Monday, February 23, 2015

6 Sustainability Buzzwords to Use at Cocktail Parties

This was originally published on Inc.com.
The world of Sustainability evolves so quickly that it can be a little hard to keep up with. You may remember Michael Porter, of Harvard Business School, trumpeting in the new term "shared value," making anyone still cooing about "corporate social responsibility" suddenly seem terribly pass.
So always make sure your buzzwords are up to date. Here are a few to get under your belt while they're still hot:
1. Triple Bottom Line. This one's been around since what seems like ancient history, but it's still going strong. Just focusing on profits (the original bottom line on the balance sheet) is a no-no; companies today need to show good social and environmental performance along with good financials. An even classier way to refer to 'social, environmental and financial' is to wax poetic: people, planet, and profits, or the 3 Ps.
2. "Multi-Stakeholder Engagement." Engaging only with shareholders has an '80s greed ring to it. Companies must engage with their employees and communities, as well as with NGOs and regulatory watchdogs. This may sound like the latest politically correct trend, to look warm and fuzzy but without any serious business reason for it--but companies still focusing on only one bottom line and one stakeholder can see their reputations--and share prices--crash and burn.
3. Net Positive. European home improvement retailer Kingfisher has set out a plan to "be restorative to the environment" as well as having a positive impact on people and communities, becoming carbon positive, wasting nothing, AND creating wealth. This is the future. Across the spectrum of sustainable companies, the next frontier is to not only 'do less bad' and to 'do more good,' but to actually leave the planet a better place than it was.
4. ESG and SRI. "Socially Responsible Investing (SRI)" has morphed into "Environmental, Social, and Governance (ESG)" investing. The SRI acronym also gets translated in different ways: "Sustainable, Responsible, and Impact" investing and "Sustainable and Responsible Investing". But whatever: it's all Green. Now that it's catching on in the US, ESG is becoming institutionalized. Big pension funds are making it strategic and fleshing out the concept with more lists and acronyms. CalPERS, for example, talks of "three forms of economic capital--financial, human, and physical--that are needed for long-term value creation," and has proceeded to roll out a new acronym, with its Sustainable Investment Research Initiative (SIRI).
5. Materiality Matrix. Let's face it: it is tough to get quantitative about sustainability. If I'm in the tire business and doing something for rubber farmers in Indonesia, how can an investor put a number on that? How can her ESG index compare my social responsibility to that of a canned food company working on feeding the poor in Africa? And what about measuring environmental impact or governance? But even ESG investors need graphs and charts. So companies using the latest GRI (Global Reporting Initiative) framework to do their sustainability reporting are producing a matrix, with X and Y axes. Stakeholders tell them what to put on it, and this helps prioritize. Investors love it. Don't report without one.
6. Circular Economy. The basic premise here is that all waste should become some sort of fuel or resource. Technology is making that possible, right now, so the next step is implementing it across the board. Products need to be made with recyclable materials; new applications need to be developed for end-of-life products to be turned into new things, and infrastructure for collection, recycling and transformation needs to develop further. This is a good buzzword to have, especially since at some cocktail parties you might run into people who think sustainability is just about energy efficiency and LEED-certified buildings. LEED, by the way, stands for Leadership in Energy and Environmental Design. But that is a buzzword for another column.