Today’s agendaA number of organizing concepts that can impact your

thinking about organizations within your project scope—like farms, processors, consumers, policy-makers. Not all concepts may have a direct impact, but all have at least some indirect impact(s).

Not necessarily a bunch of insights, but some ways to structure thinking about the actors and behaviors of actors in your project

Individual firmsHow do firms behave? How do firms engage with sustainability initiatives?

Groups of firmsSupply and value chainsBusiness clusters

Corporate social accountability—reporting and verifying

Some management ‘theories’ for understanding firm behavior

Institutional—individual firms, but generally thought of at the industry level

Legitimacy—individual firm levelStakeholder—individual firm level

These are not mutually exclusive, there is overlap

Institutional forces

Forces that drive one unit of a population to resemble other units1. coercive2. normative3. mimetic

Grocery storesOil companiesUniversity academic departments Pulp mills

Responses to institutional pressures

Tied to how much is firm success influenced by the actors applying the force

Compromise—balance constituents, negotiateAcquiescence—habit imitation, complianceDefiance—ignore, attack, challengeManipulation—co-opt, control, influenceAvoidance—conceal, escape

In your project—what forces exist, how do the actors behave?

Legitimacy

License to practice

Congruence between society’s perceptions of an organization’s behaviors and society’s expectations of the organization

How to assess:MarketplacePerceptions of stakeholdersCongruence with norms

Examples of legitimationChange organizationChange societyIdentify with symbols of legitimacy

Stakeholder theory

Identify potential stakeholdersBy typeBy “importance”

Power—ability to influence behaviorLegitimacy—socially expected and acceptedUrgency—time sensitivity or criticality of claim

Determine salience to the organization

Then deal with the stakeholdersNegotiation, balancing (traditional view)Conversation (alternate view)

Matrix for interpreting firm strategic focus

Operations—relationships and processes within

the firm

Market—relationships

within the firm’s consumer market

Society—relationships

within the society-at-large

Legitimacy—maintain standing and preserve license to practice

Competitive advantage—improve market position

Enlightened management—achieve sustainability

Matrix for interpreting firm actions

Innovation Compensation

Internal

Supply chain (vertical)

Beyond supply chain (horizontal)

Use this as an example, a structuring concept...not necessarily as an inviolate rule...use it to open your thoughts not guide your thoughts

Firm Sustainability Behaviors

Motivating factors—these are fundamental reasons for sustainability behaviorsLegitimacyMarket opportunitiesEnlightened management (my values, not Friedman’s)

Beyond (compliance) activities—these are philosophical strategies:Win-win—get help with achieving goalsMargin of safety—look at risk and uncertaintyAnticipatory (compliance) measuresGood citizenship (means good business)

Accelerate firm progress toward competitive (environmental) approach—these are tactical :Measure direct and indirect (environmental) impactsRecognize opportunity cost of underutilized resourcesCreate a bias toward innovative, productivity-enhancing solutionsBecome proactive in dealing with regulators and activists (stakeholders).

Firm strategies to be CSR competitive1

Timing needs to be strategic—not too soon, not too lateAn appropriate level of commitment needs to be made—be a

leader, but stay relevantCompanies need to influence policy—earn a seat at the

policy tableCompanies need to create business opportunities—shift from

risk management to innovation

--Strategies cannot be an add-on to business as usual; the core business must change. The ultimate goal is a game-changing strategy; building a complete business to alter the competitive environment

1 adapted from the Pew Center on Global Climate Change, Oct 18, 2006

Today’s (2/1/07) Financial Times

in an article on Exxon’s engagement with climate change issues---

John Llewellyn, senior economic adviser at Lehman Brothers, says: “Companies that see climate change coming, recognise it for what it is, do the relevant R&D and inculcate a positive attitude to change on the part of their management stand to do very well. A company that doesn't believe it and doesn't encourage its managers to take it seriously is going to get rolled over.”

Take-aways from the articles

Management style is important

Regulation and competitiveness are synergisticThe market will not work without regulation

-to achieve certain efficiencies...those not well priced-to recognize values rather than value

Managers can choose among different strategiesInnovation v. compensationAn organization can influence behaviors in its stakeholders

Some inter-organization concepts

Supply chainValue chainBusiness clusters

Supply chain

A supply chain is a coordinated system of organizations, people, activities, information and resources involved in moving a product or service in physical or virtual manner from supplier to customer.

Supply chain and Supply chain management

Value chain

Internal—Processes within the organization that convert materials and labor into a product

Value chain analysis describes the activities within and around an organization, and relates them to an analysis of the competitive strength of the organization. Therefore, it evaluates which value each particular activity adds to the organizations products or services. The insight is that an organization is more than a random compilation of machinery, equipment, people and money. Only if these things are arranged into systems and systemic processes it will become possible to produce an output that customers value more than the inputs.

Value chain example

Business clusters

A business cluster is a geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field.

Business clustersIncrease productivity of firmsDrive the direction and pace of innovationStimulate the formation of new businesses

Members of a cluster benefitAs if they were largerAs if they had collaborations with others

Reporting and verifying

Big question—does reporting matter?

Some websites

Wessex 05 Sustainability indicatorsNike

FLA reportFLA Independent External MonitoringSustainability chartsFLA WatchSoccer ball manufacturer

Environmental Cost Statement—pg 9

Reporting G250

0% 10% 20% 30% 40% 50% 60%

1999

2002

2005

Reporting N100

0% 5% 10% 15% 20% 25% 30% 35%

1993

1996

1999

2002

2005

Reporters verified (G250 dark, N100 light)

0% 5% 10% 15% 20% 25% 30% 35%

1999

2002

2005

By country for F250

0% 20% 40% 60% 80% 100% 120%

Total

South Korea

USA

France

Germany

Japan

UK

Italy

Netherlands

Switzerland

200520021999

By country, for N100

0% 10% 20% 30% 40% 50% 60% 70% 80%

Total

France

Australia

Finland

Belgium

The Netherlands

Denmark

USA

Norway

UK

Sweden

Germany

200520021996

By country, for N100 (percent verified)

0% 10% 20% 30% 40% 50% 60%

France

Australia

Finland

The Netherlands

Denmark

USA

Norway

UK

Sweden

Germany

20052002

Verifying parties GFT250 and Top 100 (2002)

Information matrix

Information matrix—Environmentally enabled accounting information system

What gets measured gets managed… (somebody, some date)Traditional view supposes only (primarily) economic information

needsWe recognize risks, opportunities, imperatives driven by cultural,

social, and business demandsHow to create an information system (AIS) that addresses these

(other) needs

Develop a matrix to relate strategy, scope, and information

Information matrix—examples

Interior cells contain examples of changes

from a typical AIS

Operations—relationships and

processes within the firm

Market—relationships within the firm’s consumer market

Society—relationships within the society-at-

large

Legitimacy—maintain standing and preserve license to practice

Full cost of dealing with waste; segregating cost components

Types and costs of certifications; market share of certified products

Costs of public meetings; permitting costs; avoided costs due to green permits

Competitive advantage—improve market position

Costs of green activities; relative energy costs; costs of alternatives

Salary differentials of DfE and other engineers; consumer price elasticity for green

Availability and cost of trading permits; cost of auditing suppliers; incremental cost of educating suppliers

Enlightened management—achieve environmental sustainability

Employee commute miles; GHG from travel/logistics; building waste; water consumption

Cost of take-back; percentage of product recycled; cradle to grave (cradle) data

Co-location data; local, regional, etc environmental data

Information matrixOperations—

relationships and processes within

the firm

Market—relationships

within the firm’s consumer market

Society—relationships

within the society-at-large

Legitimacy—maintain standing and preserve license to practice

Competitive advantage—improve market position

Enlightened management—achieve environmental sustainability