Cranfield on Corporate Sustainability
Cranfield on Corporate Sustainability
Edited by David Grayson & Nadine Exter
Greenleaf Publishing (June 2012)
ISBN: 978-1-906093-82-2, 264 pages
Theme of the Book
Cranfield on Corporate Sustainability is designed to inform and stimulate debate
about what sustainability means for business and, therefore, on what business
schools across the globe should research, teach and advise.
This book is a manifesto and a toolkit for a holistic, embedded approach to corporate
sustainability involving the whole organisation. It advocates the need for
sustainability to become embedded throughout an organisation’s DNA. It recognises
that many managers in traditional departments have little or no knowledge of what
sustainability and corporate responsibility means to their day-to-day roles.
Conversely, many corporate responsibility practitioners find themselves isolated from
core business issues. The book bridges this gap.
With contributions from more than 30 Cranfield faculty and associates across multiple
management disciplines, the book emphasises a cross-discipline approach when
confronting sustainability dilemmas and opportunities.
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Key Learning Points

Ideally, sustainability contributes to business performance and that
performance can be measured.

Embedding sustainability requires leadership, board supervision, employee
engagement, and engaging the value chain.

There are five stages of maturity in approaching sustainability, from those who
deny responsibility, to those where it is ingrained. Understanding these stages
helps explain where the organisation currently is and visualise where it can
aspire to.

Knowledge sharing is an essential component of Corporate Sustainability –
both in compliance and innovation.

In a business aspiring to sustainability, marketing is key and has to look
beyond economic and financial targets.

To get employees engaged in a sustainable business, sustainability must mean
the same thing to them as to the organisation.

Reporting on sustainability performance is not mandatory but will increasingly
be expected.
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Contents
Introduction
Professor Frank Horwitz, Director, Cranfield School of Management
Chapter 1: Overview of embedding corporate sustainability
David Grayson, Professor of Corporate Responsibility
Chapter 2: Embedding corporate sustainability as a knowledge-creation
journey
Patrick Reinmoeller, Professor of Strategic Management
Chapter 3: Philosopher, poet, trickster: New role models for corporately
responsible leaders
Donna Ladkin, Professor of Leadership and Ethics
Chapter 4: Embedding the governance of responsibility in the business of
the board
Andrew Kakabadse, Professor of International Management Development, and David
Grayson, Professor of Corporate Responsibility
Chapter 5: Strategic business performance for sustainability
Mike Bourne, Professor of Business Performance, Pippa Bourne, Regional Director,
Institute of Chartered Accountants in England and Wales and David Ferguson, Visiting
Fellow, Doughty Centre for Corporate Responsibility
Chapter 6: Sustainability and new product development
Keith Goffin, Professor of Innovation and New Product Development
Chapter 7: Issues in sustainable marketing
Lynette Ryals, Professor of Strategic Sales and Account Management and Director of
the Demand Chain Management Community, and Paul Baines, Radu Dimitriu,
Professor Simon Knox, Emma Macdonald and Javier Marcos-Cuevas
Chapter 8: Implementing sustainable marketing
Lynette Ryals, Professor of Strategic Sales and Account Management,
and colleagues Shahpar Abdollahi, Stan Maklan and Hugh Wilson
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Chapter 9: Evolution or revolution: New models for sustainable supply-chain
management
Mike Bernon, Senior Lecturer in Supply Chain Management, and Peter Baker, Carlos
Mena, Andrew Palmer, Alan Smart, Heather Skipworth and Simon Templar, Centre
for Logistics and Supply Chain Management
Chapter 10: Enabling the change: Corporate sustainability and employee
engagement
David Ferguson, Visiting Fellow, Doughty Centre for Corporate Responsibility, and
Martin Clarke, Programmes and Business Director, Centre for General Management
Development
Chapter 11: Sense and sustainability
Sharon Jackson, Associate at the Centre for Customised Executive Development
Chapter 12: Telling it like it is: Reporting sustainability performance
Ruth Bender, Reader in Corporate Financial Strategy
Appendix: How Cranfield School of Management is embedding corporate
sustainability in its own work
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Introduction
Corporate sustainability is defined as:
“a business approach that creates long-term value to society at large, as well as to
shareholders, by embracing the opportunities and managing the risks associated with
economic, environmental and social developments; and builds this into corporate
purpose and strategy with transparency and accountability to stakeholders”
Increasingly, businesses are understanding that sustainability is an opportunity and
enabler rather than a risk for business, summed up as “doing good is good business”.
For those involved in educating and developing leaders, recent financial crises and
corporate scandals have created an imperative to address the ethical and social
issues raised. The global environmental and social challenges created in part by
decades of misaligned business activity have a significant impact on long term
business survival. The overall challenge is to instil the know-how, acumen and ‘active
citizenship’ needed in organisations.
Cranfield on Corporate Sustainability is designed to:

Stimulate debate about what corporate sustainability means for business.

Develop an extended conversation with stakeholders about corporate
sustainability and responsibility.

Signal the range of informed viewpoints on the topic that together endorse a
holistic and cross-disciplinary approach to sustainable business.
In doing so it becomes clear that sustainability is not a topic with formulaic answers,
since there are often conflicts of interest between stakeholder groups, ethical
dilemmas, and questions about what constitutes good corporate behaviour.
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Chapter 1: Overview of embedding corporate sustainability
Sustainability has become the issue that can’t be ignored. Rising global population
and demand on resources, climate change and societal cohesion have profound
implications for the business landscape, and so managing your organisation’s
environmental, social and economic impacts must now be regarded as business
critical. The only way that this can be comprehensively addressed is to embed
sustainability within the strategy, mindset and operations of your organisation.
Cranfield’s Doughty Centre for Corporate Responsibility has developed a model for
embedding sustainability throughout the business (below)
Embedding
Sustainability
Communications and stakeholder
engagement including investors
Leadership
Governance & board oversight
Core Vision
Knowledge –
management
and training
Key targets &
measurement
Strategy
Vision
Values
Strategic
business units
& functions
Specialist
function
Strategic
Engaging employees
Engaging value chain
Operational
Collaborations, partnerships & CR networks
Developed from David Ferguson
© Doughty Centre 2012
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It incorporates the following elements:

leaders must lead

boards must provide effective oversight

corporate targets and measurements must include sustainability indicators

the approach to sustainability should align with the company’s overall strategy
and culture and within business units/functions way of doing business

you need to engage employees from the ground up

you need to engage your value chain

there are enablers to use such as knowledge management, working with
partners and in networks, and developing specialists in the business.
Cranfield’s model identifies five stages of maturity towards embedding corporate
responsibility. At one end of the spectrum are companies that deny that they have
any responsibility for their social, environmental and economic impacts. At the other
are those where sustainability thinking has become ingrained in organisational
culture and behaviours and they are a beacon of best practice – a champion – for
other organisations to learn from:
Five stages of Corporate Responsibility Maturity
Stage 1 Denier
Stage 2 Complier
Stage 3 Risk-mitigator
Stage 4 Opportunity maximiser
Stage 5 Champion
Organisations are taking different approaches to sustainability, due in part to their
stage of CR maturity.
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Unilever case study
Unilever is a prime example of a major corporation which has committed itself to
pursue sustainability with its Sustainable Development Plan (USLP). It commits the
company to ‘double in size while reducing its environmental impact’. Paul Polman,
CEO, has said: “Sustainability is our business model.”
There are three detailed targets underlying the USLP:
1) improve the health and wellbeing of more than 1m people through measures such
as hygiene, drinking water and nutrition.
2) halve the environmental impact of Unilever products
3) source 100% of agricultural raw materials sustainably.
The Brand Imprint process is an approach that embeds sustainability brand-bybrand.
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Chapter 2: Embedding corporate sustainability as a knowledge-creation
journey
Knowledge and the sharing of knowledge is at the heart of the embedding process. At
every stage of building awareness and skill of what it means to be a sustainable
organisation: organisations have to learn about what needs to be done, capture that
knowledge, and then share that knowledge to increase learning and practice.
The overall goal for corporations is to achieve Responsible Competitive Advantage
(above), which comes about through:
• Compliance – meeting societal expectations, standards and legal requirements;
AND
• Co-creation of new ways to increase sustainability over and above compliance –
tapping into the values and views of organisations and people to pioneer new
products, services and practices that co-create positive impacts for company, society
and the environment.
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There are five main steps to the embedding process.
Step 1: compliance as process. This can in turn be broken down into:
• Identifying rules
• Translating rules into actionable routines
• Effecting change in the existing routines to deliver the outcome.
Step 2: discovering new insight by going beyond legal compliance. To pursue
responsible competitive advantage, you may need to anticipate future legislation or
help frame it, which becomes a source of innovation.
Step 3: unanticipated effects. In the process of investigating their responsibilities, for
example in the workplace, or the supply chain, companies often discover emergent
customer needs that help create responsible competitive advantage.
Step 4: making new sustainability responsibilities explicit. This is about articulating
the insights you have gained, in terms of setting priorities and finding a meaningful
language to communicate ideas, particularly with other stakeholders.
Step 5: integration. This is about applying new sustainability programmes, processes
and policies, and so in practice it is about managing a portfolio of initiatives,
resourcing them and balancing long-term and short-term initiatives.
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Chapter 3: Philosopher, poet, trickster: New role models for corporately
responsible leaders
Transformational change will only happen if strong leadership is demonstrated.
Employees and other stakeholders need leaders to explain what sustainability means
for the business and why it is important. They have to lead by example.
This chapter looks at some alternative ways of understanding the leadership task.
The first challenge facing the leader who wants to establish sustainability is to decide
what it means for the organisation. This is something leaders have to define and redefine as they go along. Leaders need to engage their people and obtain their buy-in
to the corporate responsibility agenda, which may not automatically be seen as
relevant. And, crucially, to become a responsible organisation, leaders need to shift
behaviour. So leading for CR is a challenge that requires different skills to the
traditional leadership toolkit.
Three archetypes describe particular leadership qualities that may be particularly
useful in this context:
The Philosopher. A philosopher’s perspective is required because leadership has to
ask questions about the company’s identity, and what it means in practical terms for
that organisation to be responsible.
The Poet. This archetype comes into play because poetry has the capacity to help
people make connections between seemingly incongruent ideas, shifting from a fixed
position to a new perspective. In the context of CR, ‘poetry’ can mean deploying
imagery and metaphor to show people what is really going on.
Example: photographs of children working in sweatshops were used to induce
Walmart employees to think about the reality behind their cheap clothing products.
The Trickster. The trickster is a disruptive force, the “Great Awakener’ who creates
chaos in order to bring people’s assumptions into question. This resonates because
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CR leadership has to challenge accepted assumptions about the need for short-term
profit.
Each of these archetypes can be used to make impact from different levels of the
organisation, not just from the top level of hierarchy.
Chapter 4: Embedding the governance of responsibility in the business of the
board
Corporate governance is a key part of becoming a sustainable organisation, because
it is the board’s responsibility to see that sustainability is integrated into purpose and
strategy, and that it is being implemented. Environmental, social and governance
(ESG) issues can all affect the value of the company. Various surveys show that
companies are increasingly expecting their board to take responsibility for
sustainability issues. The extent to which they do so depends on the level of CR
maturity.
Board oversight of CR takes a number of different forms in practice, including: a nonexecutive director for sustainability; a formal board committee; existing board
committee has extended responsibility for CR; full board discussion; a hybrid boardexecutive committee. The particular formula used is less important than ensuring the
model chosen fits with corporate culture and practice.
A commitment to CR creates extra responsibilities for existing board committees, for
example:
Audit and risk – embracing a wider definition of risk to include ESG
Remuneration – appraising performance on sustainability
Investment – appraising opportunities on sustainability criteria
Some companies supplement the board structure formal stakeholder-engagement
mechanisms involving sustainability experts and external stakeholders. Many
companies also publish a specific CR or Sustainability Report to supplement the
Annual Report.
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Organisations adopting sustainability need to make it a specification for all new board
members and should also strive to establish diversity in the board so as to create not
just fair representation and inclusion but also diversity of ideas and the opportunities
that emerge from that. In making the board aware of and effective in discharging its
duties in this area, sustainability needs to be included in activities such as induction,
training, reward and remuneration, and professional development.
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Chapter 5: Strategic business performance for sustainability
There is ample evidence that taking a proactive position on sustainability contributes
to improved business performance. However, this cannot be quantified purely in
financial terms, so a non-financial model for measuring the contribution of
sustainability is required.
A seven step process describes how as a performance management system for
business sustainability can be built:
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• the stakeholder’s sustainability landscape.
Identify the key stakeholders and the issues associated with them. Plotting each
issue on a power/interest matrix can help to prioritise the issues relevant to your
organisation.
• future scenarios.
Use the information captured on key stakeholders and concerns to develop potential
future scenarios (medium- and long-term), and the impact and opportunity each
presents for your company. Aspects to consider include:
• will your products still be relevant?
• will regulation or law change?
• will your activities be acceptable?
• what will customer needs be?
• strategic management processes.
An impact assessment matrix is a tool that enables you to identify the issues likely to
have major impact on your business, and that are most likely to occur, then develop
plans for each. The output is a detailed strategy document.
• gain commitment internally
This is a prerequisite to success. Involving a representative group of staff, and
having a sponsor at senior management level can both make a difference.
• design, target and measure progress.
This involves designing the KPIs, which can measure success in introducing
sustainability processes as well as management of sustainability issues. They need to
be relevant, meaningful and practical.
• internal reporting
Consider how you will present data so that progress can be effectively evaluated.
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• communicate progress
Validate the data you collect (not least to counteract charge of ‘greenwash’),
improving methods where necessary, and design your reports to different audiences.
Chapter 6: Sustainability and new product development
If your organisation aspires to become sustainable in the long term, then it is
essential that all new products and services you develop are designed with
sustainability in mind, and embrace that at every stage of the New Product
Development (NPD) process.
The consideration of sustainability in NPD has four elements: a broader consideration
of stakeholder needs (including consulting legislators and activists); a focus on the
whole life-cycle of a product; planning for post-use; and ensuring that the supply
chain is effective.
The Stage-Gate process is the class approach to NPD; at each stage it specifies the
responsibilities of each function and the goals that must be met at each gate before
proceeding to the next stage. To pursue sustainability, Stage-Gate needs to be
modified at each stage to consider the wider range of issues raised. Here are some
examples:
Discovery – consider the vision for the product, the widest range of customer and
stakeholder views, and legislation that could impact.
Scoping – consider Life Cycle Costs and responsible production methods.
Build Business Case – can you demonstrate that a sustainable product would
contribute to profits?
Development – monitoring the impacts of design decisions by R&D
Testing & Validation – testing in Bottom of Pyramid markets
Launch – make recycling facilities available from day one.
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Case study: Unilever defined three product metrics (covering water, waste and
greenhouse gases) and one supply chain metric for sustainable sourcing, then
measured the existing product portfolio to establish a baseline against which new
products could be measured.
Chapter 7: Issues in sustainable marketing
Sustainability is a big issue for marketing, because it is increasingly perceived that if
marketing is solely concerned with increasing consumption, then it is part of the
problem.
Sustainable marketing is an idea that has emerged in recent years which seeks
broadly to give marketing morality and a wider accountability. There are three
central tenets:

Marketing should not negatively impact the environment

Marketing should not allow or promote inequitable social practices

Marketing should encourage long-term economic development
Some of the key concepts that marketers are addressing to create successful
responsible marketing behaviours are:
The attitude–behaviour gap. The gap between consumers saying they will pay for
sustainable products and their actual behaviour.
Choice influencing – Creating value propositions that incorporate an ethical or
sustainability dimension.
The sustainable brand – Brands building connections with sustainable issues, for
example through Fairtrade, or cause-related marketing.
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Chapter 8: Implementing sustainable marketing
It’s one thing to want to be sustainable in your marketing; it’s another to get it right.
As with any marketing strategy, first principles apply. So you have to identify a
customer segment that is receptive to the strategy, and then develop a value
proposition which is both relevant and competitive.
Some other issues to consider are:
Evaluation. Many aspects of sustainable marketing can be evaluated in conventional
business terms, whether that be savings generated by reducing packaging, or even
increased brand value resulting from an ethical stance.
More visionary, long-term activities such as BP’s ‘Beyond Petroleum’ postitioning are
much harder to evaluate in these conventional terms.
Loyalty. Building long-term relationships with customers can have benefits in terms
of sustainability, through greater efficiencies, both in inventory levels and in reducing
wasted sales and marketing effort, such as discarded brochures.
The role of networks. Strategic partnerships play a part in sustainable marketing
through bringing together organisations with similar goals and interests, for example
in cause-related marketing, and sharing the knowledge to support sustainability.
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Chapter 9: Evolution or revolution: New models for sustainable supply-chain
management
Your own company’s efforts to pursue sustainability are largely futile if they are not
matched by the companies that supply you, or even your own customers further
down the value chain. And supply chain activities, from manufacture to physical
distribution, have some of the biggest SEE impacts of all. Managing supply chains to
minimise social and environmental impacts is not easy because of the complexity and
lack of control over third parties; but it can deliver reduced operating costs and
competitive advantage.
Some key issues in sustainable supply chain management:
Design – this phase often determines 75 per cent of lifecycle costs, and should be
carried out with manufacturing process, recycling and logistics in mind.
Sourcing and procurement. Carbon footprints, and the human rights of production
workers are two key issues.
Manufacture. Issues include land usage, use of natural resources, energy
consumption, pollution.
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Chapter 10: Enabling the change: Corporate sustainability and employee
engagement
Evidence shows your company won’t succeed in pursuing sustainability unless your
people are on board. But the classic top-down approach – cascading policies,
processes and training – is not necessarily the best one.
Key to circumventing the barriers is making it a two-way process from the outset:
asking employees about their expectations; gathering feedback along the way.
Alternatives to top-down engagement strategy include:
• harnessing office politics through constructive political leadership involving debate.
• creating pockets of good practice and supporting ‘agents of change’.
• democratisation. Developing ideas and objectives about sustainability from the
bottom up.
Chapter 11: Sense and sustainability
It is important that your people ‘get’ what the organisation means about
sustainability, or they won’t take the necessary actions.
In order to do so, they need to understand the company’s aspirations in a meaningful
way. Some of the ingredients in achieving this include:
• getting managers to contribute to crafting the message in the first place
• using the same language as is used within the company in other contexts so
managers can relate to it.
• sustainability aspirations aligned with business objectives
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There is often a gap between rhetoric and action. Managers frequently expect
someone else to take action over sustainability, so it is important that communication
is clear about where responsibility and expectation lies.
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Chapter 12: Telling it like it is: Reporting sustainability performance
Reporting on sustainability performance is not mandatory but will increasingly be
expected in future, thanks to pressure from investors, regulators and other external
sources. Many companies report not just to comply, but because there are
commercial benefits, or they simply want to. Nevertheless, it’s up to the company to
decide what to report, and in what form.
One approach is to consult stakeholders about what they consider relevant, reporting
trends and data that can be benchmarked where possible. And reports should cater
for the widest range of stakeholders, though tailored versions may be produced for
different groups.
There is no mandatory requirement for verification, but many organisations do
commission some form of external audit.
There are a number of standards available that can help companies to produce
effective disclosure at a meaningful level for stakeholders; these include
AccountAbility’s A1000 series; the Global Reporting Initiative (GRI) and Accounting
for Sustainability (A4S).
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About the Editors
David Grayson CBE is Professor of Corporate Responsibility and Director of the
Doughty Centre for Corporate Responsibility at Cranfield School of Management. He
joined Cranfield as director of the new Doughty Centre in April 2007, after a 30-year
career as a social entrepreneur and campaigner for responsible business, diversity
and small business development. His books include: ‘Corporate Social Opportunity:
Seven Steps to Make Corporate Social Responsibility Work For Your Business’ and
‘Everybody’s Business’ — both co-authored with Adrian Hodges. He has also
contributed to several other books including ‘The Accountable Corporation and What
If?’. His research interests focus on how companies profitably embed sustainability.
He is a member of the editorial advisory group of Ethical Corporation.
Nadine Exter is a manager in and Lead Advisor for the Doughty Centre for
Corporate Responsibility, an action-research centre within Cranfield School of
Management. She has over a decade of experience in marketing, stakeholder
engagement, and communications: Nadine co-founded a successful SME, advised on
change management in the public sector, and ran learning networks between public
and private sectors. Publications include ‘How to Develop a Champions Network’;
‘Engaging Employees for Corporate Responsibility’; ‘The Business Case for Corporate
Responsibility’ (with BITC); ‘Sending the Right Message’ (chapter in an ebook with
Ogilvy); ‘Engaging Employees with Sustainable Business: How to Change the World
whilst Keeping your Day Job’ (book in progress, due Q2 2013); ‘The Sustainability
Profession: The How, What and Why’ (occasional paper in progress, due Q4 2012).
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