Why do some companies “go green,” while others are satisfied to go grey? Why do some develop robust sustainability programs while others sit back and watch?
Yesterday (Oct. 2), as part of my Business Ethics Speakers Series at the Ted Rogers School of Management, I had the pleasure of hosting Hamish van Der Ven, a Ph.D. candidate from the University of Toronto. The title of his talk was “Big-Box Retail and the Environment: Why Some Firms Innovate and Others Stagnate.” His main contention was that what matters is socialization and whether the leaders of the company in question make use of opportunities to sit down with a range of folks to talk about sustainability.
The main competing theory of why companies go green is that it has to do with profitability. Companies go green because they buy into the “business case” for sustainability. That is, they come to believe that reducing energy usage, minimizing packaging and waste, and so on, will be good for the bottom line. Alternatively, they come to believe that being perceived as environmentally progressive will win them customers, and increase profits that way.
But as van Der Ven rightly points out, this explanation suffers from a serious defect. Every company is subject to those pressures—they all want to cut costs and reduce waste and attract environmentally-concerned consumers—but only some of them actually put much effort into sustainability programs that will do those things. If the business case is such an important motivator, why don’t all companies buy into it?
Much more significant, van Der Ven argues, are the opportunities executives take, or don’t take, to open themselves up to internalizing new social norms. In other words, what we call socialization. And that happens through social interaction.
And when leaders change their thinking, they tend to do a lot to change corporate culture. As the head of CSR for one major corporation told me, “We talked a lot about going green, but then one day the CEO called and said, ‘Make it happen,’ so it happened.”
Of course, this isn’t just just a story about how policy-makers and activists can influence companies by influencing leaders. It’s also a story about how leaders can implement change in their own organizations. Says van Der Ven, “If you sit down with people who think differently, you start to see things in a new light. We cannot expect change to result from [instead] sitting around a table with people who think just like you.”
Chris MacDonald is Director of the Jim Pattison Ethical Leadership Education & Research Program at the Ted Rogers School of Management.