By Jane Nelson, Director, CSR Initiative, Harvard Kennedy School and Senior Associate, Cambridge Institute for Sustainability Leadership
Over the past decade, leading multinational companies have recognized that to effectively manage environmental, social and governance issues, they have to integrate them into their core business practices. This moves sustainability beyond compliance and community social investment, although these are still important elements of the whole.
SABMiller has been one of the pioneers in this transition. The announcement of Prosper — its new sustainable development ambition — takes the company to the next stage of the journey. Prosper offers potential for more transformational and systemic impact and creates new opportunities for business leadership, as well as new challenges.
There are three characteristics of this more holistic approach that are worth highlighting:
Firstly, the company’s commitment to not just embed sustainability into its business practices, but to align it with its corporate strategy.
SABMiller has been at the vanguard of integrating sustainability into its core business practices. However, like other leading companies, its focus has primarily been on ‘doing no harm’ and improving sustainability-related risk management and accountability by creating voluntary standards and more rigorous management and reporting systems. These remain vitally important. Safety, health, human rights and environmental risk management and due diligence remain a day-in-day-out responsibility for any company that aspires to be a global and local business leader everywhere it operates.
SABMiller has almost a decade of experience in setting, managing and reporting on standards related to a set of 10 sustainable development priorities, ranging from respecting human rights to water efficiency and contributing to the reduction of HIV/Aids. Work will continue in all of these areas, but while it remains critical, it is no longer enough to be an industry leader.
The company’s new commitments align sustainability much more ambitiously with its overall corporate strategy, growth opportunities and long-term value creation. They combine an integrated global platform for setting targets and sharing good practice with the flexibility needed to support strong brand portfolios, innovation and profitable businesses in local markets and diverse contexts. The new goals have been championed and will be led by senior executives of key business functions and regions, with the sustainability team providing facilitation and support rather than taking the lead.
Effective implementation will require enhanced leadership skills and performance evaluation of company executives. SABMiller will need to increase the rigor and business relevance of its sustainability metrics and to demonstrate how its new sustainability goals are directly relevant to the company’s investors as well as its consumers, employees, business partners, and host communities and governments.
Secondly, the company has outlined a systemic approach that aims to leverage its scale and stakeholder relationships to address shared risks and shared opportunities. Through Prosper, SABMiller has identified five shared imperatives: a thriving world, a sociable world, a resilient world, a clean world, and a productive world.
These provide greater focus, but at the same time are more ambitious and systemic than the company has been in the past. They focus on issues that create the most material risks and strategic opportunities for the company and for its stakeholders. As such, they have potential to measurably create both business value and socio-economic or environmental value.
Importantly, they are more explicit than ever before about the concept of shared risks and shared opportunities – and the need for joint responsibilities in addressing these. The shared imperatives are also clear about the need for solutions that move beyond specific company-led projects to collaborative approaches that drive more systemic or transformational change in the face of increasingly complex business and societal challenges.
Consider the company’s new target to support half a million small businesses along its value chain, many of which are micro-enterprises. A key element of its approach will be to work directly with these businesses helping them to improve their capabilities and productivity, and potentially improving opportunities for some 1.5 million employees and an estimated 6 million family members of the entrepreneurs in question. At the same time, the company is increasingly partnering with local banks, training institutes, government entities and other companies to strengthen the ecosystem for these entrepreneurs and for small business development more broadly, thereby aiming for a more systemic, sustained and scalable impact.
SABMiller’s goal to secure water supplies for the business and its host communities is another example. The company is driving not only for a world-class water efficiency target of 3.0 litres of water per litre of beer and 1.8 litres of water per litre of soft drink through its direct operations; it is also developing partnerships at the broader level of watershed management at every site that faces water risks, thereby aiming to improve watershed resilience and sustainability more broadly. A similar approach is possible, but needs to be made more explicit, in the area of climate change.
While inspiring in terms of vision, such collaborative and systemic approaches are often challenging and time-consuming to implement in practice. Again, success will depend on enhancing the capabilities and leadership skills of both the company’s managers and employees and those of its partners in government, other businesses and communities.
Thirdly, SABMiller has set ambitious, transparent targets so that it can be held accountable for its impact. The company will disclose its performance against these, with third party verification in most cases.
Although such an approach is not new to SABMiller, the more ambitious targets and their more systemic nature raise the bar. The company will face additional expectations to excel in implementation, to engage effectively with external partners and to measurably demonstrate shared benefits for both the business and its stakeholders.
There is likely to be growing interest in the performance of specific regions, countries or even brands. The company’s leadership in reporting its tax payments should be recognised, although even here expectations are likely to grow as multinational companies reinforce their efforts to strengthen accountability and trust.
SABMiller’s CEO, Alan Clark, has publicly asked: “Why are we doing something new? The answer is that the stakes are getting higher. Climate change, resource depletion, water scarcity, alcohol related harm, income inequality and poverty… the challenges we face as a society and as a business are getting bigger.”
The company’s ambition to align its sustainability goals with its corporate strategy, to leverage its scale and stakeholder relationships to achieve more systemic impact, and to hold itself accountable for managing shared risks and creating shared value has the potential to be transformational. Ultimately, it will be the leadership skills and technical expertise of SABMiller’s managers, employees and partners that will determine if the company’s achievements match its ambition.
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