The Four Types of Corporate Sustainability Projects—Only One Creates Lasting Value
Why Treating Sustainability As a Center of Excellence Outperforms Marketing, Compliance, and Values-Based Approaches
I had a great conversation with a sustainability leader at a consulting firm last week, which helped clarify something for me:
There’s not one type of sustainability project. There’s at least four.
And one is clearly superior to the others when measured by business value and long-term environmental impact.
Let’s take a look at the main types of projects, examples of each, and pros/cons of each approach:
1/ Marketing
This is your typical “2030 Climate Pledge” that was very popular back in 2022, and now that 2030 is getting closer, no one is talking about. Marketing saw an opportunity for your firm to take a stand for the environment and appeal to younger buyers, they signed onto some effort, this resulted in a pledge to “do better” and now there’s nothing but question marks.
What are you going to do to meet that pledge? Are there options you can still implement — or is it already too late?
And most pressing of all:
If you just ignore that pledge entirely, will anyone notice?
It’s hard to avoid being cynical about marketing-led sustainability work. BUT it’s also undeniable that for many organizations (Patagonia, Ikea, Ben & Jerry’s, Microsoft), their sustainability work is an element of their brand and has a significant marketing lift. Often these organizations can earn a premium on their products because of their sustainability leadership.
What’s the catch?
Marketing-led sustainability efforts collapse if it’s just a marketing effort. Without buy-in from the broader organization, operations and other divisions will resist the change and efforts will stall. And your customers are smart—marketing pablum without demonstrable change gets spotted immediately and will backfire.
So can marketing lead a sustainability effort?
Sure—if marketing is the dominant force in your organization, if the CEO supports the work and if marketing has enough visibility into operations to understand what’s achievable and what isn’t.
Otherwise, marketing-led efforts are almost doomed to fail.
(And remember: No one likes greenwashing.)
2/ Compliance
Compliance efforts used to dominate environmental work in the corporate world. Even early software packages that tracked environmental impact were focused on pollution monitoring as a reporting tool.
Compliance-led sustainability efforts are still very common—look at the power-generation sector’s efforts to transition to renewable energy, and at times it’s been an effort to stay ahead of state and local regulations.
So what’s wrong with thinking about sustainability as a compliance exercise?
There’s at least three reasons why this isn’t the best way to think about sustainability:
1/ You’re always on defense. Compliance efforts, by definition, are reactionary — either a new regulation is enacted that you must deal with, or the threat of a coming one spurs action. But you’re not leading, you’re just trying to pass a slowly rising bar. This is more costly in the long-term, as you’re constantly tweaking operations to meet regulatory requirements, and more critically, you’re never leading.
Playing defense is OK. Playing offense is better.
And if you’re not in the lead, guess what? Someone else in your industry probably is. Why not be that leader?
2/ No marketing lift. When you’re just trying to pass the bare minimum, everyone in the industry knows it. Your partners know it, and most importantly, your customers know it. They all know you’d just as soon continue to pollute, were it not for those pesky regulations.
The result? You get no marketing value from the good work you are doing. Motivations matter in marketing. If you’re going to need to transition to renewable energy in a specific market anyway because of eventual regulations, for example, why not do it now—not in defense to pending requirements, but proactively, as a way to position your business for future growth and profitability?
You both take the lead and, critically, get recognized for your leadership. That can have significant marketing benefit.
3/ You’ll miss giant opportunities. The company that’s only looking at regulatory compliance is going to miss the financial return—which may be a lot higher—from non-regulatory-compliance opportunities.
Look at it this way:
If, due to regulations, you need to deal with sustainability anyway, wouldn’t it be smarter to maximize the financial value from this additional work? Why hinder those efforts by focusing your sustainability efforts narrowly on compliance, when the real opportunities to drive business value may be elsewhere?
Compliance isn’t a bad way to approach sustainability work, but it will hinder your team’s ability to maximize the value from the work you’re doing.
3/ “Values” Project
A quick story.
I’m familiar with a corporation that launched a company-wide digital transformation effort after the CEO read a book on the subject. I’m oversimplifying slightly, but not by much—a multi-year, multi-million-dollar transformation effort was launched because the CEO read a book.
It wasn’t the wrong decision—the company was late to the game and the effort had an impact—but it was undoubtedly the CEO’s pet project.
Guess what happened when the CEO retired?
Sound like your sustainability efforts?
Values-based business decisions are understandable and have a role in business—after all, we’re humans, and we have personal values that we bring to the workplace. Environmental stewardship is a core value for many people, and many successful sustainability programs (Interface, Patagonia) trace their roots to their founder’s values.
So what’s the catch with approaching sustainability this way?
Often it makes the work—pardon the pun—not sustainable.
What gets cut the instant there’s a downturn? The second that quarterly numbers are missed? Or the moment a new leadership team is put in place?
The pet projects.
This is because they’re often not well-grounded in the company’s economics and market dynamics.
If the CEO says “go do X”, you do X—you don’t spend time thinking about why you should do X, or what the goals of X are.
You just do it.
This makes the project—”do X”—poorly grounded. No one identified the clear goals of the project or the financial motivations, making the project not as well thought-out as it could be. Take away the CEO mandate—”go do X!”—and there’s no clear business reason for doing it.
Which means, eventually, the project fails.
4/ Center of Excellence
So if the first three types of sustainability efforts are bad, how should a company approach its sustainability opportunities?
You should approach your sustainability work as a center of excellence within your organization. Their mantra should be Identify, Share and Support: Identify opportunities for sustainable innovation, share that knowledge broadly across the organization, then support teams and business units as they implement change.
Approach sustainability work not as a marketing effort, or a values expression, or a compliance effort—think of it like a digital transformation or an AI transformation effort.
Create a small team (a mix of insiders and new people is ideal) and charge them with identifying their business goals and objectives for their sustainability efforts.
Then, with these goals and objectives firmly in place, charge them with identifying opportunities to bring sustainability best-practices into your organization, and give them the tools and resources they need to bring their knowledge and insight throughout the rest of the organization.
Importantly, this team is a cross-functional, cross-department team—they provide thought leadership and knowledge to the rest of the organization, but also help identify areas for improvement and can help lead the improvement efforts.
(This is a good resource on how to implement a center for excellence well).
Approaching sustainability as a center for excellence ensures you remain focused on the business objectives of your work, focus on the difficult product and operational challenges this focus may unveil, and entrenches the effort into your organization.
With this foundation in place, you’ll be surprised at what opportunities your team uncovers, what new advantages your company creates in the marketplace, and where your sustainability journey may lead.
Are there other categories of sustainability projects you’ve encountered? Drop me a note or leave it in the comments — I’d love to hear!