Risk Mitigation

Still another valuable strategy for bringing sustainability into an organization is in terms of risk mitigation. Even when leaders and other stakeholder don’t understand or accept what they feel are “touchy-feely” values, most can imagine the costs associated with operational risk in policies and offerings. For example, many manufacturers have discovered the nega­tive impact ill-defined or non-existent social policies with their labor can have on their brand and revenues. Even when a corpora­tion’s policies are deemed acceptable to the public, if their products are created and ser­viced by subcontractors with unacceptable labor policies, they still risk the backlash. Risks not only affect revenues, but also can affect any aspect of an organization’s operations—and many, many environmental and social issues defined in the first chapters of this book.

Divesting in Apartheid

In the 1980s, when corporations and university investments were found to support apartheid in South Africa, they suffered a very real divestment risk when this became an issue with the public. These organizations had to change policies quickly, shift investments, and even sell business units in some cases, to mitigate the risk of losing investments, short – and long-term revenues, customers, and their market value.

These kinds of social and environmental risks are difficult to measure, which can be an ally to those promoting more sustainable practices and strategies within an organization. The open – ended potential—especially in financial terms— of these risks, piled on top of each other, can concern leaders and shareholders beyond what the actual risks may be. This is further leverage to make change in favor of socially, environmen­tally, and financially sustainable practices. How­ever, using this approach to scare or threaten action usually has the opposite effect. Many companies, when risks are uncovered under threat, move quickly to squash any discussion or knowledge of these risks precisely to limit their liability if these risks ever result in legal action. Threatening to “go public” with risky behavior can result in stifling all conversation of change and all progress toward more suitable and sus­tainable policies.

The most helpful frameworks to employ in the strategic phase are the Natural Capital and Sustainability Helix frameworks. This is because they are both high-level, business­centric discussions of sustainability. Both tend to support strategic goals and speak in ways that leaders and senior managers can under­stand within their own cultures. This doesn’t mean that the others aren’t useful. All of the others, particularly Natural Step and Cradle to Cradle, can offer important and vivid examples that help strategists better understand sustain­ability and envision how it might benefit their organizations. But these frameworks don’t offer a lot of operational tools for strategists to use to implement sustainability throughout their organizations, particularly in strategic terms.