Business consultant and author Chris Laszlo knows a thing or two about value creation. His new book, “Sustainable Value: How the World's Leading Companies Are Doing Well by Doing Good,” builds on decades of experience advising the world’s largest companies on how to leverage sustainability into competitive advantage. In this SLM interview, Chris outlines his strategy for selling corporate executives on green initiatives (hint: it's helpful to equate “sustainability” with “opportunity”) and explains why “tradeoff” is such a dirty word. (To listen to our conversation with Chris, click here.)

---

SLM: Chris, as co-founder of the consulting firm Sustainable Value Partners, you've advised hundreds of Fortune 1000 executives on turning sustainability to competitive advantage. What was your inspiration in writing this book?

Chris: I've really seen a huge change in the marketplace. Companies that were previously motivated by risk management and cost reduction are now looking at sustainability and a strategic growth opportunity. Green efforts that had been the province of particular departments within the enterprise are now increasingly driven by CEOs in search of innovation and game change. The "environmentalist" approach, which has traditionally pitted environmental concerns against business interests, has given way to a new value-based approach in which sustainability can be an enabler of business goals. It's this basic shift that really inspired me to write the book.

SLM: This is probably not the first time that our audience of sustainable business innovators has heard the phrase "doing well by doing good," but this book is written more for the skeptics. How did you tailor your message to reach an audience of management executives who haven't yet been convinced that sustainability yields significant returns for business?

Chris: It's a question of being able to put things in the language that executives are used to - for example, talking about how sustainability might create value for stakeholders and what this means for business. It's about helping these executives see sustainability not as a moral agenda that might limit their options but rather about integrating sustainability concerns to better help them meet their pre-existing business objectives.

That last part is particularly key because the triple bottom line approach - in which environmental and social plans are developed in parallel to financial ones - can sometimes end up overwhelming managers already focused on achieving economic results. If sustainability is seen as a separate goal - i.e. the company has to meet its customer needs and its shareholder objectives, and in addition to that its environmental goals - those green targets become viewed as additional work. A large part of what my colleagues and I do is re-frame sustainability in terms of value creation, highlighting how creating value for stakeholders translates into bottom-line business value. Executive need to understand that it's not about adding a new set of goals on top of the ones they've already laid out. Instead, sustainability can be a means of achieving goals that they need to reach anyway.

SLM: In your book you argue that delegating green programs to individual business departments, as many companies do, can often get in the way of a truly successful corporate sustainability strategy. Why is that, and how can companies avoid making this mistake?

Chris: Part of the problem with taking this kind of piecemeal approach is that the champion of the program might be interested in a particular environmental or social outcome, but it doesn't necessarily have the support of top management. If you take a more integrated approach, in which sustainability is really about helping reduce costs, differentiate products in the marketplace, or addressing new markets (in the way, for example, that GE is creating new products that help solve environmental problems), then it suddenly becomes an enabler of profit and growth.

SLM: I imagine that your book will be read by a lot of middle-management executives who would like to begin implementing more sustainability efforts at their company but need top-level support to drive those programs through. How do you suggest that those readers talk to their superiors about incorporating sustainability into core business strategy?

Chris: Above all, you need to communicate to upper management the ways that a more sustainable approach might help your company increase market share, reduce costs, and create new revenue streams. Focus on how adding an environmental and social dimension might help achieve specific objectives - for your business unit, your product line, or the enterprise as a whole. Are there impacts that the company has on stakeholders that can be seen as value destruction? Are there costs that the company is incurring that could be minimized or eliminated? Most of all, are there ways that the company can differentiate itself from competitors by offering products that are more environmentally or socially responsible?

The trick is to cast sustainability as a means of driving innovation. It's not about compromising, it's not about going green even though it may increase costs in certain areas. Sustainability-driven innovation means rethinking a product or service so that, say, it reduces environmental impact while at the same time costing less, or offering some other performance enhancement. We need to get away from conversations that center around the notion of tradeoffs.

Finally, it's important to invite in other perspectives. I worked for ten years at a major multinational and I know how insular they can be. Often large companies think they're open to the marketplace and to the voices of stakeholders but in fact they're making a lot of assumptions about what stakeholders - NGOs, communities, the media - are saying about their company and their activities. Be open to other perspectives and try to bring those views into the internal decisionmaking process.

SLM: As your book points out, very high-profile companies including GE, Wal-Mart, and DuPont are successfully creating competitive advantage by greening their products and supply chains. If it’s such an effective strategy, why aren't more companies following their lead?

Chris: In many cases it's because there's a pre-existing belief either that sustainability issues aren't relevant to business or that addressing those issues is going to be costly. I think the biggest obstacle is getting top management to invest the time to consider these issues. Once they finally take a meeting in which sustainability is framed as a source of opportunity along the value chain, most senior executives tend to get it pretty quickly.

It helps if you can score some quick wins, too. At some point, you have to clearly demonstrate how a specific sustainability initiative reduced costs, boosted sales, or attracted new customers - or the larger sustainability plan falls by the wayside. I call it the "sustainable value pathway": a series of quick wins inspires the company to make bigger bets, to take on larger, more innovative projects that eventually lead to the kind of game-changing leadership. DuPont is a great example of the pathway in action. Between 1995 and 2003 the company totally restructured its portfolio, and over the past six or seven years has posted consistent growth in earning per share.

Finally, many executives are surprised at the extent to which sustainability can inspire their employees. Wal-Mart, for example, looks at sustainability as a terrific way to motivate their sales associates, attract talent, and encourage employees to generate new ideas within the company. Small improvements at a company that size can translate to cost savings in the millions of dollars, which is of course a very compelling argument for senior management.