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Monday, May 16, 2011

Global 100: Most Sustainable Corporations in the World, & General Electric?





Introduction
According to the Global 100’s report for 2010, General Electric, PG &E Corp., Tnt Nv, and H&M are the four ‘most sustainable corporations in the world’.[1] All publicly-traded companies, The Global 100 bases its rankings on research and analysis of nearly two thousand companies worldwide. These companies are deemed to have the “best developed abilities, relative to their industry peers, to manage environmental, social and governance risks, and to take advantage of new business opportunities”[2] in their respective areas. One would assume that the matter of sustainability in an organization's operation should be reflected in the development of a sound mission statement which reflects the organization's commitment to minimizing its impact on the relevant ecosystems. Does this assumption measure up to the reality of the Global 100’s top ranked companies?

Case Study: General Electric
GE does not have a defined mission statement per se. However, according to GE’s 2003 annual report, GE’s mission center around four core values. These are: Imagine, Solve, Build, and Lead.[3] The annual report goes on to detail what GE values about these core principles.
Imagine at GE is the freedom to dream and the power to make it real. This requires the values of passion and curiosity. Solve reflects GE’s unique ability to tackle the world’s toughest problems and expresses our values of resourcefulness and accountability. Build requires a performance culture that creates customer and shareowner value, and the word captures our values of teamwork and commitment. Lead reflects our spirit of optimism that embraces change, and our values of openness and energy; it’s what it will take to win.[4]
While the lack of a specific mission statement might be an indication of a company confused about its values, company culture, and goals for the future, this is clearly not true for GE. The above statement that has been a guiding force for executives at GE for years is perfectly suitable for both a successful growth driven company as well as a company that dynamic and flexible enough to accept and adopt an ever changing business landscape and embrace the need but also the business case for a more sustainable way of operating. Specifically, the value Imagine is not only important from an innovation point of view but the value of passion and curiosity are essential elements of growing a sustainable business practice. Solve. While it is noble and admirable to value the power of dreams and free thoughts; it is through passion and curiosity that solutions are created. In an ever-changing world the ability of a company to both envision both the problem and the solution is invaluable. Such abilities will only become more important as the world becomes more globalized and fuel sources become less abundant. Build. GE fuels the passion for these ideas by requiring a performance culture that benefits all stakeholders. A new and revolutionary way to handle energy or technology infrastructure not only benefits the individual, the company and the shareholders, it benefits all stakeholders and perhaps even society and the environment at-large. Holding all these other values together and providing an overall focus is GE’s concept, Lead. Leadership is perhaps the most important element in the continued success of GE or any company. It is leadership that has taken the initiative and made GE what is it today. It is that same leadership that will propel it into a new era of sustainable business.

Case Study: PG &E Corp.[5]
Like GE, PG&E Corporation has no specific mission statement. Listed by the Global 100 as the second most sustainable company in the world for 2010, PG&E does list an ‘environmental commitment’ on its website. It states,
As a provider of electricity and natural gas to approximately 40 percent of Californians and 1 in 20 Americans, we recognize that the way we produce and deliver our products and serve our customers has a direct impact on the environment. We understand that environmental excellence is necessary to be a leader in our industry and to the success of our business. A healthy environment is also necessary for the well-being and vitality of our customers, employees, and the communities we serve—as well as society at large.
That's why our environmental commitment extends beyond compliance. Our vision of becoming the nation's leading utility requires that we raise the bar for ourselves, and that we work with others to do the same.[6]

If an examination of companies on the Global 100 seeks to assess if a company’s values are consistent with its sustainability commitments, then PG&E certainly meets the minimum qualifications. As an energy company it is important that PG&E’s chosen industries can be very taxing on the environment. The acknowledgement of PG&E of this is notable. The commitment goes on to say that ‘environmental excellence is necessary to be a leader in our industry and the success of our business.’ From these statements it would seem clear that PG&E acknowledges the challenges that, it and its industry face, in the transition to a more sustainable business model. That future business success can only come with the continued success of the environment and community that PG&E serves.

Case Study: TNT N.V.

The mission statement for TNT N.V. is to “exceed its customers’ expectations in the transfer of their goods and documents around the world.”[7] The mission goes on to say that “TNT delivers value to its clients by providing the most reliable and efficient solutions through delivery networks.”[8] Specifically, “TNT aims to lead the industry by:
  • instilling pride in its people,
  • creating value for its shareholders, and
  • sharing responsibility for the world in which it operates.”[9]

While the crux of the mission statement for TNT does not, at first, appear to be very reflective of its sustainability commitment, TNT does have a marked pledge toward ‘shared responsibility’. TNT’s goals for its industry include developing a sense of pride and purpose to the lives of the men and women that work in express and mail delivery industry. One can only assume that part of the pride that TNT is referring will come from its pledge of ‘sharing responsibility for the world in which” TNT operates. According to the ‘corporate responsibility’ section of TNT’s website, “a responsible company can no longer flourish by focusing on its financial performance alone. To perform well, to attract and motivate employees and to retain its license to operate, TNT must adopt a more holistic approach to managing its business, one that focuses on all of its key stakeholders.”[10] In many ways, TNT is living up to its commitment to responsibility and the holistic approach to business that it describes. Listed as the third most sustainable company in the world by the Global 100, TNT is a model for its industry.
Case Study: H&M
H &M Hennes & Mauritz AB often referred to simply as H&M is a Swedish fashion company that operates thousands of stores across over 35 countries. Ranked as the forth most sustainable company by the Global 100 in 2010, the mission statement of this company is "Fashion and quality at the best price."[11] Of all the mission statements discussed in this analysis, H&M’s is perhaps the least reflective of its commitment to sustainability and responsibility. The ‘corporate responsibility’ section of H&M’s website goes into greater depth about H&M’s commitment to sustainability.
At H&M, quality is about more than making sure that our products meet or exceed our customers' expectations. It also means that they have to be manufactured under good conditions and that our customers must be satisfied with us as a company. Taking responsibility for how our operations affect people and the environment is also an essential prerequisite for H&M's continued profitability and growth.[12]
Like many companies today, H&M has realized that their operations affect people and the environment. More importantly, that consideration of people and the environment are “essential prerequisites for H&M’s continued profitability and growth”. This is a powerful assessment from H&M, and one of the more reflective of H&M’s commitment toward a sustainable business future.

Conclusion

Through the work of some dedicated sustainability research groups the Global 100 is able to produce a ranking of the most sustainable corporations in the world. Assessing sustainability is by no means an easy task. As a developing field of study, there are, as yet, no absolute or universally accepted measures for the ‘sustainability’ of any given company. That is not to say that the work being done by the Global 100 is not valuable. There are always growing pains in any industry. One aspect not examined by the Global 100 is the assumed correlation between a corporation’s sustainable performance and its general mission statement. Indeed, in the case of both General Electric and PG&E Corp. there is no mission statement at all. This may be less of an argument against the overall sustainability of a company and more a general business oversight than anything else. Both TNT N.V. and H&M have mission statements but neither mention sustainability. It is interesting to note the marked absence of specific and powerful language within the above mentioned companies mission statements for sustainability. The lack of commitment in their mission statements is even more interesting when you consider, that these companies are ranked, at least by one organization, as the most sustainable in the world. It is not clear what importance mentioning sustainability, a relatively new concept, may have for companies that have had established mission statements for years. While including sustainability in a mission statement would certainly confirm a company’s commitment, actions have always spoken louder than words.

1 comment:

Zita said...

Daniel,
This is an interesting observation. One would think that sustainable corporations would show their commitment to sustainable practices through their mission statement. But apparently, some don't. I am not saying this is good or bad, but it is interesting to note what mission statements mention.
Laura Tache