Being answerable, or responsible, to stakeholders. In Sustainable Management this goes beyond financial stakeholders to include any natural or social systems affected by a business, including customers, employees, and communities.
A term coined by Jed Emerson at Stanford University to describe social, financial, and environmental value created by all organizations’ activities (whether non-profit or for-profit). When investors acknowledge these value components, they can be more focused about their investments in organizations that create the mix and amount of value that matched their own values.
CSR (Corporate Social Responsibility)
A business outlook that acknowledges responsibilities to stakeholders not traditionally accepted, including suppliers, customers, and employees as well as local and international communities in which it operates and the natural environment. There are few accepted standards and practices so far, but a growing concern that the actions organizations take have no unintended consequences outside the business, whether driven by concern, philanthropy, or a desire for an authentic brand and public relations.
Closed-loop Supply Chain
Ideally, a zero-waste supply chain that completely reuses, recycles, or composts all materials. However, the term can also be used to refer to corporate take-back programs, where companies that produce a good are also responsible for its disposal.
The ability one organization has to outperform others in producing products and services of higher quality, lower price, or of greater value for customers. To be a truly effective the advantage must be:
• Difficult to mimic
• Superior to the competition
• Applicable to multiple situations
Compliance can be the first step to sustainability. Compliance can be achieved through a commitment to social expectations and the law or simply by observing the letter of a law. For businesses striving to achieve restorative, sustainable practices, compliance becomes not a motivation, but simply a minimum baseline against which to measure achievable cost savings increases in profitability, market share, share price, and stockholders’ equity.
The primary skills, abilities, and knowledge used to excel at a particular endeavor. Businesses tend to focus on their core competencies in an effort to take advantage of “what they are good at.” Often, core competencies may go unrecognized within an organization that focuses too much on their markets, products, and services and not their skills, knowledge, and experience. For example, a large retailer’s core competencies might include shipping and transportation services, real estate management, and training s well as their retailing experience.
The expectation that drives companies to interact with their wider communities in an ethical and socially-responsible manner. Many companies view themselves as other than citizens of the places they do business or define business as having no social or ethical responsibilities. Increasingly, however, organizations are reconciling their corporate goals with those of their stakeholders, including local communities and their customers’ values. Good corporate citizenship involves: legal compliance, employee relations, environmental performance, transparency, human rights, product stewardship, stakeholder communication, profitability, strategy integration, and community involvement.
A phrase invented by Walter R. Stahel in the 1970s and popularized by William McDonough and Michael Braungart in their 2002 book of the same name. This framework seeks to create production techniques that are not just efficient but are essentially waste free. In cradle to cradle production all material inputs and outputs are seen either as technical or biological nutrients. Technical nutrients can be recycled or reused with no loss of quality and biological nutrients composted or consumed. By contrast cradle to grave refers to a company taking responsibility for the disposal of goods it has produced, but not necessarily putting products’ constiuent components back into service.
Reducing the total material that goes toward providing benefits to customers. May be accomplished through greater efficiency, the use of better or more appropriate materials, or by creating a service that produces the same benefit as a product.
Dow Jones Sustainability Index
Created in 1999, the Dow Jones Sustainability Index is one of the first global indexes watching the financial performance leading companies with an emphasis on sustainability in economic, social, and environmental capacities. The DJSIs emphasize long-term corporate performance and positive risk/returns. The DJSIs are audited using a special framework from the International Auditing and Assurance Standards Board (IAASB), called ISAE 3000, designed for assurance engagements other than auditing of historical financial information, for example,:
• Environmental, social and sustainability reports
• Information systems, internal control, and corporate governance processes
• Compliance with grant conditions, contracts and regulations.
A term coined by ecologist William Rees and Mathis Wackernage to describe the total ecological impact (the amount of land, food, water, and other resources needed) to sustain a person or organization. This is usually measured in acres or hectares of productive land. It is used to determine relative consumption and is frequently used as an education and resource management tool. When addressing large populations (such as countries), the total productive capacity of the Earth is sometimes used. For example, on average, the population of the USA consumes so many resources that were the rest of the world’s population to consume at the same level, several more Earths would be needed to meet the demand.
Externalities are effects of services, products, or production on third parties who were not involved in the buyer/seller relationship. Externalities occur when a third party incurs unintended consequences from the market behaviors of others. Externalities can be either negative (pollution, waste clean-up fees that a community must bear, rather than the generator of the waste), or they can be positive (The Clean Water Act generates positive effects for many who were not involved in enacting the bill).
GRI (Global Reporting Initiative)
A multi-stakeholder process and independent institution whose mission is to develop and disseminate globally applicable Sustainability Reporting Guidelines. The guidelines were developed so that companies, government agencies, and non-governmental organizations can report on the economic, environmental, and social dimensions of their activities, products and services. Started in 1997 by the Coalition for Environmentally Responsible Economies (CERES) and the United Nations Environment Program (UNEP), the GRI incorporates the active participation of representatives from business, accountancy, investment, environmental, human rights, research, and labor organizations from around the world.
Critics of the 2002 guidelines note that corporations were only required to describe procedures and practices rather than demonstrating that these procedures had been put into practice.
Global Reporting Initiative: http://www.globalreporting.org
A term merging the concepts of “green” (environmentally sound) and “whitewashing” (to conceal or gloss over wrongdoing). Greenwashing is any form of marketing or public relations that links a corporate, political, religious or nonprofit organization to a positive association with environmental issues for an unsustainable product, service, or practice.
In some cases, an organization may truly offer a “green” product, service or practice. However, through marketing and public relations, one is wrongly led to believe this “green” value system is ubiquitous throughout the entire organization.
One of at least four forms of capital used by people, organizations, corporations, and governments, to build and maintain their livelihoods. Human Capital is the sum total of knowledge, experience, “good will,” intellectual property, and labor available to an organization or society. While many organizations value their people, many do not manage or measure human capital in sustainable terms.
Traditionally, stakeholders in a company have been thought to be limited to stockholders and, possibly, employees. However, stakeholders have come to refer to all people for whom a company or its products and services have an impact, including, customers, governments, organizations, and the environment. Sustainable management requires that these stakeholders’ needs be addressed in the development and deployment of products and services.
An approach to determining whether a given process or policy should be pursued or continued based on an analysis of the social, economic, or environmental risks associated with that activity. Not all risks are known when a new practice is introduced or a current one is re-examined, and the ethical approach in light of implied or expected (but not confirmed) negative impacts is to stop such practices as a precaution until more is known about the impacts.
SROI (Social Return on Investment)
The measure of an investment’s ability to produce social value in a community or broader society. An attempt to monetize social value in order to help investors assess potential investments based on returns outside of traditional financial measures.
A concept under development by Woody Tasch, Chairman of Investors’ Circle. Inspired by the mission of the Slow Food Movement, Tasch considers that “fast” money investments (such as venture capital) is expected to return a profit quickly but is rarely invested long enough to create sustainable ventures. This is especially true of early-stage companies in some industries (such as biotech, high tech, and food development) which often require longer time frames to generate competitive returns. Slow money is invested with an understanding of the natural dynamics of these businesses and investors set their expectations of financial return around these processes.
Individuals or organizations with an interest in the success or failure of a project or entity. Potential stakeholders in a company may include customers, clients, employees, distributors, wholesalers, retailers, suppliers, partners, creditors, stockholders (shareholders), communities, government courts and departments (city, state, federal, and international), banks, media, institutional investors and fund managers, Labor Unions, Insurers and re-insurers, NGOs, media, business groups, trade associations, competitors, the general public, and the environment (local, regional, and global). Different stakeholders can exercise different types of power, including: voting, legal, economic, and political, and can form coalitions with others. Sustainable organizations should identify stakeholders and maintain dialog with them in order to better understand how to help address stakeholder concerns, operate more effectively, and make better strategic and tactical decisions.
Responsible caretaking; based on the premise that we do not own resources but only manage them, and are responsible to future generations for their condition. Making decisions regarding the care of our environment with the goal of passing healthy ecosystems on to future generations.
Rather than studying something by breaking it into its constituent parts, systems thinking looks at how the thing interacts with other constituents within a larger framework. Particularly useful in the study of complex problems, or situations involving the considerable interdependence of elements.
Triple Bottom Line
An addition of social and environmental values to the traditional economic measures of a corporation or organization’s success. Triple Bottom Line accounting attempts to describe the social and environmental impact of an organization’s activities, in a measurable way, to its economic performance in order to show improvement or to make evaluation more in-depth. There are currently few standards for measuring these other impacts, however. John Elkington, co-founder of the business consultancy SustainAbility, coined the phrase, in his 1998 book Cannibals with Forks: the Triple Bottom Line of 21st Century Business.
The goal of developing products and services, managing their use and deployment, and creating recycling systems and markets in order to eliminate the volume and toxicity of waste and materials and conserve and recover all resources. Implementing zero waste eliminates all discharges to land, water, or air that may be a threat to planetary, human, animal or plant health. Many cities and states already have set zero-waste goals.