Indra Nooyi is right about CSR — what it means for corporate water strategy
Sustainability is the right business thing to do and about making money in a different way. Read More
Indra Nooyi
During my early days in sustainability consulting, the value proposition for sustainability was frequently framed as the “triple bottom line” and the “right thing to do.” My experience was that these value propositions gained very little traction with corporate clients except for a few that were adventurous and committed to exploring sustainability.
At that time, sustainability was primarily framed as an environmental issue — climate change and greenhouse gas accounting along with corporate water stewardship. Over the last roughly 20 years, however, corporate sustainability strategies have matured to include social performance along with other environmental challenges such as waste, packaging and sustainable agriculture. And, of course, we can’t ignore the current focus on environmental, social and governance (ESG) reporting.
I never believed the early value propositions of “triple bottom line” and “the right thing to do” were very compelling for the private sector. The real value of a sustainability strategy lies in its role in fueling business growth through increased brand value, reduced operating costs and reduced risk. Today’s business value proposition for sustainability also includes the value for recruiting and workforce retention, improved customer engagement and increased sales.
The rules of business growth have changed
As I wrote almost five years ago in GreenBiz (“Why you need a ‘license to grow’ strategy“), the rules of business growth have changed, due to society’s increased attention to how businesses address environmental and social issues.
This shift is, in part, being enabled by digital connectivity and frictionless access to information by stakeholders. No longer is business growth solely tied to how companies relate to their customer base. The digital revolution, coupled with an increase in the value placed on environmental and social performance, is rewriting the rules of business growth. Increased attention to ESG reporting adds further business value for those companies that perform well with rating organizations.
The business case for sustainability versus the “right thing to do” mindset was well put by Indra Nooyi, former chairperson and CEO of PepsiCo, in a recent interview with the New York Times. Nooyi has just published her memoir “My Life in Full” and was discussing with David Marchese her challenges and opportunities in addressing environmental and social sustainability issues. In my opinion, she rightly challenges the use of the words “socially responsible” and makes the business case for sustainability.
In the NYT interview, she said, “This is about nudging consumers to the healthier choice because societies are changing. The biggest issue is when you use the words socially responsible. It sounds like you’re giving money away that shareholders should be getting. It’s not about giving money away we’ve made. It’s about how we make money a different way.”
This rings true for me and aligns with my decades of experience and focus on the evolution from corporate water stewardship to water strategy. The rise of water stewardship was a progression from viewing water as a compliance and efficiency strategy to acknowledging that how companies address water quantity, quality and access to WASH (safe drinking water, sanitation and hygiene) was a risk when it comes to a company’s social license to operate.
Water stewardship versus water strategy
Discussions on water stewardship versus a water strategy (“What is a post-CSR water stewardship strategy?”) reinforce Noori’s perspective.
Companies leading the way on water strategy are investing in innovative technologies to address water scarcity, poor quality and WASH concerns. These investments can take the form of participation in water technology investment funds such as those made by Ecolab and Microsoft in the Emerald Technology Ventures Fund, which will invest in early-stage innovative water technology companies. Or it could take the shape of a sustainability accelerator program (such as AB InBev’s 100 + Accelerator 100 + Accelerator where Unilever, The Coca-Cola Company and Colgate Palmolive joined this year), which identifies innovative technology startups that address complex sustainability challenges, including water, and supports them in scaling their businesses.
A corporate water strategy now includes “making money a different way” and builds upon the operational efficiency of water management and the risk mitigation practices of water stewardship. The companies leading in corporate water strategy are having a positive environmental and social impact by thinking beyond their water footprint (the idea of a water footprint vs. water handprint) and fit in the upper right of the water maturity model provided below. In my view, companies such as AB InBev, Ecolab and Microsoft are creating new business opportunities and addressing wicked water problems by building on their water stewardship. All three have a water strategy that delivers greater business, environmental and societal value.
Sustainability, including water strategy, is not about giving money away; it is about driving business growth by integrating environmental and social strategies into the overall business strategy.