Environmentalist turned strategist Adam Werbach on his central role in the fight against climate change
Adam Werbach has already made one notable career transformation. As a former president of the Sierra Club, America's most prominent green lobby group, he caused an outcry in 2006 by agreeing to work for Wal-Mart, a company he'd previously named "a new breed of toxin". To his former environmentalist colleagues, Werbach had sold his principles for a job with the enemy.
But Werbach had simply reinvented himself. His switch of direction was chiefly about leverage. On the inside, he could affect change. "Business needs to step up. We face these challenges, like climate change, that will not be solved by my former colleagues [alone]." His message to corporate clients is always the same: "There is a strategy to build a healthier, profitable business that also seems to take care of the things that your CSR programs cares about."
Werbach's environmental stance remains unchanged. It's his methods that have altered. "In some ways I'm an unlikely business consultant," he says. Last year, Werbach's consultancy, Act Now Productions, merged with Saatchi & Saatchi to become Saatchi and Saatchi S, of which Werbach is CEO. The new company helps its corporate clients to create sustainable strategies. The "S", of course, stands for sustainability. It's an important addition, because Werbach's intention is to reclaim the word from the environmentalists. You could call it his second transformation.
"There's a deflation of the green bubble now, which is very healthy because there was an irrational exuberance about 'green' in the last two years that allowed companies to get away with putting a leaf on the front of their packaging and getting a benefit from that."
He says in the traditional sense, sustainability meant "a company that's around for the long term, making predictable profits over a long period of time." It was highjacked, he says, by environmentalists and, perhaps more significantly, by companies staking a claim to honourable intentions. "Now when someone says 'sustainability', they are thinking about protecting the environment. I want to go back to the old definition."
His new book, Strategy for Sustainability, deals with this reclamation. It identifies the macro and micro-economic problems of the present and adds a dizzying selection of future traumas—resource scarcity, population growth—to come up with a compelling reason for companies to change the way they do business. "This is very straightforward. We have confused ourselves into making it more complicated. It's about looking at the outside world, making changes and in the end investing in the people inside your organisation to make those changes." Not for the sake of the green lobby. Not even for the customer. But for the sake of profitability. Or to be precise, for the long-term sustainability of the company.
Environmentalism still has an important role to play, he says. "Particularly a focus on reducing the carbon in the atmosphere, preventing toxins getting into our children's food, protecting our last fisheries. But that's certainly not enough to run a company on. They've tried to use it as a business framework and it doesn't work. It's too narrow a definition."
For Werbach, there is one metric to running a business and one metric alone, and that is profit. "Not the highest possible profit, but a level of profit that's sustainable over the long term". At Saatchi & Saatchi S he receives plenty of offers from businesses that want him to "quantify the triple bottom line". It's a confused request he says. "Even John Elkington, who basically invented the concept, says people took it too literally. It was a mental framework to [help you] think about the bottom line as having other aspects, but now people are trying to calculate what their people capital is worth. It's a fool's errand."
He tells the story of a friend's business, supplying tree-free paper. It was a company with a clear social conscience, so Werbach asked his friend why he didn't also donate 10 per cent of his profits to environmental causes. His friend was unequivocal. "He said, 'it's my business to make the world a better place, why on earth would I give money to somebody else to do that?'" The story illustrates Werbach's mission to a tee. "It was a business that was perfectly aligned with its purpose."
Most CSR programmes, he says, are not. "It's the same as giving 10 per cent of your profits away. Generally speaking, CSR does not connect to the core of the business. While it makes people feel good, I tend to agree with Jack Welch that CSR comes second to profits. I would probably put it third or fourth." The challenge is not using CSR to win plaudits, he says, "The challenge is how do you take the important part of CSR and put it right at the core of your profitability?"
Although he insists it is easier to find unsustainable business models than not, there are a few notable successes. M&S and Tesco "both try", he says, but probably expended too much effort selling the idea of sustainability instead of fully exploring it. "They jumped on the bubble rather than on the efficiency trends," he says. "Tesco moved to a carbon labelling commitment, which was admirable, but it didn't make sense for them as a business because the collective knowledge isn't at a point where we can do this yet." Besides, he adds, customers aren't really at a stage where they care either way. "An admirable goal without really thinking through how it connects into the business."
But the environment is only one aspect of Werbach's sustainable strategy. The companies that will still be around in 100 years, says Werbach, will be the ones opening themselves up to full scrutiny, and volunteering to do so. The goal is full transparency. "The banks had very poor risk management tools. The prospectuses for mortgage debt were 400 pages long because the attorneys were earning millions of dollars to create these impenetrable prospectuses so that no one read them."
He says he hasn't yet seen the kind of changes that need to be made in the banking sector. "I have seen some structural changes, some rules, but transparency is a cultural phenomenon. Can you explain what you are doing, do you wish to explain what you are doing, do you wish to be honest and truthful? That's not compliance training, it's cultural training. That's what I'm looking for in banks: how do you build that culture of transparency; and do you wish to?"
While we're on the subject of sustainability, how does he rate all those banking bail-outs? The question proves something of a red rag. "100 per cent they are not sustainable—unconscionable. We are papering over the hard medicine that the finance industry needs to take." Does he not entertain the theory of Too Big to Fail? "An interesting question. The planet and its ecosystem are too big to fail. I deal with a lot of people who work at Wal-Mart, they don't have credit cards or bank accounts. To them the failure of a bank is not a major thing."
For Werbach, the way we plan for the future needs to change because the landscape is altering. "Business strategy is built on what happened in the last 100 years. If you believe the next 100 years is going to be different, how do you build an organisation that reacts and moves?" The pace of events threatens to overwhelm us, he says. "Even in my lifetime I feel like history is speeding up. As there are fewer newspapers, there is more news. How many things would you name already in this decade? If I wasn't doing this," he says, "I would feel very depressed."
Posted 29 May 2009 : Director.co.uk
