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Alan S. Gutterman
Strategic Planning for Sustainability
10 9 8 7 6 5 4 3 2 1
Keywords
strategy; strategic planning; sustainability; triple bottom line; CSR
Contents
Chapter 1 Introduction���������������������������������������������������������������������1
Chapter 2 Environmental Forces and Strategic Planning�����������������25
Chapter 3 Conducting a CSR Assessment���������������������������������������49
Chapter 4 Developing a Corporate Social Responsibility
Strategy��������������������������������������������������������������������������67
Chapter 5 Developing CSR Commitments�������������������������������������89
Chapter 6 Implementing CSR Commitments�������������������������������111
Chapter 7 Measuring Planning Performance and Effectiveness������143
Introduction
In order to understand how to formulate and execute a strategy for cor-
porate social responsibility (CSR) and sustainability, it is necessary to
have a foundation in the art and science of strategic planning generally.
A substantial amount of literature exists on the importance of strategic
planning and it generally is accepted that implementing and maintaining
formal planning processes at the appropriate time during the develop-
ment of the company is an essential element in creating and maintain-
ing competitive advantage. It is not uncommon for larger companies to
employ teams of experts in a dedicated strategic planning unit to work
full-time on the planning process and to solicit input from hundreds or
thousands of managers throughout the organization. For smaller compa-
nies, however, the process is necessarily more informal and compressed
and may even be as simple as the founder or chief executive officer (CEO)
sitting down with a handful of key employees to solicit their opinions on
where the company should go over the planning period and what invest-
ments will need to be made in order to achieve the mutually recognized
goals and objectives.
Regardless of the context, a variety of factors determine the planning
practices that may be adopted by a particular company including envi-
ronmental conditions, which include both the “specific environment”
(i.e., the forces, such as stakeholders, that can be expected to have a direct
impact on the ability of the specific company to obtain the scarce resources
required for the company to create value for its owners and other stake-
holders); and the “general environment” (i.e., the forces that typically will
have an impact on the shape and design of all companies, including the
company and other companies that are part of the stakeholder network
of the company (e.g., economic, technological, political, demographic
and socio-cultural forces)); organizational size, complexity and age; the
nature of the business engaged in by the firm, top management values and
2 Strategic Planning for Sustainability
1
Brews, P., and M. Hunt. 1999. “Learning to Plan and Planning to Learn: Re-
solving the Planning School/Learning School Debate.” Strategic Management
Journal 20, no. 10, pp. 889–913; Miller, C., and L. Cardinal. 1994. “Strate-
gic Planning and Firm Performance: A Synthesis of More Than Two Decades
of Research.” Academy of Management Journal 37, no. 6, pp. 1649–1665; Goll,
I., and A. Rasheed. 1997. “Rational Decision-Making and Firm Performance:
The Moderating Role of Environment.” Strategic Management Journal 18, no. 7,
pp. 583–591; Anchor, J., and J. Dehayyat. 2010. Organisational Characteristics
and Strategic Planning in an Emerging Economy: the Case of Jordan. Huddersfield,
UK: Unpublished Working Paper. Emerging Markets Research Group Univer-
sity of Huddersfield, http://eprints.hud.ac.uk/7504/ (citing, e.g., Greenley, G.
1986. “Does Strategic Planning Improve Company Performance?” Long Range
Planning 19, no. 2, 101–108; Schwenk, C., and C. Schrader. 1993. “Effects of
Formal Planning on Financial Performance in Small Firms: A Meta-Analysis.”
Entrepreneurship Theory and Practice 17, no. 3, pp. 56–63; Powell, T. 1994. “Un-
tangle the Relationship between Strategic Planning and Performance: The Role
of Contingency Factors.” Canadian Journal of Administrative Science 11, no. 2,
pp. 124–144; Hopkins, W., and S. Hopkins. 1997. “Strategic Planning-Financial
Performance Relationships in Banks: A Causal Examination.” Strategic Manage-
ment Journal 18, no. 8, pp. 635–652; and Rudd, J., G. Greenley, A. Beatson and
I. Lings. 2008. “Strategic Planning and Performance: Extending the Debate.”
Journal of Business Research 61, pp. 99–108).
Introduction 3
the firm that will usually take more than just one annual planning period
to achieve (e.g., long-term growth of revenues, market share or product
lines; improved profitability; and/or building a “best of class” customer
service function). It then falls on the managers of each business unit and
department to identify and implement the specific ideas, or tactics, that
are best suited to achieving the goals and objectives set at the top of the
company. These tactical plans address important and practical questions
for each unit or department: what needs to be done, how it will be done,
what resources are needed to do it, how will those resources be acquired
and managed, and how will progress be tracked and evaluated. Tactical
plans typically cover one year or less and require the same type of infor-
mation needed to set overall goals and objectives—financial information,
operational performance data, and information on markets and the exter-
nal environment in general. The supervisors below the business unit and
departmental managers also play an important role in the strategic plan-
ning process by the way in which they develop and enforce the opera-
tional plans that serve as guides for the day-to-day activities of the specific
employees that they oversee. The supervisors are responsible for the “nuts
and bolts” of executing the tactical plans and do so through scheduling,
budgeting, setting, and enforcing standards (i.e., policies, procedures,
methods, and rules) and identifying and procuring necessary resources
(e.g., personnel, information, capital, facilities, machinery, equipment,
and materials).
The recognition that planning is a collaborative exercise may require
some changes in the company’s management style and company culture.
In order to create and implement the most effective strategy, managers
must be open to innovation, change, and new ways of doing business
and communicating. Specifically, management must be willing to accept
and embrace employee participation and set up a whole set of procedures
and practices that support the planning process. For example, if the plan
includes performance targets, appropriate changes in the incentive and
reward systems in the firm may be required. If the traditional approach
to decision making within the company has been “top-down” and man-
agers and employees at lower levels of the organizational hierarchy have
simply accepted directives from the senior management team without
question or advance consultation, it can be expected that the transition
Introduction 5
Rangan, K., L. Chase, and S. Karim. 2012. “Why Every Company Needs a
2
CSR Strategy and How to Build It.” Cambridge MA: Harvard Business School
Working Paper 12–088, April 5.
8 Strategic Planning for Sustainability
initiatives come from all parts and levels of the organization. Moreover,
while it makes sense to identify a specific business logic and rationale for
each sustainability initiative, the reality is that companies often take on
causes and projects that have little or no connection to their core compe-
tencies or business strategy. As such, Rangan et al. cautioned that while
they were arguing for a sustainability strategy, it was not something that
could or should be completely absorbed into the company’s core business
strategy.6
Companies proactively engaged in sustainability and CSR are in many
ways no different than any other business: their business model needs to
generate sufficient profits for the company to survive and grow (i.e., to
achieve the sustainability necessary for it to be around long enough to
achieve its social and/or environmental goals as well as generate income
for its investors, managers, and employees). As such, sustainable com-
panies still need to understand and apply traditional business planning
techniques; however, they also need to integrate their sustainability and
CSR projects and initiatives into their strategic goals and business and
operating plans. Hohnen and Potts noted that there is no “one-size-fits-
all” framework or method for pursuing a sustainability strategy and that
each company must consider its own unique characteristics and circum-
stances when implementing, expanding, or modifying its sustainability
programs and policies.7 Among other things, these characteristics and
circumstances include the company’s overall mission and purpose, orga-
nizational culture, external environment and risk profile, operating con-
ditions, and existing relationships with stakeholders.
Strategic planning for sustainability is far from easy or precise, if only
because it requires that simultaneous consideration be given not only
to economic performance and development but also to environmental
protection and the social well-being of employees and other persons and
groups outside of the organization. Companies and their managers are
6
Rangan, K., L. Chase, and S. Karim. April 5, 2012. Why Every Company Needs
a CSR Strategy and How to Build It. Cambridge MA: Harvard Business School
Working Paper 12–088
7
Hohnen, P., and J. Potts, ed. 2007. Corporate Social Responsibility: An Implemen-
tation Guide for Business. Winnipeg CAN: International Institute for Sustainable
Development.
10 Strategic Planning for Sustainability
struggling to find and deploy the tools and practices that are necessary
for balancing and reconciling the “triple bottom line” of profits, planet,
and people. Clearly a company cannot contribute to sustainable devel-
opment on a long-term basis unless it remains “in business” and this
often means taking actions thought necessary for financial survival at
the expense of other actions that would be environmentally or socially
preferable. Even when businesses clearly understand that respecting the
environment and society are necessary, it may take time for them to
make the necessary changes in their operational activities and it is not
always possible for companies to avoid actions that might cause short-
term environmental or social harm. In those situations, however, com-
panies need to take responsibility for their actions and remediate the
damage, such as by committing to build new skills and find meaningful
employment for workers laid off as part of a downsizing of operations in
a specific community. Another challenge is that the empirical data that
manages are used to having for their financial analysis is not as readily
available for environmental and societal issues and the information that
does exist is continuously changing, often technically ambiguous and
subject to competing interpretations that not only make internal deci-
sion making more difficult but also muddle the regulatory environment
in which businesses must operate.
10
For a survey of the literature regarding frameworks about sustainability imple-
mentation, see Maon, F., V. Swaen, and A. Lindgreen. 2008. Mainstreaming the
Corporate Responsibility Agenda: A Change Model Grounded in Theory and Prac-
tice, 56–58. IAG—Louvain School of Management Working Paper 39, (see also
Figure 1.1: Proposed Integrative Framework at 62 of publication).. Frameworks
discussed included Khoo, H., and K. Tan. 2002. “Using the Australian Business
Excellence Framework to Achieve Sustainable Business Excellence.” Corporate So-
cial Responsibility and Environmental Management 9, no. 4, pp. 196–197; Werre,
M. 2003. “Implementing Corporate Responsibility—The Chiquita Case.” Jour-
nal of Business Ethics 44, nos. 2–3, p. 247; Panapanaan, V., L. Linnanen, M.
Karvonen, and V. Phan. 2005. “Roadmapping Corporate Social Responsibility
in Finnish Companies.” Journal of Business Ethics 44, no. 2, 133; and Cramer, J.
2005. “Experiences with Structuring Corporate Social Responsibility in Dutch
Industry.” Journal of Cleaner Production 13, no. 6, p. 583.
11
UN Global Compact. “Training of Trainers Course Guidance Manual.” New
York, NY: UN Global Compact.
Introduction 13
While first published in the early 1990s, guidance from the Inter-
national Institute for Sustainable Development in collaboration with
Deloitte and Touche and the World Business Council for Sustainable
Development remains relevant today and suggests the following steps for
the process of creating a sustainability strategy and managing an enter-
prise based on sustainable development principles14:
12
Hohnen, P., and J. Potts, ed. 2007. Corporate Social Responsibility: An Imple-
mentation Guide for Business. Winnipeg CAN: International Institute for Sustain-
able Development.
13
UN Global Compact. “Training of Trainers Course Guidance Manual.” New
York: UN Global Compact, pp. 39–40.
14
1992. Business Strategy for Sustainable Development: Leadership and
Accountability for the '90 s. Winnipeg CA: International Institute for Sustainable
Development, jointly with Deloitte and Touche; Business Council for Sustainable
Development.
14 Strategic Planning for Sustainability
reached along the way. Once the strategy and the general plan
have been approved, detailed plans should be prepared indicating
how the new strategy will affect operations, management systems,
information systems, and reporting. Plans should be reviewed
and approved by senior management following consultation with
employees throughout the organization.
• Design and execute an implementation plan for the manage-
ment system changes that are needed in order to achieve sustain-
able development objectives, a process that normally includes
changing the corporate culture and employee attitudes, defining
responsibilities and accountability, and establishing organiza-
tional structures, information reporting systems, and operational
practices.
• Develop a supportive corporate culture to ensure that the organi-
zation and its people give their backing to the sustainable devel-
opment policies. In most cases, managers will need to be retrained
to change attitudes that have traditionally emphasized wealth
management for the owners of the enterprise. An effort should
also be made to develop a culture that emphasizes employee par-
ticipation, continuous learning and improvement.
• Develop appropriate measures and standards of performance
taking into account the company’s sustainable development objec-
tives and standards that have been established by government and
other public agencies.
• Develop meaningful reports for internal management and
stakeholders, outlining the enterprise’s sustainable development
objectives and comparing performance against them. Directors
and senior executives use internal reports to measure performance,
make decisions, and monitor the implementation of their policies
and strategies. Shareholders, creditors, employees, and custom-
ers, as well as the public at large, use external corporate reports
to evaluate the performance of a corporation, and to hold the
directors and senior executives accountable for achieving financial,
social, and environmental objectives.
• Enhance internal monitoring processes to help directors and
senior managers ensure that the sustainable development policies
16 Strategic Planning for Sustainability
knows the direction that has been selected and the steps that have been
planned.15
15
Adapted from “Best Practice in Corporate Social Investment.” https://next-
generation.co.za/best-practice-in-corporate-social-investment-csi/ (accessed May
6, 2020).
16
Sukle, B., and S. Debarliev. 2012. “Strategic Planning Effectiveness: Compara-
tive Analysis of the Macedonian Context.” Economic and Business Review 14,
no. 1, pp. 63–93, 88–89.
Introduction 19
Sukle and Debarliev surveyed the various ways that researchers have
attempted to measure the “effectiveness” of strategic planning techniques
and argued that “the effectiveness of strategic planning is associated with
achieving formulated objectives, producing better results, or improving
the organizational performance as the result of the use of strategic plan-
ning process in the companies.”17 They noted that attempts to measure
strategic planning effectiveness had traditionally been limited to using
financial criteria that provide a scorecard of the financial performance of
the company; however, they pointed out that new approaches to assessing
organizational results and performance adopted over the last few decades
had expanded the notion of strategic planning effectiveness to include
“many other non-financial, qualitative criteria associated with core busi-
ness process, customers, employees, organizational learning and inno-
vation and other core areas in the companies important for the overall
organizational performance.” These changes are welcome since strategic
planning is believed to improve organizational performance in a number
of complex, and often subtle, ways such as by improving coordination,
communication, and control activities18 and it is therefore necessary to
factor measures of those improvements into the analysis.
Barney reported evidence of four major approaches to measuring firm
performance—survival as a measure of firm performance, stakeholder
approaches to performance measurement, simple accounting measures
of performance, and adjusted accounting measures of performance—
and noted that accounting measures were by far the most popular tools
for performance measurement due, in part, to the emphasis that early
trainers of strategic planning placed on the relationship between strategy
17
Id. at 66.
18
Meilich, O., and A. Marcus. 2007. “Strategic Planning and Decision-making.”
In Handbook of Decision-making, ed. Morcol, G. 433–456, 441–442. Boca
Raton, FL: CRC Press.
22 Strategic Planning for Sustainability
19
Barney, J. 2002. Gaining and Sustaining Competitive Advantage. Upper Saddle
River, NJ: Prentice Hall.
20
Drucker, P. October 30, 1986. “If Earnings Aren’t the Dial to Read.” Wall Street
Journal.
21
Digman, L. 2002. Strategic Management: Competing in a Global Information
Age. Mason, OH: Thomson Learning.
22
Neilson, G., K. Martin, and E. Powers. June 2008. “The Secrets to Successful
Strategy Execution.” Harvard Business Review, p. 61. See also Neilson, G., and B.
Pasternack. 2005. Results: Keep What’s Good, Fix What’s Wrong, and Unlock Great
Performance. New York: Random House.
Introduction 23
23
Id. at 62.
24
Id. at 67.
24 Strategic Planning for Sustainability
Operations, 95 Safety, 32
Organization Scope and Content, 148
costs to, 160 Shareholders, 100
CSR commitments, 97–98, Social forces, 45–48
100–102 Social responsibility, 39, 125
domain, 26, 29, 30, 33, 35, 41, Special interest groups, 40–41
43, 44 Specific environment, 29–30
environment, 25–26 communities, 39–40
size and circumstances, 62 competitors, 41
social responsibilities, 61–62 labor practices, 35–38
sustainability-oriented, 120–124 products, services, and customers,
Output environment, 29 30–32
regulators, 38
Patients and customers, 100 special interest groups, 40–41
PepsiCo, 51 stakeholder engagement, 41–43
Performance, 14 suppliers and distributors, 33–35
Performance measurement system, Stakeholder
144–145 analysis, 14, 57–59
Plan–Do–Check–Improve, 12–13 CSR commitments, 98–100
168 Index