New Insights On How Social Responsibility Can Be Good For the Bottom Line

The two day Commit! To A Responsible Culture & Supply Chain conference, which took place in New York City, concluded Thursday night (October 22nd). I attended the second day of the event. This event provided some insights on how social responsibility can be good for the bottom line, as well as barriers that continue to exist in this area.

The CEOs who spoke – from the WEC Energy Group, Xcel Energy, the Mosaic Company, and Southwire – were unapologetically capitalists. They are trying to do good while doing well. The key business driver for social responsibility is that millennials increasingly care about these issues. This is already an important demographic; and it is a demographic that will only grow in power as Baby Boomers retire.

But doing good, from a business perspective, makes less sense if you can’t get that message out there. Convincing millennials you are good requires a social media presence – with emotive Internet videos being a particularly powerful social media tool – and good integration between the marketing and social media departments.

Interestingly, the CEOs reported that they get very few questions from Wall Street analysts about their corporate social responsibility (CSR) initiatives. But they see CSR as a form of governance that decreases their risks of suffering incidents that significantly damage their brand. 30 percent of the stock value of companies is related to goodwill, an intangible asset greatly impacted by a company’s brand reputation.

In many cases, there is short term payback from CSR projects. But not always. Bill Bliem, the Senior Vice President of Fleet Services at NFI Industries spoke. NFI is a 3PL with warehouses and a large fleet of trucks. Mr. Bliem reported that with the falling price of fuel, the ROI surrounding CNG or LNG trucks is more challenging; NFI is still committed to alternative fuel truck purchases in the belief that the demand among shippers for very low carbon emission shipments will take off within six or seven years.

NFI spoke on the same panel as Bimbo Bakeries USA, the largest bakery in the US. Bimbo has also continuing to invest in an alternative fuel fleet but they still make use of outside carriers. Because NFI is green, they are a key transportation partner for Bimbo.

Sustainability isn’t always easy. Both NFI and Bimbo Bakeries made it clear that there are challenges associated with moving to an alternative energy fleet:

Truck drivers are often somewhat apprehensive about driving alternative fuel trucks and they need to be trained on how to fuel these trucks. However, once they start driving them they love how quiet they are;

As a newer technology there is a greater risk of liability issues associated with CNG or LNG trucks. For this reason, it was suggested that you lease these trucks to help minimize the liability.

The infrastructure of fueling systems for CNG, which has better ROI for big trucks, is still limited. There is an opportunity for shippers and carriers to collaborate to prove to fueling companies that there will be enough collective demand to anchor a station in a new location.

For large trucks electric powered vehicles are currently unrealistic for safety reasons (too large a load on the battery makes them prone to catching on fire).

But even if companies don’t buy alternative fuel trucks, there are many things that can be done to make a fleet more fuel efficient based upon making trucks more aerodynamic. Participating in the SmartWay program can be very helpful in this area.

Jim Prokopanko, the former CEO at the Mosiac Company, also spoke of the challenges associated with sustainability. It is a truism that you can’t improve what you can’t measure. Seven years ago when the company began the journey they had much of the data, but that data was in siloes and did not lend itself to drill down style analysis. 

It was a seven year slog to weave the different data sources together. Only know are they confident of their sustainability reporting. But getting to that point was far more difficult than they anticipated.

-Forbes