Achieving Sustainable Performance Means Anticipating Social ConsequencesBusiness' role in improving both organizations and society is not a simple one, but it can be done with leaders who are caring and careful, according to Marc Epstein, distinguished research professor of management at Rice University. Epstein was the featured speaker at the Spring Dean's Distinguished Lecture Series with his talk focusing on sustainability and social innovation.
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Marc Epstein shares insights with a community member. | Epstein is the author of 14 books and more than 100 professional papers on how companies are integrating social and environmental issues into management decisions.
"It shouldn't be profit versus global citizens or excellence in financial performance versus excellence in social performance," said Epstein. "We need managers who can manage social impacts of their business and minimize negative externalities."
Current issues Epstein cited include child labor, nutrition and obesity, alternative fuels-autos and oil companies, low consumer prices and local /global employee wages, nationalization of industries, unstable or corrupt governments and more.
Epstein used an example of Wyoming gas drilling. He noted that while Wyoming has the largest natural gas reserves in the U.S. and companies drill only six months a year to accommodate migration season, all parties are still unhappy. The largest drilling company wants to understand the impacts and is willing to make changes, but there is little data. "Finding the exact impact, whether it be energy development, residential development or drought, is not too easy," said Epstein. In addition, when the drillers are off, other social issues increase including crime, etc. because they are bored. "Is the company responsible?" asked Epstein.
To help companies manage, Epstein shared nine principles of sustainability performance.
The principles are ethics, governance, transparency, business relationships, financial return, community involvement/economic development, value of products and services, employment practices and protection of the environment.
"Because of stakeholder reactions, companies realize they must pay attention to sustainability performance," said Epstein. He noted companies becoming more responsible when they realized stakeholder communities were rejecting their building permits, protesting child labor and filing class action lawsuits.
He also said that companies need to embed full environmental costs into the costs of products. For example, he noted a beverage company that makes a fortune serving poor people. He said, "They could sell beverages with more nutritional value. They could get a recycling or waste management plan. Are they being socially responsible?"
Ultimately, though, Epstein said companies need to overcome short term vs. long term thinking, the measurement challenge, inadequate information and inadequate decision models to create win-win social/economic opportunities.
"We all have a role in this paradox of accountability," said Epstein. "There are many examples of company successes and many remaining challenges, but we can try and make a difference." | 
