Yesterday I was writing about recommendations that had been made by the Corporate Responsibility Officers Association (CROA) on aligning sustainability strategy with the overall business strategy of the firm. Interestingly, the CROA argued that the first thing that had to be gotten right before companies could go any further was “transparency”, which involved a deliberate decision by the company, through its board and senior executives, to dedicate resources to improving the ability of stakeholders to hold the company accountable for its sustainability initiatives by making more information publicly available. Generally, transparency, which is executed through implementing reporting and communications processes for informing stakeholders about the nature and progress of a company’s sustainability-related, falls a few feet down the road on the path to sustainability prescribed by pundits. You begin with goals and commitments, move on to planning and implementing operational changes and then you turn to figuring out how to track performance and report the results both internally and externally. All of this makes sense, but somehow the idea of putting transparency at the beginning seemed to make perfect sense and open opportunities for sustainable entrepreneurs to take bold steps with their ideas for having a meaningful impact on the environmental and social issues that they are most passionate about.
The first thing to consider is that the term “transparency” has been much more frequently used over the last few years according to survey done by those who track these sort of things. One can speculate as to why this is, but the main point is that transparency has come to be front and center on the societal stage. What’s interesting for planning for sustainability is that the word transparency traces its lineage back to the medieval Latin term for “shining through”. In the context of a sustainable startup, I think that means making a clear and public commitment to all of the stakeholders of the company to be clear about the goals of the business, open in communications with stakeholders, direct in setting goals and measuring progress and, most important, accountable for promises made and actions taken.
In practice, transparency begins for a sustainable entrepreneur by sitting down, either alone or with the other founders, and taking a hard look at what is driving the formation of the business. In other words, looking past dreams of fame and fortune to discover the true purpose of the mission–the goal that will fuel the passion to build a sustainable business. Once this fundamental introspection has been completed, transparency requires the “sunshine” of dialogue with, and scrutiny from, the prospective stakeholders of the company: potential investors, employees, customers, suppliers and community members. These discussions, popularly known as “engagement”, need to happen in the earliest days of the business in order to establish trust and create commitments and performance metrics that are meaningful to the groups that are most important to the success of the venture.
Transparency seems easy and natural and every sustainable entrepreneur should expect that he or she will need to set up processes to report on progress toward the company’s key strategic goals and sustainability issues. However, transparency requires bravery and a strong will because it means making very visible commitments at a very early stage in the venture and empowering stakeholders to be brutally honest in their critiques as the business unfolds. It also means adding a significant investment of time on stakeholder engagement to a plate that is already full with developing the initial product or service, raising seed capital and convincing others to bring their talents and experience to an untested company. There is no doubt that all this might lead to a quick and painful demise for the company or, at the very least, a dizzying set of decisions resolving the needs and expectations of all of the stakeholders. But, with persistence, the sustainable entrepreneur can use the tools of transparency as guide to build trust, demonstrate leadership and accountability, effectively design processes and systems, empower employees to innovate and create a competitive advantage. Knowing what needs to be reported to stakeholders focuses the sustainable entrepreneur on results and frees him or her to create culture in which employees are also focused and motivated and a brand that is comfortable and meaningful for external stakeholders.
Alan Gutterman is the Founding Director of the Sustainable Entrepreneurship Project, which engages in and promotes research, education and training activities relating to entrepreneurial ventures launched with the aspiration to create sustainable enterprises that achieve significant growth in scale and value creation through the development of innovative products or services which form the basis for a successful international business. Visit the Project’s Library of Resources for Sustainable Entrepreneurs to download handbooks, guides, articles and other materials relating to sustainable entrepreneurship and keep up with the Project’s activities by following Alan on LinkedIn, Twitter and Facebook.