Agents of change?

July 01, 2004

Sustainable development has spawned its very own consultancy industry. Even the Big Four professional services firms have got in on the act. This may help push the issues up the agenda, but is it actually taking the subject forward? Oliver Balch investigates.

As with the explosion of environment management thinking in the early 1980s, sustainability has undoubtedly attracted its fair share of carrion-searchers. While few are out-and-out charlatans, many entered the market with little more than a jazzy website, a piece of headline-grabbing ‘research’ and a copy of the ‘Bluffers’ Guide to Sustainable Development’.

The efforts of the public relations industry, which jumped on the bandwagon with alacrity, can attract particular derision from the sustainability purists. No one denies the need for good communication in this area, but many fear that encouraging organisations to shout before they can walk will only sour public confidence. Think Coke in India, BP in Alaska, and BAT in – well, just about everywhere.

Consultants, too, attract – merit, some would say – suspicion. In the business press, consultancies have been called the ‘guardians of market capitalism’, but they’ve also been dubbed the ‘masters of the universe’ and, more dismissively, ‘a production line for Fortune 500 CEOs’. My careers advisor at university preferred the term ‘vultures’. From one-man bands and boutique specialists, to the large outfits providing multiple services across different industries and sectors, they seem to crop up everywhere on the sustainable development circuit these days.

And aren’t they easy to satirise, with their ‘blue sky thinking’ and management gobbledegook, proffering advice like “Go on, be a Tiger” on the Accenture billboards – surely some kind of post-modernist self-parody? Yet there is no shortage of organisations queuing up to pay their fees – at an average of £1,150 a day. If that’s what they cost to their clients, it seems only fair to ask what value they bring.

The menu of services on offer gets longer and longer as the field of sustainability expands and professionalises. Should we be encouraged that businesses (and indeed public sector bodies) are buying these services, thereby indicating an appetite for the subject? There’s surely a risk that the melange of product offerings is so bewildering that they end up not knowing what they are buying – or, worse still, forget why they are buying it in the first place.

From a great height

A major selling point is perceived independence and objectivity – and the ability to form a view of an organisation uncluttered by all the insider’s baggage. A sustainability manager with a major UK retailer summarises it succinctly: “Good consultants are invaluable because many companies are still full of cradle-to-grave jobs. In my team of about a dozen, there’s 130 years of in-house experience and only 25 from outside the company – and 15 of those are mine!”

Experience with other clients is a strong card that the Big Four play with practised ease. Over the last five years, all of them – Ernst & Young, PricewaterhouseCoopers (PwC), KPMG and Deloitte – have developed specialist sustainability ‘competencies’ (a term beloved of all consultants). In the case of KPMG, this simply meant going to The Body Shop and buying up its ethical trading division.

Their arrival on the sustainability scene does bring some welcome professional rigour to what is still an emerging management science. While they do offer some advice on strategy development and policy implementation, in the main these big players have tended to concentrate on what they know best – the bread-and-butter work of risk management and auditing. In sustainability terms, this translates to non-financial accounting and reporting, gap analyses of social and environmental risks, and other compliance management services.

Fair enough, too, for clients to buy in some specialist expertise that they lack in-house – knowledge on the micro-details of a particular technical issue, or latest trends in a specific management area. But, needless to say, the Big Four claim there are a number of other arrows to their value bow.

The devil you know

One advantage that they certainly have over smaller consultancy houses is an existing relationship with many of their clients, as providers of auditing or other financial services. Geoff Lane, a partner in PwC’s impressive sounding Global Sustainability Solutions unit, makes much of this. “If we’re providing assurance services to a company as their auditor,” he says, “then by default we already have a detailed knowledge of that business. With the best will in the world, if you’re coming in as an individual or even from a small technical organisation, you may not have the same level of insight into how that company runs.”

The Big Four also boast an impressive international network that they can draw on. For large corporations with business activities in markets around the world, such a global reach has its obvious benefits. Lane cites PwC’s work with the Tea Sourcing Partnership, a consortium of all the major companies in the UK tea industry. Hired to develop a global monitoring programme to assure the environmental and social credentials of the industry’s supply chain, Lane was able to delegate the day-to-day auditing task to local trained staff, while himself providing quality control and support from his London base. A tidy arrangement, it would seem.

But it’s just the kind of thing that worries Craig Bennett, corporate accountability campaigner for Friends of the Earth. Regardless of their global reach, he argues, most of the serious interaction with clients happens in head offices, many miles away from the issues under discussion. “All too often we see big London-based transnational companies hiring London-based consultancies to get a view on what they should do on the other side of the world,” Bennett argues. His call for consultants to “get their boots on rather than their suits on” smacks of soundbite, but it still hits home.

Loop the loop

Would you bite the hand that feeds you? It’s a familiar challenge, even for management consultancies with good reputations in sustainable development, and one that goes to the heart of the issue about the objectivity of external advisers. How often can you afford to come back with the recommendation your client does not want to hear?

Ironically, the problems of perceived independence could play into the hands of the big sustainability consultants, whose wide portfolios reduce their dependency on any one major client. But the real question remains whether the Big Four can really stand ‘out of the loop’ on sustainable development. Will they interpret their remit as to deliver challenging new thinking – or just the odd tweak? Because consultancies won’t make a difference just by delivering the reassurance of a ‘top brand’ seal of approval.

Suit cred

The truth is that consultancies succeed by giving their clients what they want, even if that might cause them not to go as far as sustainable development purists would like. Nowhere is this seen more clearly than among the Big Four, whose appeal in matters sustainable has as much to do with business credibility as professional capacity.

For wary managers, getting in a well-known brand spells safety and reassurance. Boardroom doors are more likely to open, and the ears of investors prick up, when a sustainability expert walks in wearing a Big Four badge. Yet approaching the large accountancy brands for sustainability services is, as one of their own senior executives put it, a bit like buying an IBM 15 years ago. “It may not be the most innovative or dynamic, but you know what you’re going to get” – and nobody ever got fired for buying it. This might offer some comfort to the confused executive, but it’s hardly a maxim for changing the world.

Certainly there’s a growing disillusionment on the corporate social responsibility (CSR) circuit. Widely used in big business as a proxy for sustainable development, the CSR approach can too easily be reduced to ‘do as much as you like’, without the potential bite of the latest responsible business agendas which focus on corporate governance and risk. Playing the CSR system cynically is all too easy, and it’s a fair charge that consultancies have connived in making it so. Some companies simply get them in to fill out the hundreds of pages of forms that may be required in the best way to secure a favourable rating in one of the various self-reporting indices spawned by the CSR and SD industries.

“Consultancies in general are only as good as the project they’re given,” says Joanna Collins, head of policy at the environment non-profit, Green Alliance. “Consultants can therefore lend themselves to box-ticking and post hoc justification of what’s already been done, rather than up-front involvement in business planning.” Couple this with the fact that the advice they may give is often not acted upon – organisations are under no obligation to implement or publish their recommendations – and the sphere of influence for paid advisers appears all the more restricted.

“Bolt on or build in?

More worrying in the longer term, however, is the perceived reluctance of large organisations to develop their own skill-base in the SD arena. “Where companies regularly hire in external consultants, it’s normally because they don’t want to be committed to developing that expertise in-house,” Bennett complains. The damaging consequence, he claims, is that sustainability remains a management bolt-on, which is never factored into mainstream decision making.

Bennett is not alone. There’s a strong argument, coming from influential voices such as John Elkington’s at specialist consultants SustainAbility, that the whole business model for the advice industry needs to be redeveloped, and the role of consultants should be refocused on building the internal capacity of their clients to address CSR/SD.

Firing the driver

The predominantly risk-based approach adopted by the Big Four may go a long way to meeting corporate needs for assurance, but it makes no pretension towards fanning the flames of innovation. Simon Berkeley, senior manager of the SD team at strategic consultants Arthur D. Little, admits surprise that sustainable development was lumped in with the audit side of the big accountancy firms, rather than the consulting side, when the Enron fallout effectively made them choose between the two.

For the Big Four, the rationale is simple. Firstly they understand risk. Secondly, they believe there’s a lucrative business to be had in it. Certainly the recent Operating and Financial Review, with its requirements on company directors to disclose material social and environmental risks, bodes well for those with expertise in non-financial auditing and reporting.

Berkeley concedes that risk mitigation is an important piece of the sustainable development puzzle. Yet he, and advocates like him, believe that sustainability needs to be recognised primarily as an engine for growth and innovation. It should be the driver of change, not the spy in the cab. “I think it’s a pity that so many bright, young sustainability people are sitting in audit practices,” Berkeley laments. He’s right. By any standards, that really is a pity.

Oliver Balch is managing editor of Corporate Citizenship Briefing.