This is a guest post by Joshua Parker, Sr. Director of Corporate Sustainability and Assistant General Counsel at Western Digital
In an era where sustainability and corporate social responsibility are crucial, corporations often fall short when delivering on promises to consumers. As a result, corporate accountability for genuine, sustainable action could be a huge driver behind an evolution in ESG-related standards in 2022. In my experience leading Western Digital’s sustainability initiatives, I have seen three key factors that support a successful, actionable sustainability strategy: impactful targets, credible transparency, and data-centered strategy. Together, these practices create a corporate sustainability trifecta.
This corporate sustainability trifecta is at the foundation of our company’s recent progress in sustainability. But for these guiding principles, we would not have set ambitious Science-Based Targets to reduce our emissions by 42% over 10 years, run a detailed human rights impact assessment on our operations and value chain, implemented an incentive-based product takeback program nor been named one of America’s Most Responsible Companies. In this article I will outline how our corporate sustainability trifecta has fueled Western Digital’s sustainability progress, to offer lessons learned that may help other corporate leaders achieve their own sustainability goals.
Getting Started with Corporate Sustainability: Impactful Targets
It’s not always necessary to “start small” as conventional wisdom suggests. When it comes to developing corporate sustainability initiatives, companies need to think big, especially when potential impacts are significant. To drive real impact, setting bold targets closely tied to a company’s footprint and strategy can be an incredible catalyst for progress.
For example, as part of the Science Based Targets initiative, Western Digital set emissions reduction targets to help limit warming to 1.5°C. The Science Based Targets initiative provides a valuable, unbiased assessment of organizational targets, validating goals that are consistent with the science underlying the Paris Agreement. By adopting such externally-verified goals, organizations can demonstrate their commitment to real, substantive progress and avoid claims of greenwashing. In just our first year, we reduced emissions by almost 7% and are well on our way to achieving our goal.
Goals can be too ambitious, however. Companies that set unachievable targets may benefit from positive short-term attention, but failure to achieve those targets can erode trust and cause long-lasting reputational damage. Striking the right balance between bold commitments and fantastical targets is the trick, and it requires thorough research and analysis. At Western Digital, we run models to identify and test various paths to achieve potential targets, adopting targets only when we have reasonable line of sight to the end goal. It takes work, but that allows us to be both ambitious in our vision and confident in our execution.
Success Starts with Corporate Transparency
Most organizations don’t need to be persuaded to publicize their sustainability progress, given the increasingly clear reputational value associated with sustainability; a much more common mistake is to fly to the other extreme, making much ado about relatively minor achievements. As Ronald Coase said, “If you torture data long enough, it will confess to anything,” and ESG data is no exception. Trust can be notoriously difficult to regain once lost, and a company with a negative reputation for sustainability will face more and more challenges.
Credible transparency, however, is critical to maximizing the effectiveness of a corporate sustainability program. The maxim that “what gets measured, gets managed” is especially true here, since public disclosure of ESG data—whether voluntary or mandated—raises the stakes for demonstrating progress. Accountability often follows close upon the heels of transparency, as stakeholders from employees to shareholders to customers review the data, recognize gaps and apply positive pressure for improvements.
Transparency can only go so far without a common language. If one company focuses on its advanced water reclamation efforts and another its ethical treatment of workers, how can we compare their performance on sustainability more generally? The introduction of standardized reporting frameworks like GRI, SASB and TCFD was a step in the right direction, offering some consistency in disclosure, at least amongst companies who chose to follow them. Current efforts to consolidate those frameworks could advance accountability even further by increasing the consistency and comparability of companies’ datasets.
Western Digital has made transparency a pillar of our sustainability strategy from the beginning of our program. Publishing detailed sustainability reports every year is no small task, especially for companies that follow rigorous standards for data integrity, and those reports have been an anchor for our progress. They send a signal to our stakeholders that we intend to be accountable, and that we expect progress of ourselves over time. That type of message has proven self-reinforcing, motivating our employees to extend our efforts, enhancing the culture of sustainability throughout the company.
Data is King: Data-Centric Sustainability
In his opening for Anna Karenina, Leo Tolstoy observed that “Happy families are all alike, but each unhappy family is unhappy in its own way.” Something similar could be said of corporate sustainability programs: good programs have some core elements in common, but there are countless ways to poorly manage sustainability. Research has borne out that one of the clearest common features of successful, value-additive sustainability programs is a disciplined, data-centered approach to setting sustainability priorities.
Companies just getting started in sustainability may be tempted to jump on any bandwagon they see, trusting that what other companies are doing is a reliable model for their own programs. Although benchmarking data might properly influence a strategy, a company founding its strategy on such data can end up mis-investing in low-impact and low-value projects. Copying another company’s strategy is akin to eavesdropping on someone else’s diagnosis at a doctor’s office in hopes of finding a cure for your own disease. Following that path is unlikely to be helpful and might even do more harm than good.
Even within industries, the corporate footprint of companies can vary significantly. One company might have operations concentrated in Singapore, while another has more employees in India. One might have customers with aggressive climate goals, while another’s customers are more keenly focused on protection of human rights in its supply chain. One company might have a diverse workforce thanks to a longstanding inclusive culture, while another does not.
These factors and more can suggest wildly different priorities for sustainability, and the best way to cut through that ambiguity is to take a company-specific, data-centric approach to setting sustainability strategy. Materiality assessments, for example, can be more than processes to determine what to include in a GRI-aligned sustainability report—they can be powerful tools for collecting actionable data and building consensus around sustainability. At Western Digital, we conduct regular materiality assessments, and the resulting data forms the foundation of our sustainability strategy. Without direct data from customers, investors, employees, NGOs and more, our strategy could not be so closely tied to the unique footprint of our company. And the last thing any organization needs is a sustainability program that consumes resources without impact or value.
A Continuous Process
Ultimately, operating sustainably requires constant evaluation and adaptation, as the world evolves and we make focused progress. But constant guiding principles, including the sustainability trifecta of impactful targets, credible transparency and data-centric strategy, should guide that change, channeling it in the direction of impact and value. As we marry our passion for sustainability with a methodical approach to program management, we unlock our full potential to do exactly what we’re all working towards: sustaining people and planet, day after day.