As alluded to in the BSR conference theme: “Reset Economy. Reset World.”, we’ve entered a brief period where business and society is re-examining core assumptions about how we live and work. There’s a realization that the concept of sustainability is vital and relevant, and that sustainability integration is a business imperative fundamental to innovation, profitability, and ultimate long-term survival.

But it’s not as easy as pressing a reset button (there is no sustainability CTRL-ALT-DELETE key sequence!) In a sense, what we’re talking about is systems redesign. Embedding sustainability is very difficult, not least because of the fundamental culture change that accompanies efforts to integrate and operationalize sustainable business practices. Join that with barriers to implementation ranging from existing political frameworks, lack of scale, and an entrenched system of investor valuation that excludes most social and environmental factors, and the true nature of the challenge becomes apparent.

The BSR conference reflected these hard truths, mirroring in the choice of conference topics what we as sustainability practitioners need to do to move forward. Namely, to

• engage in transparent and collaborative learning and problem-solving,
• create openness for new models and approaches, and
• incorporate a multitude of views, voices, and experiences along the way.

We’ve moved past the early stages where the “low-hanging fruit” in terms of sustainability theory and practice has been harvested. In large part, we know what has to be done—and we know that it will take sustained and considerable effort to achieve systems redesign. Perhaps Ben Verwaayen, CEO of Alcatel-Lucent said it best in his closing plenary (@ 4:09) : “CEO involvement is YOUR measure of success”.  Let’s make it happen.

The Business for Social Responsibility (BSR) conference in San Francisco is in full swing today, and the opening plenary yielded some early insights as to the shape of the event.

Aron Cramer, President and CEO of BSR, highlighted three areas critical for both business and planetary survival in a reset world:

• Innovation
• System redesign (with the first test of whether we can adequately reshape global systems to be determined in Copenhagen in just a few short weeks)
• Leveraging the power of networks

Ernst Ligteringen, Chief Executive of the Global Reporting Initiative, added his own thoughts on the challenge of reshaping systems and economies. He stated that creating a business case for action can be very difficult, as it requires that we justify a transition to a new economy based on current economic fundamentals… something akin to trying to explain quantum physics using Newtonian principles.

Finally, an audience member highlighted the fact that over the past several decades, we have been using what was abundant (natural resources) while trying to squeeze maximum productivity from sometimes limited manpower. With the world population exploding to 9 billion in this century, the equation is reversed, creating another opportunity for systemic change in how we approach resource use and the concept of gainful employment.

I sat on a panel at a NIRI chapter meeting on Thursday with Don Kirshbaum, Investment Officer, Policy, at the Connecticut State Treasurer’s Office and Julie Gottlieb, who led the launch of Lenovo’s sustainability program and first report. The discussion was lively: several of the IROs in the room noted that they had never been asked about ESG risk, and one asked whether there had been any studies regarding performance of companies that focus on ESG performance. Happily, I was able to point to SAM’s long-short portfolio (long sustainability leaders, short sustainability laggards), which shows significant outperformance compared with each group; HIP Investor’s HIP 100 Index^SM, which, since 2004, has outperformed the S&P100; and a chart showing the DJSI solidly outperforming both the S&P500 and the DJIA even in this recession.

After the discussion, I was thinking, why are we still having this conversation? How it is that, in this day and age, and despite ample evidence, so many companies still don’t get that sound ESG performance can drive financial performance?

At the risk of oversimplifying, I think that the silo effect is a big factor. The folks in IR don’t talk much to the folks in sales, who, increasingly, have to respond to RFPs seeking information on ESG performance. (Note to federal contractors, if you’re not already getting those questions, get ready: On October 5, as part of a broader executive order, the White House ordered all federal agencies to employ sustainability criteria in the procurement of goods and services (see Section 2(h)). And when the federal government chooses a more sustainable option, it’s not likely to give the losing bidder a call to explain why.)

Yet with more than 11% of all US assets held by firms employing SRI strategies, and with well-respected business journals such as the HBR and the MIT Sloan Management Review extolling the benefits of sustainability as a key driver of innovation (and, ergo, financial performance), there’s no excuse for companies not to get what this sustainability thing is all about.

But some still don’t want to get it. I recently heard one company’s management respond thus to an investor request for greater disclosure of ESG performance: they don’t have to invest in us.

It’s true, they don’t. And increasingly, they won’t.