Transcript Document

The Busine$$ Ca$e
for $ustainability
Barrie Business
Sustainability
April 7, 2011
Bob Willard
[email protected]
www.sustainabilityadvantage.com
The “Sustainability Imperative”
Megatrend: “A fundamental shift in the
competitive landscape that creates
inescapable threats and
game-changing opportunities ...
profoundly affects companies’
competitiveness and even their survival.”
Over the last 10 years,
the “Sustainability Imperative” has emerged,
magnified by escalating public and governmental concern
about climate change, industrial pollution, food safety,
and natural resource depletion, among other issues.”
David A. Lubin and Daniel C. Esty, “The Sustainability Imperative,” HBR May 2010
Significant CEO Mindset Shift
CEOs Agree /Strongly Agree that sustainability should be ….
2010 Increase
Over 2007
… fully embedded into company
strategy and operations
… discussed and acted on by boards
… fully embedded into subsidiaries’
strategies and operations
… embedded throughout the
global supply chain
… the basis for industry collaborations
and multi-stakeholder partnerships
… incorporated into discussions
with financial analysts
Survey of 766 worldwide CEOs, including 50 in-depth interviews
UN Global Compact and Accenture study, “A New Era of Sustainability,” June 2010
Stakeholders Driving Sustainability
Stakeholders who CEOs believe will have the greatest impact
on the way they manage societal expectations
Consumers
Employees
Governments
Communities
Regulators
Media
Investment Community
Suppliers
NGOs
Boards
Organized Labor
Other
Survey of 766 worldwide CEOs, including 50 in-depth interviews
UN Global Compact and Accenture study, “A New Era of Sustainability,” June 2010
CEOs: Sustainability Drivers
Top 3 drivers of CEOs’ action on sustainability issues
Brand, trust, and reputation
Potential for revenue /
growth / cost reduction
Personal motivation
Consumer / customer demand
Employee engagement
and recruitment
Impact of development gaps
on business
Governmental / regulatory
environment
Pressure from investors /
shareholders
Survey of 766 worldwide CEOs, including 50 in-depth interviews
UN Global Compact and Accenture study, “A New Era of Sustainability,” June 2010
Corps Are Investing in Sustainability
• 59% of companies in all industry sectors increased their
investments in sustainability in 2010, versus 25% in
2009.
• 69% expect their organization to step up its investment in
and management of sustainability in 2011.
MIT Sloan and the Boston Consulting Group winter 2011 research report,
“Sustainability: The ‘Embracers’ Seize Advantage,” Feb. 2011
Definitions of Sustainability
Sustainable Development (SD)
Meeting the needs of the present generation
without compromising the ability of future generations
to meet their own needs
-- Brundtland Commission, 1987 –
Sustainability
The possibility that human and other forms of life on earth
will flourish forever
-- John Ehrenfeld, Professor Emeritus. MIT –
Sustainable Development (SD)
Enough - for all - forever
-- African Delegate to Johannesburg (Rio+10) --
The 4 DON’Ts of Sustainable Behavior
Do not contribute to the…
... buildup of substances extracted from the earth
(e.g. heavy metals, fossil fuels, their life-cycle polluting byproducts)
... buildup of chemicals produced by society
(e.g. 70,000+ chemicals, dioxins, PCBs, their life cycle byproducts)
... degradation of nature and its natural processes
(e.g. over-harvesting, species extinction, peak soil, water security)
... conditions that undermine people’s capacity to
meet their basic human needs and well-being
(e.g. unsafe working conditions, chasm between the wealthy and the poor)
http://www.naturalstep.org/the-system-conditions;
Darcy Hitchcock, “Sustainability Buzzwords,” ISSP Insight, October 2009
Core Concepts of Sustainability
Futures Thinking
Intergenerational responsibility
(Eco-)Systems Thinking
Carrying capacity of the planet
to absorb waste and support life
Social Justice
Equity, Dignity, Basic services, Human rights,
Stakeholder voices
************************************
Economic, Environmental, Social/Cultural
responsibilities
Sustainability 3-Legged Stool
Sustainability
Economic Leg
Good Jobs
Fair wages
Security
Infrastructure
Fair Trade
Environmental Leg
0 Pollution & Waste
Renewable Energy
Conservation
Restoration
Social Leg
Working conditions
Health services
Education services
Community & Culture
Social justice
Quality of Life / Genuine Wealth / Genuine Progress
Corporate Sustainability 3-Legged Stool
Sustainability = Sustainable Development (SD)
= Environmental, Social, Governance (ESG)
= Corporate Social Responsibility (CSR)
= Corporate Responsibility (CR) = Green
= Triple Bottom Line (TBL) = 3Es = 3Ps
Economy - Profits
Growth, Jobs,
Taxes
Products
Services
Environment - Planet
Eco-efficiencies
Eco-effectiveness
Equity - People
Employees
Community / Culture
World
Smart Business 3-Legged Stool
Asset Management
Natural
Capital
Economic / Financial
Capital
Built / Manufactured
Capital
Human Capital
Social Capital
Sustainable Value Creation
Municipal “3-Legged Stool”
Sustainable
Community
(28 Indicators)
Economic Security
Employment participation
Unemployment rate
Household shelter spending
% Low income people
Household debt
Infrastructure &
Built Environment
Density
Green buildings
Green transportation use
Local food production
Renewable energy
Clean tech business opportunity
Ecological Integrity
Water quality & consumption
Green space
Air quality
Waste diversion, residential
GHG emission reduction
Urban biodiversity monitoring
Social Well-being
Life satisfaction Crime rate
Health and access to care
Cultural Events
Homelessness
Governance &
Empowerment
Education
Voter turnout
City council diversity
Household garbage limit
GHG reduction target
Corporate Knights 5th Annual Sustainable Cities Rankings, Winter 2011
Ranking of Sustainable Canadian Cities
Ecological
Integrity
Economic Governance & Infrastructure
Social
Security Empowerment & Built Envir’t Well-Being
6.93
7.61
6.07
Corporate Knights 4th Annual Sustainable Cities Rankings, Issue 30, Winter 2010
Smart Community 3-Legged Stool
Resilient Community
Economic / Financial
Capital
Physical / Built
Capital
Natural
Capital
Human Capital
Social Capital
Passion Capital
Cultural Capital
Political Capital
Community Value Creation
Cheryl Jacobs, “Measuring Success in Communities,” 2007
http://agbiopubs.sdstate.edu/articles/ExEx16005.pdf
5-Stage Sustainability Journey
5. Purpose/Passion
Values-driven founder / CEO
4. Integrated Strategy
Enhanced organizational value
3. Beyond Compliance
Save on eco-efficiencies
Avoid PR crisis
Avoid threat of new regulations
2. Compliance
Regulatory enforcement
1. Pre-Compliance
The 3 R’s of Justifying Sustainability
RISKS
+
RESPONSIBILITIES
+
REWARDS
BUSINESS CASE
Based on Alan AtKisson, The IRIS Agreement, p. 127
Risks to Financial and Natural Capitals:
Big-5 Sustainability Storm Fronts
Waste, Toxicity,
and Health
Poverty and
Social Injustice
Species Extinction and
Overharvesting
Food and Water
Crises
The 3 R’s of Justifying Sustainability
RISKS
+
RESPONSIBILITIES
+
REWARDS
BUSINESS CASE
Based on Alan AtKisson, The IRIS Agreement, p. 127
Risks to Financial and Social Capitals:
Stakeholders’ Rising Expectations
Species Extinction and
Overharvesting
Waste, Toxicity,
and Health
Poverty and
Social Injustice
(NGOs)
Food and
Water Crises
Media
Economists
The Public
Investors
Customers
Employees
Competitors
Risks to Reputation re Banks
Corporate Responsibilities
Governments
Insurers
Markets
(Scientists)
The 3 R’s of Justifying Sustainability
RISKS
+
RESPONSIBILITIES
+
REWARDS
BUSINESS CASE
Based on Alan AtKisson, The IRIS Agreement, p. 127
One More Goal … or an Enabling Strategy?
Profit
Share price
Growth
Revenue
Customer care
Expense savings
Competition
Market share
Leadership
Governance
Innovation
Speed to market
New markets
Talent wars
Productivity
Motivation
Brand image
Managing risks
Compliance
Supply security
The 3 R’s of Justifying Sustainability
RISKS
+
RESPONSIBILITIES
+
SME
Companies:
At least 66%
more profit
REWARDS
BUSINESS CASE
Large
Companies:
At least 38%
more profit
Potential SME Profit Increase
• Reduced recruiting costs
-1%
• Reduced attrition costs
-2%
• Increased employee productivity
+6%
• Eco-efficiencies: savings in energy/carbon,
water, materials, waste handling
-10%
• Increased revenue / market share
+5%
• Lower insurance & borrowing costs
-5%
… yielding a profit increase of +66%
REPUTATION
Potential Improvements - Municipal
• Reduced recruiting costs
• Reduced attrition costs
• Increased employee productivity
• Eco-efficiencies: savings in energy,
water, materials, waste handling
• Reduced infrastructure costs / more
efficient use of tax revenues
• Increased public trust & confidence /
Increased leverage of social capital /
Magnet for companies and citizens
REPUTATION
Same
as for a
business
3M Eco-Efficiency Savings
Pollution Prevention Pays (3P)
Up-front waste prevention: Product reformulation, process
modification, equipment redesign, and recycling and reuse
“Fourth P”—People.
Employee suggestion program generated
$1.4B in first-year savings through 8,100 voluntary projects
over 35 years (1975-2010)
http://solutions.3m.com/wps/portal/3M/en_US/3M-Sustainability/Global/Environment/3P/
Employees Are Key to Eco-Efficiencies
Community Centre Conservation Challenge (CCCC)
8 Community Centres; June – August 2009
Annual verified energy savings of $90,000
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“Low cost / No cost” employee engagement approach
Classy “no pizza boxes” luncheon to launch the challenge
Trained maintenance staff and programs facilitators
Engaged staff in inventory of plugs and savings ideas
Presented winning team leaders with trophies at Council
Classy thank-you closing luncheon for all participants
Results included in City’s Leisure Guide
Ernie Davies and Suzanne Elston, Oshawa Environment and Energy Mgmt Services
Presentation to the Durham Region Roundtable on Climate Change, June 2010
The 3 R’s of Justifying Sustainability
Climate Change
&
Energy Crises
RISKS
+
RESPONSIBILITIES
(NGOs)
(Scientists)
Customers
Economists
Governments
+
REWARDS
BUSINESS CASE
Employees
Investors
Insurers
At least 38% to 66%
more Profit
The New Economy
• Low-carbon economy vs. fossil fuel-based economy
• Local supply chains vs. global supply chains
• Services vs. products
• “Dematerialization” vs. physical goods, processes, or travel
using “virtual” alternatives like videoconferencing or online
shopping”
• Responsible consumption / thrift vs. over-consumption
• Low / No-growth model vs. “grow or die” model
• New ownership models: employees, customers,
co-ops, social venture funds, government funding
• New company purposes: “Social enterprises,” “B Corps,”
“Hybrid organizations,” “Flexible purpose corporations”
(California Bill SB 201, Corporate Flexibility Act, Feb. 2011)
In Summary …
Sustainability is smart business
Important stakeholders’ expectations are rising
New market forces & risks are in play
Relevant to existing organizational priorities
Can protect & enhance organizational values
Many willing, helpful partners
Opportunity for leadership … by example
The Busine$$ Ca$e
for $ustainability
Barrie Business
Sustainability
April 7, 2011
Bob Willard
[email protected]
www.sustainabilityadvantage.com