Transcript Senge Necessary Revolution, Chapter 8

Peter Senge,
The Necessary Revolution:
Working Together to Create a Sustainable World (Random
House/Broadway Books, 2008, 2010)
MIS 201 Introduction to MIS
Fall 2010
Chapter 8
The Business Rationale for
Sustainability
Martha Grabowski
Le Moyne College
Rensselaer Polytechnic Institute
[email protected]
9 September 2010
http://www.darden.virginia.edu/uploadedImages/
News/Peter-Senge222.jpg, retrieved 29 Aug 2010
The Business Rationale for
Sustainability
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Risk vs. opportunity
Can’t have a fishing
industry without fish
Can’t have a beverage
company without
fresh water
Businesses need to realize that
“the economy is the wholly-owned
subsidiary of nature, not the other
way around.”
Ray Anderson, CEO of Interface, Inc.
(Quoting Gaylord Nelson, US
senator):
http://bostonlocalvores.org/wp-content/
uploads/2009/07/cod61-300x195.jpg, 9/11/10
Environment
Society
Economy
The Business Rationale for
Sustainability -- Google


Purchasing renewable
energy
Green data centers


Consumes enormous power
to operate servers
Avoiding collisions between
global warming and
sustainability
http://http://3.bp.blogspot.com/_7ZYqYi4xigk/
\S98N8Pf9ziI/AAAAAAAAF_4/UH15N4CBPv0/
s400/ashtabula.jpg, retried 9 Sept 2010
Environment
The Business Rationale for
Sustainability – Google

CO2 Emissions for Every Day Activities
Activity
Google
searches
CO2 emissions of an average daily newspaper (100% recycled
paper)
850
A glass of orange juice
1,050
One load of dishes in an EnergyStar dishwasher
5,100
A five mile trip in the average U.S. automobile
10,000
A cheeseburger
15,000
Electricity consumed by the average US household in one month
3,100,000
http://www.google.com/corporate/green/datacenters/index.html, 9/11/10
Tracking Data Center
PUE =
Power Usage
Effectiveness
http://www.google.com/corporate/green/datacenters/measuring.html, 9/11/10
The Business Rationale for
Sustainability -- GE
Jeffrey Immelt, CEO, GE:
“Five years ago, I started to see
technology that I felt really, for
the first time, didn’t make this
about compromise, it made it
more about opportunity.
If we made the right
investments in renewable
energy, conservation, water
desalination, then we could earn
money and solve a societal issue
at the same time.”
http://business-ethics.com/wp-content/
uploads/2010/07/GE_Immelt_3.jpg, 9/10/10
Environment
http://www.smartplanet.com/business/blog/smart-takes/ge-water-sustainability-chief-jeff-fulgham-we-need-a-price-on-water/9808/
The Business Rationale for
Sustainability – GE Drivers
Customers were demanding
sustainable products,
processes


Scale, scope



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
300,000 employees
5 million shareholders
Operations in 100 countries
Annual revenues $156B
http://www.ge.com/citizenship/_files/images/
content/homepage-header_healthy-planet.jpg,
9/10/10
Renewing Responsibilities (July 2010)


Corporate social responsibility report
www.ge.com/citizenship
The Financial Industry Does a UTurn
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
Financial industry making massive
commitments to environmental
movement
Citigroup, Inc.

$50B green initiative, $10B
Committed

Reducing the carbon footprint
in its 14,500 offices worldwide
http://www.citigroup.com/citi/environment/ , retrieved 10 Sept 2010
The Financial Industry Does a UTurn: Citigroup’s Drivers

Activists target the supply chain


Rainforest Action Network targets
Boise Cascade’s customers
Home Depot phases out wood products
not certified to come from well-managed
forests

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Target financial sources
To influence policy and CEO’s,
follow the money
Environmental liabilities are a risk
factor
BankTrack—network of financial institutions
‘doing well and doing good’ (HSBC’s Jon Williams)
Business Risks in an Interdependent
World


Ignoring social and
environmental costs
puts investment capital
at serious risk
Carbon Disclosure Project
(CDP)



Global climate change
reporting system
2400 companies, on behalf
of 315 institutional
investors (2007)
www.cdproject.net
https://www.cdproject.net/CDPResults/CDP-TransportReport.pdf, 9/10/10
Competitive Advantage, Innovation
and Growth

Only 20% of a company’s value is reflected in its
accounting statements

Vast majority of company’s value is brand &
reputation


Co-Operative Bank survey (UK, 2005): ‘ethical
consumerism’ increased 11% to £30B
‘Mainstream activism’ 45% of US population (2007)

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Most likely to act on their expectations of companies
High levels of education and high income
Producing environmentally friendly products is a
brand attribute
Employees are making career choices by brand as well
http://royaldutchshellplc.com/wp-content/themes/primepress/rotating.php?image=74
The Business Rationale for
Sustainability

Significant money to be saved





DuPont slashed greenhouse gases, energy savings
$3B, while growing business 30%
GE Industrial saved $12.8B by upgrading lighting
Ford has radically changed car painting – 3 coats
applied simultaneously
15% reduction in CO2 emissions
Significant money to be made



General Mills burns Cheerios’ oat hulls,
Recycled 86% of its solid waste
Green building construction $12B in 2008, $60B in
2010
The Business Rationale for
Sustainability

Create customers’ competitive advantage

Cost of powering & cooling computers > hardware
http://images.businessweek.com/mz/08/13/pop_0813_60indep.gif

IBM Project Big Green – reduce server cooling costs
The Business Rationale for
Sustainability

Sustainability is a competitive differentiator

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50% of Enterprise Rent-a-car’s fleet > 28 mpg
Shape the future of your industry


BMW and Sony Europe played leadership roles in
sustainability
BP and Shell’s stance on climate change
The Business Rationale for
Sustainability

Become a preferred supplier


CostCo identifies preferred, sustainable suppliers
Sustainability a condition for doing business
Suppliers

Producers,
Service
Providers
Distributors
Retailers
Change your image and brand

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GE’s Eco-imagination
BP’s stance on climate change
Wal-Mart’s
focus on packaging
Customers
From Compliance to Innovation
http://4.bp.blogspot.com/_JsAU6pu5Yk4/RgAttssbxBI/
AAAAAAAAAGs/neKhJvT48NE/s320/Willard%27s+5-stages.png