Transcript Safety as a Springboard to Sustainability

Safety as a Springboard to Sustainability
International Rail Safety Conference: Denver, Colorado
5th to 10th October 2008
James Catmur
Arthur D. Little Limited
300 Science Park
Cambridge
United Kingdom
Telephone +44 (0)870 336 6700
Fax + 44 (0)870 336 6701
www.adlittle.com
Safety as a Springboard to Sustainability
Introduction
 Safety is fundamental to the operations of public transport, poor
safety performance can threaten the existence of a firm
Background  Safety has been a long-standing fact of business for most firms
 The way that company chooses to act forms part of its own
responsibility as a corporation
 Sustainability is much higher up everyone’s agenda
Problem
 There is an urgent need to respond
 However, many companies are ill-equipped to tackle this area
Answer
 A robust safety culture within a firm can be an excellent
springboard to wider sustainability
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Safety as a Springboard to Sustainability
Safety as a starting point
 Safety is part of the license to operate
 As such it is already well managed
 Safety has benefits for the bottom line and longevity of the firm
– Reduced Costs – improved safety means services run to time
reducing potential fines
– Increased Opportunities – a good safety record can be the
difference between success and failure in competitive tenders
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Safety as a Springboard to Sustainability
Past focus on safety is being mirrored by the new focus
on climate change
The past focus on Safety…
 The Clapham accident
– A turning point for UK rail safety
 The Ladbroke Grove accident
– Significant media attention
– Increase in stakeholder interest
– More interventionist approach by
the safety regulator
 Significant activity to address
concerns
Safety high up the agenda
…is now mirrored by
Sustainability
 Intergovernmental Panel
– Scientific evidence of mankind’s
contribution to climate change
 The Stern Review
– Economic assessment
– Climate change shown to have an
impact on the global economy
 Activity to address concerns
Sustainability higher up the agenda
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Safety as a Springboard to Sustainability
Increasing importance of climate change brings with it
pressure on other issues
It is not enough to simply manage climate change and CO2
Corporations
are in the
Spotlight
Leaders have
Emerged
Leadership
Requires a
Holistic
Approach
 Individual corporations are targeted as emitters, for example:
– BAA/Heathrow airport are criticised over expansion plans
– Drax, regularly attacked by pressure groups
 Virgin recently trialled an aircraft on running on biofuel
 UK retailer Marks and Spencer have adopted “Plan A”
The spotlight on climate change has elevated attention on other
sustainability issues, for example human rights, supply chain
working conditions, governance, corruption and benefit to society
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Safety as a Springboard to Sustainability
The drivers are growing, especially relating to risks and
opportunities associated with climate change
Market Drivers
1. Investor expectations
 The influence of SRI funds is filtering into
mainstream investment decisions
2. Tendering requirements
 Companies could enhance position through
environmental performance
3. Regulation
 Could use best practice to help shape regulation
4. Resources
 Rising resource costs a threat to transport
companies but could build client base
5. Competition
 Competition from efficient vehicles could
undermine the inherent advantage of mass transit
6. Changing attitudes
 Integration of sustainability into decision making
places pressure on poorly performing companies
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Safety as a Springboard to Sustainability
The difficulty is understanding which issues are relevant
and where to draw the line
Navigating corporate social responsibility isn’t easy
Leadership ethics
Probity
Transparency
Responsibility
CSR
Disclosure
Philanthropy
Sustainable
innovation
CSR
Reputation
management
Environmental
stewardship
Business
principles
Sustainabilitydriven-innovation
Responsible
marketing
Non-financial
risks
Engagement
Enhanced
analytics
Accountability
Corporate
citizenship
Governance
Corporate
social
opportunity
Social
products
Competitive
integration
Community
investment
Good
business
ESG
risks
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Safety as a Springboard to Sustainability
Assess how social and environmental issues are
managed across a business
Governance
 Vision/mission
 Board of
Directors
Business integration
of sustainability
 Profitability and
growth
 Environmental
impact
 Reputation
 Resource
utilisation
 Organisation and
culture
 Strategic
management
 Business
principles
 R&D
 Performance
measurement &
management
 Stakeholder
engagement
Environmental
stewardship
 Products and
services
 Facilities and
operations
 Climate Change
and carbon
Social performance
 Workplace
 Treatment of
employees
 Human rights
 Community
 Benefit to society
 Markets
 Partners and
alliances
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Safety as a Springboard to Sustainability
Review company’s positioning in the ‘zone of
acceptability’, and against peers and investor expectations
Sustainable Performance
Leading edge
 Scores 5 on the ADL Sustainable
Performance Template
Sustainable
performance
Top-quartile
Prevailing
 Performance is tomorrow’s leading
practice
5
3
Leading Edge
Zone of
acceptability
 Scores 3 on the ADL Sustainable
Performance Template
 Performance is leading edge for
the industry
1
Prevailing
Trailing edge
Past
Present
Timeline
Future
 Scores 1 on the ADL Sustainable
Performance Template
 Performance is consistent with
industry
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1Based
Governance
Company performance
Integration of Sustainability
Zone of competitor performance1
Environmental
Stewardship
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Benefit to Society
Community
Human Rights
Treatment of
Employees
Workplace
Climate Change and
Carbon
Facilities and
Operations
Resource Utilisation
Environmental
Impact
Partners and
Alliances
Markets
Products and
Services
Research and
Development
Strategic
Management
Reputation
Management
Profitability and
Growth
Stakeholder
Engagement
Performance
Measurement
Business Principles
Organisation and
Culture
Board of Directors
Vision/Mission
Score
Safety as a Springboard to Sustainability
Results were benchmarked to highlight the strengths,
weaknesses, opportunities and threats
5
4
3
2
1
-
Social Performance
Future Stakeholder Expectations
on four benchmark companies examined for this project
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Safety as a Springboard to Sustainability
To address the key drivers of sustainability, three different
options are presented
1: Risk
Management
2: Stakeholder
Responsive
3: Leading Edge
 Maintain present activities, including biofuel and hybrid trials, ecodriving initiatives and technology upgrades at depots
 Communication is enhanced Governance issues such as
determining and publicising policies and measuring performance
are addressed
 Overhauls approach to those areas where it is deemed furthest
from future stakeholder expectations
 Seeks to become identified with sustainability in its business but
maintains a cautious approach to rolling out new technologies, etc
 Leads and shapes the direction of sustainability in the transport
sector, working with regulators to influence new regulation
 Seeks out new avenues for revenue from intelligent transport
 Maintains a leadership position in resource management
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Business As Usual
Governance
Leading Edge
Integration of Sustainability
Environmental
Stewardship
Stakeholder Responsive
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Benefit to Society
Community
Human Rights
Treatment of
Employees
Workplace
Climate Change and
Carbon
Facilities and
Operations
Resource Utilisation
Environmental
Impact
Partners and
Alliances
Markets
Products and
Services
Research and
Development
Strategic
Management
Reputation
Management
Profitability and
Growth
Stakeholder
Engagement
Performance
Measurement
Business Principles
Organisation and
Culture
Board of Directors
Vision/Mission
Score
Safety as a Springboard to Sustainability
The three options, with ‘leading edge’ matching both peer
performance and investor expectations
5
4
3
2
1
-
Social Performance
Risk Management
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Safety as a Springboard to Sustainability
Companies who have learned to manage safety are better
placed to manage sustainability
The effort required to manage sustainability may seem high
In reality it is no more of a change than that required to manage safety
 Companies who already manage safety:
– Can see the tangible financial and operational value
– Can also accept and understand the intangible benefits
 Are well placed to use the same experience to manage sustainability:
– Seeing beyond the jargon and image of being “Sustainable”
– Understand that it is about protecting and growing the firm
 An approach can be taken which builds upon strengths developed in
safety and other key sustainability related areas
Focus on issues which are material and which are demonstrated a through
the business case – just like any other strategic business issue
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