2014 kaleidoscope conference algonquin college may 13, 2014 the good news about the new...
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2014 Kaleidoscope ConferenceAlgonquin College
May 13, 2014
THE GOOD NEWS ABOUT THE
NEW SU$TAINABILITY IMPERATIVE
[email protected] sustainabilityadvantage.com
CORPORATE SUSTAINABILITY
TRIPLE BOTTOM LINE
Eco
nom
y
Environment
Equit
y
Pro
fits
/
Planet /
Peop
le
/
CORPORATE SUSTAINABILITY
GREEN +CSR
Eco
nom
ic
Environmental
Socia
l
CORPORATE SUSTAINABILITY
ESG
Gov
ernan
ce
Environmental
Social
CORPORATE SUSTAINABILITY
ASSET MANAGEMENT
Fin
anci
al /
Man
ufa
cture
dC
apit
al
Natural Capital
Hum
an /
Social
Cap
ital
AC S-E-E FRAMEWORK
http://www3.algonquincollege.com/sustainability/overview-2/our-framework/
THE REAL “REAL WORLD”
NESTED INTERDEPENDENCIES
1. Pre-Compliance
2. Compliance
4. INTEGRATED STRATEGY
5. PURPOSE & PASSION
FIVE-STAGE SUSTAINABILITY JOURNEY
3. Beyond Compliance
“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 Lubin and Daniel Esty, HBR, May-
June 2010
“Expect the Unexpected: Building business value in a changing world,” KPMG, 2012
Access to
capital
Talent wars
Productivity
Innovation
Quality
Risk
management
Supply security
Profit
Share price
Brand value
Revenue
growth
Market share
Expenses
ROI
(SUSTAINABILITY) STRATEGIES
“SUSTAINABILITY”
ENABLERS vs. ONE MORE GOAL
Revenue
PROFIT
4.Reduced materials
1. Increased revenue2. Reduced energy
6.Reduced turnover
5.Increased productivity 7
.Red
uce
d r
eve
nu
e
an
d i
ncr
ease
d
exp
en
ses3. Reduced waste
Opportunities RisksIncome Statement
10%
9%
75%
25%
2%
20%
+51 to
+81%
-16 to -36%
Exp
en
ses
SUSTAINABILITY CAPITAL RESERVE
SUSTAINABILITY BUSINESS CASE
Company Data Profile
Small Professi
onal Services
Large, Manufactu
ring & Distributio
n
Revenue $1,000,000
$500,000,000
Energy expense $20,000 $10,000,000
Materials and water expense
$50,000 $150,000,000
Total salary / payroll expense
$300,000 $150,000,000
Profit $70,000 $35,000,000
Average salary $50,000 $40,000
Number of employees 6 3,750
Potential profit increase
51% 81%
Potential profit at risk-
16%-
36%
60-employee manufacturing company
58% reduction in electricity usage90% reduction in natural gas usage
Reduced annual CO2 emissions by 115 tonnes
Invested $46,186 to yield energy savings of $89,152
Average pay-back period of 6.3 months
Increased profits by 76%.
“Manufacturer finds lighting energy efficiency convenient,” Green Manufacturer, March 1, 2010
42 projects between 2006-2008
GREEN BUILDING BENEFITS: TO WHOM?
Adapted from Cleland Robertson, Lead Manager, Sustainable Construction & Infrastructure Group, Sustainable Business Solutions, PwC Chile. Based on World Green Building Council.
• Reduced downtime• Lower operating costs• Lower maintenance costs
• Easier financing• Rapid ROI• Higher market value
• Slower depreciation• Higher occupancy rate
• Lower refurbishment costs• Corporate image / prestige• Compliance with regulations
• Lower design and construction costs• Faster sales
• Increased productivity
GREEN BUILDINGS: PRODUCTIVITY
World Green Building Council, “The Business Case for Green Buildings,” March 2013
Bottom Line Business Case
Profit could drop by 16-
36%“Expect the Unexpected: Building business value in a changing world,” KPMG, 2012
Profit could increase by 51-
81%
Revenue at risk
Risk from poor reputation on energy and carbon management
Risk from poor reputation on water management
Risk from poor reputation on materials and waste management
Risk from poor reputations of suppliers or customers
Risk from poor reputation on eco-system damages
Risk from less competitive prices
Risk from sudden disruptions in the value chain
5%
Potential Revenue Erosion% Rev.
at Risk
% Probability within 5 yrs
5%
5%
2%
5%
5%
10%
25%
25%
20%
5%
10%
1%
10%
5%
RISKS TO REVENUE
Potential increase in expenses
Risk of higher cost of energy
Risk of a price on carbon ($20/T x 300T/$1M Rev.)
Risk of higher cost of waste
Risk of higher cost of water and materials
Risk of higher cost of capital (Debt = 30% of Rev.)
Risk of higher employee voluntary turnover
Risk of lower employee productivity
10%
Potential Escalating Expenses %
Potential Impact
% Probability within 5 yrs
100%
5%
5%
0.60%
5%
75%
25%
70%
75%
75%
25%
11% to 31%
1% 10%
Impact on profit from revenue and expense risks -16% to -36%
RISK OF ESCALATING EXPENSES
GLOBAL RISKS 2014
• 10-year outlook
• 31 global risks with the potential to cause significant negative impact across entire countries and industries
• Five classifications: • Economic, • Environmental • Societal• Geopolitical • Technological
• All are interconnected.
World Economic Forum (WEF), “Global Risks 2014,” January 2014.
RISK LIKELIHOODS AND IMPACTS
World Economic Forum (WEF), “Global Risks 2014,” January 2014.
RISK INTERCONNECTIONS
World Economic Forum (WEF), “Global Risks 2014,” January 2014.
1.80% increase in world energy demand, with 85% from fossil fuels; 50% increase in GHGs (685 ppm)
2.Urban air pollution / ground-level ozone is top cause of mortality, ahead of dirty water and lack of sanitation.
3.Global biodiversity declines by a further 10%, mature forests shrink by 13%.
4.Global water demand increases by some 55%; competing demands put water use by farmers at risk; 40% of the global population live in river basins under severe water stress
OECD RISKS BY 2050
OECD, “Environmental Outlook to 2050.”
New companies will be more resilient, robust, and able to thrive in fast-changing times”
Andrew Winston, The Big Pivot, HBR Press, 2014
“A weakening of the pillars of our planetary infrastructure
—a stable climate, clean air and water, healthy biodiversity, and
abundant resources— is costing business real money”
If this hotter, scarcer, more transparent, and unpredictable world is the new normal, then how
must companies act to ensure a prosperous future for all, including
themselves? … That’s the Big Pivot … and it’s
nonnegotiable.”
Assess current realities
7-STEP CHANGE PROCESS
Wake up and decide
Build case(s) for change
Inspire shared vision(s)
Develop strategies
Mobilize commitment
Embed and align changes
ContinuouslyLearn and
Adapt
2014 Kaleidoscope ConferenceAlgonquin College
May 13, 2014
THE GOOD NEWS ABOUT THE
NEW SU$TAINABILITY IMPERATIVE
[email protected] sustainabilityadvantage.com