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Six Key Lessons on Mapping Out a Business Case for Sustainability Initiatives By David Bent, Forum for the Future Head of Business Strategies www.forumforthefuture.org

"Finding the business case" is the holy grail of corporate

sustainability professionals. For over a decade they've

set out to demonstrate the commercial benefits of social

and environmental initiatives. So why is it so hard to find?

A number of recent reports and surveys - from MIT

Sloan/Boston Consulting Group (pdf) and Boston

College/McKinsey (requires registration) and Cranfield

(pdf) - show that sustainability professions find the

business case difficult. Over the last few years, I've

turned my accounting background to help companies

profit from making sustainability - from climate change

and resource shortages to poverty or child labour - issues

for their business strategy, rather than the CSR plan.

This first post of three covers why the business case is

so difficult and some lessons I've learnt on the front line.

Subsequent posts cover how to create a virtuous cycle

and how to turn qualitative arguments into quantitative

results.

1. There is no "one size fits all" business case. Each

company has different drivers of shareholder value and

different material sustainability issues. The senior

decision-makers will have different hot buttons. Not

surprisingly, different companies have different business

cases for sustainability too. Cadbury went Fairtrade to

secure the future of its supply chain and engage the

consumer. Engineering and construction firm Balfour

Beatty realises that its long-term success requires

alignment between market demands, healthy

communities and environmental limits.

Lesson: Focus on finding only your company's business case.

2. The "societal case" doesn't automatically make a business case. There is a growing acceptance of the

need for action on sustainability issues like climate

change and chronic under-development. Unfortunately,

this "societal case" does not automatically make a

business case for every company. There are still plenty

ways of making profit today that are unsustainable in the

medium term, like gas-guzzlers and bottled water. Over

time, we can expect greater overlap between the societal

case and the business case, as there are changes in

regulation, consumer behaviour, investor expectations

and more.

Lesson: Don't expect a business case to exist now for all the things the company needs to do.

3. Opportunity trumps responsibility. Often corporate

responsibility means improving the current business so it

is good enough for legislation or stakeholder

expectations. Companies get into a "compliance

mentality" that resent the costs, and are blind to the

benefits. Plus there are other ways of improving the

current business - if your best argument is "it motivates

staff" then be prepared for someone finding a cheaper

way of raising their spirits.

On the other hand, senior business people love the idea

of opportunity and hate the idea of missing out.

Fundamentally, corporate sustainability is about exploring

the next way your company will be successful, because

almost all the things you currently rely on - energy,

supply chain, consumers, investors, regulation - are

going to change. Ecomagination is about inventing a new

future for GE, not improving its energy efficiency.

Lesson: Frame sustainability as a way of unlocking opportunity for the company now and into the long term.

4. The more you look, the more you find. The

evidence is that "once companies being to act

aggressively, they tend to unearth more opportunities,

E-TIPS

OHS, Environment & Sustainability

© informa PLC IIR Executive Development

ACN. 002 541 013 ABN 87 002 541 013 Level 6, 120 Sussex Street, Sydney NSW 2000

T 02 9080 4000 | F 02 9299 3109 | edinfo@iir.com.au | www.iired.com.au

your one-partner solution for building skills and knowledge

not less" (to quote the MIT Sloan Review report). For

instance, in January 2007 Marks & Spencer planned to

invest £200m over five years in Plan A - by 2009, two

years into the initiative, it has already become cost

positive.

Lesson: Plan to explore how to make sustainability commercial and how to keep improving your

company's business case.

5. Sustainability professionals and finance professionals speak different languages. One side

tends to make a case in qualitative terms, talking about

how it will benefit society first and then the company. The

other is primarily interested in the direct, provable

benefits to the company in financial, quantitative terms.

(Guess which is which.) Fundamentally, accounting is the

language of business, and finance directors call the

shots. So, the sustainability change agents have to learn

"accountant."

Lesson: Frame the case for sustainability in terms your finance director will understand, ideally in drivers of shareholder value (this will be subject of a

subsequent post).

6. The "no business case, no permission" vicious

cycle. Often sustainability professionals need permission

from the finance department to get the resources they

need to find a business case. But the finance function will

not give permission without a business case. Everyone is

stuck in a vicious cycle.

Lesson: Plan small steps to iteratively create a virtuous circle of permission and results

This blog was first published on GreenBiz.com. This is the first of three blogs looking at the business case for sustainability. The other blogs are: How to Build a Business Case for Sustainability: Four Tips on Getting Buy-In from Finance and Investigating the business case for sustainability: seven steps that could make you millions. To obtain these articles, please email e-tips@iir.com.au David Bent is Head of Business Strategies with independent sustainability experts Forum for the Future www.forumforthefuture.org