sustainability a competitive advantage in your career “every single pressing social and global...
TRANSCRIPT
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SustainabilityA Competitive Advantage In
Your Career
“Every single pressing social and global issue of our time is a business opportunity”
(Peter Drucker)
Financial Executives InternationalCraig Raben, P.E., LEED AP
September 2, 2010
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Agenda
- An Unsustainable Path
- What Is Sustainability
- Business Implications
- The Sustainable Business
- Implications For Financial Executives
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Growing Concerns
- Energy Sources
- Water Use
- Food Supply
- Natural Resources
- Inequality
- Toxics
Causing Symptoms With Synergistic Effects- Climate Change
- Public Health
- Habitat
- Security
- Biodiversity
- Migration
Exacerbated By- Globalization - Population Growth
Increasing Public Awareness and Action
An Unsustainable Path
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What Is Sustainability?
“The ability to meet today’s global economic, environmental and social needs
without compromising the opportunity of future generations to meet theirs.”(UN Brundtland Commission, 1987)
Why Its A Business Issue?-63 Of 100 Largest Economic Entities Are Corporations (Werbach, 2009)
-Growing Market Demand
-Becoming More Mainstream
-Finding Correlation Between Sustainability And Improved Results
Majority Yet To Establish A Clear Business Case
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Sample Business Implications
All Industries Impacted
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Highest Opportunity And Risk (Esty, 2006)
Organizational Characteristics
- High Brand Exposure
- Big Environmental Impact
- Dependent on Natural Resources
- Exposure To Regulations
- Increasing Potential For Regulation
- Competitive Market For Talent
- Low Market Power
- Established Environmental Reputation
List Is For Environmental, Similar List For Social
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Perspectives
Limited
- Milton Friedman: Social Responsibility Of Business Is To Increase Its Profits
- Regulatory Compliance
Functional
- Managed By Silos (i.e. EHS, HR etc)
- Approaches Are Often Independent
Strategic
- Aligned And Integrated
- Group Responsibility
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The Sustainable Business
“A company’s ability to achieve its business goals and increase long-term shareholder value by integrating economic, environmental and social opportunities
into its business strategies.” (Wirtenberg, 2007)
What Works: Common Traits
1. Stakeholder Engagement -Visioning Exercises
-Involved In Defining Sustainability
2. Aspirations - Long Term Perspective
3. Aligned With Overall Strategy -Comprehensive Approach Illustrating Value
4. Integrated Throughout - Visible Management Support
- Organizational Culture vs. Functional Silo
5. Communications - Transparent
- Balanced
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The Sustainable Business (Cont.)
What Works: Common Experiences
1. Drives Innovation- Different “Lens”
- New Processes
2. Strengthens Culture- Everyone Has Skin In The Game
- Emotional Connection and Purpose
3. Finding More Opportunity Than Expected
4. Tangible Bottom-line And Top-line Impacts
Gaining Competitive Advantage
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Recent Trends Of Interest
- Corporate Strategy Integration
- Behavioral Interviewing
- Management Education
- SEC Reporting
- Shareholder Resolutions
- Grants, Rebates And Incentives
- Regulatory Developments
- Investment Indices And Analyst Reports
- Supplier And Customer Expectations
Opportunity To Differentiate For You And Your Org.
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Senior Financial Executive Role
A Senior Financial Executive Plays A Critical Role
Potential Areas For Contribution
-Change Management
-Performance Metrics
-Efficiency And Innovation
-Project Support
-Employee Engagement
-Ethics And Governance
-Rewards And Incentives
-Voluntary Standards
-Internal Audit
-Investor Relations
-Vendor Oversight
-Accounting Practices
-Charitable Giving
-Risk Management
-Mergers And Acquisitions
-Capital Expenditures
-Measurement And Reporting
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(McKinsey: “Valuing Social Responsibility Programs”, 2009)
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(McKinsey: “Valuing Social Responsibility Programs”, 2009)
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Example Key Issues - Finance
Structural Considerations (Hitchcock, 2007)
- Negative Impacts Are Often Externalized
- No Standard Performance Metrics Or Reporting
- No Valuation On Nature
- Limited Role of Risk Avoidance And Intangibles In Decision Making
- Internal Accounting Methods (Silo vs. Systems Approach: ABC, LFC, LFA)
Reporting
- Sustainability Reporting Is Largely Voluntary, But In Some Cases Expected
- Stand Alone Reports Imply Non-Strategic
- State, Country, International And NGO Level Requirements And Approaches
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Example Key Issues (Cont.)
Communications
- Distrust Regarding Company Intentions, High Scrutiny
- Often Need To Discuss Metrics Other Than Financial
- Avoid Greenwashing
- Balance And Transparency
Standards, Expectations And Regulations
- Lack Of Clarity, Still Evolving
- Participate In Development, Partnerships With Stakeholders
- Wide Range Of Voluntary, Local, National, Industry, International etc.
Great Opportunity To Gain Skills And Differentiate
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Useful Resources
- U.N. Environment Program – Finance Initiative
- Global Reporting Initiative
- World Business Council For Sustainable Development
- World Resources Institute
- American Institute Of CPAs
- Corporate Sustainability Websites
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Summary
- An Unsustainable Path
- Growing Awareness, Concern And Action
- A Business Issue
- Trends And Implications For Finance Executives
- Key Issues Currently With Clarity Needed Near-Term
Opportunity To Develop New Skills And Differentiate
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SustainabilityA Competitive Advantage In
Your Career
“Every single pressing social and global issue of our time is a business opportunity”
(Peter Drucker)
Financial Executives InternationalCraig Raben, P.E., LEED AP
September 2, 2010