why the $u $ tainability imperative makes sen $ e bob willard [email protected] cauce june 7,...
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Why the $u$tainability Imperative
Makes Sen$e
Bob Willard [email protected] www.sustainabilityadvantage.com
CAUCE
June 7, 2011
The “Sustainability Imperative”
David A. Lubin and Daniel C. Esty, “The Sustainability Imperative,” HBR May 2010
Megatrend: “A fundamental shift in the competitive landscape that creates
inescapable threats and game-changing opportunities ... profoundly affects companies’
competitiveness and even their survival.”
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.”
Significant CEO Mindset Shift
Survey of 766 worldwide CEOs, including 50 in-depth interviews UN Global Compact and Accenture study, “A New Era of Sustainability,” June 2010
… fully embedded into company strategy and operations
CEOs Agree /Strongly Agree that sustainability should be ….
… discussed and acted on by boards
… fully embedded into subsidiaries’ strategies and operations
… embedded throughout the global supply chain
… the basis for industry collaborations and multi-stakeholder partnerships
… incorporated into discussions with financial analysts
2010 Increase Over 2007
Stakeholders Driving Sustainability
Survey of 766 worldwide CEOs, including 50 in-depth interviews UN Global Compact and Accenture study, “A New Era of Sustainability,” June 2010
Stakeholders who CEOs believe will have the greatest impact on the way they manage societal expectations
Consumers
Employees
Governments
Communities
Regulators
Media
Investment Community
Suppliers
NGOs
Boards
Organized Labor
Other
CEOs: Sustainability Drivers
Survey of 766 worldwide CEOs, including 50 in-depth interviews UN Global Compact and Accenture study, “A New Era of Sustainability,” June 2010
Brand, trust, and reputation
Potential for revenue / growth / cost reduction
Personal motivation
Consumer / customer demand
Employee engagement and recruitment
Impact of development gapson business
Governmental / regulatory environment
Pressure from investors / shareholders
Top 3 drivers of CEOs’ action on sustainability issues
Sustainability 3-Legged Stool
Sustainability
Economic LegGood JobsFair wages
SecurityInfrastructure
Fair Trade
Social Leg Working conditions
Health servicesEducation services
Community & CultureSocial justice
Environmental Leg0 Pollution & WasteRenewable Energy
ConservationRestoration
Quality of Life / Genuine Wealth / Genuine Progress
Corporate Sustainability 3-Legged Stool
Sustainability = Sustainable Development (SD)= Environmental, Social, Governance (ESG)
= Corporate Social Responsibility (CSR)= Corporate Responsibility (CR) = Green= Triple Bottom Line (TBL) = 3Es = 3Ps
Economy - ProfitsGrowth, Jobs,
TaxesProductsServices
Equity - People Employees
Community / Culture World
Environment - PlanetEco-efficiencies
Eco-effectiveness
Smart Business 3-Legged Stool
Asset Management
Economic / FinancialCapital
Built / ManufacturedCapital
NaturalCapital
Human CapitalSocial Capital
Sustainable Value Creation
5-Stage Sustainability Journey
5. Purpose/Passion Values-driven founder / CEO
2. Compliance Regulatory enforcement
1. Pre-Compliance
3. Beyond ComplianceSave on eco-efficienciesAvoid PR crisis Avoid threat of new regulations
4. Integrated Strategy Enhanced organizational value
The 3 R’s of Justifying Sustainability
RISKS
RESPONSIBILITIES
REWARDS
BUSINESS CASE
+
+
Based on Alan AtKisson, The IRIS Agreement, p. 127
Risks to Financial and Natural Capitals:Big-5 Sustainability Storm Fronts
Poverty and Social Injustice
Species Extinction and Overharvesting
Food and Water Crises
Waste, Toxicity,
and Health
The 3 R’s of Justifying Sustainability
RISKS
RESPONSIBILITIES
REWARDS
BUSINESS CASE
+
+
Based on Alan AtKisson, The IRIS Agreement, p. 127
Risks to Financial and Social Capitals:Stakeholders’ Rising Expectations
Waste, Toxicity, and Health
Poverty and Social Injustice
Species Extinction and Overharvesting
Food and Water Crises
Employees
Customers
Media Economists
(Scientists)
(NGOs)
Competitors
Markets
Governments Insurers
The Public Investors
BanksRisks to Reputation re Corporate Responsibilities
Social license
to operate
The 3 R’s of Justifying Sustainability
RISKS
RESPONSIBILITIES
REWARDS
BUSINESS CASE
+
+
Based on Alan AtKisson, The IRIS Agreement, p. 127
Top 10 Business Priorities for 2011
Forrester's survey of 2,691 executives in Europe, North America, and Asia, “Forrsights Business Decision-Makers Survey, Q4 2010.”
One More Goal … or an Enabling Strategy?
Talent wars
Productivity
Innovation
Brand image
Quality
Risks
Compliance
Governance
Supply security
Profit
Share price
Growth
Revenue
Market share
New markets
Customer care
Expenses
Enabling Strategies
“Sustainability”
The 3 R’s of Justifying Sustainability
RISKS
RESPONSIBILITIES
REWARDS
BUSINESS CASE
+
+Large
Companies:At least 38%more profit
SME Companies:At least 66%more profit
Potential SME Profit Increase
… yielding a profit increase of +66%
-1%
-2%
+6%
-10%
+5%
-5%
REPUTATION
• Reduced recruiting costs
• Reduced attrition costs
• Increased employee productivity
• Increased revenue / market share
• Eco-efficiencies: savings in energy/carbon, water, materials, waste handling
• Lower insurance & borrowing costs
Usual
focus
Sustainable Procurement: U.S. Gov’t
Ecovadis survey, “Sustainable Procurement: A Crucial Lever to End the Crisis?,” Aug 09
Green procurement policy covers 95% of new acquisitions • Federal agencies must set 2020 GHG reduction goals • 30% reduction in fleet gasoline by 2020• 26% boost in water efficiency by 2020• 50% waste recycling and diversion rate by 2015• Net-zero-energy building requirement by 2030
Executive Order 13514 (Oct. 2009)
Federal Leadership in Environmental, Energy, and Economic Performance
Largest consumer of energy in the U.S. economy Impacts 500,000 buildings and 600,000 vehiclesImpacts $500B / Yr spent on 2M goods and services Impacts 600,000 suppliers
The 3 R’s of Justifying Sustainability
RISKS
RESPONSIBILITIES
REWARDS
BUSINESS CASE
+
+
Climate Change &
Energy Crises
Employees
Customers Economists
(Scientists)(NGOs)
Governments
Insurers
Investors
At least 38% to 66% more Profit
The New Economy
• New ownership models: employees, customers, co-ops, social venture funds, government funding
• New company purposes: “Social enterprises,” “B Corps,” “Hybrid organizations,” “Flexible purpose corporations” (California Bill SB 201, Corporate Flexibility Act, Feb. 2011)
• Responsible consumption / thrift vs. over-consumption• Low / No-growth model vs. “grow or die” model
• Services vs. products• “Dematerialization” vs. physical goods, processes, or travel
using “virtual” alternatives like videoconferencing or online shopping”
• Low-carbon economy vs. fossil fuel-based economy• Local supply chains vs. global supply chains
In Summary …
Sustainability is smart business
Green Universities are smart universities
New market forces & risks are in play
Relevant to existing priorities
Opportunity for leadership
1. Progressive policies and courses
2. Walk-the-talk in university operations
3. Use procurement clout
Why the $u$tainability Imperative
Makes Sen$e
Bob Willard [email protected] www.sustainabilityadvantage.com
CAUCE
June 7, 2011