Achieving high performance: the sustainability imperative · 2010-09-09 · Achieving high performance: the sustainability imperative 5 Natural resources Robust economic growth in

By Bruno Berthon, Jim Grimsley, Peter Lacyand David Abood

Achieving high performance: the sustainabilityimperative

2 Achieving high performance: the sustainability imperative

Confronting fundamental challengessuch as climate change, populationgrowth, human rights and resourceconstraints, businesses and public sector organizations face a daunting new imperative.

Achieving high performance: the sustainability imperative 3

They must use fewer resources to producegoods and services that benefit societyand the environment and still meettraditional demands—from customers andcitizens for price, quality and availability;from shareholders for outstandingperformance and returns; and frompoliticians for economic growth andprosperity in both developed anddeveloping economies.

The imperative for sustainable productionand consumption builds on the principlesof reduce, reuse and recycle, but itrequires much more than that. It requiresinnovative thinking and fundamentalalterations in business models. It requiresmaking the most of fast-changingregulations, leading-edge technologiesand shifting consumer expectations anddemands. Above all, this new imperativerequires that sustainability be woven intothe core strategies of companies andpublic sector organizations.

As sustainability moves from theperiphery to the heart of business and the public sector, organizations arefinding that it comes with a price and a prize. The price is the fundamentaltransformation that fully integratedsustainability requires in the face of anaggressive social, environmental andeconomic agenda. The prize, however, is tantalizing: the opportunity fororganizations to outperform their peers and achieve high performance.

So what to do as a top executive? We believe opportunities abound to both preserve and create value byintegrating sustainability into yourbusiness strategy and operating model.New and differentiated products andservices can increase revenue andgenerate market-leading innovations and technologies for a renewed path to profitable growth. Higher resourceefficiency and lower emissions canreduce cost. Proactive responses can better manage regulatory andoperational risk. Together theseopportunities also can build theintangible—and invaluable—assets of brand and reputation.

Sustainability definedSustainability affects all industries andgovernments. Issues encompass anintegrated agenda of environmental,social and economic impact—sometimesreferred to as “planet, people and profit.”

Accenture defines sustainability as the way a company or organizationcreates value for its shareholders andsociety by maximizing the positive and minimizing the negative effects on social, environmental and economicissues and stakeholders to:

• Grow revenue

• Reduce cost

• Manage risk

• Build intangible assets


Drivers of changeThe challenge is getting from here tothere and delivering the benefits. In arapidly changing business context,gaining competitive advantage can bedaunting. Accenture believes there aresix key drivers of change on whichexecutives should begin acting now.Broadly speaking, these driversrepresent the impact sustainability hason changing supply, changing demandand changing rules of the game.


Natural resources Robust economic growth in emergingeconomies, combined with the highrequirements of Western economies, has caused fierce competition for naturalresources, particularly energy and water.It also has increased carbon dioxide (CO2)emissions, which contribute to globalclimate change. The UN FrameworkConvention on Climate Change estimatesthat the private sector will need to investmore than US$600 billion every yearthrough 2030 to stabilize CO2 emissions.The price is huge, but so is the prize.Dealing with climate change cangalvanize an extraordinary wave oftechnology, service and business modelinnovation and drive coordinated globalaction on a scale not seen before. Thelevel of venture capital investment inclean and “green” technologies is alreadysignificant, on a par with the earlyphases of the dot-com boom. Cleantechinvestments in the United States rocketedfrom US$500 million in 2005 to morethan US$4 billion in 2007.1 Europeangrowth is slower but still significant,more than doubling to US$1 billion inthe same period.

Employees In the face of an aging workforce and global competition for talent,organizations that take sustainabilityseriously are well positioned to attractand retain the most qualified employees,studies indicate. In developing countries,companies that offer above-averageworking conditions and health carebenefits can have an easier time findingskilled employees in areas with limitededucational systems. But benefits forcompanies go beyond employment. As a number of global human resourcesexecutives have told us, leadership andperformance on sustainability also candirectly contribute to productivity and to customer sales and satisfaction byincreasing employees’ motivation andcommitment and their propensity to gobeyond what is expected of them.

Capital marketsInvestors have begun to considersustainability performance as anindicator of business performance and a new lens through which to scrutinizethe quality of management. Banks andpension funds are starting to view the longevity of a business and itsenvironmental, social and governanceimpact as part of their financial ratingprocess. Increasingly they are willing to praise—and punish—sustainabilityperformance. JPMorgan, Citigroup andMorgan Stanley have developed lendingguidelines that make it tougher forinvestor-owned utilities to build coal-fired power plants because of the risksassociated with CO2 emissions. We alsosee significant growth in sustainabilityreports and indexes from leading globalfinancial institutions like Goldman Sachs,Lehman Brothers and Morgan Stanley,which weigh the impact on valuation and investment decisions.

Changing supply

1 Estimates cited in Greening the Economy: New Energy forBusiness—Creating a Climate for Change, INSEAD study for theEuropean Business Summit, February 21–22, 2008.


Consumers as citizens Changing consumer expectations andbehavior have a material impact on valuecreation, profitability and growth. Nineout of 10 consumers around the worldsay they are ready to switch to energyproviders offering products and servicesthat help reduce carbon emissions—andtwo-thirds are willing to pay on average11 percent more for the privilege.2

Consumers read labels more avidly thanever, scrutinizing not just a product’scontent but also the process required to put it in their hands. They pay moreattention to ethical and environmentalconcerns, including the use of child labor,the procurement of conflict diamonds,the spread of HIV/AIDS, human rightsabuses and the rising amount of non-recyclable waste.

Sustaining high performance meansmeeting these rising consumerexpectations and competing for trust to secure growth, reputation and brandstrength. In the area of climate change,this is no small task. Consumers havelittle faith in government and business

to advise them on ways to addressclimate change. Asked who they mosttrust, about 43 percent of consumers“always” believe academics and non-governmental organizations (NGOs) and37 percent believe consumer associations,but less than 15 percent believegovernments and energy companies.3

Nonetheless, 18 percent of consumersbelieve that the responsibility for tacklingclimate change lies primarily withgovernment and business.

Stakeholder influenceBusinesses and public sectororganizations must answer to anexpanding group of stakeholders,including NGOs, the media, academia,and influential individuals and celebrities. All of them have freshdemands and increasing power tothreaten a company’s commercialviability. Their perception is your reality,regardless of the facts. Social capital can determine a company’s license tooperate. Companies today must takeresponsibility for both the social andenvironmental impact of their operations

or leave themselves open to retrospectivelegislation and stakeholder backlash inthe future. If you want to do business inAfrica, you must contend with HIV/AIDSand its effect on the health of yourworkforce and the communities in whichyou operate. If you want to establish a presence in a developing country butdo not have on-the-ground connectionsto local people, your chances for successare diminished.

However, companies’ reactions tostakeholder pressure can demonstrateleadership in sustainability. GlobalWitness lobbied De Beers to stop tradingin conflict diamonds in 1998; today thecompany leads advocates of theKimberley Process Certification Schemeto ensure that rough diamonds areconflict-free. Nike suffered consumerboycotts in the 1990s over the use ofchild labor in its contractors’ sweatshops;today the company is viewed as a sectorrole model for human rights policiesbecause it implemented changes.

Changing demand

2 End-consumer Survey on Climate Change, Accenture, 2007.3 Ibid.


Changing rules of the gamePolicy and regulationNational or global regulation on sustainabilitycreates winners and losers. While it candisrupt and even destroy existing businessmodels and industry structures, it also cancreate a positive platform for change byreducing business uncertainty and creatingnew market opportunities. In the area ofclimate change, four out of five businessleaders want governments to take a centralrole in tackling the issue.4 They feel this wayeven though there is no agreement over how best to standardize requirements acrosscountries and incentivize businesses andconsumers to change their behavior.Proactively partnering with policy-makers,stakeholders and even industry rivals inshaping regulation and policy solutions thatbenefit business and society makes sense inmanaging healthy competition. Increasinglythis will be a feature of smart strategy.

4 Achieving High Performance in an Era of Climate Change,Accenture, 2008.

In the face ofthese changesand pressures,organizationsmust grapplewith difficulttrade-offs andmajor changesto businessmodels.

Electric utilities, for example, must meet ever-increasing demand and stillfind ways to reduce emissions fromgenerating electricity. The industry isresponding not only with investments in renewable energy and clean-coaltechnology but also with new businessmodels that make energy demandmanagement a core component of thebusiness and a competitive advantage.Accenture helped a multinationalnetwork utility embed a scenario-planning approach within its businessand identify and manage strategicuncertainties—including environmentaleffects and requirements, changingconsumer behaviors and the shiftingavailability of resources—that wouldaffect the business over the next 10 to 20 years.

Companies in extractive industries stillneed to grow despite scarce resources, so they are moving deeper into remotelocations and frontier geographies wherethey are unaccustomed to operating.These moves demand new levels ofcorporate responsibility—since theirrevenues can equal the entire grossdomestic product of the host country—as well as higher costs.

When BP led several consortia ofpetroleum companies to develop oil and gas fields in Azerbaijan, Georgia and Turkey, the company opened anEnterprise Center in Baku to help developan effective local supplier base andstrengthen the Azerbaijani economy.5

The center, run on behalf of BP’sinternational oil and gas partners in the Caspian region, offers training inmanagement, finance, IT, quality controland marketing. Experts also providetechnological assistance to improveengineering and manufacturing know-how. BP’s local supplier developmentprogram benefits BP and local Azerbaijanifirms alike. More competitive local firms offer BP a greater choice of cost-effective suppliers. Building local skills encourages improved businesspractices, staff development, technologyinvestments and better safetyperformance.


Difficult trade-offs

5 As quoted in “Business for Development: Business Solutions in Support of the Millennium Development Goals,” report of the World Business Council for Sustainable Development,pp. 44-45, September 2005.

Facing sustainability challenges isn’t easy. It is important not to make thewrong bet in your choice of policies and technologies. Early regulation, forexample, can unexpectedly handicapbusiness for the longer term. Germanydecided in the late 1990s to close all itsnuclear power reactors by 2020. As aresult, renewable energies grew tooslowly, and the carbon footprint ofGerman electricity remains very high.Meanwhile, numerous other countriestoday are considering major investmentsor reinvestments in nuclear facilities toreduce their carbon emissions.

It is also important to understand the full impact of sustainability up and down your supply chain and the expectedextent of your responsibility now and inthe future. Timberland was surprised todiscover that its major carbon impactoccurred before the company even gotinvolved in the making of shoes. It wasthe manufacture of the raw materials,not the manufacture and transportationof the final product, that caused thegreatest impact. Similarly, when Cadburyperformed a life-cycle assessment on itsDairy Milk bar, the company discoveredthat the biggest environmental impact

came from the methane generated bycows producing the milk rather thanfrom the transportation, packaging orprocessing of the finished product.

Herman Miller, working to make its chairs more environmentally sustainable,had to reach deep into its chain ofsuppliers and its suppliers’ suppliers—numbering into the hundreds—whichwere reluctant to disclose sensitiveinformation. To understand the fullvulnerability—and opportunity—thatsupply chains represent, companies mustdevelop new relationships with theirsuppliers to influence them effectively.For their part, suppliers can gain first-mover advantage in some cases bymaking the shift to more sustainableproduction and influencing theircustomers.

Integrating sustainability into businessstrategies is further complicated by the speed, intensity and aggressiveness of globalization, which many businessleaders still struggle to address or evenunderstand. Fast-moving globalization is one reason execution is especiallydifficult in global organizations withcritical global processes and complexoperating models and organizationstructures.

Add to the mix the unprecedentedchange and complexity thatorganizations face with the advent of the multi-polar world—a worldcharacterized by multiple centers ofeconomic power and activity.6 Establishedglobal companies now compete withemerging-market multinationals fornatural resources, capital and talent aswell as for consumers and innovations. In the future, they might also contendwith hybrid organizations such as public-private partnerships or social enterprises,which operate as for-profit businesseswith social or environmental missions.

In the face of such sweeping changes,little wonder that senior executives tellus their biggest challenge is shifting fromstrategy to execution.


Complex conditions

6 See The Rise of the Multi-Polar World, Accenture, 2007, and Multi-Polar World 2: The Rise of the Emerging-MarketMultinational, Accenture, 2008.


The complexity of the issuesnotwithstanding, sustainability can createsubstantial value and innovation—a pointvalidated by the world’s largest researchstudy to date on corporate responsibility.7

Companies with the highest levels ofsocial performance view social andenvironmental challenges as drivers toinnovate and unlock new opportunities.The study also found that businessesexcelling in their approach to corporateresponsibility tend to be those thatintegrate the principles of sustainabilityinto both their everyday business processesand their strategic decision making.

Leading companies already aredemonstrating how integratingsustainability into their business helpsthem achieve high performance.

Accenture helped a leading electronicsretailer transform its supply chainnetwork, cutting distribution costs by 11 percent and reducing its carbonfootprint by 10 percent.

Electricité de France is introducing smart metering on a broad scale to help users better manage their electricityconsumption and evaluate new ways tooptimize and balance production cyclesand volume.

Wal-Mart measures 60,000 suppliers ontheir ability to develop environmentally

friendly packaging and conserve naturalresources. Local products are sourced intwo dozen states to reduce “food miles”,save shipping costs and increase productfreshness. The company projects thatreducing product and logistics packagingby just 5 percent will yield a savings in itsglobal supply chain of US$11 billion by2013, including US$3.4 billion flowingdirectly to Wal-Mart.

Sustainability labeling is also emerging as an opportunity for companies todifferentiate and grow market share.Accenture is working with a major globalretailer to explore sustainable labelingand life-cycle assessment for the fullrange of its branded products.

Fairtrade is a fast-growing, multi-billion-dollar annual global market for coffee,chocolate and other agriculturalcommodities. In the United Kingdom—where Fairtrade is already estimated to be worth £400 million in 2007, upfrom £290 million in 2006—significantcompetition is emerging among retailersand consumer goods companies. The Co-op, a supermarket chain, recentlyannounced a switch of its own brand of teas to Fairtrade. Sainsbury’s recentlycommitted to stock only Fairtradebananas. Tesco already stocks more than140 Fairtrade products. Tate & Lyle

intends to move its entire line of retailcane sugars to Fairtrade, the largestswitch to Fairtrade by any major UK food or drink brand.

Walking the Talk

Walking the talk on sustainability isimportant. Accenture itself developed an environmental policy outlining ourcorporate commitment in areas such as travel, procurement and technology. We have achieved ISO 14001 certificationin a number of locations and havefactored in environmental considerationsbased on LEED8, BREEAM9 and Green Star into our office design decisions. We recently signed the United NationsGlobal Compact, a voluntary initiativethat seeks to promote responsiblecorporate citizenship. Five years ago, we established Accenture DevelopmentPartnerships, a not-for-profit groupwithin Accenture focused on channelingAccenture’s management consulting andinformation technology resources andexperience to address development sectorchallenges. Accenture is also a member of the World Business Council forSustainable Development, a CEO-led,global association of some 200companies dealing exclusively withbusiness and sustainable development.

Seizing competitive advantage


Organizations that effectively weavesustainability into the fabric of their corestrategy and operating model can drivenew capabilities and innovation with far-reaching effects in four areas:

• Revenue growth from new ordifferentiated products and services

• Cost reduction and efficiencyimprovements

• Better risk management

• Brand and reputation enhancement

To achieve these benefits, it is importantto prioritize and leverage core strengthsand opportunities in the short term andexecute accordingly. From our work insustainability across the globe, we seecompanies employing four types ofcompetitive strategies.

Go it aloneSome companies differentiate based on sustainability by virtue of having afirst-mover advantage and a clear way to profit from a new market segment orconsumer preferences. Toyota and itsPrius hybrid car is one example. Anotheris Philips, which invested €400 million in“green” lighting technologies from 2001to 2005. By 2006, the company’s totalportfolio of “green” products had grownto €4 billion, accounting for 15 percentof its total turnover.

Collaborate in partnerships and clustersOther organizations partner with NGOs,development agencies or across theirvalue chain with suppliers, distributorsand new business partners to developnew technologies and solutions or winstakeholder and consumer trust.

Lafarge, the French cement and buildingmaterials producer, has a long-standingpartnership with the World Wildlife Fund to better understand and manageits environmental impact. Demonstratingcredible performance makes it easier for the company to secure access to landand resources.

UK retailer Marks & Spencer works withsupply chain partner MAS Holdings in SriLanka on a broad range of sustainabilityinitiatives, from sharing best practicesand co-investment in environmentalmanagement systems to a “Go Beyond”label that supports women’s issues anddiversity. Joint efforts like these play animportant part in raising performanceand underpinning credibility in the battle

for consumer trust, typified by Marks & Spencer’s “Plan A” campaign.

Collaborate at an industry levelLeading players in an industry canvoluntarily band together to regulatethemselves, setting and agreeing onvoluntary codes of conduct. This iscritical where there is a first-moverdisadvantage or collective action problemand little chance of formal regulation.The long-standing Forest StewardshipCouncil, set up to avoid unsustainableforestry, is an example. Begun inpartnership with leading NGOs and UK retailer B&Q, it now includes many of the world’s leading industry players.

Shape regulation and policyCompanies can proactively engage inefforts to shape regulation that benefitsbusiness and society, particularly whenthey are well placed to take advantage ofnew markets. Alcoa, DuPont, Duke Energy,GE and others have teamed with the USClimate Action Partnership to leadlobbying to limit carbon emissions andintroduce cap and trade mechanisms atthe state and federal levels. In California,the public utility commission adopted a groundbreaking decision mandatingCalifornia’s four investor-owned utilitiesto prepare a single, statewide energyefficiency plan for 2009–2020. Accenturewas selected as the third-party advisor tomanage the process of pulling togethervarious agencies and stakeholders todevelop an actionable plan to meet thestate’s ambitious CO2 reduction goals.

Combine optionsNone of these strategies are mutuallyexclusive. Companies often implementmore than one at the same time. GE is going it alone to develop itsEcomagination suite of “green” industrialproducts while it actively works to shaperegulation for its future markets.

To make the right choices, organizationsconsidering their options should askthemselves the following questions:

• Is there a first-mover advantage ordisadvantage?

• What is the chance for formalregulation and policy support? How canwe attempt to influence and shape it?

• Do we have the capabilities ourselvesto succeed?

• Who are the right partners, and whatare the most effective forms ofcollaboration?

Strategic options

7 Project RESPONSE, joint research conducted between 2004 and 2007 by the European Academy of Business in Society(EABIS) and a consortium of top European business schools,led by INSEAD, Copenhagen Business School, SDA Bocconi and LKAEM. The study encompassed nearly 1,500 respondentsfrom 20 major multinational companies and 180 stakeholderorganizations.

8 Leadership in Energy and Environmental Design.9 The Building Research Establishment Environmental

Assessment Method.


In order to win, you needto play—even though aclear answer on what ittakes to achieve successmay not be available yet.Wait too long and it willbe too late. With theproper level of assessmentand scenario planning, it ispossible to test someinitiatives early, learn fromthe lessons and makeinformed decisions aboutyour business strategy andoperating model.

It is also critical to take an integratedapproach to action. Organizations thatcreate value from sustainability exhibittwo features:

• Sustained and public leadershipcommitment—absolutely necessary forsymbolic, financial and motivationalreasons.

• An integrated framework across theirorganization and value chain.

True integration is essential, as opposedto random, isolated efforts with narrowimpact and little measurement.Integrated sustainability means:

• Integrated into core business strategiesbased on a rich understanding ofindustry trends, with execution basedon deep industry insights.

• Integrated across environmental, socialand economic issues.

• Integrated and aligned across businesssegments.

• Integrated into strategy and executionacross the value chain, from design tobuild to run.

• Integrated into performancemanagement measures so sustainabilityindicators can help manage stakeholderexpectations and deliver both directand indirect business benefits.

Accenture’s framework further illustratesthe depth and breadth of integrationrequired. To achieve sustainable valuecreation for shareholders and society,sustainability must be integratedthroughout an organization’s strategyand operating model—taking intoaccount the six drivers of change and the enabling effects of innovations andtechnologies—as the adjacent modelshows. True integration will require newtools, technologies, processes and metrics,as well as changes in human behavior, to align strategy and operations.

Playing to win


Strategy

SustainableValue Creation• Shareholders• Society

Operating Model

Changing Business Context

Reshaping Strategy and Execution

Achieving High Performance

Marketfocus &position

Distinctivecapabilities

Performanceanatomy –culture,leadership,people

NaturalResources

Innovations and Technologies

Employees

Capital Markets

Consumersas Citizens

Stakeholder Influence

Policy & Regulation

Key Questions

How does sustainabilityaffect our business andour industry now and in the future?

What are we doing—and what should we be doing?

How should we execute? What framework and tools do we need?

What does success look like? How do wemeasure and manage it?

Follow-up Questions

What are the material issues for our business, what do our stakeholders expect of us and how do weprioritize demands?

Where are we placing our sustainability investments? Are they the right amount? Are they worth it?

What new technologies, innovations and business models do we need?

What organizational capabilities and what individual skills, talent and leadership do we need?

Are initiatives aligned with each other and with thebusiness as a whole?

How do we measure performance and make sure we stay on track?

What does competitive advantage look like—and how do we maintain it? What are our competitors doing?

Turning Sustainability into a Lever of High Performance

Key Questions You Should Ask


Accenture sees sustainability as an engineto drive high-performance businesses andpublic sector organizations by:

• Focusing on business imperatives—growing new business, optimizingassets and protecting long-termbusiness value.

• Creating value through appropriatelevers—emissions reductions, materialssafety, waste reduction, landsustainability, water use optimization,energy reduction and social value.

• Applying levers to core business areas—value chain, products and services,physical assets, operational executionand stakeholder influence.

• Guiding organization moves towardsustainability—through rigorousstrategic analysis, programmanagement, performancemeasurement and leadership.

We have found the most efficient andeffective way to achieve these objectivesis through the three building blocks ofhigh performance:

• Market focus and position define thebest business strategies on where andwhen to compete.

• Distinctive capabilities represent thehard-to-replicate capabilities that

define how businesses compete andcreate value. Accenture research hasidentified five areas of functionalmastery: human and organizationalperformance, marketing and customermanagement, finance and performancemanagement, supply chainmanagement and informationtechnology (IT).

• Performance anatomy represents the common mindsets relating toculture, leadership and the workforcethat help companies out-execute their competition. Performanceanatomy determines the mindset top management brings to such diverse areas as strategy, planning and financial control, leadership andpeople development, performancemanagement and use of IT.

These building blocks are part ofAccenture’s research into HighPerformance Business, ourgroundbreaking and ongoing researchprogram on the characteristics andpractices that make organizationsoutperform their peers. By focusing onthe right balance, alignment and renewalamong the building blocks, organizationscan develop a blueprint that createsbusiness opportunities and lasting valuefrom sustainability strategies.

Market focus and positionActivities to integrate sustainabilityinclude stakeholder analysis, enhancedcustomer analytics and businessintelligence, best practices for internaland external benchmarking, new productdevelopment, strategic portfoliomanagement and considerations on how to win in both high-value and high-potential markets.

Case in point: When we worked with a national postal service to identify anddefine growth opportunities, we foundthree interrelated areas of commercialimportance that provide significantopportunities to generate new profit in the mail, parcel and recycling markets.We also discovered opportunities tominimize emissions reduction costs and develop a profitable carbon trading capability.

Market focus and position enable you to consider such key questions as:

• Are our strategies aligned withstrengths, and are they realizable? Inparticular, where are the opportunitiesfor sustainable growth?

• Do we have the right governancestructure to deal with changingenvironmental issues, public agenciesand stakeholders?

Integratingsustainabilitythroughout yourorganization


• Are we in the right businesses for the future?

• Are we making the right investments inthe right areas of our business? What isthe right pace? The right level?

• Does a shareholder/stakeholder valueperspective permeate our metrics anddecision making?

• Are we at risk from a specificstakeholder’s point of view? Do wesystematically map and prioritizestakeholders and issues?

• Do we manage to multiple horizons ordo we focus excessively on one timeframe?

Distinctive capabilities

Distinctive capabilities in sustainabilityallow you to manage and integratestakeholder expectations across a social,economic and environmental agenda,either working alone or in partnership.They produce actionable insights,optimized supply chains, smarttechnologies, product life-cycleinnovation and optimal customersegmentation.

Cases in point: In the area of supplychain management, we are helpingtransform Unilever’s logistics network in South Africa in a project expected to deliver significant reductions in thecarbon footprint through networkconsolidation. Further analysis has been conducted on leading “green”initiatives for warehousing that arebeing considered as part of the newwarehouse designs.

In the area of information technology, we are working with a digital televisionprovider to reduce the environmentalimpact and improve the performance of its data centers.

Accenture Development Partnershipshave worked extensively with the GSMAssociation Development Fund in aunique public-private collaboration tobring mobile telephony to remote anddeveloping communities to improve voiceand data access, health care and mobilemoney transfer. Projects have beencompleted in Nigeria, Kenya, Bangladesh,India, South Africa, Namibia, Rwanda,Pakistan, Uganda and Algeria.

Distinctive capabilities provoke action on such key questions as:

• Do we monitor external developmentsin the political, economic, social andtechnological arenas and actaccordingly?

• Do we set, communicate and measurelong-term sustainability goals thatguide and motivate our actions andbehaviors across all functions andprocesses?

• Do we measure and manage integratedperformance? Do we track qualitativeand quantitative key performanceindicators and their impact on corebusiness performance?

• Do we plan for multiple scenarios—and do we have the organizationalcapability to adapt to a changingbusiness environment?

Performance anatomyPerformance anatomy drives a flexible,scalable and integrated sustainabilitybusiness model. It promotes long-termcompetitive advantage by multiplyingtalent and rewarding activities thatsupport the organization’s sustainabilityagenda. Above all, performance anatomycreates a culture of sustainabilityconsciousness and strengthens newprocesses and activities. It helpsexecutives support sustainability andcommunicate regularly on the progressthey make.

Case in point: We are helping a largemining company develop a standardized,disclosed and globally accepted form of sustainability information based onguidelines of the Global ReportingInitiative. When the project is completedthis year, the company will be able toprovide the public, investors and internalstakeholders with a better assessment ofits performance along environmental,social and economic parameters.

Importantly, the company will have solidperformance metrics to provide insightinto further actions it should take.

Performance anatomy inspires deepinsights into such questions as:

• Do we have the right balance betweenmaking markets and executingeffectively?

• Do we get more from our employeesthan our competitors get from theirs?Are our employees committed todelivering the discretionary effort that drives higher productivity? Arethey personally engaged with ourorganization’s strategy? Are we giving them the right training anddevelopment on sustainability to drive business performance?

• Do we use IT as a strategic weaponacross the enterprise?

• Do we adequately balance intangiblesthat drive long-term success againstfinancial measurement?

• Does our organization demonstrate therequired agility in the face ofuncertainty?

• Do we know—in real time—how we areperforming against our targets?

• Do we have the operational dataavailable to understand our challengesand opportunities in enough time toadjust for them?


Business challenge In July 2007, Governor Charlie Cristdirected his agencies to address theimpact of climate change, which isexpected to have significant impact onFlorida and other coastal states. Crist alsofollowed other US governors and mayorsof major US cities in setting targets forcarbon reduction.

Market position (strategic response) Accenture helped the client design andexecute the governor’s program in twoareas: sustainable sourcing, and carbonfootprint measurement and reduction.For sustainable sourcing, we designed aframework for the state to develop andmaintain an environmentally preferredproducts list. In the area of carbonfootprinting, we used a greenhouse gas(GHG) protocol to create an emissionsbaseline assessment for state agencies,focusing on facility and fleet operations.

Distinctive capabilities and performance anatomy (operational response) Accenture leveraged our supply chaindistribution and project managementskills to work with the state to identifyorganizational and operationalboundaries, collect and validate data,track assumptions and calculate GHGemissions. We also developed a reportingformat for the final baseline assessment.For the sustainable sourcing initiative, we used our strategic sourcing skills toresearch current product sustainabilitylabels and standards and assess them for independence, verifiability, relevanceand reasonableness to deploy. Then wecoordinated the collection of vendorinput on relevant labels and standardsacross all product categories. We alsotracked the submission and approval of product sustainability labels andstandards by the Florida Department ofEnvironmental Protection to documenttheir approval decision process.

High performance delivered State agencies were able to meet thegovernor’s requirements with minimalresources despite aggressive deadlines.The central collection and managementof baseline assessment emission activitydata allowed agencies to spend time on data validation rather than datagathering. The team leveraged thecentralized data to identify opportunitiesfor agencies to reduce GHG emissions by looking at average fuel economy byvehicle class and alternative fuel vehiclesas a percentage of total vehicles.Approved sustainability labels andstandards and a list of environmentallypreferred products were delivered in lessthan six weeks, using a process thatprovided transparency into the criteriafor labeling and standards assessment.Enhancements to the eProcurementsystem also were designed and pilotedwithin three months to encourage stateagencies to purchase environmentallypreferred products.

Deploying the High Performance Business model for the State of Florida


Business challenge As the European parliament preparedlegislation to include the aviationindustry in the Emission Trading Scheme(ETS), KLM Royal Dutch Airlines faced a quandary. The legislation would capallowed industry emissions in Europe andput an economic value on carbon dioxide(CO2) emissions. Because almost 80percent of all industry CO2 emissions are caused by intercontinentaltransportation, there is no clearalternative to flying.

Market position (strategic response) Accenture helped KLM assess thepotential financial impact of introducingaviation into ETS, dealing with possiblelegislative scenarios and uncertainties.We identified the company’s major CO2 drivers and developed a framework that will be used to manage the carbonagenda. This framework covers all CO2 reduction initiatives, as well asperformance management and offsetting

(both through Voluntary Emissions Rights and emissions trading). To ensurethat the carbon agenda was integratedinto the heart of the organization, we worked with KLM to introduce the value of CO2 into all fuel-relateddecisions. Finally, we assisted the airlinein its procurement of emissions rights to compensate for customer offsettingthrough the company’s recently launchedCO2 offsetting program.

Distinctive capabilities and performance anatomy(operational response) Accenture leveraged its airline andsustainability skills and experience towork with KLM to develop the CO2

framework. Our work encompassed thecompany’s public affairs team in Brusselsto ensure optimal understanding of thelegislative process and its progress. Wealso collaborated with the airline’s fleetdevelopment, network planning, flightoperations and fuel strategy functions

to cover all areas affected by the CO2 agenda.

High performance delivered We helped increase KLM’s awareness of the impact of ETS and changed theattitude of senior management on the necessity to act. A mid-term (five- to 10-year) framework identifies themajor drivers of CO2 reduction and gives the airline a clear vision of how to set up, run and govern the CO2 program.Based on our work, KLM significantlyraised its ambition to explore newopportunities to develop aviationbiofuels. Finally, we also providedrecommendations on immediate steps to take, including feasibility studies onwhich capabilities to develop, such as carbon trading and gaining access to biofuels and related technologies.

Deploying the High Performance Businessmodel for KLM Royal Dutch Airlines

There is no doubt that sustainability can and will drive dynamic change forindustries and companies. In France, more than eight in 10 companiesconsider sustainable development to be a differentiating factor and believe theircustomers will demand new sustainableproducts and services. Most respondentsalso expect an increase in customerexpectations over the next three years.10

The market shifts that make sustainabilitya pressing issue today will continue toevolve. They require companies to addresssustainability’s most immediate demandsand also develop the ability to enableadditional change as new sustainability-driven market shifts emerge.

To achieve high performance in the short term, companies must understandtheir existing risks, competencies andopportunities across their supply andvalue chains. They must consider strategicoptions and develop new competenciesto move from strategy to execution.

Creating high performance for the long term will require more than newprocesses or technologies or regulatorycompliance. It will entail new strategiesand a transformation of organizationalstructure, culture and behavior to thrive,not just survive, in a complex and fast-changing landscape.

Future sustainability leaders will aligntheir strategies and operating models and the drivers of internal performancewith the key building blocks of highperformance. They will recognize that theway they create value is changing, andthey will redefine what value means fortheir company and their industry.

The imperative is daunting, but the prize is worth it: the opportunity to integratesustainability into a repeatable formula forhigh performance, competitive advantageand value creation that benefits bothshareholders and society at large.


10 The Economic and Financial Stakes of SustainableDevelopment: an Exclusive Study with French Companies,Accenture 2008.

Sustainable Value Creators

Global Forces and Driver of ChangeExternal business content

Building Blocks of High PerformanceStrategy and Execution

1. Economic, social and environment issues2. Stakeholder expectations

SustainabilityPressures

Achieving highperformance throughsustainability

Accenture’s Integrated View of Sustainability and Value Creation

The authors thank Rebecca Sternbergand Jonathan Burton for their insightsand contributions to this article.

About Accenture Sustainability PracticeWe help organizations achieve substantialimprovement in their performancethrough integrated programs thatmaximize the positive and minimize thenegative effects on social, environmentaland economic issues and stakeholders.We see sustainability both as acommercial opportunity and as anextension of our stewardship role insupporting global business and societies.We work with clients across industriesand geographies to integratesustainability approaches into theirbusiness strategies, operating models and critical processes. Our holisticapproach encompasses strategy, designand execution to increase revenue,reduce cost, manage risk and enhancebrand, reputation and intangible assets.We also help clients develop deepinsights on sustainability issues based on our ongoing investments in research,including recent studies on consumerexpectations and global executiveopinion on climate change.

[email protected]

www.accenture.com/sustainability

To learn more about the AccentureSustainability Practice, pleasecontact:Bruno BerthonSustainability Practice LeadGlobal and Asia/Pacific

Bruno Berthon, based in Paris, hasworked with the top management ofmultinationals across several industries,including consumer goods, retail,telecommunications and media, on theirtransformation agenda. Over the last 14 years, he has specialized in helpingorganizations address the challenges of globalization, large-scale operatingmodel change and innovation. As theglobal lead of the sustainability practice,Mr. Berthon’s expertise lies in helpingmultinational clients evaluate businessopportunities related to climate changeand sustainability challenges acrosssectors. He was previously Accenture’sstrategy Practice Lead for the Galliaregion (Belgium, France, Luxembourg and the Netherlands) and also ledAccenture’s Business Launch Centerfocusing on Internet-related activities.Mr. Berthon started his career with theFrench multinational Pechiney, where heworked in a number of managementpositions in the packaging division,including general management for itsoperations in Central and Eastern Europe.

Jim GrimsleySustainability Practice LeadNorth America

Jim Grimsley, based in Houston, Texas, has significant experience in large-scalechange efforts as the result of leading a number of successful reengineering and transformation projects. Prior to hiscurrent role, he was the global managingpartner for upstream in Accenture’senergy industry group. Mr. Grimsley’sconsulting background encompasses abroad range of leadership experiences,including major merger integrationefforts in the energy industry as well asseveral significant supply chain projects.Before joining Accenture, he was a vicepresident at CSC Index and also worked at Amoco in numerous management roles.

Peter LacySustainability Practice LeadEurope, Africa and Latin America

Peter Lacy, based in London, has workedwith the top management of a range of Fortune 500 companies, the UnitedNations, European Union and publicsector organizations on sustainabilitystrategy, policy and delivery. He wasformerly the executive director of theEuropean Academy of Business in Society,a leading global alliance on research andexecutive development, and a SeniorAdvisor on business in society to anothertop strategy consultancy. Mr. Lacy has ledseveral of the world’s largest researchprograms and projects on business andsustainability and speaks regularly on thetopic. He sits on numerous boards andadvisory councils.

David AboodExecutive DirectorResources Climate Change Practice

David Abood, based in Cleveland, Ohio,has 18 years’ experience leading businessand technology change initiatives fromstrategy through solution design,planning and implementation. In hiscurrent role, he works with clients in awide range of industries, as well as withgovernment agencies, to understand andaddress the business opportunities andrisks associated with climate changeacross Accenture’s span of capabilities.Mr. Abood plays a lead role in incubatingseveral of Accenture’s new businessinitiatives related to climate change, andprovides counsel to a number of non-profit organizations in this area. He isalso deeply involved in Accenture’sinternal sustainability initiatives focusedon corporate citizenship and employeeengagement.


Copyright © 2008 AccentureAll rights reserved.

Accenture, its logo, and High Performance Deliveredare trademarks of Accenture.

About AccentureAccenture is a global managementconsulting, technology services andoutsourcing company. Combiningunparalleled experience, comprehensivecapabilities across all industries andbusiness functions, and extensiveresearch on the world’s most successfulcompanies, Accenture collaborates with clients to help them become high-performance businesses andgovernments. With more than 178,000people in 49 countries, the companygenerated net revenues of US$19.70billion for the fiscal year ended Aug. 31, 2007. Its home page iswww.accenture.com.

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Achieving high performance: the sustainability imperative · 2010-09-09 · Achieving high performance: the sustainability imperative 5 Natural resources Robust economic growth in