Canadian Business and the Sustainability Challenge:

Performance and Engagement

Presented by David Wheeler and Annika TamlynOctober 19, 2007

OVERVIEW

• The Changing Face of Green• Corporate Canada:

Sustainability Engagement & Performance

• SMEs: Sustainability Engagement & Performance

• Observations and Conclusions

The Current and Former Face of Corporate Green

The New Face of Corporate Green?

The Face of SME Green?

Los Desaparecidos:(The Disappeared Ones)

Los Desaparecidos:(The Disappeared Ones)

Los Desaparecidos:(The Disappeared Ones)

Los Desaparecidos:(The Disappeared Ones)

Los Desaparecidos:(The Disappeared Ones)

Los Desaparecidos:(The Disappeared Ones)

Los Desaparecidos:(The Disappeared Ones)

No Universal Business Case(Kurucz et al 2007)

i) cost and risk reduction;ii) profit maximization and

competitive advantage; iii) reputation and legitimacy; and iv) synergistic value creation

The key is to embrace the paradox ‘business as value creator and business as social actor’

No Universal Drivers

• Strategic imperatives • Managerial perceptions • Corporate values • Organisational context• Stakeholder influences • Disruptive influences

Summarising……..(Bansal, 2005)

Two of the most salient reasons for corporate greening in high impact sectors are:i) resource-based (internal strategic logic); andii) institutional (role of external influencers)

So how do we know how well we are doing?

Building the Index: Performance and Engagement

1. Membership of the World Business Council for Sustainable Development (WBCSD);

2. Active membership of the United Nations Global Compact;

3. Total registrations to environmental management systems standard ISO 14001;

4. Total cumulative publications of Global Reporting Initiative compliant sustainability reports; and

5. Membership of the Dow Jones Group Sustainability (World) Index

Canada’s Scorecard versus World GDP (2.59)

• WBCSD

• UN Global Compact

• ISO 14001 Registrations

• GRI Compliant Reports

• DGS (World)Index

2.42

0.72

2.00

4.11

3.24

Ranking

1. Sweden (2.266)2. Netherlands (1.687)3. United Kingdom (1.194)4. France (1.075)5. Japan (0.994)6. Canada/Italy (0.825)8. Germany (0.720)9. United States (0.337)10. Russian Federation (0.105)

SMEs and the Economy

• 45% GDP ~$689 Billion• 97.6% of all firms• 64% of all private sector

employment• 85% of all Canadian exporters• 36% of all export value

…Still, focus remains on large firms…

SMEs and Society

• 1993-2003 60% net jobs created

• ½ new companies survive < 3 years• Owner values drive CSR• Informal approach• ‘Independent’ vs. ‘Dependent’ CSR• The ICT Case• Need for information and buy-in

SMEs and the Environment

• SME Contribution to Pollution– Conflicting data

• 70% (Government of Alberta) vs. • 62% (OCETA, 2002) vs. • 16% (Biehl & Klassen, 2006)

• Need to better understand impacts

0%10%

20%30%40%50%

60%70%80%

90%100%

1995 1996 1997 1998 2000 2002 2004

Year

$ m

illi

on

s

500+

100-499

<100

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1996 1997 1998 2000 2002 2004

Yea

r

500+

100-499

<100

EnvironmentalRevenues by Firm Size

EnvironmentalExports by Firm Size

Statistics Canada, Environment Industry Survey 1996-2004

SME Contribution to Pollution Abatement

SME Motivation for Ecological Response

Issue Salience

FieldCohesion

Individual Concern

CaringProfile

CompetitiveProfile

ConcernedProfile

Observations

• Corporate Canada can claim a respectable mid-table position on international sustainability engagement and performance compared with other G8 nations; however..

• At the present time, Corporate Canada is engaged in the international sustainability agenda primarily through sectors that may migrate into foreign ownership (resource-based industries) and or that have a largely domestic focus (energy supply and financial institutions).

• Today, corporate Canada is largely unengaged in international sustainability fora and inistiatives through sectors such as high technology, manufacturing and services that may expect to assume increasing economic prominence both domestically and internationally in future years.

Observations

• SMEs in Canada are often the ‘Cinderellas’ of Canadian business and sustainability, only invited to the ball when someone important to their industry tells them they should certify to ISO 14001 or embrace social responsibility.

• Nevertheless, SMEs have a significant economic, social and environmental impact in Canada in their own right, and if properly incentivised may be expected to contribute significantly to domestic and (through export sales) to international sustainability, for example in environmental technologies.

Conclusions

• There is a strong incipient risk of Canada losing ground in our league table of corporate engagement and performance, both through loss of Canadian corporate membership and through non-engagement of key sectors;

• There is a need for initiatives to promote institutional leadership on sustainability and competitiveness in currently non-active key sectors if Canada wishes to avoid progressive marginalisation on corporate and SME sustainability issues.

• There is a need to find ways to involve SMEs through promoting their involvement in market-based opportunities in newer and increasingly important sectors of the Canadian economy eg high technology, services (including retail and finance) and manufacturing (including environmental technologies).

Last Word to Galen Jr

In a consumer-based economy like ours, that means no sector has more at stake than retail. Think of it. The retail sector is Canada's largest employer. We're the largest consumer of energy. We produce more waste than any other sector. Our physical store layouts and their geographic locations, our supply and distribution networks, and of course, the products we carry all have a huge environmental impact.

Galen Weston Jr,

Globe and Mail,April 23rd 2007