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Delivering sustainable solutions in a more competitive world
Sustainability A Consulting Perspective
Olivier Corvez Presentation to Clark University November 2nd, 2009
Delivering sustainable solutions in a more competitive world 2
Agenda
Introduction
Refresher on Sustainability interpretation
Global panorama – Roots & trends
ERM & Sustainability framework
Case study
Q & A
Delivering sustainable solutions in a more competitive world 3
Defining Sustainability
• Return on equity
• Stock price growth
• Market share
• Profitability
• New market opportunities through innovative products and services
Economic Prosperity
• Eco-efficiency
• Energy and greenhouse gas (GHG) management
• Addressing impacts and opportunities throughout the value chain
• Green technology and design
• Support of conservation efforts and biodiversity
Environmental Stewardship
• Worker and public safety
• Local economic impacts (job creation, tax base, other investments)
• Human rights and living wage
• Stakeholder engagement and accountability
• Strategic philanthropy
Social Responsibility
While companies talk about the triple bottom line, many (initially) focus on the environmental dimension
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• Reduce human and capital costs of accidents, injuries and deaths
• Cost reduction through eco-efficiency
• Avoid fees and fines
• Facilitate entry into new markets
• Create new products
• Establish partnerships to innovate and grow
• Stay in compliance
• Avoid supply chain risk
• Avoid negative press
• Maintain social license to operate
A company’s strategic goals
Sustainability Value Proposition
Avoid RisksReduce Costs Create Options
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Major sustainability issues today Corporate ethics and
governance
Fair labor practices
Responsible use of influence
Climate change and energy security
Water – availability and conservation
Supply chain performance
Product life cycle impacts
Healthcare
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Sustainability and responsible management
Increasingly seen as the management approach of the progressive, responsible company
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Why companies think Sustainability is important?
Some Internal drivers :
Cost savings add to the bottom line
Product innovation/new market opportunities Catalyst for business performance
Attracting/retaining people (e.g. “young high potentials”)
Higher appreciation of stock value
Dow Jones Sustainability Index
CEO believers (Leading the movement)
Increase Market Share
Some External drivers :
Brand image (both opportunity- and risk-driven)
Influence financial sector/sustainability rating agencies
Information becomes public more quickly (“CNN-world/Global Village”)
International sustainability agenda (UN summit Johannesburg, Millennium development goals, etc): water, energy & climate change, health, biodiversity, population, poverty
International agreements (e.g. Kyoto) and regional regulations (e.g. WEEE in the EU or REGI in the US)
International competition
De-regulation/absence of global governance: higher expectations of (larger) companies
Regaining trust (after Enron/Worldcom etc.)
Increasing influence of NGO’s and public at large
More than 52% of the Global Fortune 250 are publishing an annual Corporate Responsibility performance report*
* KPMG 2005 annual survey
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History
Health-Safety Environment
Quality
History
Drivers
Standard
Certification
1950’s 1990’s1970’s
EmployeesUnionsRegulations H&S
Client needs
Cost controlEnv. regs
Public, Medias
ISO 14000ISO 9000
ISO 14001ISO 9001
OHSAS 18001
Local
2010’s
Sustainability
Resources
?
?
More and more scrutiny towards Corporations and transparency about their “non financial” practices & performances…
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As scrutiny increases, so does the amount of annual CSR/ SD reports….
* Source : CorporateRegister.com
As with financial reporting rules, Countries are passing more law enacting public
reporting of annual “non financial” performances…
As with financial reporting rules, Countries are passing more law enacting public
reporting of annual “non financial” performances…
Total Output of CSR Reports Worldwide - 1992 to 2007
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In proportion to the total number of companies headquartered in these
countries, the EU and Japan have been leading the way in generating the most
Sustainability reports…
In proportion to the total number of companies headquartered in these
countries, the EU and Japan have been leading the way in generating the most
Sustainability reports…
Total Output of CSR Reports per Country
Total Amount of Annual CSR/ SD reports by Country….
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Evolution In content of the SD reports
AnecdotalStories
Policy & Standards
Systems & Governance
Evidence, Consistent
Performance
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The return on investment
ENERGYSAVINGS
30%
CARBONSAVINGS
35%
WATERUSE
SAVINGS
30-50%
WASTECOST
SAVINGS
50-90%
Cost
Average Green Building Cost Savings According to the Leadership in Energy & Environmental Design (LEED)
Risk Management
Reputation
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Characteristics of Sustainability Leaders Today
Management systemsprocesses to define, measure, monitor & assure performance
Transparencycomplete and comprehensive
Engagementstakeholders have input and influence
Global perspectivesystems are global, impacts measured locally
Performancebalanced (triple bottom line), material, detailed, easily accessible
Leadershipraise the bar for their industry; set best practice; cited by 3rd parties
Humilityno “green washing” – sustainability portrayed as a challenge and a responsibility
Delivering sustainable solutions in a more competitive world
ERM’s Approach to Sustainability Consulting
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Suite of ERM Sustainability Services
Sustainability strategy
Metrics, goals, and policy development
Programs and projects
Greening supply chain
Training and awareness
Product life cycle impacts
Information management
New product development
Corporate non-financial reporting
Third-party reviews
…
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CriticalMilestone
s
Key Activities
Execution &Review
performance
Mindset
Map sector specific issues (external forces)
Identify and scale Stakeholders importance & issues
Review overall Business growth strategy
Assess Company’s products and services from a Sustainability perspective
Analyze results from Sustainability Scorecard assessment
High level redesign Blueprint
Identify business value proposition and route to them
Identify Quick wins and medium/ long term priorities
ContextAnalysis
Defining Current Profile
SustainableBusiness
Elaboration
DesignProgram
I have a clear ideaof why and where
I'm going
I know what I will change
I can see how it will work
I can see the benefits
Implementing the program
Review performance results (positive and negative)
Analyze results
Identify vision, goals and objectives.
Set tangible targets, priorities and milestones
Quantify resources necessary
ProgramPhases
Delivering the ERM Sustainability Framework - Overview
Our Sustainability Framework is embedded in the Company’s Business strategy
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Steps to developing a CSR strategy
Defining your business case
Defining your journey
Defining strategic fit
Embedding CSR strategy into your organisation
ERM’s suggested approach to defining the CSR/ SD strategy and introduce some key areas for decision-making, as follows:
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Defining strategic fit: What is your SD opportunity?
Today’s Market
Internalfocus
Externalfocus
Tomorrow’s Opportunity
OperationalExcellence
StakeholderResponsiveness
ProductInnovation
SustainableDevelopment
Adapted from S. Hart (2005),Capitalism at the Crossroads
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Defining the journey: Where are you now and where do you want to be?
Stage 4:
Integrated
Strategy
Stage 3:
Risk
management
Stage 2 :
Coping/
Compliance
Stage 5:
Competitive
Advantage
Stage 1:Pre-
Compliance
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Two Interlinked Action Fronts
Create and Implement a Create and Implement a Sustainability StrategySustainability Strategy
Supporting Actions and Organizational Supporting Actions and Organizational Changes to Ensure Buy-in, Integration, and Changes to Ensure Buy-in, Integration, and
Implementation of the Sustainability StrategyImplementation of the Sustainability Strategy
Delivering sustainable solutions in a more competitive world 21
Assuring Performance(Compliance and Assurance)
Foundation, without that nothing else matters much
Source: ERM 2004 Business Integration Forums
Performance as a business (cost reduction, cycle time, growth)
Improving Performance
Both risks coming from rising expectations and risks coming from changes in the business model
Emerging Risks
Capstone. If you don’t have the bottom three, not much to support reputation
Reputation
Foundations
Delivering sustainable solutions in a more competitive world
Case Study
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Be supplied 100% by renewable energy
Create zero waste
Sell products that sustain our resources and environment
Become the access point for organic foods at a value
Customers
Sustainable products more relevant to selective user => $ growth
Drive emotional / intangible appeal
Investors
Lower risk and volatility
Increase profits by reducing costs
Drive new customer segment growth
Sustainability Profitability Increased Share Price
The Wal-Mart EffectWal-Mart’s Sustainability Strategy
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… and have initiated a program over the next 18 months
that will show preference to suppliers who set their own goals and
aggressively reduce their own emissions
The Wal-Mart Effect – Energy efficiency moduleWal-Mart is investing $500MM to achieve goals …
Reduce greenhouse gases across network by 20% over next 7 years
Design and build more “Experimental Stores” that are 25-30% more efficient emits up to 30% less greenhouse gas within the next 4 years
Increase fleet efficiency by 25% in the next 3 years
Share technology learning with “the world,” including competitors
Reengineer all 14 Value Networks to be environmentally sustainable
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Conclusion - Sustainability Best Practice
Effective Sustainability
1. Championed at the highest levels
2. Cross functional, high level steering committee
3. Innovative public/private partnerships
4. Focused on engaging stakeholders, not managing critics
5. Effective use of resources and influence
6. Strategically focused philanthropy
Delivering sustainable solutions in a more competitive world 26
Q & A
Olivier Corvez
Environmental Resource Management
399 Boylston Street
Boston MA 02116
Tel: 617 646 7800
Email : [email protected]