Sustainability
A Consulting Perspective
Olivier Corvez
Presentation to Clark University
November 2nd, 2009
Delivering sustainable solutions in a more competitive world
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
2
Defining Sustainability
While companies talk about the triple bottom line,
many (initially) focus on the environmental dimension
Economic Prosperity
Environmental Stewardship
Social Responsibility
• Return on equity
• Eco-efficiency
• Worker and public safety
• Stock price growth
• Energy and greenhouse
gas (GHG) management
• Market share
• Addressing impacts and
opportunities throughout
the value chain
• Local economic impacts
(job creation, tax base,
other investments)
• Profitability
• New market
opportunities through
innovative products and
services
• Human rights and living
wage
• Green technology and
design
• Stakeholder engagement
and accountability
• Support of conservation
efforts and biodiversity
• Strategic philanthropy
Delivering sustainable solutions in a more competitive world
3
Sustainability Value Proposition
A company’s strategic goals
Reduce Costs
• Reduce human and
capital costs of
accidents, injuries
and deaths
• Cost reduction
through ecoefficiency
Avoid Risks
• Stay in compliance
• Avoid supply chain
risk
• Avoid negative press
• Maintain social
license to operate
Create Options
• Facilitate entry into
new markets
• Create new products
• Establish
partnerships to
innovate and grow
• Avoid fees and fines
Delivering sustainable solutions in a more competitive world
4
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
Delivering sustainable solutions in a more competitive world
5
Sustainability and responsible management
Increasingly seen as the
management approach of the
progressive, responsible company
Delivering sustainable solutions in a more competitive world
6
Why companies think Sustainability is important?
 Some Internal drivers :
 Some External drivers :
 Cost savings add to the bottom line
 Brand image (both opportunity- and risk-driven)
 Product innovation/new market
opportunities Catalyst for business
performance
 Influence financial sector/sustainability rating
agencies
 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
 Information becomes public more quickly (“CNNworld/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
Delivering sustainable solutions in a more competitive world
7
History
Health-Safety
History
1950’s
Drivers
Employees
Unions
Regulations H&S
Quality
1970’s
Environment
Sustainability
1990’s
2010’s
Client needs
Cost control
Env. regs
Public, Medias
Resources
Standard
Local
Certification OHSAS 18001
ISO 9000
ISO 14000
?
ISO 9001
ISO 14001
?
More and more scrutiny towards Corporations and transparency
about their “non financial” practices & performances…
Delivering sustainable solutions in a more competitive world
8
As scrutiny increases, so does the amount of annual
CSR/ SD reports….
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
* Source : CorporateRegister.com
Delivering sustainable solutions in a more competitive world
9
Total Amount of Annual CSR/ SD reports by Country….
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
Delivering sustainable solutions in a more competitive world
10
Evolution In content of the SD reports
Anecdotal
Stories
Policy &
Standards
Delivering sustainable solutions in a more competitive world
Evidence,
Consistent
Performance
Systems &
Governance
11
The return on investment
Cost
Reputation
CARBON
SAVINGS
35%
WATER
USE
SAVINGS
30-50%
ENERGY
SAVINGS
30%
Risk
Management
Delivering sustainable solutions in a more competitive world
Average Green Building Cost Savings
According to the Leadership in Energy &
Environmental Design (LEED)
12
WASTE
COST
SAVINGS
50-90%
Characteristics of Sustainability Leaders Today
 Management systems
processes to define, measure, monitor & assure performance
 Transparency
complete and comprehensive
 Engagement
stakeholders have input and influence
 Global perspective
systems are global, impacts measured locally
 Performance
balanced (triple bottom line), material, detailed, easily accessible
 Leadership
raise the bar for their industry; set best practice; cited by 3rd parties
 Humility
no “green washing” – sustainability portrayed as a challenge and a responsibility
Delivering sustainable solutions in a more competitive world
13
ERM’s Approach to
Sustainability Consulting
Delivering sustainable solutions in a more competitive world
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
 …
Delivering sustainable solutions in a more competitive world
15
Delivering the ERM Sustainability Framework - Overview
Mindset
I have a clear idea
of why and where
I'm going
Program
Phases
specific issues
(external forces)
 Identify and scale
Stakeholders
importance &
issues
 Review overall
Critical
Milestones
Business growth
strategy
I can see how it
will work
Defining
Current
Profile
Context
Analysis
 Map sector
Key
Activities
I know what I
will change
 Assess
Company’s
products and
services from a
Sustainability
perspective
Sustainable
Business
Elaboration
 High level redesign
Blueprint
I can see the
benefits
 Identify vision,
goals and
objectives.
 Analyze results
 Identify Quick wins
from
Sustainability
Scorecard
assessment
and medium/ long
term priorities
 Implementing the
program
 Review
 Identify business
value proposition
and route to them
Execution &
Review
performance
Design
Program
 Set tangible
targets, priorities
and milestones
 Quantify
performance results
(positive and
negative)
 Analyze results
resources
necessary
Our Sustainability Framework is embedded in the Company’s Business strategy
Delivering sustainable solutions in a more competitive world
16
Steps to developing a CSR strategy
ERM’s suggested approach to defining the CSR/ SD strategy and
introduce some key areas for decision-making, as follows:

Defining your business case

Defining your journey

Defining strategic fit

Embedding CSR strategy into your organisation
Delivering sustainable solutions in a more competitive world
17
Defining strategic fit: What is your SD opportunity?
Tomorrow’s Opportunity
Product
Innovation
Sustainable
Development
Internal
focus
External
focus
Stakeholder
Responsiveness
Operational
Excellence
Today’s Market
Adapted from S. Hart (2005),
Capitalism at the Crossroads
Delivering sustainable solutions in a more competitive world
18
Defining the journey: Where are you now and where do
you want to be?
Stage 5:
Stage 4:
Competitive
Stage 3:
Integrated
Stage 2 :
Stage 1:
PreCompliance
Coping/
Risk
Strategy
management
Compliance
Delivering sustainable solutions in a more competitive world
19
Advantage
Two Interlinked Action Fronts
Create and Implement a
Sustainability Strategy
Supporting Actions and Organizational
Changes to Ensure Buy-in, Integration, and
Implementation of the Sustainability
Strategy
Delivering sustainable solutions in a more competitive world
20
Foundations
Reputation
Capstone. If you don’t have the
bottom three, not much to support
reputation
Emerging
Risks
Improving
Performance
Performance as a
business (cost
reduction, cycle
time, growth)
Assuring Performance
(Compliance and Assurance)
Foundation, without that nothing else matters much
Source: ERM 2004 Business Integration Forums
Delivering sustainable solutions in a more competitive world
21
Both risks coming from
rising expectations and
risks coming from
changes in the
business model
Case Study
Delivering sustainable solutions in a more competitive world
The Wal-Mart Effect
Wal-Mart’s Sustainability Strategy
 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
Investors
 Sustainable products more relevant
to selective user => $ growth
 Lower risk and volatility
 Drive emotional / intangible appeal
 Drive new customer segment
growth
 Increase profits by reducing costs
 Sustainability
 Profitability
 Increased Share Price
Delivering sustainable solutions in a more competitive world
23
The Wal-Mart Effect – Energy efficiency module
Wal-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
… 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
Delivering sustainable solutions in a more competitive world
24
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
25
Q&A
Olivier Corvez
Environmental Resource Management
399 Boylston Street
Boston MA 02116
Tel: 617 646 7800
Email : [email protected]
Delivering sustainable solutions in a more competitive world
26