EXECUTIVE REPORT
February 2011 New York City
6th Annual
CEO Conference
BUSINESS AT ITS BEST:
Maximizing Long-Term Profitability and Societal Impact
2011 Board of Boards CEO Conference
New York City
On the morning of International Corporate Philanthropy
With this Executive Report, the Committee shares
Day, the Committee Encouraging Corporate Philanthropy
the results of interactive attendee poll questions
convened nearly 70 global business leaders—including
and highlights from this important conversation,
executive delegations from China and the Arabian
which began with a focus on the future of
Gulf—to discuss the theme Business at its Best:
corporate community involvement and evolved
Maximizing Long-Term Profitability and Societal
into a discussion of Sustainable Value Creation.
Impact. In this closed-door session, consistently
ranked among the world’s top ten executive events
by global public relations firm Weber Shandwick,
M
ore information and video highlights can
this esteemed group focused on the opportunities
be found online: CorporatePhilanthropy.org.
and implementation challenges that lay ahead when
reorienting their core corporate strategies to blend
commercial and societal interests.
Executive Summary
The program began with an investigation of the internal
and external forces—such as increasingly integrated global
markets, greater community needs, and the intensifying war
for talent—bringing longstanding societal issues including
poverty and education to the forefront of the corporate
agenda. The CEOs in attendance contrasted their progress
in tackling environmental concerns with the sizable investments still needed to match those gains on societal issues.
Panelists Bill Green and Indra Nooyi led their peers in
a conversation moderated by Charlie Rose examining
ways to identify an initial set of societal issues that link
to competitive advantage.
Together, attendees then discussed how to limit the scope
of their efforts to projects where they can have an impact,
scale strategies across their companies, and measure the
societal and business returns on initiatives that live up to the
conference theme: Business at its Best: Maximizing Long-Term
Profitability and Societal Impact.
Takeaways
■
■
■
ECP and Accenture shared the concept of Sustainable
C
Value Creation: a core business strategy focused on addressing
fundamental societal issues by identifying new, scalable
sources of competitive advantage that generate measurable
long-term profit and community benefit.
These solutions differ from business-as-usual because they
require new models for capturing societal impact, lengthier
investment horizons, and a deeper understanding of the
local stakeholder context.
It is imperative to dedicate sufficient time and resources to
choose the set of issues on which to focus. There are likely
to be significant company- and industry-specific nuances
that will influence this selection.
Next Steps
■
I n May 2011, CECP and Accenture will jointly release a
publication on their deeper investigation of the themes
referenced in this report, providing clear guidance on how
to implement a Sustainable Value Creation strategy.
FIGURE 1
In which country is your corporate headquarters located?
56%
8%
6%
13%
11%
6%
USA
United
Kingdom
Brazil
Arabian Gulf
China and
Hong Kong
Other
KEY FINDINGS
Blending Commercial and Societal Goals
Discussion Highlights
Opportunities
CEOs reflected on the advances
their companies have made in incorporating environmental sustainability
into their operations and business
practices, the development of new
products or services, and even the
rethinking of business models.
Indra Nooyi challenged her peers to
think beyond philanthropy and to
consider ways to weave a process to
create a positive societal impact into
the fabric of the company.
With those gains as a backdrop, they
turned to the rising pressures they
face to take action on societal issues.
Figure 2 shows that CEOs are
motivated to do so by a range of
concerns including responding to
the rising needs in their communities,
competing in a global marketplace,
and recruiting and retaining top talent.
CECP and Accenture shared
their terminology for this concept,
Sustainable Value Creation: a core
business strategy focused on addressing
fundamental societal issues by
identifying new, scalable sources of
competitive advantage that generate
measurable long-term profit and
community benefit. Attending CEOs
agreed that this approach provided
a way to engage more deeply in
societal issues.
FIGURE 2
Over the last 5 years, what trend has
most driven companies to focus on
solving societal problems?
Rise of
Transparency
16%
Competitive
Advantage
14%
Risk
Mitigation
5%
War for
Talent
18%
Globalization
22%
Greater
Community Need
25%
“We can’t sustainably give enough money away to be viewed as a responsible company
in the 200 countries in which we operate. Instead we must weave responsibility into
the core of the company.”
– Indra Nooyi, Chairman and CEO, PepsiCo
Moving Beyond Business-as-Usual
Discussion Highlights
Opportunities
In considering how Sustainable Value
Creation differs from traditional
strategies, CEOs shared their expectation that it requires new models for
capturing societal impact, lengthier
investment horizons, and a deeper
understanding of stakeholder needs
and behaviors (as shown in Figure 3).
Following the table discussion period,
CEOs shared their interest in using a
values-based filter to evaluate potential
business opportunities against the
company’s Sustainable Value
Creation strategy.
Reflecting on these differences, 70%
of CEOs indicated that they would
not evaluate Sustainable Value
Creation opportunities using the
same criteria as they would for other
opportunities. Yet Sustainable Value
Creation opportunities must return
a profit in order to justify ongoing
corporate involvement despite the
different approaches and timeframes
required for execution.
For manufacturers and service
companies alike, these filters may
be used to assess the sustainability
and societal impact of capital
expenditures, and also to select
vendors and clients.
FIGURE 3
A strategy that benefits society and business differs most from
business-as-usual because it requires:
New models for measuring business
value that include social metrics.
26%
A longer-term investment horizon.
23%
A deeper understanding of
stakeholder needs and behaviors.
23%
Greater CEO stewardship.
8%
More cross-sector collaboration.
7%
Guiding consumers to more
sustainable choices.
7%
More open and inclusive
frameworks for innovation.
6%
KEY FINDINGS
Putting Ideas into Action
Discussion Highlights
Opportunities
While the opening half of the
conference explored the Sustainable
Value Creation concept, the second
half centered on overcoming the
challenges in bringing this type of
strategy to life.
CEOs were in agreement that it
is imperative to dedicate sufficient
time and resources to choose the set
of issues on which to focus. This is
because the success of all subsequent
When asked what stage of implementation was most difficult, attendees
were divided, as shown in Figure 4.
Roughly half answered that identifying
and prioritizing the best set of societal
issues—ones that truly mesh business
and societal interests—presented the
biggest obstacle. For others, scaling
the strategy across the firm and
measuring results were toughest.
In implementing a Sustainable Value Creation strategy, which stage did your
company find most difficult?
stages is predicated on the company’s
ability to commit, authentically and
profitably, to those issues for the
foreseeable future.
FIGURE 4
Identifying an initial set of societal issues
that link to our competitive advantage.
Focusing our scope to projects
where we can make an impact.
Deploying the project and learning
from early mistakes.
25%
24%
9%
20%
Scaling the strategy across the company.
Measuring societal and business performance.
Not applicable to my company at this time.
22%
0%
“If you’re not passionate about this, then don’t bother. And being passionate isn’t about memos
and speeches; it’s about asking questions and being a part of what you’re trying to accomplish.
That’s what sets it into your company’s character and inspires people.”
– Bill Green, Chairman, Accenture
Learning While Scaling the Strategy
Discussion Highlights
Opportunities
CEOs felt confident that they could
deploy initial, small-scale Sustainable
Value Creation projects. However,
they agreed that integrating the
priorities across the entire firm would
require linkages to employee incentives,
new governance structures, and
reinforcement by senior leadership.
Bill Green commented that rich
learning opportunities arise as a
natural consequence of engaging
in Sustainable Value Creation.
They wondered where the most
internal resistance might arise and
suggested that middle management
might be most resistant, given the
metrics-oriented nature of their
responsibilities—which is at odds
with the longer time horizon and
undefined metrics currently associated
with Sustainable Value Creation.
Discussing how to establish a foundation
for incentive changes, the CEOs
considered the importance of having
a conducive corporate culture.
While profitable projects may need to
“cover for” the cost of Sustainable Value
Creation pilots in the short-term, the
learning resulting from Sustainable
Value Creation is a solid investment
in preparing for the company’s future.
FIGURE 5
Which approach to scaling a Sustainable Value Creation strategy across the
company is most effective?
Link employee incentives and rewards
to the goals of the strategy.
32%
Create governance structures that
guide and support the strategy.
27%
Connect senior leadership to employees
through site visits and town halls.
20%
Publicize ambitious targets in the media
to hold the company accountable.
10%
Use social media and other channels to
share successes and generate dialogue.
10%
Invite credible outsiders to praise
the company’s progress.
1%
Indra Nooyi, Dominic Barton, Doug Conant
Each year, leading global
CEOs gather in New York to
further the role of business in
creating long-term value for
society and their companies.
Kris Gopalakrishnan
Charlie Rose
Dan Doctoroff, Klaus Kleinfeld
Patricia Woertz
Lloyd Blankfein
ATTENDEES OF THE 2011 BOARD OF BOARDS CEO CONFERENCE:
William D. Green
Richard Edelman
Dominic Barton
Donald E. Felsinger
John C. Whitehead
Raza Jafar
Seiei Ono
Harold McGraw III
Ramez Baassiri
Simon Liang
Raymond W. McDaniel, Jr.
Moody’s Corporation
Thomas Lundgren
Evergreen Industries Group
James Shen
Samer AlSaifi
Jay S. Fishman
David Stern
Hikmet Ersek
Robert B. Catell
Gerald L. Storch
Ted Mathas
Robert Wolf
Duncan L. Niederauer
Stephen J. Dannhauser
Shelly Lazarus
Mark Angelson
Nader Mousavizadeh
Special Guests:
Accenture
AEA Investors LLC
AHB Group
Klaus Kleinfeld
Alcoa Inc.
H.H. Prince Faisal
Bin Farhan Al Saud
Alsalam Aircraft Co.
Patricia A. Woertz
Archer Daniels Midland Company
Fábio Barbosa
Banco Santander
Central Hispano, S.A.
Varouj Nerguizian
Bank of Sharjah
Daniel L. Doctoroff
Bloomberg
Edelman
Enshaa PSC
Bonds Group of Companies
Douglas R. Conant
Campbell Soup Company
Morgan Stanley
David Bock
National Basketball Association
FCC Advisors
Cherie Liem
GITI Group
Wu Lin
Hangzhou Huada Industrial Group
Frédéric de Narp
Harry Winston
Alan G. Hassenfeld
Hasbro, Inc.
Holsman International
Irene Dorner
HSBC Bank USA, N.A.
Hao Xue
Zhang Jun
China National Resources Recycling
Huaxing Environmental Group
Daniel J. Sullivan, Jr.
S. Gopalakrishnan
Collette Vacations
Infosys Technologies Ltd.
Antonio Quintella
Michael I. Roth
Credit Suisse
Interpublic Group
Badr H. Jafar
John B. Veihmeyer
Crescent Petroleum
KPMG LLP
Clarence Otis, Jr.
Peter L. Malkin
Darden Restaurants, Inc.
Malkin Holdings LLC
Barry Salzberg
Jay Brown
Deloitte LLP
MBIA Inc.
James E. Rogers
Alan D. Wilson
Duke Energy Corporation
Mitsubishi International Corporation
Evergreen Resources
Holding (HK) Limited
Henrietta Holsman Fore
Anson Chan
McKinsey & Company
McCormick & Company, Inc.
CECP wishes to thank the McGraw-Hill
Companies for generously hosting this event.
National Grid
New York Life Insurance Company
NYSE Euronext
Ogilvy & Mather
Oxford Analytica Ltd.
David Young
Oxford Analytica Ltd.
Li Lulin
Pan-China Group
Renata
de Camargo Nascimento
Participações Morro Vermelho
Olga Stankevicius Colpo
Participações Morro Vermelho
Indra K. Nooyi
PepsiCo
Maroun Semaan
Sempra Energy
The McGraw-Hill Companies
The One Planet
The Travelers Companies, Inc.
The Western Union Company
Toys“R”Us, Inc.
UBS
Weil, Gotshal & Manges LLP
John Engler
Business Roundtable
Yeuk Wang Li
China World Peace Foundation
Xiao Kejian
China World Peace Foundation
Michael Hastings
KPMG LLP
Jonathan Spector
The Conference Board
Moderator:
Petrofac
Charlie Rose
Surya N. Mohapatra, Ph.D.
Luncheon
Keynote:
Quest Diagnostics Incorporated
Karim Khoja
Roshan / Telecom Development
Company Afghanistan Ltd.
Lloyd C. Blankfein
The Goldman Sachs Group, Inc.
The Committee Encouraging Corporate Philanthropy
(CECP) is the only international forum of business
leaders focused on increasing the level and quality
Committee Encouraging Corporate Philanthropy
110 Wall Street, Suite 2-1
New York, NY 10005
(212) 825-1000
CorporatePhilanthropy.org
of corporate philanthropy. Membership includes more
than 180 global CEOs and chairpersons of companies
that collectively account for more than 40% of
reported corporate giving in the United States.
Membership is by invitation and is renewed annually.
Pictured on cover: Charlie Rose, Indra Nooyi, Bill Green