A Discussion of Sustainability

Brent McKnight

Conceptualizing sustainability

“Sustainable Development meets the needs of the present without compromising the ability of future generations to meet their own needs.” UN Brundtland Report -1987

“..sustainability is a mere possibility that human and other life will flourish on the Earth forever.” John Ehrenfeld

Triple Bottom Line

Profit for a company is like oxygen for a person. If you

don't have enough of it, you're out of the game.

But if you think your life is about breathing, you're really

missing something.

-Peter DruckerManagement Guru

Pollution

Ecosystem destruction

Environmental vs Profit

Human Health

Equity

Triple Bottom Line

Sustainability as Resilience

• Resilience improved when– Reduced dependence on high risk inputs (ie heavy metals,

energy, fossil fuels, particular industries, etc.)– Encourage diversity (in firms, in practices, etc.) – Emphasize caution and prudence over risk and optimization– Preparing for shocks and disturbances

How well our society absorbs disturbances; changing and adapting but still retaining its identity

A role for firms?UN Global Compact (2013)Over 8,000 firms participating in Global Compact63% - Expect sustainability will transform their industry in 5 years76% - Sustainability will drive new revenue opportunities33% - Think that businesses are doing enough84% - Businesses should lead solutions

McKinsey Sustainability’s Strategic Worth (2014)49% - Place sustainability with a firm’s top 3 strategic priorities

43% - Using sustainability to align with company’s goals and mission

Carbon disclosure project (2014)767 – institutional investor signatoriesUS $92 Trillion – in assets

What do you think might be Lego’s biggest sustainability related

challenges?

Some Sustainability Challenges

• Holistic understanding of a firm’s social and environmental footprint

• Unlocking value from sustainable technology• Distinguishing “identical” products made through

very different processes• Managing and navigating diverse stakeholders

How to understand the full scope of a firm’s environmental/social impacts?

Raw Material

ExtractionMaterial

Processing

Manufacturing Parts

Assembly

Product Use

End of Life

Life Cycle Assessment

Life Cycle Assessment

• Identify and understand risks– Reputation, regulation, resources

• Opportunities for improvement– Cost reductions, supply chain

partnerships, competitive advantage

• Redesign processes and products– New materials

Product Servitization•Increase product utilization•Drives product innovation around cradle to cradle•Permits adoption of expensive technology•Monetizes sustainable technologies•Establishes ongoing client relationship•Provides the function without the product

How to unlock value from sustainable technologies?

How to distinguish identical products made with more sustainable practices?

• How it works– Independent third parties define certification rules– Provides transparency of product and process

• Key success factors– Strong branding and awareness (combat label

proliferation)– Partnering; firms, NGOs and government– Target willing customers (often higher prices)– Ongoing monitoring

Certifications

Lego and Shell

• https://www.youtube.com/watch?v=qhbliUq0_r4

Stakeholder Analysis

What are their Interests? Goals?Concerns?

What is the impact of your firm on them?

Who is powerful? urgent? legitimate?

Firm

Other Parties

Stakeholders

Stakeholder Analysis

4 Dominant Stakeholder

1 Dormant Stakeholder

7 Definitive Stakeholder

2 Discretionary Stakeholder

8 Nonstakeholder

6 Dependent Stakeholder

3 Demanding Stakeholder

5 Dangerous Stakeholder

Legitimacy

Power

Urgency

How can a stakeholder exert power and influence?

What makes a stakeholder have more or less legitimacy?

Why is urgency an important consideration?

How can I sell more sustainable initiatives within a company?

Source: Berns et al 2009 Sustainability and Competitive Advantage. MIT Sloan Review, 51(1)

What role do you occupy? What issue selling efforts are required?

Lego: A Sustainability Strategy• 9,000 employees• 400 billion bricks made since 1949• 19 billion bricks annually• 50 million children annually

Lego Sustainability Goals

Waste at Lego

Lego: A Sustainability Strategy

How can LEGO effectively address emerging competitive threats while ensuring their future growth through

leadership in sustainability?"