Analyzing and Implementing Sustainability Solutions in Global Businesses

Analyzing and Implementing Sustainability Solutions in Global Businesses

July 15, 2009

“Shocking” Fact # 1

Many companies and organizations are really bad at communicating what it is that they actually do.

The Key Question: What Does Your Company (or organization) REALLY do?The Key Question: What Does Your Company (or organization) REALLY do?

• It is not the products you make• It is not the services you provide• It is the IMPACT or VALUE they have on

peoples’ lives that really counts

The Key Question: What Does Your Company (or organization) REALLY do?The Key Question: What Does Your Company (or organization) REALLY do?

Sodexo

• Provides the nutrition that enables students to learn effectively

• Helps patients in hospitals to heal

• Seniors to enjoy a healthy and active retirements.

“Lafarge does more than make

cement, concrete, aggregates,

and gypsum building products.

We make the materials that are

used to make the roads we all

drive on, the offices where we

work, the schools in which our

children are educated, and the

homes in which people live.”

The Key Elements of a Successful ProgramThe Key Elements of a Successful Program

1. Aligns with your Core Business Model

2. Integrates Sustainability into Day-to-Day Operations

3. Employees are Actively Engaged and Empowered

4. Provides tangible (Local) Benefits

5. Maximizes Stakeholder Engagement

Alignment with Core Business ModelAlignment with Core Business Model• Successful businesses must be adept at determining

market changes, trends and expectations.

• They cannot be in such a rush to embrace the “new” trend that they abandon their fundamental and core purposes.

• Do not rush headlong into activities or partnerships that are not aligned with their long-term interests.

• Recognize that for any program to be valuable to a business, it must further the goals of that company.

“Shocking” Fact # 2

Actually, most companies and organizations do have a long-range plan and are not only concerned the next quarter’s financial returns.

Our Vision 2020Our Vision 2020Financial Objectives

Expand premium offer to capture higher profit sales

Increase sales volume of existing customers

Improve margins Reduce DSOsEnsure compliance

Operational Objectives

Identify best practicesIntegrate best practices

throughout company

Increase market share Reduce raw materials costsReduce transportation costsReduce lost time accidentsReduce fines/mediation

Sales Objectives

Expand share of business with existing clients

100 percent retention of existing clients

Win new business Competitive analysis

Cultural Objectives

Attract / hire / retain the best talent

Culture of continuous Improvement

Align HR processes and incentives with desired outcomes

Increase productivity

Reduce turnover

Economic Environmental Social Alternative Fuels Negative fuel cost

carbon credits

No fossil fuels Reduce CO2

Community service

No stacks / emissions

Abatement costs Zero emissions Less visual

intrusion

Enhanced health, reputation & image

Reduced risk

No non-renewable raw materials (no quarry)

Zero variable costs No permitting costs No reclamation costs

No depletion of natural resources

No physical & visual intrusion

No rural impact Reduced urban

impact Community service

No shovel, no broom

Reduced labour & material waste

No dust No PM10 landfill Visually improved

Reduced health risk Improved morale Improved image &

reputation

Waste management

Process costs Revenue income

Handling, storage, transport & odour perceived impact

Reduced landfill

Community service X NIMBY

Use of waste heat

Revenue (heating, power) Carbon credits

Less fossil fuels & CO2

Community schemes (fuel poverty)

Scale & location appropriate to local economy

Reduced transport costs Lost economy of scale

Use of brownfield land

Less transport impact

Less landfill

Local employment integral community / economy

Local waste solution

SRI Attract investors

Stakeholder participation (Gov./regulators)

Facilitates permitting / design

Creates standards & policy Risk mitigation

Precautionary principle

Targeting issues

Open, transparent communication

Verification

No LTAs Reduces hidden costs (comp / insurance)

Reduce damage costs

Clean & safe sites Improved health, moral, reputation

Assured breadwinner

M O T I V A T I O N On-line real-time reporting

Reduced risk Less time in getting data

“Shocking” Fact #3

Not everything you do will be ‘green’ or ‘greenable’

– and that’s okay.

Integrate into Day to Day OperationsIntegrate into Day to Day Operations

• From a Vision to a Culture – Communicate consistently

• Identify and build on “quick hit” benefits

• Reduce Costs– Tax advantages/incentives– Risk Management– Building Credibility

• Increase Opportunities– Social marketing and co-branding– Employer of Choice: values-based companies are winning the war

for talent

• Identify Longer-term Benefits – Corporate reputation and image.

Employee Engagement And EmpowermentEmployee Engagement And Empowerment

• Align incentives with desired outcomes• Empower employees at all levels– Make them a part, give them something to

do/contribute– Leverage their unique skills

Employee Engagement And EmpowermentEmployee Engagement And Empowerment

• 81 percent of MBA candidates believe businesses should work toward the betterment of society

• 89 percent said business professionals should take social and environmental impacts into account when making business decisions

• 79 percent indicated they would seek employment that is socially responsible in the course of their careers

• 59 percent said they would do so immediately following business school.

October 2006 NetImpact Survey

“Shocking” Fact # 4

They (customers/consumers) don’t always know what you think they know.

Tangible (Local) BenefitsTangible (Local) Benefits

• Measurable• Credible• Appropriate• Demonstrable • Visually ‘obvious’

Maximize Stakeholder EngagementMaximize Stakeholder Engagement

• Accurately define and identify stakeholders • Effectively engage stakeholders• “The New PR” – Transparency instead of spin.– Forthright and forthcoming.– Transformation from communicating to people to

dialogue.– Increasing prevalence/importance of new media.

Examples that are ‘on’ messageExamples that are ‘on’ message

“Shocking” Fact # 5Large size does not make you a leader.

It just means you have the opportunity to have a bigger impact (both positive and negative)

When Size is an AdvantageWhen Size is an Advantage

• Sodexo announced today that after only one year, its switch to recycled napkins in 1,300 foodservice operations nationwide has resulted in saving nearly ten million gallons of water, more than 23,000 trees, half a million gallons of oil and five and a half million kilowatts of energy. The company began using two types of recycled napkins last year as part of a commitment to leadership in sustainability and to providing environment-friendly practices.

• Energy was saved because less power is used to recycle paper products than to create them from virgin material - enough was saved through the napkin program to power 600 American homes for an entire year! In addition, more than half a million gallons of oil were saved - 38 tanker trucks worth - and 41 tons of pollutants were kept out of the environment. Further, 4,131 cubic yards of paper were diverted from landfill space. This is enough to cover an entire football field with a two and a half feet deep stack of paper.

• The calculations are made by the Recycled Products Cooperative (RPC), which says that each ton of 100 percent post-consumer recycled paper that displaces a ton of virgin fiber paper saves 7,000 gallons of water, 4,100 kilowatt hours of electricity and prevents 60 pounds of pollutants from entering the atmosphere.

The Supply ChainThe Supply Chain

What Does It Take To Be A Leader?What Does It Take To Be A Leader?• Leadership by Influence

– Purchasing power– Requirements of your suppliers

• Leadership by Actions– The manner in which you conduct your business– Your commitments and practices– Your transparency and reporting– Stakeholder engagement– Actions you encourage by employees

• Leadership by Expertise– What you teach your customers– Expertise you share with the community– Show others how to live your mutually aligned values

“Shocking” Fact # 6

It’s not always that simple to do the ‘right’ thing.

Hallmarks of Global (Large/Decentralized) OrganizationsHallmarks of Global (Large/Decentralized) Organizations• Strengths• Size – breadth and depth• Expertise• Client relationships• Community relationships• Corporate culture provides

common culture

• Challenges• Communication/ technology• Information exchange• Customization• ‘Silos’• Cultural issues

Who defines what the ‘right thing’ is?

Considerations/Thoughts for DiscussionConsiderations/Thoughts for Discussion• Does a company/organization have an obligation to

bring its values to an overseas location, or does it have a responsibility to be respectful/protective of the local indigenous culture?

• How and who should resolve a conflict between protecting the environment and providing economic opportunity?

• How does globalization affect what we think of as capitalism?

• Is American-style capitalism ‘dead’ and if so, what will take its place?

On the Wealth of NationsOn the Wealth of Nations• Adam Smith

1. An observed economic reality (people act in their own interest). Did not argue that self-interest is always good but that the

alternative is worse: "By pursuing his own self interest he frequently promotes that of

society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.” (p. 456).

2. If markets were free and open, how does a nation keep its capitalists from moving their capital out of the nation and into other countries where labor could be bought more cheaply. “(By) preferring the support of domestic to that of foreign

industry," the capitalist will in a sense be "led by an invisible hand to promote an end which was no part of his intention."

How to Get StartedHow to Get Started1. Identify those areas that matter to your stakeholders

2. Identify those areas for which your company is well positioned to have a direct impact

3. Identify those areas for which your company can have an indirect impact

4. Inventory your existing efforts and capacities (including employee skills)• Identify internal experts and create a ‘community of practice’

5. Set and rank your priorities• Need to take the time and build consensus/agreement/buy-in

6. Educate, Inform and Engage