Delivering sustainable solutions in a more competitive world Sustainability A Consulting Perspective Olivier Corvez Presentation to Clark University November

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


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


• 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


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


Sustainability and responsible management

Increasingly seen as the management approach of the progressive, responsible company


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


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…


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


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….


Evolution In content of the SD reports

AnecdotalStories

Policy & Standards

Systems & Governance

Evidence, Consistent

Performance


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


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


ERM’s Approach to Sustainability Consulting


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

…


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


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:


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


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


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


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


Case Study


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


… 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


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


Q & A

Olivier Corvez

Environmental Resource Management

399 Boylston Street

Boston MA 02116

Tel: 617 646 7800

Email : [email protected]

Documents

Delivering sustainable solutions in a more competitive world Sustainability A Consulting Perspective Olivier Corvez Presentation to Clark University November