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THE BUSINESS CASE FOR
SUSTAINABILITY
[email protected] www.sustainabilityadvantage.com
September 12, 2012
“Meeting the needs of the present generation without compromising
the ability of future generations to meet their
own needs.”
Dr. Gro Harlem Brundtland
SUSTAINABLE DEVELOPMENT
“The possibility that human
and other forms of life on earth
will flourish forever.”
Dr. John Ehrenfeld
SUSTAINABILITY
Dr. Chuck Hopkins
“Enough, for all, forever.”
SUSTAINABILITY
Systems
thinkin
g
CORE SUSTAINABILITY CONCEPTS
Intergenerational
responsibility
Socio-economic
justice
SOCIETAL SUSTAINABILITY
QUALITY OF LIFE
Eco
nom
ic
Environmental
Social
Sustainable
Municipality
(28 Indicators)Economic SecurityEmployment participation
Unemployment rateHousehold shelter spending
% Low income peopleHousehold debt
Infrastructure & Built Environment
Density Green buildings
Green transportation useLocal food production
Renewable energyClean tech business
opportunity
Ecological Integrity
Water quality & consumption
Green space Air quality
Waste diversion, GHG emission reduction
Urban biodiversity
Social Well-beingLife satisfaction Crime
rateHealth and access to care
Cultural Events Homelessness
Governance & EmpowermentEducation Voter
turnoutCity council diversity
Household garbage limitGHG reduction targetCorporate Knights 5th Annual Sustainable Cities Rankings, Winter 2011
MUNICIPAL SUSTAINABILITY
EcologicalIntegrity
Economic Security
Govern’ce & Empower’nt
Infrastructure & Built Envir’t
Social Well-Being
Large Cities Total
Toronto 5.5 6.2 7.9 7.3 7.7 6.9
Edmonton 7.1 6.2 5.3 4.7 7.2 6.1
Ottawa 4.8 7.3 6.0 4.1 7.6 6.0
Calgary 5.8 6.6 5.5 4.5 7.6 6.0
Montreal 5.2 4.4 5.3 6.8 7.5 5.8
Medium Cities
Vancouver 6.5 6.0 7.6 7.7 7.5 7.1
Mississauga 5.5 7.6 5.7 5.3 7.6 6.3
Halifax 6.3 7.1 6.7 4.3 6.8 6.2
Hamilton 5.2 7.5 6.8 4.0 6.8 6.1
Quebec 4.5 8.4 5.9 3.7 7.7 6.1
Winnipeg 4.6 7.4 5.0 5.5 6.9 5.9
MOST SUSTAINABLE CANADIAN CITIES
Corporate Knights 5th Annual Sustainable Cities Rankings, Feb. 2011
EcologicalIntegrity
Economic Security
Govern’ce & Empower’nt
Infrastructure & Built Envir’t
Social Well-Being
Small Cities Total
Victoria 5.2 7.2 7.2 7.6 8.2 7.1
Saskatoon 4.7 7.4 6.6 4.5 7.4 6.1
Saint John 4.6 8.2 5.5 4.6 7.5 6.1
Yellowknife 5.7 6.4 6.1 4.3 7.6 6.0
Charlottetown 4.6 6.3 5.2 5.4 7.3 5.8
Whitehorse 4.7 5.7 6.9 2.8 6.5 5.3
MOST SUSTAINABLE SMALL CITIES
Corporate Knights 5th Annual Sustainable Cities Rankings, Feb. 2011
CORPORATE SUSTAINABILITY
TRIPLE BOTTOM LINE
Eco
nom
y
Environment
Equit
y
Pro
fits
/
Planet /
Peop
le
/
CORPORATE SUSTAINABILITY
ESG
Gov
ernan
ce
Environmental
Social
CORPORATE SUSTAINABILITY
GREEN +CSR
Eco
nom
ic
Environmental
Socia
l
CORPORATE SUSTAINABILITY
ASSET MANAGEMENT
Fin
anci
al /
Man
ufa
cture
dC
apit
al
Natural Capital
Hum
an /
Social
Cap
ital
1. Pre-Compliance
2. Compliance
4. INTEGRATED STRATEGY
5. PURPOSE & PASSION
SUSTAINABILITY JOURNEY
3. Beyond Compliance
“Over the last 10 years, the ‘Sustainability Imperative’ has emerged,
magnified by escalating public and governmental concern about climate change,
industrial pollution, food safety, and natural resource depletion,
among other issues.” David Lubin and Daniel Esty, HBR, May-
June 2010
“Capitalism is under siege … The purpose of a business must be
redefined around creating shared value (CSV)…
How to reinvent capitalism—and unleash a wave of innovation and growth”
Michael Porter and Daniel Kramer, HBR, Jan-Feb 2011
“Sustainability should be a touchstone for all innovation …
In the future, only companies that make sustainability a goal will achieve
competitive advantage. That means rethinking business models as well as products, technologies, and
processes.”
Nidumolu, Prahalad, and Rangaswami, HBR Sept.-Oct. 2009
“Why Sustainability IsNow the Key Driver of Innovation”
UN Global Compact and Accenture study, survey of 766 worldwide CEOs, June 2010
CEO MINDSET IS SHIFTING
STAKEHOLDERS INFLUENCE CEOs
UN Global Compact and Accenture study, survey of 766 worldwide CEOs, June 2010
CEOs’ SUSTAINABILITY DRIVERS
UN Global Compact and Accenture study, survey of 766 worldwide CEOs, June 2010
Talent wars
Productivity
Innovation
Brand image
Quality
Compliance
Supply
security
Profit
Share price
Growth
Revenue
Market share
Expenses
SUSTAINABILITY STRATEGIES
“SUSTAINABILITY”
STRATEGIES VS. ANOTHER GOAL
Revenue
PROFIT
4.Reduced materials
1. Increased revenue2. Reduced energy
6.Reduced turnover
5.Increased productivity 7
.Red
uce
d r
eve
nu
e
an
d i
ncr
ease
d
exp
en
ses3. Reduced waste
Opportunities RisksIncome Statement
10%
9%
75%
25%
2%
20%
+51 to
+81%
-16 to -36%
Exp
en
ses
SUSTAINABILITY CAPITAL RESERVE
MORE COMPELLING BUSINESS CASE
Company Data Profile
Small Professio
nal Services Company
Large Manufactur
ing & Distribution Corporation
Revenue $1,000,000
$500,000,000
Energy expense $20,000 $10,000,000
Materials and water expense $50,000 $150,000,000
Total salary / payroll expense
$300,000 $150,000,000
Profit $70,000 $35,000,000
Average salary $50,000 $40,000
Number of employees 6 3,750
Potential profit increase 51% 81%
Potential profit at risk -16% -36%
“The possibility that
sustainable enterprises will flourish
forever.”
IN SUMMARY …
SUSTAINABILITY IS $MART BUSINESS
THE NEW ECONOMY
• New company ownership models• New company purposes
• Sustainable consumption / thrift• Low- / No-growth / Steady-state
economy
• Services vs. products• “Dematerialization” of everything
• Lower-carbon economy• More local supply chains
1. Pre-Compliance
2. Compliance
3. Beyond Compliance
4. INTEGRATED STRATEGY
5. PURPOSE & PASSION20%
CLOSE TO “TIPPING POINT?”
4. INTEGRATED STRATEGY
5. PURPOSE & PASSION20%
Based on survey of 1,251 companies, in UN Global Compact Annual Review 2010
SURVEY SAYS …
MIT Sloan and the Boston Consulting, “2011 Sustainability & Innovation Global Executive Study and Research Project,” Jan. 2012. Surveyed 4,000 managers from 113 countries.
• 70% say that sustainability was on the management agenda in 2011, and will stay there permanently.
SUSTAINABILITY AT TIPPING POINT?
• 67% said that sustainability-related strategies are necessary to stay competitive.
• 24% are “Embracers” … the Tipping Point?
MIT Sloan and the Boston Consulting Group,survey of 3,000 worldwide executives in 2010, “Sustainability: The ‘Embracers’
Seize Advantage,” Feb. 2011
“EMBRACERS”
THE BUSINESS CASE FOR
SUSTAINABILITY
[email protected] www.sustainabilityadvantage.com
September 12, 2012
