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©Copyright Kennedy and Coe, LLC 2014. All rights reserved. ©Copyright Kennedy and Coe, LLC 2014. All rights reserved.
Creating a Sustainability Plan to Maximize Profits and Create Differentiation
Emily Johannes, Kennedy and Coe Ryan Heuer, Novozymes
©Copyright Kennedy and Coe, LLC 2014. All rights reserved.
What we will talk about today…
• What is sustainability? • How can a sustainability plan maximize profits and
create differentiation in the marketplace?
• How can we get there?
©Copyright Kennedy and Coe, LLC 2014. All rights reserved.
Is this sustainable?
©Copyright Kennedy and Coe, LLC 2014. All rights reserved.
Or… is this sustainable?
©Copyright Kennedy and Coe, LLC 2014. All rights reserved.
Crop yields and natural resource pressures
• More extreme temperatures
• Unusual events • Unpredictable
and more extreme precipitation
Source: EPA
©Copyright Kennedy and Coe, LLC 2014. All rights reserved.
Water stress and ethanol production
• Water stress in the high plains region of the U.S.
• Over $1.6 million annual value of ethanol production is at risk.
Source: Ceres, June 2014
©Copyright Kennedy and Coe, LLC 2014. All rights reserved.
Nitrogen pollution and ethanol production
• Sixty corn ethanol refineries with $8.8 billion in annual production capacity are within watersheds of “high” or above delivery of nitrogen pollution to local waterways.
Source: Ceres, June 2014
©Copyright Kennedy and Coe, LLC 2014. All rights reserved.
Constraints and
Pressures Increasing Population
Extreme Weather Events
Expanded Buying Power and Shifting Consumer
Preferences Supply Chain Disruptions
High Volatility Higher Cost of Doing Business
Sustainability = Resilience
©Copyright Kennedy and Coe, LLC 2014. All rights reserved.
Defining sustainability…
• Environmental performance, social contributions, economic health
• Business and industry
viability
• Competitive advantage
• Resilience and reliability
• Brand and industry integrity
BALANCE PEOPLE, PROFIT, PLANET
©Copyright Kennedy and Coe, LLC 2014. All rights reserved.
The Enabling Factor: Big Data
©Copyright Kennedy and Coe, LLC 2014. All rights reserved.
What is a sustainability plan?
• Comprehensive measurement and projection of product and non-product attributes.
• Powerful tool for proving your story.
• But it is not: – Advertising – Outside of or additional to
internal business planning
©Copyright Kennedy and Coe, LLC 2014. All rights reserved.
Sustainability Plan = Political Insurance Policy
• Differentiation and value via sustainability plans can help demonstrate industry best practices and innovation.
• Proactive engagement on sustainability issues resonates with D.C.
©Copyright Kennedy and Coe, LLC 2014. All rights reserved.
Sustainability Plan = Long-term Thinking
• The reality: the world, and in particular, the U.S. will need to feed 9 billion people in 2050.
• Through sustainability planning, ethanol can demonstrate the longevity of the industry in a way that is compatible with food production.
• Sustainability doesn’t mean choosing food or fuel, rather it assesses resource use for fuel, food, and fiber!
©Copyright Kennedy and Coe, LLC 2014. All rights reserved.
How are sustainability plans created?
• Sustainability is a journey, not a destination.
• Analytical processes, such as ResourceMax™, are used to design, assess, and analyze company information for maximum value and sustainability reporting opportunities.
Discovery Assessment and Data Collection
Data Analysis and Benchmarking
Value Strategies and Reporting
©Copyright Kennedy and Coe, LLC 2014. All rights reserved.
Outcomes of ResourceMax
• Aggregate, analyze and benchmark data
• Manage what you are measuring – materiality
• Ability to report metrics to customers and stakeholders as needed
• Enhance internal decision-making and business planning
©Copyright Kennedy and Coe, LLC 2014. All rights reserved.
Integrating sustainability plans
• Board of Directors / Executive Management Level
• Annual and Strategic Planning
• Procurement requirements and supplier codes
• Budgeting
• Modeling and Projections
Source: MIT Sloan Management Review, 2013
©Copyright Kennedy and Coe, LLC 2014. All rights reserved.
Sustainability profitability
Source: MIT Sloan Management Review, 2013
©Copyright Kennedy and Coe, LLC 2014. All rights reserved.
Leveraging sustainability for brand and industry differentiation
Enhanced brand and
industry value and
reputation
Meet internal goals and external
expectations
Non-product and product sustainability
attributes
Collecting data and
information
VS
How to Get There Ryan Heuer - December 11, 2014 At Kennedy & Coe’s Ethanol Leaders’ Summit
1.Build business – place sustainability at the heart of your business strategy
2.Integrate, integrate, integrate – cross-functional, high-level and day-to-day oversight
3.Link goals to bonus schemes – integrate sustainability targets into bonus schemes
4.Don’t underestimate training – build sustainability competences across the organization
5.Make success measurable – measure progress through targets and indicators
How to Organize Sustainability In Business
©Copyright Kennedy and Coe, LLC 2014. All rights reserved.
“We imagine a future where our biological solutions create the necessary balance between better business, cleaner environment, and better lives.”
MAKE IT CENTRAL MAKE IT YOUR VISION
NGOs Suppliers Community
How to Engage Stakeholders
Key Stakeholders: The Customer
+
SAME QUALITY – CO2 SAVINGS
Beer has traditionally been produced from malted barley With Ondea Pro, great beer can be produced from un-malted barley Avoiding malting reduces CO2 emissions and barley losses
Greenhouse gas emissions can be reduced with 8%* and 7% less land is required to produce a hectoliter of beer.
* 8% of beer production, primary packaging, and upstream processes, e.g. barley (distribution and retail not included)
ACROSS INDUSTRIES
Cereals: 110 kg CO2
per ton of bread
Detergent: 100 kg CO2
per ton of laundry
Animal feed: 80 kg CO2
per ton of feed
Textile: 1100 kg CO2 per ton of fabric
Agriculture: 15 kg CO2
per ton of corn
Beverage: 25 kg CO2
per 1000 litre of beer
Leather: 100 kg CO2 per ton of hide
Paper making: 150 kg CO2 per ton of pulp
Vegetable oil: 44 kg CO2 per ton of oil
Dairy: 230 kg CO2
per ton of mozzarella
Cosmetics: 190 kg CO2 per ton of fatty
acid ester
Margarine: 23 kg CO2 per ton of hardstock
What’s in it for the …
Ind
ust
ry
Wor
ld
Con
sum
ers
Other Stakeholders: Partners
With a unique blend of microorganisms farmers can improve the efficiency of chemical fertilizer, fight insects and disease, and deliver higher yields
Stable prices Reduced cost Higher yields Cleaner water environment More food pr. acre
More stable food prizes
How to Prepare for a Sustainable Strategy
Corporate Sustainability
28
Source: Unilever Sustainable Living Plan Progress Report 2014,Internal analysis
Help more than a billion people to improve their health and well-being
Halve the environmental footprint of its products across the value chain
Source 100% of its agricultural raw materials sustainably and enhance the livelihoods of people across its value chain
Unilever as a Model Example
©Copyright Kennedy and Coe, LLC 2014. All rights reserved.
THANK YOU
Novozymes Contributors: Arlan Peters – Head of Sustainability Jesper Kloverpris – Manager, Sustainability Chris Bender – Head of Public Affairs & Communications