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Sustainability Advantage: The Busine $$ Ca $ e for Sustainability Bob Willard PPPC Convention Toronto.

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Presentation on theme: "Sustainability Advantage: The Busine $$ Ca $ e for Sustainability Bob Willard PPPC Convention Toronto."— Presentation transcript:

1 Sustainability Advantage: The Busine $$ Ca $ e for Sustainability Bob Willard PPPC Convention Toronto January 16, 2012

2 Sustainable Promotional Products Cause-related promotional products Donation to charity of persons choice Carbon offsets Matching grants

3 Definitions of Sustainability Sustainable Development (SD) Meeting the needs of the present generation without compromising the ability of future generations to meet their own needs. – Brundtland Commission, 1987 – Sustainability The possibility that human and other forms of life on earth will flourish forever. – John Ehrenfeld, Professor Emeritus, MIT – Sustainable Development (SD) Enough - for all – forever. – African Delegate to Johannesburg (Rio+10) –

4 Core Concepts of Sustainability Futures Thinking Intergenerational responsibility (Eco-)Systems Thinking Carrying capacity of the planet to absorb waste and support life Social Justice Equity, Dignity, Basic services, Human rights, Stakeholder voices Economic, Environmental, Social/Cultural responsibilities

5 3-Legged Sustainability Stool Sustainability Economic Leg Good Jobs Fair wages Security Infrastructure Fair Trade Social Leg Working conditions Health services Education services Community & Culture Social justice Environmental Leg No Pollution & Waste Renewable Energy Conservation Restoration Quality of Life / Genuine Wealth / Genuine Progress

6 Corporate Sustainability 3-Legged Stool = Corporate Social Responsibility (CSR) = Green Economy - Profits Growth Jobs, Taxes Products Services Equity - People Employees Community / Culture World Environment - Planet Eco-efficiencies Eco-effectiveness = Corporate Responsibility (CR) = Environmental, Social, Governance (ESG) = Sustainability = Sustainable Development (SD) Triple Bottom Line (TBL) = 3Es = 3Ps

7 Smart Business 3-Legged Stool Asset Management Economic / Financial Capital Built / Manufactured Capital Natural Capital Human Capital Social Capital Sustainable Value Creation

8 5-Stage Sustainability Journey 5. Purpose/Passion Align with founders / CEOs values 2. Compliance Avoid fines, prosecution, bad PR 1. Pre-Compliance 3. Beyond Compliance Save on eco-efficiencies Avoid PR crisis Avoid threat of new regulations 4. Integrated Strategy Enhance company value / prosperity

9 The Sustainability Imperative David A. Lubin and Daniel C. Esty, The Sustainability Imperative, HBR May 2010 Megatrend: A fundamental shift in the competitive landscape that creates inescapable threats and game-changing opportunities... profoundly affects companies competitiveness and even their survival. 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.

10 Significant CEO Mindset Shift Survey of 766 worldwide CEOs, including 50 in-depth interviews UN Global Compact and Accenture study, A New Era of Sustainability, June 2010 … fully embedded into company strategy and operations CEOs Agree /Strongly Agree that sustainability should be …. … discussed and acted on by boards … fully embedded into subsidiaries strategies and operations … embedded throughout the global supply chain … the basis for industry collaborations and multi-stakeholder partnerships … incorporated into discussions with financial analysts 2010 Increase Over 2007

11 Stakeholders Driving Sustainability Survey of 766 worldwide CEOs, including 50 in-depth interviews UN Global Compact and Accenture study, A New Era of Sustainability, June 2010 Stakeholders who CEOs believe will have the greatest impact on the way they manage societal expectations Consumers Employees Governments Communities Regulators Media Investment Community Suppliers NGOs Boards Organized Labor Other

12 CEOs: Sustainability Drivers Survey of 766 worldwide CEOs, including 50 in-depth interviews UN Global Compact and Accenture study, A New Era of Sustainability, June 2010 Brand, trust, and reputation Potential for revenue / growth / cost reduction Personal motivation Consumer / customer demand Employee engagement and recruitment Impact of development gaps on business Governmental / regulatory environment Pressure from investors / shareholders Top 3 drivers of CEOs action on sustainability issues

13 % The Iceberg of Company Value 2009 Sources: For 2009, Hollender, Orgain, and Nunez, The Business Case for Sustainability [accessed July 30, 2011], Kaplan Eduneering/Seventh Generation Sustainability Institute, February 2010; for 1998 and 1981, Roberts, Keeble, and Brown, The Business Case for Corporate Citizenship, Arthur D. Little, 2002, p. 1; for 1978, Stewart, Accounting Gets Radical, Fortune, April 16, Intangibles / Non-Financials / Reputation / Goodwill 25% Market Value / Capitalization 29% Tangibles / Financials 75% 17% 83% 5% 71%

14 The Perfect Storm Threatens Financial and Social Capitals Intangibles / Non-Financials / Reputation / Goodwill 25% Market Value / Capitalization Tangibles / Financials Waste, Toxicity, and Health Poverty and Social Injustice Species Extinction and Overharvesting Food and Water Crises Climate Change and Energy Crisis Employees Customers Media (Scientists)(NGOs) Competitors Global Markets Governments Insurers The Public Investors Banks Communities Social license to operate Boards Economists

15 CEOs: Sustainability Drivers Survey of 766 worldwide CEOs, including 50 in-depth interviews UN Global Compact and Accenture study, A New Era of Sustainability, June 2010 Brand, trust, and reputation Potential for revenue / growth / cost reduction Personal motivation Consumer / customer demand Employee engagement and recruitment Impact of development gaps on business Governmental / regulatory environment Pressure from investors / shareholders Top 3 drivers of CEOs action on sustainability issues

16 Top 10 Business Priorities for 2011 Forrester's survey of 2,691 executives in Europe, North America, and Asia, Forrsights Business Decision-Makers Survey, Q

17 One More Goal … or an Enabling Strategy? Talent wars Productivity Innovation Brand image Quality Risks Compliance Governance Supply security Profit Share price Growth Revenue Market share New markets Customer care Expenses Enabling Strategies Sustainability

18 Income / Profit & Loss Statement Expenses Cost of goods sold (COGS) Selling, general, and administrative (SG&A) Interest, taxes, depreciation, and amortization (ITDA) Revenue / Sales Profit / Net Income

19 Wouldnt it be nice if someone … 1.…determined what real companies have achieved from their sustainability-related revenue enhancement and expense saving initiatives, by researching books, articles, press releases, surveys, research papers, case studies, etc. 2.…sorted the benefits into generic categories 3.…monetized the benefits and normalized them to revenue 4.…projected profit improvements for typical companies, if they were to simply do what leading companies have already done, within the next 3 to 5 years 5. …made it easy to tailor the business case for a particular company with an open source simulator

20 7 Business Case Benefits Revenue Profit 4.Reduced material and water expenses 1. Increased Revenue 2. Reduced energy expenses 6.Reduced employee turnover expenses 5.Increased employee productivity / innovation 7.Reduced risks to revenue and expenses 3. Reduced waste expenses OpportunitiesRisksIncome Statement 10% 9% 75% 25% 2% 20% +51 to +81%-16 to -36% Expenses Sustainability Capital Reserve

21 Two Sample Typical Companies Company Data Profile Small Professional Services Company % of Revenue Large Manufacturing & Distribution Corporation % of Revenue Revenue$1,000,000$500,000,000 Energy expense$20,0002%$10,000,0002% Materials and water expense$50,0005%$150,000,00030% Total salary / payroll expense$300,00030%$150,000,00030% Profit$70,0007%$35,000,0007% Average salary, including benefits $50,000$40,000 Number of employees63,750 Potential Profit Increase51%81% Potential Profit at Risk-16%-36%

22 5 Sources of Funds Existing budgets: maintenance, advertizing, marketing, communications, education Government grants and incentives, especially for early movers Treat as an investment, rather than as a cost: high yield, low risk Other internal capital or external capital markets Sustainability Capital Reserve Benefits are only counted after their 1 to 5 year payback period

23 The Tipping Point 3.3: Embed sustainable governance 3.2: Create new eco-effective products, services, leases 3.1: Improve supply chain conditions and footprints 3.0: Improve company eco-efficiencies and sustainability brand 1. Pre-Compliance 2. Compliance 3. Beyond Compliance Capture eco-efficiencies; Avoid PR and regulatory risks 4. Integrated Strategy Enhance company value / prosperity 5. Purpose & Passion Align with founders / CEOs values 20%

24 Question How long do you think it will be before we reach the sustainability tipping point in the business community? years years years 4.More than 15 years 5.Never

25 Time Until Sustainability Tipping Point Source: Environmental Leader, Time Until Sustainability Tipping Point is Reached, View of Global CEOs (% of respondents) in Environmental and Energy Data Book Q2 2011, July 2011, p. 26. Based on survey of 1,251 companies, in UN Global Compact Annual Review % 3% 26% 44% 17%

26 Corps Are Investing in Sustainability The growth of investment in sustainable business programs will be between % higher in 2013 than in Spending on sustainability programs by Australian, Canadian, U.K. and U.S. companies with over $1B in sales will hit $60B in (Verdantix, based on spending patterns of 2,500 global firms, March 2011) MIT Sloan and the Boston Consulting Group winter 2011 research report, Sustainability: The Embracers Seize Advantage, Feb. 2011

27 Sustainable Promotional Products Cause-related promotional products Donation to charity of persons choice Carbon offsets Matching grants

28 In Summary … Sustainability is smart business Relevant to current organizational priorities Important stakeholders expectations are rising New market forces & risks are in play Large companies have a ripple effect on suppliers Promotional products are symbolic gestures Opportunity for leadership … by example Many willing, helpful, unusual partners

29 Sustainability Advantage: The Busine $$ Ca $ e for Sustainability Bob Willard PPPC Convention Toronto January 16, 2012


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