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THE BUSINESS CA$E for the Sustainability Imperative CANSEE York University November 2, 2013.

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Presentation on theme: "THE BUSINESS CA$E for the Sustainability Imperative CANSEE York University November 2, 2013."— Presentation transcript:

1 THE BUSINESS CA$E for the Sustainability Imperative CANSEE York University November 2, 2013

2 “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

3 CAPITALISM 2.0 Capitalism 1.0Capitalism 2.0 Purpose of the Firm Maximize shareholder value; Short-term Maximizing stakeholder value: Short- and long-term Legitimate capitalsFinancialFinancial, Natural, Social, Human Bottom linesProfitProfit, Planet, People Strategic focusGrowth; ConsumptionStakeholder well-being Negative impactsExternalizedInternalized BoundariesThe firmThe firm’s value chain TransparencyAs little as possibleNaked Business modelSell products; Take- Make-Waste; Linear Sell services; Borrow-Use-Return; Circular, Cradle to Cradle; Closed loop Source of financial capital Stock market; Big financial institutions; Absentee owners Smaller financial institutions; Crowd sourcing; Customers; Employees; Local communities; Shared ownership Market focusGlobalMore local

4 Access to capital Talent wars Productivity Innovation Quality Risk management Supply security Profit Share price Brand value Revenue growth Market share Expenses (SUSTAINABILITY) STRATEGIES “SUSTAINABILITY” ONE MORE GOALENABLERS vs.

5 # Strategies MORE RIGOROUS BUSINESS CASE 4.Reduced materials 1. Increased revenue 2. Reduced energy 6.Reduced turnover 5.Increased productivity 7.Risks to revenue and expenses 3. Reduced waste % rewrite; recalibrated 7 +7 Benefits

6 Revenue PROFIT 4.Reduced materials 1. Increased revenue 2. Reduced energy 6.Reduced turnover 5.Increased productivity 7.Reduced revenue and increased expenses 3. Reduced waste OpportunitiesRisksIncome Statement 10% 9% 75% 25% 2% 20% +51 to +81% -16 to -36% Expenses SUSTAINABILITY CAPITAL RESERVE SUSTAINABILITY BUSINESS CASE

7 SOURCES OF FUNDS  Sustainability Capital Reserve + ONLY COUNT BENEFITS AFTER PAYBACK PERIODS  Other internal or external capital markets  Treat as a high-yield, low-risk investment  Existing budgets  Government grants and incentives

8 WHICH “BUSINESS CASE”? Sustainability Business Case #1: More Profit Sustainability Business Case #2: Better ROI Sustainability Business Case # 3: Higher Share Price

9 HOW WOULD WE RECOGNIZE A TRULY SUSTAINABLE BUSINESS IF WE SAW ONE?

10 CAPITALISM 2.0 Capitalism 1.0Capitalism 2.0 Purpose of the Firm Maximize shareholder value; Short-term Maximizing stakeholder value: Short- and long-term Legitimate capitalsFinancialFinancial, Natural, Social, Human Bottom linesProfitProfit, Planet, People Strategic focusGrowth; ConsumptionStakeholder well-being Negative impactsExternalizedInternalized BoundariesThe firmThe firm’s value chain TransparencyAs little as possibleNaked Business modelSell products; Take- Make-Waste; Linear Sell services; Borrow-Use-Return; Circular, Cradle to Cradle; Closed loop Source of financial capital Stock market; Big financial institutions; Absentee owners Smaller financial institutions; Crowd sourcing; Customers; Employees; Local communities; Shared ownership Market focusGlobalMore local

11 THE FOURTH BENCHMARK X 1 Baseline year Other companies Performance Today 2 Company Goal 3 GOAL LINE(S) 4 Gold-standard benchmark Material, science-based KPIs and Goals for a Truly Sustainable Business Company X

12 FIVE BENEFITS 1.It addresses the confusion factor 2.It creates a sense of urgency 3.It raises the bar and sparks innovation 4.It identifies true leaders and best practices 5.It helps identify material ESG issues

13 SEVEN REASONS THAT IT’S TIME 1.Leading companies are ready 2.Important stakeholders are ready 3.Capitalism is ready 4.Business case is stronger than ever 5.Opportunity to harmonize with ESG standards 6.We’re running out of runway 7.It is doable

14 TRULY SUSTAINABLE BUSINESS Economy Society Environment If it were to operate forever, it would not only do no harm; it would do well by doing some net good. … contributing to the possibility that human and other life will flourish on our planet, forever … throughout its value chain/network A truly sustainable business creates positive environmental, social, and economic value WHERE WHY WHAT X

15 METHODOLOGY / FLOW OF LOGIC 8 science-based System Conditions for a sustainable environment (3) and a sustainable social system (5) 18 KPIs with measureable goals that confirm the company is performing within the Design Constraints 8 Design Constraints for a truly sustainable business model

16 SYSTEM CONDITIONS 1. concentrations of substances extracted from the Earth’s crust, 2. concentrations of substances produced by society, 3. degradation of nature by physical means, In a sustainable society, nature is not subject to systematically increasing … …and 4. people are not subject to systemic barriers to their … 4a. Wellness: physical, psychological, emotional and spiritual wellness; safety 4b. Influence: participation in decision making; voice 4c. Learning: increasing competence; growth 4d. Equity: impartiality; respect; diversity; fairness; justice 4e. Meaning: purpose; making a difference

17 ORGANIZING FRAMEWORK ESG Governance Environmental Social

18 KPIs & GOALS Governance / Profit (6) Board oversight: ESG committee Policies and systems: embed ESG principles Ethics: zero ethical violations Disclosure: full disclosure on ESG aspects Transparency: transparent about lobbying Financial performance: going concern Environment / Planet (6) GHGs: zero or better Energy: 100% renewable Water used: sustainable share or net zero Materials: 100% recycled/renewable Waste / Pollution: zero or better Ecosystems services: restorative? Society / People (6) Employee remuneration: fair living wage? Human capital: enhanced annually? Local economy: strengthened annually? Community well-being: enhanced annually? Social license to operate: enhanced annually? Customer well-being: enhanced annually? Towards a Gold-standard Benchmark for a Truly Sustainable Business

19 CAPITALISM 2.0 Capitalism 1.0Capitalism 2.0 Purpose of the Firm Maximize shareholder value; Short-term Maximizing stakeholder value: Short- and long-term Legitimate capitalsFinancialFinancial, Natural, Social, Human Bottom linesProfitProfit, Planet, People Strategic focusGrowth; ConsumptionStakeholder well-being Negative impactsExternalizedInternalized BoundariesThe firmThe firm’s value chain TransparencyAs little as possibleNaked Business modelSell products; Take- Make-Waste; Linear Sell services; Borrow-Use-Return; Circular, Cradle to Cradle; Closed loop Source of financial capital Stock market; Big financial institutions; Absentee owners Smaller financial institutions; Crowd sourcing; Customers; Employees; Local communities; Shared ownership Market focusGlobalMore local

20 THE BUSINESS CA$E for the Sustainability Imperative CANSEE York University November 2, 2013


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