1. Sustainability A Consulting Perspective
Will change these pictures
Olivier Corvez
Presentation to Clark University
November 2nd, 2009

2. Agenda Introduction Refresher on Sustainability interpretation
Global panorama – Roots & trends
ERM & Sustainability framework
Case study
Q & A
Discussion and questions throughout

3. Defining Sustainability
While companies talk about the triple bottom line, many (initially) focus on the environmental dimension
Economic Prosperity
Environmental Stewardship
Social Responsibility
Return on equity
Stock price growth
Market share
Profitability
New market opportunities through innovative products and services
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
Worker and public safety
Local economic impacts (job creation, tax base, other investments)
Human rights and living wage
Stakeholder engagement and accountability
Strategic philanthropy

4. Sustainability Value Proposition
A company’s strategic goals
Reduce Costs
Avoid Risks
Create Options
Reduce human and capital costs of accidents, injuries and deaths
Cost reduction through eco-efficiency
Avoid fees and fines
Stay in compliance
Avoid supply chain risk
Avoid negative press
Maintain social license to operate
Facilitate entry into new markets
Create new products
Establish partnerships to innovate and grow

5. 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
For some manufacturers, management and supply chain are the big drivers; expect more pressure from customers
This doesn’t include industry specific topics – e.g., if this was a pharmaceutical company, access to drugs and drug pricing would be on this list.

6. Sustainability and responsible management
Increasingly seen as the management approach of the progressive, responsible company
This is a departure from early attempts to couch environmental action and philanthropy in very promotional terms – yea, look at us and the wonderful things we’re doing. Green washing was and is a concern. The new approach is much more humble. The “we are doing this because we should” approach is a sharper dig against competitors who are doing less; and also nods to the company’s more business minded shareholders.

7. 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

8. History 1950’s 1970’s 1990’s 2010’s Local ISO 9000 ISO 14000
Health-Safety
Quality
Environment
Sustainability
History
1950’s
1970’s
1990’s
2010’s
Employees
Unions
Drivers
Regulations H&S
Client needs
Cost control
Env. regs
Public, Medias
Resources
Local
Standard
ISO 9000
ISO 14000 ?
Certification
OHSAS 18001
ISO 9001
ISO 14001 ?
More and more scrutiny towards Corporations and transparency about their “non financial” practices & performances…

9. As scrutiny increases, so does the amount of annual CSR/ SD reports….
As with financial reporting rules, Countries are passing more law enacting public reporting of annual “non financial” performances…
Total Output of CSR Reports Worldwide to 2007
* Source : CorporateRegister.com

10. Total Output of CSR Reports per Country
Total Amount of Annual CSR/ SD reports by Country….
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

11. Evolution In content of the SD reports
Evidence, Consistent Performance
Anecdotal Stories
Policy & Standards
Systems & Governance
Point – programs and reporting can make positive impact no matter what level the company is at. The point is to build and keep momentum – keep the trends positive.

12. The return on investment
ENERGY
SAVINGS
30%
CARBON
35%
WATER
USE
30-50%
WASTE
COST
50-90%
Cost
Average Green Building Cost Savings According to the Leadership in Energy & Environmental Design (LEED)
Reputation
Note multiple positive impacts of reputation – goodwill, recruitment & retention, facilitation of growth, company influence in external policy & regulation
CDP – risk criteria
Considers Climate Change to represent commercial risk and/or opportunities.
Considers regulatory responses to climate change to represent potential financial risk.
Recognizes climate change as physical risk to operations.
Has developed products or services in response to climate change.
Has allocated board-level responsibility for climate change issues.
Emissions data disclosed.
Emissions data related to supply chain and/or products and services disclosed.
Implemented emission reduction programs with formalized targets.
Considers formal emission trading framework relevant to operations.
Total costs of energy consumption disclosed.
Risk Management

13. Characteristics of Sustainability Leaders Today
Management systems processes to define, measure, monitor & assure performance
Transparency complete and comprehensive
Engagement stakeholders have input and influence
Global perspective systems are global, impacts measured locally
Performance balanced (triple bottom line), material, detailed, easily accessible
Leadership raise the bar for their industry; set best practice; cited by 3rd parties
Humility no “green washing” – sustainability portrayed as a challenge and a responsibility

14. ERM’s Approach to Sustainability Consulting

15. 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 …

16. Delivering the ERM Sustainability Framework - Overview
Mindset
I have a clear idea
of why and where I'm going
I know what I will change
I can see how it will work
I can see the benefits
Program
Phases
Defining
Current
Profile
Sustainable
Business
Elaboration
Execution &
Review performance
Context
Analysis
Design
Program
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
Identify vision, goals and objectives.
Set tangible targets, priorities and milestones
Quantify resources necessary
Implementing the program
Review performance results (positive and negative)
Analyze results
Key Activities
Critical
Milestones
Our Sustainability Framework is embedded in the Company’s Business strategy 9

17. Steps to developing a CSR strategy
ERM’s suggested approach to defining the CSR/ SD strategy and introduce some key areas for decision-making, as follows:
Defining your business case
Defining your journey
Defining strategic fit
Embedding CSR strategy into your organisation

18. Defining strategic fit: What is your SD opportunity?
Today’s Market
Internal
focus
External
Tomorrow’s Opportunity
Product
Innovation
Sustainable
Development
Operational
Excellence
Stakeholder
Responsiveness
Adapted from S. Hart (2005),
Capitalism at the Crossroads

19. Defining the journey: Where are you now and where do you want to be?
Stage 5:
Competitive
Advantage
Stage 4:
Integrated
Strategy
Stage 3:
Risk
management
Stage 2 :
Coping/
Compliance
Stage 1: Pre-
Compliance

20. Two Interlinked Action Fronts
Create and Implement a Sustainability Strategy
Supporting Actions and Organizational Changes to Ensure Buy-in, Integration, and Implementation of the Sustainability Strategy

21. Foundations Reputation Emerging Risks Improving Performance
Capstone. If you don’t have the bottom three, not much to support reputation
Reputation
Emerging Risks
Both risks coming from rising expectations and risks coming from changes in the business model
Improving Performance
Performance as a business (cost reduction, cycle time, growth)
Assuring Performance
(Compliance and Assurance)
Foundation, without that nothing else matters much
Source: ERM 2004 Business Integration Forums

22. Case Study

23. The Wal-Mart Effect Wal-Mart’s Sustainability Strategy
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

24. The Wal-Mart Effect – Energy efficiency module Wal-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
… 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
Light bulb goal: 100 million CFBs per year by 2008.
All kinds of supply chain issues. Fewer bulbs sold, mfg jobs lost, mercury into waste stream.
BUT, a company that creates it’s own economic ecosystem is getting in front of it’s customers/consumers on the issue.

25. Conclusion - Sustainability Best Practice
Effective Sustainability
Championed at the highest levels
Cross functional, high level steering committee
Innovative public/private partnerships
Focused on engaging stakeholders, not managing critics
Effective use of resources and influence
Strategically focused philanthropy
Not corporate activism

26. Environmental Resource Management Email : olivier.corvez@erm.com
Q & A
Olivier Corvez
Environmental Resource Management
399 Boylston Street
Boston MA 02116
Tel: