1. The Busine $$ Ca $ e for $ustainability Bob Willard bobwillard@sympatico.ca www.sustainabilityadvantage.com Barrie Business Sustainability April 7, 2011

2. 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.”

3. 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

4. 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

5. 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

6. Corps Are Investing in Sustainability 59% of companies in all industry sectors increased their investments in sustainability in 2010, versus 25% in 2009. 69% expect their organization to step up its investment in and management of sustainability in 2011. MIT Sloan and the Boston Consulting Group winter 2011 research report, “Sustainability: The ‘Embracers’ Seize Advantage,” Feb. 2011

7. 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) --

8. The 4 DON’Ts of Sustainable Behavior... buildup of substances extracted from the earth (e.g. heavy metals, fossil fuels, their life-cycle polluting byproducts)... buildup of chemicals produced by society (e.g. 70,000+ chemicals, dioxins, PCBs, their life cycle byproducts)... degradation of nature and its natural processes (e.g. over-harvesting, species extinction, peak soil, water security)... conditions that undermine people’s capacity to meet their basic human needs and well-being (e.g. unsafe working conditions, chasm between the wealthy and the poor) Do not contribute to the… http://www.naturalstep.org/the-system-conditions; Darcy Hitchcock, “Sustainability Buzzwords,” ISSP Insight, October 2009

9. 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

10. Sustainability 3-Legged 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 0 Pollution & Waste Renewable Energy Conservation Restoration Quality of Life / Genuine Wealth / Genuine Progress

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

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

13. Municipal “3-Legged Stool” Sustainable Community (28 Indicators) Economic Security Employment participation Unemployment rate Household shelter spending % Low income people Household debt Infrastructure & Built Environment Density Green buildings Green transportation use Local food production Renewable energy Clean tech business opportunity Ecological Integrity Water quality & consumption Green space Air quality Waste diversion, residential GHG emission reduction Urban biodiversity monitoring Social Well-being Life satisfaction Crime rate Health and access to care Cultural Events Homelessness Governance & Empowerment Education Voter turnout City council diversity Household garbage limit GHG reduction target Corporate Knights 5 th Annual Sustainable Cities Rankings, Winter 2011

14. Ranking of Sustainable Canadian Cities 7.61 Ecological Integrity Economic Security Governance & Empowerment Social Well-Being Infrastructure & Built Envir’t Corporate Knights 4 th Annual Sustainable Cities Rankings, Issue 30, Winter 2010 6.93 6.07

15. Smart Community 3-Legged Stool Resilient Community Economic / Financial Capital Physical / Built Capital Natural Capital Human Capital Social Capital Passion Capital Cultural Capital Political Capital Community Value Creation Cheryl Jacobs, “Measuring Success in Communities,” 2007 http://agbiopubs.sdstate.edu/articles/ExEx16005.pdf

16. 5-Stage Sustainability Journey 5. Purpose/Passion Values-driven founder / CEO 2. Compliance Regulatory enforcement 1. Pre-Compliance 3. Beyond Compliance Save on eco-efficiencies Avoid PR crisis Avoid threat of new regulations 4. Integrated Strategy Enhanced organizational value

17. The 3 R’s of Justifying Sustainability RISKS RESPONSIBILITIES REWARDS BUSINESS CASE + + Based on Alan AtKisson, The IRIS Agreement, p. 127

18. Risks to Financial and Natural Capitals: Big-5 Sustainability Storm Fronts Poverty and Social Injustice Species Extinction and Overharvesting Food and Water Crises Waste, Toxicity, and Health

19. The 3 R’s of Justifying Sustainability RISKS RESPONSIBILITIES REWARDS BUSINESS CASE + + Based on Alan AtKisson, The IRIS Agreement, p. 127

20. Risks to Financial and Social Capitals: Stakeholders’ Rising Expectations Waste, Toxicity, and Health Poverty and Social Injustice Species Extinction and Overharvesting Food and Water Crises Employees Customers Media Economists (Scientists) (NGOs) Competitors Markets GovernmentsInsurers The Public Investors Banks Risks to Reputation re Corporate Responsibilities Social license to operate

21. The 3 R’s of Justifying Sustainability RISKS RESPONSIBILITIES REWARDS BUSINESS CASE + + Based on Alan AtKisson, The IRIS Agreement, p. 127

22. One More Goal … or an Enabling Strategy? Innovation Speed to market New markets Talent wars Productivity Motivation Brand image Managing risks Compliance Supply security Profit Share price Growth Revenue Customer care Expense savings Competition Market share Leadership Governance RELEVANCE

23. The 3 R’s of Justifying Sustainability RISKS RESPONSIBILITIES REWARDS BUSINESS CASE + + Large Companies: At least 38% more profit SME Companies: At least 66% more profit

24. Potential SME Profit Increase … yielding a profit increase of +66% -1% -2% +6% -10% +5% -5% REPUTATION Reduced recruiting costs Reduced attrition costs Increased employee productivity Increased revenue / market share Eco-efficiencies: savings in energy/carbon, water, materials, waste handling Lower insurance & borrowing costs Usual focus

25. Potential Improvements - Municipal Reduced recruiting costs Reduced attrition costs Increased employee productivity Eco-efficiencies: savings in energy, water, materials, waste handling Reduced infrastructure costs / more efficient use of tax revenues Increased public trust & confidence / Increased leverage of social capital / Magnet for companies and citizens Same as for a business Huge potential REPUTATION

26. 3M Eco-Efficiency Savings Pollution Prevention Pays (3P) Up-front waste prevention: Product reformulation, process modification, equipment redesign, and recycling and reuse “Fourth P”—People. Employee suggestion program generated $1.4B in first-year savings through 8,100 voluntary projects over 35 years (1975-2010) http://solutions.3m.com/wps/portal/3M/en_US/3M-Sustainability/Global/Environment/3P/

27. Employees Are Key to Eco-Efficiencies Community Centre Conservation Challenge (CCCC) 8 Community Centres; June – August 2009 Annual verified energy savings of $90,000 “Low cost / No cost” employee engagement approach Classy “no pizza boxes” luncheon to launch the challenge Trained maintenance staff and programs facilitators Engaged staff in inventory of plugs and savings ideas Presented winning team leaders with trophies at Council Classy thank-you closing luncheon for all participants Results included in City’s Leisure Guide Ernie Davies and Suzanne Elston, Oshawa Environment and Energy Mgmt Services Presentation to the Durham Region Roundtable on Climate Change, June 2010

28. The 3 R’s of Justifying Sustainability RISKS RESPONSIBILITIES REWARDS BUSINESS CASE + + Climate Change & Energy Crises Employees CustomersEconomists (Scientists)(NGOs) Governments Insurers Investors At least 38% to 66% more Profit

29. The New Economy New ownership models: employees, customers, co-ops, social venture funds, government funding New company purposes: “Social enterprises,” “B Corps,” “Hybrid organizations,” “Flexible purpose corporations” (California Bill SB 201, Corporate Flexibility Act, Feb. 2011) Responsible consumption / thrift vs. over-consumption Low / No-growth model vs. “grow or die” model Services vs. products “Dematerialization” vs. physical goods, processes, or travel using “virtual” alternatives like videoconferencing or online shopping” Low-carbon economy vs. fossil fuel-based economy Local supply chains vs. global supply chains

30. In Summary … Sustainability is smart business Important stakeholders’ expectations are rising New market forces & risks are in play Relevant to existing organizational priorities Can protect & enhance organizational values Many willing, helpful partners Opportunity for leadership … by example

31. The Busine $$ Ca $ e for $ustainability Bob Willard bobwillard@sympatico.ca www.sustainabilityadvantage.com Barrie Business Sustainability April 7, 2011