1. BUGEN 5930 – Business, Society & the Planet
Week 3 – Sustainability for Business

2. ‘Business as usual is not an option’ Ban Ki-Moon, 11 Nov
‘Business as usual is not an option’ Ban Ki-Moon, 11 Nov United Nations Secretary-General

3. “Like it or not, the responsibility for insuring a sustainable world falls largely on the shoulders of the world’s enterprises, the economic engines of the future.”
Professor Stuart Hart
Johnson School of Management
Cornell University, USA

4. ‘… the business community alone cannot create sustainability
‘… the business community alone cannot create sustainability. All sectors of the society, including the government, communities, academia and NGOs have specific roles to play in contributing towards sustainable development.’ March, 2006
Datak Anuar Ahmad
Datuk Anuar Ahmad
Executive VP – Gas & Power, Petronas, Malaysia
Business Council for Sustainable Development, Malaysia

5. “Those companies that wait to be forced into action or who see it solely in terms of reputation management or CSR will do too little too late and may not even survive.” Paul Polman, CEO, Unilever 25 Feb. 2010

6. Richard Branson - Virgin

7. Chris McKnett State Street Global Advisors Head of Environment, Social & Governance Investing
The investment logic for sustainability

8. Transitioning business for sustainability
Prof Dexter Dunphy University of Technology, Sydney Prof Suzanne Benn UTS

9. Achieving sustainability is a process – organisations advance by stages

10. -----------------------------------------------------
The Phase Model
Rejection
Non-responsiveness
Compliance
Efficiency
Strategic proactivity
The sustaining corporation
In both Phase 1 & 2, businesses ARE NOT taking any action towards sustainability. According to Dunphy, Griffiths & Benn, these organisations will not survive long term.
Rejection - businesses reject any requirement to change or that their operations need to change i.e. ‘Yes sustainability is great but it has nothing to do with my business’ or that it is possible for their business to adopt sustainable practices
- businesses that ignore any regulations/guidelines for change, or any opportunities
Non-responsive – businesses accept the requirement to change, but for a variety of reasons, they do nothing
From Dunphy, D. , Griffiths, A. and Benn, S., Organisational Change for Corporate Sustainability, Routledge, London and New York, 2003; revised edition 2007

11. 3. COMPLIANCE PHASE: The Reactive Minimalists
Objective: Seek to be compliant to the law and all environmental, health and safety requirements and relevant community expectations.
Business opportunities:
Avoid the potentially huge costs of non compliance and create an effective risk management system.
Positive outcomes:
Risk minimisation
Easier finance
Basis for positive reputation
Improved relationships with regulators.
The Reactive Minimalists are those making the first major step forward on the road to creating more sustainable organisations. While this is a minimalist approach it is a vitally important step.
Executives in these organisations are surveying the key legislative and regulatory requirements of their industry. Governments are increasingly raising the bar on environmental pollution, OHS, energy and waste etc. The costs of ignoring this can be significant the real payoff is your licence to operate.
Basically these organisations are making a step forward by cleaning up their act. Mining giants for instance, have been hit by the collapse fo tailings dams or other such disasters and are trying to put positive programs in place to prevent further occurrences.
At its best these companies have effective programs of risk management. A recent KPMG survey found that 85%of executives believe that an effective risk management strategy is critical to achieving the objectives of their company.
A great resource in this area is the Compliance Institute of Australia which has hundreds of members and runs courses in identifying areas of concern in achieving compliance and risk minimisation.
You have to walk before you can run and there is no point in skipping this phase.

12. What does business compliance look like?
Identification of relevant laws & regulations:
Environment Protection Act
Occupational Health & Safety legislation
Industrial Relations Fair Work Act
Local Govt. bylaws etc.
Industry Standards, Guidelines & Codes of Practice
Actions include:
Determine relevant legislation, regulations and community expectations
Measurement, monitoring and reporting.

13. Beyond compliance?
Some organisations choose to commit to achieving sustainability standards, targets and actions that go beyond those required by law. Some of these initiatives include:

14. 4. EFFICIENCY PHASE: The Industrious Stewards
Objective: Eliminate waste and increase process & materials efficiencies.
Key business opportunity:
Increase efficiencies by waste reduction and reorganisation.
Potential business benefits:
Cost reduction; savings
Increased employee productivity & involvement/engagement
Better teamwork and lateral communication.
“DO MORE WITH LESS”
This is the next step in achieving sustainability and is often taken when the benefits of compliance have been achieved. HP for instance became an industry leader in going beyond compliance, becoming “dissatisfied with mere compliance”. They wanted to be an industry leader in actively contributing to the formulation of governmental environmental standards for the industry. They are engaged in redesigning their products to make them easier and cheaper to recycle.
Efficiency means making sustainability an integral aspect of the supply chain and production process. Sustainability has to be built in not bolted on to get the rewards.
Interface is the world’s leading manufacturer of modular carpets. In 1994 Interface made a commitment to become sustainable not an easy ambition for a company whose product was based on petrochemicals. They started by eliminating waste – rather than costing them money the exercise has saved them $300 million since Interface is redesigning its carpets to replace oil-based carpets with fibres manufactured from starch. Even more importantly, the firm has moved into servicing carpets rather than supplying them. The firm has reduced its greenhouse gas emissions by 46% and solid waste to landfill by 65%
In Australia more and more organisations are signing voluntary agreements with environmental agencies such as DECC in NSW. For example, Pilkington Glass is Australia’s largest glass manufacturer and has signed a Sustainability agreement with the Victorian government in which it has agreed to reduce its greenhouse gas emissions at its Dandenong plant by 35%. Other companies associated with such covenants include Sensis and HP.

15. What does efficiency look like for business?
Efficient consumption of resources:
Inputs (raw materials, water, energy etc.)
Eliminating waste (increasing recycling)
Typical actions:
Reduce resource use (energy, water, materials)
Design/redesign buildings/plant to dramatically reduce ‘footprint’, create adaptable spaces
Recycle/remanufacture (life cycle stewardship; cleaner production)
Dematerialise, Redesign products, Meet international GRI guidelines.

16. 5. STRATEGIC PROACTIVITY PHASE:
The Proactive Strategists
Objective: Pursue the strategic opportunities in sustainability.
Key business opportunity: Become market leader through pursuing the strategic potential of sustainability.
Potential business benefits:
Increased revenue and market share
Stronger stakeholder support (reputation and commitment)
Higher customer retention rates; faster attraction of new customers
Established lead in developing new markets
Employer of choice – attract and retain skilled managers and professionals
“LEAD IN VALUE-ADDING AND INNOVATION”
Example of BP switch in branding which reaped it benefits in terms of reputation but it has to be sincere and applied over the organisation. Innovation is the mark of this phase. For example, Vicptr Smorgon and International Power are working on developing biofuels from carbon dioxide using algae and photosynthesis. Waste becomes fuels.

17. What does strategic proactivity look like?
Typical actions:
Commit strongly to sustainability
Re-brand and build wider stakeholder support
Creatively destroy existing product designs, manufacturing models and re-invent the firm, leapfrog competition by early breakthroughs
Increase employee and stakeholder engagement to source innovative ideas
Concentrate on adding value and innovating.

18. 6.THE SUSTAINING CORPORATION PHASE:
The Transforming Futurists
Objective: Redefine the business environment in the interests of a more sustainable world and to support the core strategies of the firm.
Key business opportunity:
Create a constructive culture that continually renews the long-term viability of the organisation.

19. “TRANSFORM OURSELVES: LEAD IN CREATING
6.THE SUSTAINING CORPORATION PHASE:
Potential business benefits:
Global leadership of the sustainability movement
Enhanced reputation and stakeholder support and involvement
Increased share value
Attraction/retention of talented, highly motivated employees.
“TRANSFORM OURSELVES: LEAD IN CREATING
A SUSTAINABLE WORLD”

20. Typical actions:
Participating in changing the ‘rules of the game’ to achieve sustainability
Reorganise the company’s supply chain to ensure that the whole production process is sustainable
Build human and relational capital
Support dematerialisation and the growth of the knowledge-based economy
Model best practice; support/publicise best practice elsewhere
Participate in international agreements
Seek external auditing of sustainability
Build a constructive culture that encourages openness, debate, innovation and participation.

21. Questions?