1. Reconciling the creation of value, sustainability, and corporate social responsibility - a strategic stakeholder approach David Wheeler Schulich School of Business & Sustainable Enterprise Academy York University NOTE: Copyright Protected. May only be used for academic purpose only.

2. Dimensions of organisational strategy - three key dimensions (de Wit & Meyer) §Context l world trends §Content §Process l organisational responses and a navigational tool NOTE: Copyright Protected. May only be used for academic purpose only.

3. Key indicators 1950 - 1997 (Worldwatch Institute, 1999) §population - doubled §megacities - tenfold increase §food production - 40 per cent increase §fisheries catch - fivefold increase §water use - trebled §carbon emissions - quadrupled NOTE: Copyright Protected. May only be used for academic purpose only.

4. Consumption and production (UNEP, WBCSD & WRI) §The money spent on household consumption worldwide increased 68% between 1980 and 1998. NB In many developing countries, food purchases account for as much as 70 % of family income. §World energy production rose 42% between 1980 and 2000 and will grow 150-230% by 2050. NB Renewable resources like solar and wind account for only 11.5% of current consumption. §Over the past century, world water withdrawals increased almost as fast as population growth. NB Currently, 70% of freshwater withdrawals is for agriculture. NOTE: Copyright Protected. May only be used for academic purpose only.

5. 75 per cent of global materials flow is waste Natural Resources Goods and Services Pollution, Waste and Environmental Disturbances NOTE: Copyright Protected. May only be used for academic purpose only.

6. Data Source: C.D. Keeling and T.P. Whorf, Atmospheric CO2 Concentrations (ppmv) derived from in situ air samples collected at Mauna Loa Observatory, Hawaii, Scripps Institute of Oceanography, August 1998. A. Neftel et al, Historical CO2 Record from the Siple Station Ice Core, Physics Institute, University of Bern, Switzerland, September 1994. See http://cdiac.esd.ornl.gov/trends/co2/contents.htm Atmospheric carbon dioxide concentrations (1750 to present) NOTE: Copyright Protected. May only be used for academic purpose only.

7. outlines show watersheds that are both in and approaching scarcity; about 2.3 billion people are living in conditions of water stress or water scarcity. Water scarcity in 2025 - a threat to public health and security (WRI) NOTE: Copyright Protected. May only be used for academic purpose only.

8. Demographic, democratic and technological shifts (UNEP, WBCSD & WRI) §The current addition of 60 million urban citizens a year is the equivalent of adding another Paris, Beijing, or Cairo every other month. §In developed countries, the working age population will shrink from 740 million to 690 million between 2000 and 2025. NB In developing countries, it will increase from 3 to 4 billion people. §There are 119 democratic states out of a total of 192 countries in 2000, as compared to 22 democratic states out of 154 countries in 1950. In 1948, only 41 non-governmental organizations had consultative status in the UN; now there are 2,091.  Today, over 400 million people use the Internet, compared with less than 20 million 5 years ago. By 2005, there will be about a billion users. NB More than half the world's peoples have never used a telephone.

9. DEVELOPING DEVELOPED billions of people World population growth NOTE: Copyright Protected. May only be used for academic purpose only.

10. Basic social needs §more than 150 million children malnourished §more than 750 million people lack health services §more than 1250 million people lack access to safe drinking water §more than 850 million adults can not read or write NOTE: Copyright Protected. May only be used for academic purpose only.

11. Social equity? §seven fold increase in developing country debt since 1970 §in 70 countries around the world average incomes today are less than they were in real terms in 1980 §there are between 200 and 300 million children working world wide; one million children work in the sex industry NOTE: Copyright Protected. May only be used for academic purpose only.

12. On the future... We must recognise that we are living with a time bomb, and unless we take action now it could explode in our children’s faces. If we do not act, in thirty years the inequities will be greater. With population growing at 80 million a year, instead of 3 billion living on under $2 a day, it could be as high as 5 billion. In thirty years the quality of our environment will be worse. Instead of 4 per cent of tropical forests lost since Rio, it could be 24 per cent. James Wolfensohn, President, World Bank NOTE: Copyright Protected. May only be used for academic purpose only.

13. In summary……economic, social and environmental drivers of change §environmental and biophysical limits §social inclusion and equity §population growth §consumption and production shifts §demographic, democratic and technological shift §values shifts: assurance: stakeholders’ - including investors’ - need for assurance and companies’ need for trust and loyalty §governance shifts: the retreat of the state, the rise of civil society NOTE: Copyright Protected. May only be used for academic purpose only.

14. Strategy process §Analysis §Formulation (choice) §Implementation Linear or systems based? Stakeholder inclusive or exclusive? Mental models matter! NOTE: Copyright Protected. May only be used for academic purpose only.

15. Mental models - linear or systems thinking? A world in which poverty and inequity are endemic will always be prone to ecological and other crises. World Commission on Environment and Development, 1987 NOTE: Copyright Protected. May only be used for academic purpose only.

16. Sources of wealth creation and competitive advantage - stakeholder exclusive or stakeholder inclusive? 20th Century §production inputs §access to capital §market domination §proprietary information 21st Century §knowledge §innovation §competencies §intellectual property and social capital l brands l reputation l relationships NOTE: Copyright Protected. May only be used for academic purpose only.

17. . Competitive, ethical and sustainable Economi c value Social value Environmental value Sustainability - a potential new strategic framework for business NOTE: Copyright Protected. May only be used for academic purpose only.

18. Financial capital Natural capital Social capital A new ‘capitalism’: three capitals in dynamic synergy

19. Consultation - Engagement - Climate Change Panel Diversity Social Investment SD Principles Employees United Way/ Days of Caring Community Development and Education Industry Guidelines and Standards Green House Gases STEP - VCR - ABC Waste Emissions Toxics Biodiversity - TNCC Ecosystems ISO 14001 - HSSD - MS HSSD Assessments Research Business planning Product Stewardship Branding Green Products / Image Stock price Reputation Supply Chain Management Shell Environmental Fund Resource management Energy efficiency projects The Shell Canada approach to SD Courtesy of Murray Jones NOTE: Copyright Protected. May only be used for academic purpose only.

20. Novartis approach to SD performance Environmental Objectives Ecosystem integrity Climate integrity Carrying capacity Biodiversity Economic Objectives Growth Shareholder value Efficiency Sustainable Growth Social Objectives Empowerment & Equity Social mobility Social cohesion Cultural identity Institutional development Courtesy of Novartis NOTE: Copyright Protected. May only be used for academic purpose only.

21. JHIC Equity Pooled Fund (net of cash) Total Return = 44.8% Jones Heward Investment Counsel Sustainable Development Equity Fund Total Return = 43.5% TSE 300 Total Return = 2.8% Sustainability and stock performance - the Jones Heward Index NOTE: Copyright Protected. May only be used for academic purpose only.

22. Innovest Index EcoValue ‘21 Top and Bottom Rated Companies1998 Total Return 10 AAA vs. 10 CCC companies in: aerospace defense specialty chemical chemicals communication equipment electric companies electronics (semiconductors) health care iron and steel paper, forest products, etc. petroleum NOTE: Copyright Protected. May only be used for academic purpose only.

23. How are leading edge companies responding at the organisational level? §Systems thinking and future focused §Sensitivity to stakeholder relationships (creation of communities of interest) §Capability-based §Innovation-based …….all of these are strategic responses NOTE: Copyright Protected. May only be used for academic purpose only.

24. Tier 1 Tier 2 Tier 3 Interdependence Balance Do minimum harm Do maximum good Control Reconciling the creation of value, sustainability, and corporate social responsibility - a strategic stakeholder approach: 1 - Mindsets NOTE: Copyright Protected. May only be used for academic purpose only.

25. Tier 1 Tier 2 Tier 3 Engaged Responsive Do minimum harm Do maximum good Compliant Reconciling the creation of value, sustainability, and corporate social responsibility - a strategic stakeholder approach: 2 - Behaviours NOTE: Copyright Protected. May only be used for academic purpose only.

26. Stakeholder capitalism Stakeholder capitalism sets a high standard, recognizes the common-sense practical world of global business today, and asks managers to get on with the task of creating value for all stakeholders. Freeman, 2000 NOTE: Copyright Protected. May only be used for academic purpose only.