Sustainability What It Is, What It Isnt and How to Make it Work for Your Company

1
SustainabilityWhat It Is, What It Isntand How
to Make it Work for Your Company

• A Presentation By
• Dr. Mark W. McElroy
• Executive Director
• Center for Sustainable Innovation
• Jed Davis
• Director of Sustainability
• Cabot Creamery Cooperative

2
Lets First Define Some Terms

• Sustainability - The study of human impacts on
  vital capitals as needed for human well-being

3
Lets First Define Some Terms

• Sustainability - The study of human impacts on
  vital capitals as needed for human well-being
• Vital Capitals - Key resources required for human
  well-being natural, human, social, and material

4
Lets First Define Some Terms

• Sustainability - The study of human impacts on
  vital capitals as needed for human well-being
• Vital Capitals - Key resources required for human
  well-being natural, human, social, and material
• Triple Bottom Line - Organizing principle for
  managing sustainability impacts on
• The environment
• Society
• The economy

5
Lets First Define Some Terms

• Transparency - Visible to inspection from the
  outside, openness

6
Lets First Define Some Terms

• Transparency - Visible to inspection from the
  outside, openness
• Stakeholders - Groups with an interest in the
  performance of an organization

7
Lets First Define Some Terms

• Transparency - Visible to inspection from the
  outside, openness
• Stakeholders - Groups with an interest in the
  performance of an organization
• Metrics - A measure of performance

8
Lets First Define Some Terms

• Sustainability Measurement and Reporting - The
  process of calling attention to an organizations
  triple bottom line performance
• Transparency
• Responsiveness to stakeholders
• Regulatory compliance
• Reputation
• Risk management

9
Why Disclose Your Sustainability?

• A business imperative!

10
Why Disclose Your Sustainability?

• A business imperative!
• Calls attention to
• Your positive impacts on society and the
  environment
• Steps to improve your sustainability performance

11
Why Disclose Your Sustainability?

• A business imperative!
• Calls attention to
• Your positive impacts on society and the
  environment
• Steps to improve your sustainability performance
• Active commitment to transparency

12
Why Disclose Your Sustainability?

• A business imperative!
• Calls attention to
• Your positive impacts on society and the
  environment
• Steps to improve your sustainability performance
• Active commitment to transparency
• Reputation and risk

13
What Sustainability Is Not!

• Eco-efficiency - Incremental improvements in
  energy and material use
• Less unsustainable, not sustainable
• Unsustainability in slow motion

14
What Sustainability Is Not!

• Eco-efficiency - Incremental improvements in
  energy and material use
• Less unsustainable, not sustainable
• Unsustainability in slow motion
• Green - Sexier way of saying eco-efficient
• Non-toxic, organic, biodegradable, etc.
• Green products versus manufacturing processes
  not the same things

15
Context is Key!

• Actual social and environmental conditions

16
Context is Key!

• Actual social and environmental conditions
• Context sets standards of performance

17
Context is Key!

• Actual social and environmental conditions
• Context sets standards of performance
• Vital capitals and human well-being

18
Context is Key!

• Actual social and environmental conditions
• Context sets standards of performance
• Vital capitals and human well-being
• Managing for sustainability requires context!

19
Dalys Rules

• To be sustainable, a social system (e.g., an
  organi-zation) is one
• Whose rate of renewable resource use should not
  exceed rate at which such resources are
  regenerated

20
Dalys Rules

• To be sustainable, a social systems (e.g., an
  organi-zations)
• Rate of renewable resource use should not exceed
  rate at which such resources are regenerated
• Rate of non-renewable resource use should not
  exceed rate at which renewable alternatives are
  developed

21
Dalys Rules

• To be sustainable, a social systems (e.g., an
  organi-zations)
• Rate of renewable resource use should not exceed
  rate at which such resources are regenerated
• Rate of non-renewable resource use should not
  exceed rate at which renewable alternatives are
  developed
• Rate of waste emissions should not exceed rate at
  which such wastes can be assimilated by the
  environment

22
Heres the Dupont report with context missing!
23
Heres the Dupont report with actual context added
24
Lets Review

• Concept of vital capitals should underlie
  sustainability program in its entirety
• Its not sustainability management if capitals
  missing!
• Is the basis of Triple Bottom Line (TBL)
  reporting
• and of GRI, the leading sustainability standard
  in the world

25
How To Measure Sustainability

• Measure social and economic aspects of TBL, not
  just environmental

26
How To Measure Sustainability

• Measure social and economic aspects of TBL, not
  just environmental
• Dont ignore sustainability context
• Triple Top Line reporting!

27
How To Measure Sustainability

• Measure social and economic aspects of TBL, not
  just environmental
• Dont ignore sustainability context
• Triple Top Line reporting!
• Dont mistake eco-efficiency reporting for
  sustainability reporting

28
Do Mainstream Reports Do the Job?

• Global Reporting Initiative (GRI)
• Clear proponent of context

29
Do Mainstream Reports Do the Job?

• Global Reporting Initiative (GRI)
• Is a clear proponent of context
• Fails to provide guidelines

30
Do Mainstream Reports Do the Job?

• Global Reporting Initiative (GRI)
• Is a clear proponent of context
• Fails to provide guidelines
• Is usually top-line only in content

31
Do Mainstream Reports Do the Job?

• Global Reporting Initiative (GRI)
• Is a clear proponent of context
• Fails to provide guidelines
• Is usually top-line only in content
• Is really standards-based greenwashing

32
Do Mainstream Reports Do the Job?

• Global Reporting Initiative (GRI)
• Is a clear proponent of context
• Fails to provide guidelines
• Is usually top-line only in content
• Is really standards-based greenwashing
• Ecological Footprint Method
• Is rarely used in business
• Narrowly focused

33
How To Measure Sustainability

• Always think in terms of three bottom lines
• Environmental (impacts on vital capitals)
• Social (impacts on vital capitals)
• Economic (impacts on vital capitals)

34
How To Measure Sustainability

• Always express impacts in context
• Environmental conditions in the world
• Social conditions in the world
• Economic conditions in the world

35
How To Measure Sustainability

• Set standards, then measure against them
• Impacts on vital capitals
• Human well-being
• Sustainability meeting your standards

36
Enter Sustainability Quotients
Normative Impacts On Vital Capital
37
Measure Actual Impacts
Actual Impacts On Vital Capital
Normative Impacts On Vital Capital
38
Compute Sustainability Performance
Actual Impacts On Vital Capital
Sustainability Performance

Normative Impacts On Vital Capital
39
Example - DuPonts Water Use
2001
Gallons Consumed Per Capita (millions)
3.01
3.01
Sustainability Performance


1.36
2.21
Gallons Available Per Capita (millions)
2.21
40
Footprint Models Work

• Ecological Footprints
• Measure human impacts on natural capital against
  norms for what such impacts ought to be
• Norms grounded in ecological limits or thresholds
• Do not cross ecological thresholds
• Live within our ecological means
• Footprints have denominators, not just numerators
• Not eco-efficiencysustainability

41
Footprint Models Work

• Carbon Footprints (4 kinds)
• Top line only, nothing else
• Carbon intensity variant (emissions per economic
  unit)
• Bottom Line Type 1 (emissions relative to
  ecological limits)
• Bottom Line Type 2 (emissions relative to social
  norms or expectations, such as Kyoto)

42
Footprint Models Work

• Recall Ecological footprints vital capital is
  fixed and non-anthropogenic
• Must live within our ecological means
• Cannot increase supply must manage our use of
  it

43
Footprint Models Work

• Recall Ecological footprints vital capital is
  fixed and non-anthropogenic
• Must live within our ecological means
• Cannot increase supply must manage our use of
  it
• Social footprints vital capital is not fixed
  and is anthropogenic
• Can produce it at whatever levels we require
• Since we can increase the supply, should produce
  and maintain it to ensure human well-being

44
What Does This Mean To You?

• Operationalizing your Triple Bottom Line
• Be clear about your standards specify them
• In ways grounded in social and environmental
  context
• For each of the three bottom lines
• Base your sustainability program on this approach

45
A Quick Case Study

• Ben Jerrys
• A social footprint
• To what extent is Ben Jerrys contributing
  towards returning greenhouse gas concentrations
  to safe levels?

46
A Quick Case Study

• Ben Jerrys
• A social footprint
• To what extent is Ben Jerrys contributing
  towards restoring greenhouse gas concentrations
  to safe levels by investing in vital capitals
  required to do so?
• Measurement was based on a specific climate
  change mitigation scenario known as WRE350
• Actual CO2 emissions by BJ were used as an
  indicator of investments made in related vital
  capitals
• If BJs actual emissions were consistent with
  the WRE350 scenario, its investments were
  considered adequate

47
BJs Sustainability Quotient
Actual carbon emissions at Ben Jerrys (tC)
Sustainability performance (carbon
emissions through 2006)
6,279


6,146
Maximum carbon emissions allowed in order to
return greenhouse gas emissions to safe levels
(tC)
1.022
48
Another Case

• Cabot Creamery Cooperative
• Strong commitment to the vital capitals approach

49
Another Case

• Cabot Creamery Cooperative
• Strong commitment to the vital capitals approach
• Focusing on all three bottom lines, not just
  ecological

50
Another Case

• Cabot Creamery Cooperative
• Strong commitment to the vital capitals approach
• Focusing on all three bottom lines, not just
  ecological
• Working closely with supercenters and more
  traditional retailers

51
Another Case

• Cabot Creamery Cooperative
• Strong commitment to the vital capitals approach
• Focusing on all three bottom lines, not just
  ecological
• Working closely with Wal-Mart and other customers
• Developing a social contract that will specify
  all of its triple bottom line responsibilities

52
Another Case

• Cabot Creamery Cooperative
• Strong commitment to the vital capitals approach
• Focusing on all three bottom lines, not just
  ecological
• Working closely with Wal-Mart and other customers
• Developing a social contract that will specify
  all of its triple bottom line responsibilities
• Collaborating with its owner/farmers to create a
  Vital Capital Scorecard

53
Footprinting Possibilities Are Many

• UN Millennium Development Goals
• Extent to which an organization is meeting its
  share of the burden to achieve them
• Local, Regional, National Issues
• Healthcare
• Education
• Housing
• Infrastructure
• The economy
• Internal affairs
• Work/family balance
• Livable wage

54
Dos and Donts for Sustainability

• Donts
• Dont confuse with eco-efficiency
• Dont fall prey to greenwashing
• Dont begin without context

55
Dos and Donts

• Dos
• Embrace the vital capitals principle, and base
  your sustainability program upon it
• Ensure a full triple bottom line approach to your
  operations
• Environmental, social, economic
• Tell the world what youre doing call attention
  to what you are doing well, and take credit for,
  it
• Define your own standards of performance before
  others do it for you
• Leverage sustainability to your full advantage in
  the marketplace

56
Thank You!

• Dr. Mark W. McElroy
• mmcelroy_at_vermontel.net
• www.sustainableinnovation.org

Jed Davis Jdavis_at_cabotcheese.coop www.cabotcheese.
coop