Corporate Stewardship Bottom line Business Drivers for Change

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Corporate StewardshipBottom line Business
Drivers for Change

• ABA Seminar
• University of Maryland School of Law
• June 10, 2005
• Alan D. Hecht
• Director for Sustainable Development
• U.S. Environmental Protection Agency
• Office of Research and Development

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Outline Of Presentation

• Global context for business and sustainability
• EPA perspective on stewardship and sustainability
  
• Scenarios for the future things to watch

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Perspectives on Business and Sustainability

• The proper business of business is business.
  No apology required. The
  Economist, 1-22-05
• A responsible focus is a necessary foundation
  before business can expect to find opportunity
  and top-line value. Carpenter and
  White, PG, 2004
• There is a clear link between sound environmental
  governance policies, practices and performance
  and the financial performance of businesses.
  UK Environment Agency, 2-13-05

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Global Context for Business, Finance and
Sustainability

• Customer and employee pressures
• Public access to information and non-financial
  reporting
• New markets (fortune at bottom of pyramid)
• Globalization and growing social pressures
  (licenses to operate)
• International business competitiveness
• International (UN) pressures
• Growth of SRI/TBL

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Response to Pressures

• Many profit-seeking firms are
• adopting sustainability goals and management
  practices and
• embracing non-financial public reporting.
• Many investors are attracted to
• sustainable management and
• socially responsible behavior.

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Changing Nature of U.S. Environmental Protection

• Dominant approach Command-and-control
• Government Performance and Results Act (GPRA)
  cost/benefit and risk analysis
• Growing suite of voluntary programs (e.g.,
  Climate Leaders, Energy Star)
• Reliance on market forces (emission trading)
• Incentives, reporting and public pressures (TRI)
• Partnerships with business (DfE)
• Evolving toward sustainability

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Defining Sustainability

• Public Policy Protect human health and the
  environment, provide for social well-being, and
  support a growing economy
• Business Increase shareholder value while
  benefiting society and decreasing environmental
  footprint

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Four Trends Promoting Sustainability

• Science and technology are making possible more
  sustainable operations.
• Corporate and financial leaders are moving toward
  sustainable operations and socially responsible
  investing.
• State and local communities are taking leadership
  roles for sustainability.
• National policy is beginning to reflect and
  reinforce the first three trends
• Provision of and access to industrial and
  environmental information
• Green products and labeling
• Recognition and rewards programs

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Governance Challenges2005Future

• Changing natures of environmental problems
• Need for policy coherence among federal agencies
• Need to set clearer direction for EPA

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Scenarios for the Future Today 50 Years

• Trends
• Economy 500
• Population 50
• Energy and Manufacturing 300
• Challenges
• Decouple material and energy use
• Develop new governance framework
• Integrate across media
• Develop cost-effective policies
• World Resources Institute, The Weight of
  Nations, 2000

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Consensus on Major Threats to the Global
Environment and Continued Economic Development
Graph shows the number of studies, among nine
analyzed by Jessica Biamonte and Robert L. Olson,
that consider each factor to be a threat or
serious threat. Adapted from New Global Agenda
An Analysis of Major Overview Studies of the
Global Environment, a White Paper prepared for
Foresight and Governance Project, Woodrow Wilson
International Center for Scholars (Washington
Institute for Alternative Futures, August 2004).
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Consensus of Underlying Contributors to the
Degradation of the Global Environment

• Graph shows the number of studies, among nine
  analyzed by Jessica Biamonte and Robert L. Olson,
  that consider each cause to be a contributor or
  significant contributor. Adapted from New Global
  Agenda An Analysis of Major Overview Studies of
  the Global Environment, a White Paper prepared
  for Foresight and Governance Project, Woodrow
  Wilson International Center for Scholars
  (Washington Institute for Alternative Futures,
  August 2004).

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Consensus on Governance Strategies forReversing
Serious Environmental Trends
Graph shows the number of studies, among nine
analyzed by Jessica Biamonte and Robert L. Olson,
that consider each strategy to be a useful or
critical role. Adapted from New Global Agenda
An Analysis of Major Overview Studies of the
Global Environment, a White Paper prepared for
Foresight and Governance Project, Woodrow Wilson
International Center for Scholars (Washington
Institute for Alternative Futures, August 2004).
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Things To Watch

• Revolution in science and technology (nanotech,
  biotech, informatics, genomics)
• Social pressures for CSR
• Finance and Business cases for
• Sustainability
• Seeking the fortune at the bottom of the
  pyramid
• Evolution of EPA programs