The Business Case for Sustainability

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The Business Case for Sustainability
Prairie Centre Policy Institute Roadmap
2020 Saskatoon Luncheon November 16, 2004
Bob Willard bobwillard_at_sympatico.ca www.sustainabi
lityadvantage.com
2
Definitions
Sustainable Development Meeting the needs of the
present without compromising the ability of
future generations to meet their own needs.
-- Brundtland Commission,
1987 --
Corporate Social Responsibility The overall
relationship of the corporation with its
stakeholders. Elements of social responsibility
include financial performance, creation and
maintenance of employment, environmental
stewardship, employee relations, and investment
in community outreach. -- Conference Board of
Canada --
Corporate Social Responsibility The commitment
of business to contribute to sustainable economic
development working with employees, their
families, the local community and society at
large to improve their quality of life. --
WBCSD --
Sustainability The possibility that we all
flourish forever. -- John
Ehrenfeld, International Society for Industrial
Ecology --
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4 Systems Conditions for a Sustainable Society
In a sustainable society, nature is not subject
to systematically increasing 1. concentrations
of substances from the earths crust 2.
concentrations of substances produced by
society 3. degradation by physical means
(unsustainable harvesting) and 4. people
are not subject to conditions that systematically
undermine their capacity to meet their needs

-- The
Natural Step --
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Terminology
Sustainability
Sustainable Development (SD)
Corporate Social Responsibility (CSR)
Corporate Responsibility (CR)
Triple Bottom Line (TBL)
3Es / 3Ps

• Economy / Profits
• Sustainable business
• Profits
• Taxes, RD
• Jobs
• Expenditures
• Training
• Fair trade
• Core values

• Environment / Planet
• Eco-Efficiency
• Manufacturing efficiencies
• Operations efficiencies
• Product efficiencies
• Smart design
• Cradle-to-cradle, take-back
• Beyond compliance
• Restorative to nature

• Equity / People
• Ethical business
• Internal employees
• Human rights
• Health Safety
• Empowerment
• Respect, Caring
• Local community
• Rest of the world

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5 Sustainability Stages

5. Purpose / Values
-------------------------------
4.
Integrated Strategy
3. Beyond Compliance 2.
Compliance 1. Pre-Compliance
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3 First Wave Drivers

• Founder / CEOs personal passion values based
• PR crisis reputation / brand value / image hit
• Regulatory pressure ... actual or threatened
  sufficient for next wave?

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First Wave Drivers

5. Purpose / Passion
-------------------------------
4.
Integrated Strategy
3. Beyond Compliance 2.
Compliance 1. Pre-Compliance

• Passionate CEO

• Regulatory Threat

• Regulatory Pressure
• PR Crisis

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Business Case

• The Stick Risk Management
• The Carrot Business Opportunities

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The Perfect Storm

• Oct. 27 Nov. 1, 1991
• Hurricane Grace near Bermuda
• Cold front over the Great Lakes
• Old warm front near Sable Island
• All were dying out
• Energy from the 3 systems combined
• Worst storm in history 100 waves
• Sudden, unexpected, devastating

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Perfect Storm of Business Risks
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10 Market Forces
Sea Change Of Rising Expectations
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A Perfect Storm of Opportunities
Innovation
Business Value
Growth
Productivity
Brand Image
Revenue
aving
Competitive Advantage
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Business Case

• The Stick Risk Management
• The Carrot Business Opportunities

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Business Priorities
Revenue
Governance
Brand Image
Productivity
New Markets
Complying with New Regulations
Profit
Attracting Retaining Top Talent
Share Price
Attracting Retaining Customers
Growth
Leadership
Motivation
Innovation
Managing Risks
Competitive Advantage
Market Share
Speed to Market
Responding to Emerging Market Forces
Expense Savings
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Dow Jones Sustainability Index
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Benefits to SME Ltd.
Revenue 4,000,000 Profit 200,000
(5 of Revenue) Workforce 50 (43 7
Managers) Avg. Employee Salary 25,000 Avg.
Manager Salary 55,000
Potential profit increase 46 Energized
employees Improved corporate image
Competitive advantage Positioned for the future
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6 Benefit Areas
Usual focus

• Reduced electricity, fuel, and waste costs
• Reduced recruiting costs
• Reduced attrition costs
• Increased employee productivity
• Increased revenue / market share
• Reduced risk, easier financing

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6 Benefit Areas Improvement

• Reduced electricity, fuel, and waste costs -10
• Reduced recruiting costs
  -1
• Reduced attrition costs
  -2
• Increased employee productivity
  6
• Increased revenue / market share
  5
• Reduced risk, easier financing
  -5

yielding a profit increase of 46
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6 Benefit Areas Relative Sizes
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6 Benefit Areas Improvement

• Reduced electricity, fuel, and waste costs -10
• Reduced recruiting costs
  -1
• Reduced attrition costs
  -2
• Increased employee productivity
  6
• Increased revenue / market share
  5
• Reduced risk, easier financing
  -5

yielding a profit increase of 46
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What if

• Reduced electricity, fuel, and waste costs -10
• Reduced recruiting costs
  -1
• Reduced attrition costs
  -2
• Increased employee productivity
  6
• Increased revenue / market share
  5
• Reduced risk, easier financing
  -5

2
43
yielding a profit increase of 46
22
What if

• Reduced electricity, fuel, and waste costs -10
• Reduced recruiting costs
  -1
• Reduced attrition costs
  -2
• Increased employee productivity
  6
• Increased revenue / market share
  5
• Reduced risk, easier financing
  -5

3
28
yielding a profit increase of 46
23
What if

• Reduced electricity, fuel, and waste costs -10
• Reduced recruiting costs
  -1
• Reduced attrition costs
  -2
• Increased employee productivity
  6
• Increased revenue / market share
  5
• Reduced risk, easier financing
  -5

3
2
25
yielding a profit increase of 46
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Emerging Drivers

5. Purpose / Passion
-------------------------------
4.
Integrated Strategy
3. Beyond Compliance 2.
Compliance 1. Pre-Compliance

• Passionate CEO

• Risk Management
• Business Opportunities

• Regulatory Threat
• Business Opportunities

• Regulatory Pressure
• PR Crisis

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The Business Case for Sustainability
Prairie Centre Policy Institute Roadmap
2020 Saskatoon Luncheon November 16, 2004
Bob Willard bobwillard_at_sympatico.ca www.sustainabi
lityadvantage.com