Second Lecture for Sustainability course in LUISS university, Rome. Topic: Importance of Sustainability within Strategy decisions of Organizations.

1. Business Sustainability
Published Online in Sustainability Company (www.sustainabilitycompany.net)
Why Business Sustainability
is Strategic ?
Lecture: 2
By Giovanni Tordi - Sustainability Company CEO
Lectures on Business and Environment Sustainability for
Luiss University, Rome – 2009/2010
In the medium long term the Consumption styles are modified.
enterprise must generate profit. We The consumer is always more
have seen that, if we concentrate attentive and available if, in case of
exclusively on “short term”, similar efficiency, in satisfying his all
originating profit is sensibly at risk. requirements, he can obtain an
It is around this concept of risk that indirect benefit for the environment
business sustainability is based: and for the society.
SUSTAINABILITY = DEVELOPEMENT Generate an improvement in
+ MITIGATION OF RISKS quality
In many cases, one of the effects of
Sustainability is therefore no longer sustainability integration is the
essentially a concept with a social induced improvement in the quality
and environmental dimension, but of products.
also economic. In fact, a non- The reduction of the environmental
sustainable approach may cause the impact of a given product through
progressive failure of the enterprise. the modification of the production
What are the benefits deriving from method, represent a quality element
the introduction of sustainability in perceived by the client.
the conduct of business? Let us A company producing cotton fioc
make some example: had always suffered of problems
with the environment organization.
ANTICIPATE THE MARKET, This was caused by the fact that the
INNOVATE plastic holder of the product was not
biodegradable and was polluting the
Introducing sustainability in sea.
processes and products, allows For this reason, when the company
innovating and differentiating from found a material that was absolutely
competitors. There are today many biodegradable still having the same
companies which, like Toyota and structural characteristics of the
Fiat, present hybrid models - plastic holder, the effect on the
gasoline + electric or gas - capable attitude of the environmental and
of reducing consumption, improving consumers organizations was highly
cost efficiency and reducing CO2 positive.
emissions.

2. Why is business sustainability strategic ?
This holder was produced from corn California, Oregon State and many
meal and was introduced in the multinational companies (Toyota,
production chain. Bell Canada, Xerox, Hewlett
Packard, and others). For example,
Reducing operational costs Xerox Usa estimates its Zero Waste
(example score reducing energy policy has saved, since 1990, more
costs) than $ 2 billion. Hewlett Packard in
Nowadays many companies are re- Roseville, CA has reduced waste by
qualifying the energy system of 95% and saved 870,564 dollars in
their buildings. They are definitely 1998. Interface, Inc. Atlanta, GA
aware of the fact that energy was a has saved more than $ 90 million.
high cost, which is subject to In 2000, the establishment of Epson
increases caused by shortage of Portland, Oregon has reduced its
fossil combustible materials. waste to zero and has saved $
The utilisation of new technologies 300,000. In 2006, Toyota has
from renewable sources (solar, achieved the goal of zero waste in
aeolian) allows savings of up to all its European plants.
60/70% of energy costs and a
reduction of CO2 emissions. Improving the work
environment
Reducing waste and the One of the fundamental elements
environmental impact for prosperity of companies is the
In production processes but also in management of human resources.
services, disposal of scraps may be To this end, the adoption of policies
optimized with substantial benefits in favour of employees is a key
for the environment. In the sector of element for success.
electronic RAEE, some components There are numerous cases of
of waste may serve to originate new wellness at work: companies which
products. Very often we can see the open the gyms for employees or
reconditioning of obsolete nurseries for the children have
computers which may be reutilized obtained a remarkable improvement
where there is no budget for the in acceptance and productivity. In
purchase of machinery (schools, Spain, some companies have
prisons). allowed a longer rest period in the
This is a tangible example of waste middle of the working day to allow
management with social and their employees to rest at home.
environment benefits. In so doing, they have obtained a
There are companies, like Nokia, remarkable increase in the
which, annually, make handsets afternoon productivity. Integrating
recycling campaigns. services for employees in the
But this is also true in solidarity food company model is definitely a
trade with food bearing a close success element in attracting new
expiration date and serve a low cost talents and keep in the company.
chain for poor families. In 2009, a survey of
The Zero Waste Strategy, is now MonsterTRAK.com found that 80%
carried by 50% of cities in New of young professionals interested in
Zealand, Australia, Canada, from working in an ambient that has a

3. Giovanni Tordi, CEO Sustainability Company
positive impact on the environment environmental legislation, relating to
and 92% would be more inclined to climate change within the next five
work for a company environmentally years and third in just two. Those
friendly. A chain of fast-food who had expected an earlier trend,
restaurants in the U.S., through a have had more time to improve
study on employees, found a direct their standards.
correlation between the pursuit of
sustainable policies (organic food, Reducing reputation risks
waste reduction, energy efficient The induced effect of having
lighting, training, ....) and the ability sustainability integrated in business
to attract qualified workers. is to be found in a return of
reputation based on facts.
Reducing operational risks Many corporations invest millions of
One of relevant aspect of risk euro in publicity communication
governance is definitely that of aiming at the sale of their products
mitigating legal and insurance risks. and trying to motivate a positive
It is sufficient to think of refunds approach in the consumer.
made by financial sector companies Actually, today, also thanks to the
(bonds in default) for consigned diffusion of Internet, which
products, which were not in line with represents an innovation for the
the risk profile of the client and consumer to inform himself,
have not gone through a reputation is more easily achieved
sustainability examination. with facts.
This has meant long and costly For this reason we start seeing in
processes that have generated some firms, departments in charge
unbelievable recovery costs for of management of reputation risks.
companies. These are unites specialized in the
preventive evaluation of risks which
Anticipating policy changes may be caused by some company
Having a sustainability approach and decisions.
follow it up with a pro-active At the same time, the incorrect
stakeholder engagement, often integration of sustainability in
allows to anticipate times and to business may cause a threat to the
overcome, without a critical impact, development of the enterprise.
policy changes.
In some European countries the Pollution risks
introduction of an energy It is the effect of unsustainable
certification is a mandatory element processes. An incomparable
to proceed in the sale of buildings example is provided by the great
(also in some Italian regions). environment catastrophe caused by
Having foreseen a step of the pouring of highly harmful and
certification in the conduct if toxic substances in the
business and work processes is an environment.
element of remarkable advantage. Here are a few examples:
According to a study published in
2008 McKinsey study, 80% of • 1976, the emission of dioxin in
managing directors expect new Seveso left the population w

4. Why is business sustainability strategic ?
ith a rate of deformed birth speculation in housing in the USA,
6.6 times higher than the have gone bankrupt.
Italian average. The impact of this failure has been
dramatic not only for thousand of
• IN 1984 the Bhopal pesticides employees losing their job but also
plant in India killed 3787 for all those people which were
people in just a few days after badly advised and lost their life
the discharge of 40 tons of saving.
Methyl isocyanate. But still
nowadays, the mortality rate Problems of products or services
is 2.4 times higher than Always because the superior
National average. information capacity through a
community web, if a given product
• After the explosion of the 4th has some problems, the network
reactor of a nuclear plant in puts it immediately in evidence.
1986 the population of There are non-specialized blogs of
Chernobyl decreased from people having their own
350.000 to 400 habitants. independent opinion about products
Debris are still easily findable and services, throwing under a good
around all EU. or a bad light the work of some
firms.
• The British Petroleum is One example could be the Dell case,
ordered to refund 9.5$ billion a company which produces
to the Mexican Gulf population computers and entered the market
after a leak of more than 4 with highly competitive prices.
million barrel of petrol in the The problem evidenced by
ocean. consumers was in the customer care
and assistance.
These catastrophes have caused For these reasons, after a short
death to human beings, upset the time, an independent campaign was
life of thousands of persons and launched attacking the company in
damaged the environment in a internet. This originated a heavy
dramatic way but nowadays we talk decrease in sales and forced the
about pollution also in finance. company to make improvement and
We should consider the so called guarantee a better after sale service
“toxic bonds”, I.E. bonds whose to clients.
value, all though submitted to the If Dell had immediately integrated
evaluation of financial analyst of sustainability, this attack to their
important rating agencies (Moodys, products and services was not going
Fitch) are thwarted, dissipating life to take place.
savings of many investors.
We can remember the case of
Lehman Brothers, historical
company in the world of
international finance, with a high
rating (A+) which, because of