1. Implementing an All-Encompassing
Sustainability Strategy – The Key
Challenges
Christopher Shanahan
Food Industry Analyst
Chemicals, Materials and Food
San Antonio, Texas USA
June 4th, 2009

2. Agenda
• What is Sustainability?
• The Current Economy and the State of
Sustainability
• Review of Sustainability Business
Strategies Currently Adopted by
Companies
• Sustainability Strategies Assessment
and Recommendations
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3. What is Sustainability?
Objective Generation, Evaluation and Implementation of an Effective Sustainability
Strategy
• Sustain Profitability Margin
• Sustain Competitive Advantage
• Sustain Revenue Growth
• Adopt strategies that will minimize/maximize the production of
negative/positive externalities produced by the company over time
• Minimize wasted inputs and unusable byproduct
• Avoid/minimize use of non-renewable resources
• Resources that have a virtually fixed amount (petroleum)
• Resources that have a virtually fixed amount
harvest rate > renewal rate (corn ethanol)
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4. What is Sustainability?
Optimization of the bottom lines over time
Yesterday’s Objective Today’s Objective
Change in Bottom Line
Change in Bottom Line
Line
tom
ic Bot
om
E con
e
Economic Bottom Lin
y
sponsibilit
Social Re
Time
s
Social Responsibility warenes
Environmental A
Time
Envi
ronm
enta
l Aw
aren
ess
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5. What is Sustainability?
Recognizing the interaction of the economic, social and environmental bottom lines over
Economic Bottom Line = Maximize Profit
+
∆ Yesterday < ∆ Today
- -
-
+ +
Environmental Awareness = Minimize Social Responsibility =
Waste and/or Negative Impacts on the Maximize/Minimize
Environment Positive/Negative Impact on the
Community
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6. The Current Economy State
Reviewing the Recession Genesis and its Impact on Sustainability Policy
Government’s Green
Private Sector Response
Defaults Lack of Trust in Financial Institutions • Cap and Trade
Sub-Prime Mortgages Financial Institutions • $100bn toward more efficient
Losses
Lack of Capital private homes and government
Suspension of
for Companies Interbank Lending buildings
Tightening Credit Markets
$
• Development of wind and solar
Banks Slow Lending Down
power
$ $
Lack of Lending for
Small Business
• Increased spending money on
public transport
• More fuel-efficiency under GM
Slower Growth Lack of Retail
Consumers Reduce Spending
$ Credit
bankruptcy plan
• 30% increase in fuel efficiency
$ standards
Economy Slows Down/Contracts
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7. The Current Economy and the State of Sustainability
What will happen in 2009…we have a better idea in 2010/11
Likely Independent of Economic Environment
?
Note the flat growth in the number of
companies choosing to report
sustainability performance during the
2001/02 recession Likely Not Independent of Economic Environment
Source: Global Reporting Initiative
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8. The State of Food Safety Sustainability
The Changing Face of Food Safety in the United States
Food Safety Standard Heightened Awareness of
Confusion and Food Security
Redundancies
Changing Face of
Food Safety in the
US
Mistrust of 3rd Party Growing Power of
Auditors Retailers
Source: Frost & Sullivan
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9. Sustainability Strategies Currently Adopted by Companies
Using The Warm Glow to Drive Demand
• Some consumers experience ‘a warm-glow’ when they buy a product with an icon that reports
social responsibility or increased environmental awareness.
• Thus, some people are willing to pay a greater premium for a given socially-beneficial, firm-
provided, service
• Consumers are motivated by the desire to receive praise and social acceptance, or avoid ridicule
• Thus just like any other product, consumer motivation is driven by both altruistic and egotistic factors.
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10. Sustainability Strategies Currently Adopted by Companies
Effectively Communicating Your Sustainability Practices Involves the Entire Supply Chain
Without a clear industry icon…
Raw Material Supplier Finished Good Distributors and Final Consumers
Manufacturer Retailers
We Are Still We Are Still Is this
Are We
Green Green Green?
Green?
With a clear industry icon…
Raw Material Supplier Finished Good Distributors and
Final Consumers
Manufacturer Retailers
We Are Still We Are Still We Are Still We Are Still
Green Green Green Green
3rd Party
Verified
Product Flow Source: Frost & Sullivan
$ and Feedback Flow
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11. The Current Economy and the State of Sustainability
When Adopting Sustainability Strategies Can Lead to Unintended Economic Consequences
• The bioethanol industry was believed to have been a motivating factor in increased corn production and
increases in grain product prices in late 2007 through 2008
• Increased speculation that farmers had a new incentive to switch away from other crops such as wheat and
soybeans Industry experts believe that speculative activity rooted in is accounting for approximately 20 to
30 percent of price growth during this period
• Summary: In an effort to move away from resources that have a virtually fixed amount of
global inventories such as petroleum, consumption moved to renewable sources at such
a fast rate that the resource effectively became a nonrenewable resource in the short
run, as shown in the growth in market prices.
ZeaChem: the “Food vs. Fuel” Debate is
Null and Void with New Sustainable Technology
Factory Yield End User Benefits
1st Generation (Corn Ethanol) 2.7 Gallons per Bushel 5,670 Mile/ac/yr
3rd Generation Cellulosic – ZeaChem
135 Gallons per Bone Dry Tons 28,350 Mile/ac/yr
Process
Source: ZeaChem
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12. Sustainability Strategies Currently Adopted by Companies
The Objective is to Offer a Product that Consumers will Buy No Matter What…
• Invest in marketing strategies that focuses on your
core product offering
• Exploit opportunities from consumer feedback
• Have a complete 360 degree perspective on your
market’s external environment
• Establish partnerships with other suppliers
• Adopt proactive product and service
differentiation strategies understand the
consumer’s motivation for buying your product
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13. Sustainability Strategies Assessment and Recommendations
v Select Optimal
Define the Identify End Identify Market
Identify Strategic Construct and Run Plan of Action Implement Plan of
Problem and Markets and Dynamics and
Options the Model based on Model Action
System Potential Constraints
Results
Renewable Inputs Non-renewable Inputs
Non- Complex Business Universe
Social
Social
Benefits
Benefits
The more
Sustainable Green we
Production are the
SUPPLY = Output
SUPPLY = Output Market more
System
Demand
Green we
make
Waste
Waste
Initial Investments
Initial Investments + Production Costs
Production Costs + Marketing and Logistic Costs
Marketing and Logistic Costs < Total Revenues
Total Revenues
Profit
Source: Frost & Sullivan
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14. Next Steps
Request a proposal for a Growth Partnership Service to support you and your
team to accelerate the growth of your company. (myfrost@frost.com)
1-877-GoFrost (1-877-463-7678)
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Sullivan Global Congress on Corporate Growth, September 13-16 2009,
Hyatt Scottsdale Resort & Spa at Gainey Ranch, Scottsdale, AZ
(www.gil-global.com)
Register for the next Chairman’s Series on Growth:
Growth Acceleration System: Leveraging the Growth Diagnostic Blueprint (July
9th) (http://www.frost.com/growth)
Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast
of innovative growth opportunities
(www.frost.com/news)
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16. For Additional Information
Steve Lee
Strategic Account Manager Melinda Meyer
Chemicals, Materials and Food, Asia Pacific
Director of Sales, NA - Chemicals,
(65) 6890 0914
steve.lee@frost.com Materials & Food
(210) 348-1000
Melinda.Meyer@frost.com
Johanna Haynes
Corporate Communications
Chemicals, Materials & Food
(210) 247-3870
Johanna.hayes@frost.com
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