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Sustainability Seetha and Brian Simply Sustain

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Build Business Case Commit Resources Set Base Line Vision, Goals, Projects Organizational Resistance Resolve Dilemmas Innovate Collaborate Integrate into DNA Reinvent Capitalism Where the movement is Where it is headed Sustainability

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1. Business Case - Drivers Resource Supply Costs, Shortages Energy, Water, Fish Do The Right Thing Owners Epiphany License to Operate Compliance and Regulations Chemicals, Air Quality Protect Reputation Improve Image, Brand Media, NGO, Activists Nike Interface Unilever HP Dow

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2. Commit Senior Resources <ul><li>Company example </li></ul><ul><ul><li>Dow Chemicals, appointed a Chief Sustainability Officer, VP and Sustainability External Advisory Council </li></ul></ul><ul><li>Main role of CSO and his staff </li></ul><ul><ul><li>Make compelling case for change, </li></ul></ul><ul><ul><li>Put it high on the management team’s agenda </li></ul></ul><ul><ul><li>Develop vision, goals and bring along others </li></ul></ul><ul><ul><ul><li>Employees, middle management, business units </li></ul></ul></ul><ul><ul><li>Develop new tools and thinking </li></ul></ul><ul><ul><ul><li>e.g. Life Cycle Tools, integrate into core business processes, </li></ul></ul></ul><ul><ul><li>Change perspective </li></ul></ul><ul><ul><ul><li>From inward looking to outward looking </li></ul></ul></ul><ul><ul><li>Measurement and External Reporting </li></ul></ul><ul><ul><ul><li>Track progress </li></ul></ul></ul>

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3. Set Base Line, Identify Opportunities Making an inventory of past green activities motivates and reveals opportunities Internal External Strategic Enterprise Wide Functions Facilities Business units Low Energy Light Bulbs Reduce solid waste Recycle paper etc. Double sided printing Save water Many companies Community clean-up days Join local fund raising Local giving Many Companies Green products & technologies that were ahead of their time. Shell, Dow Coffee growers - Starbucks Sust. Fisheries - Unilever Diary farmers - Nestle

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3. Set Base Line, Identify Impacts Opportunities Corporate Infrastructure Human Resource Management Technology Development Procurement Inbound Logistics Operations Outbound Logistics After-Sales Services Marketing & Sales Financial reporting & Transparency Benefits, Training, Lay-off policies Suppliers Values e.g. Bribery, Child labor Green research, Conservation, Transportation Impacts Emissions, Waste, Energy & Water use, Hazardous Materials Packaging use & Disposal Transportation Impacts Truthful Advertising Transparency to Consumers Disposal of Obsolete Products, Handling of End-of life Issues (Porter & Kramer)

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4. Develop Vision, Goals and Programs <ul><li>While developing a sustainability vision, </li></ul><ul><li>goals and projects, some companies seek </li></ul><ul><li>to leverage their core strengths to: </li></ul><ul><li>Address their business case – the drivers for change for sustainability </li></ul><ul><li>Create value for the company, for the planet and for society- triple bottom line </li></ul>

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Unilever Business Case “ 9.5 billion people will put strain on biophysical resources. Water will be scarce, and food supplies will be insecure. Populations of India, China, and Indonesia will all aspire to the lifestyles and living standards enjoyed in California. There is nothing we can or should do to stop that” - CEO Paul Polman <ul><ul><li>Help billion+ people improve their hygiene habits and bring safe drinking water to 500m people </li></ul></ul><ul><ul><li>Double nutrition products, helping billion(s) of people to healthier diet. </li></ul></ul><ul><ul><li>Halve the GHG from raw materials to consumer use and disposal. </li></ul></ul><ul><ul><li>Halve the water associated with the consumer use of our products </li></ul></ul><ul><ul><li>Halve the waste associated with the disposal of our products </li></ul></ul><ul><ul><li>Source 100% Agricultural raw materials sustainably (water) </li></ul></ul><ul><ul><li>Link 500 000+ smallholder farmers and small-scale distributors into our supply chain, so they can benefit from working with Unilever. </li></ul></ul>2020 Sustainability Goals Goals to save water create value to their “care” portfolio which depends strongly on water and those in the food category secure agricultural supplies and uplift suppliers

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Dow Chemicals <ul><li>Business Case </li></ul><ul><ul><li>“ There's only one planet earth, with limited resources. So everything we do, and how we do it, has an impact. As the world’s population rises and new economies emerge, society requires novel solutions to meet its most basic needs, including energy, water, housing, food, health and transportation. Those solutions simply can’t happen without the right chemistry . </li></ul></ul><ul><ul><li>Achieve a 75% improvement in Health and Safety indicators of neighbors, communities where Dow works. </li></ul></ul><ul><li>2. Achieve three breakthroughs which solve world challenges for- water, food, housing and health </li></ul><ul><li>3. Reduce greenhouse gas intensity 2.5% per year. Reduce energy intensity 25% </li></ul><ul><li>4. Increase sales of products that are highly advantaged by sustainable chemistry by 10%. Publish product safety assessments for all products. </li></ul>2020 Sustainability Goals Goals create value to their business portfolio and to society while helping to change their legacy through green chemistry goals

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5. Dilemmas and Resistance <ul><li>Capital investment </li></ul><ul><ul><li>Green higher risk projects with longer time horizons vs. less risky and short term projects </li></ul></ul><ul><li>People’s time </li></ul><ul><ul><li>Split between ongoing work and sustainability work. </li></ul></ul><ul><li>Reward structures </li></ul><ul><ul><li>E.g. sales people’s commission is based on sales volume, not value. </li></ul></ul><ul><li>Portfolio choices </li></ul><ul><ul><li>Exiting unsustainable but profitable products could lower share price </li></ul></ul><ul><li>Culture and employee skepticism </li></ul>Black Cash Cows Green Stars Black Dogs Green Question Marks Sustainability Low High Profitability Low High

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6. Collaboration <ul><li>Reasons and examples: </li></ul><ul><ul><li>Address externalities which they can not solve alone </li></ul></ul><ul><ul><ul><li>Post-consumer waste </li></ul></ul></ul><ul><ul><li>Create level playing field </li></ul></ul><ul><ul><ul><li>USCAP for carbon policies. </li></ul></ul></ul><ul><ul><li>Spread regulatory burdens </li></ul></ul><ul><ul><ul><li>Costs of organizing recyclables collection - EPR. </li></ul></ul></ul><ul><ul><li>Share knowledge / data for speed of change </li></ul></ul><ul><ul><ul><li>Nike Environmental Apparel Design Tool. </li></ul></ul></ul><ul><ul><li>Gain more credibility and wider stakeholder perspectives </li></ul></ul><ul><ul><ul><li>NGO and private sector. </li></ul></ul></ul><ul><ul><li>To set and agree green standards </li></ul></ul><ul><ul><ul><li>Eco labels. </li></ul></ul></ul>

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6. Innovation <ul><li>Sources and examples </li></ul><ul><ul><li>Regulatory compliance </li></ul></ul><ul><ul><ul><li>HP, stop using Hexavalent Chromium ahead of regulations </li></ul></ul></ul><ul><ul><li>Supply chains </li></ul></ul><ul><ul><ul><li>Wal-mart, sustainable packaging scorecard </li></ul></ul></ul><ul><ul><li>Operations </li></ul></ul><ul><ul><ul><li>FedEx, no left turns </li></ul></ul></ul><ul><ul><li>Returns </li></ul></ul><ul><ul><ul><li>Cisco, value recovery </li></ul></ul></ul><ul><ul><li>Products and Services </li></ul></ul><ul><ul><ul><li>Clorox Greenworks </li></ul></ul></ul><ul><ul><li>New Business Models </li></ul></ul><ul><ul><ul><li>Calera - give away cement but charge Carbon emitters </li></ul></ul></ul>

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Integration into values & culture <ul><li>What does integration look like? </li></ul><ul><ul><li>Company is changed in all it does. </li></ul></ul><ul><ul><li>Business process are changed </li></ul></ul><ul><ul><li>Changes the market through marketing. </li></ul></ul><ul><ul><li>Sustainability is not a tab on the web site. </li></ul></ul><ul><ul><li>Employee pride and motivation goes up. </li></ul></ul>

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7. Integration into DNA InterfaceFLOR Business Case If we can not make carpets sustainably we will not have a place in a sustainable world. We have been plundering what is not ours. Someday people like me will end up in jail. Ray Anderson CEO of InterfaceFLOR <ul><li>Zero Waste from making, selling and installing product. </li></ul><ul><li>Lead recovery of carpet for recycling, repurposing, or energy recovery.. </li></ul><ul><li>Benign Emissions: offset GHG, use landfill methane, reduce VOC </li></ul><ul><li>Reduce energy consumption and increase use of non-fossil energy </li></ul><ul><li>Redesign Commerce: shift from product to service “climate-neutral” carpet </li></ul>Sustainability Objectives

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Where is Sustainability Heading? <ul><li>Emerging questions and thinking: </li></ul><ul><ul><li>Is the way business is currently done ethical? </li></ul></ul><ul><ul><li>Do we need to re-define the boundaries of good business? </li></ul></ul><ul><ul><li>Do we need to re-define the purpose of capitalism? </li></ul></ul><ul><ul><li>Business is part of nature and society & not separate from them </li></ul></ul><ul><ul><li>If business impacts society negatively, these impacts will pose limits to its existence and growth. </li></ul></ul>

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8. Re-inventing capitalism Porter and Kramer (HBR) <ul><li>Purpose of business needs to change because </li></ul><ul><ul><li>Businesses are losing governments’ and people’s trust. </li></ul></ul><ul><ul><ul><li>Seen as the major cause of social, economic and environmental problems and prospering at the expense of society </li></ul></ul></ul><ul><ul><li>Political leaders are setting policies that sap economic growth. </li></ul></ul><ul><ul><ul><li>Businesses fight governments which reduces trust even more. </li></ul></ul></ul><ul><li>Big part of the problem lies with businesses </li></ul><ul><ul><li>Seeing their role as returning shareholder value in the short term. </li></ul></ul><ul><ul><li>Think it is sufficient to give back to society through employment, wages, purchases and taxes and not required to the non-economic needs of workers, communities and other supporting organizations. </li></ul></ul><ul><ul><li>They are overlooking: </li></ul></ul><ul><ul><ul><li>Depletion of natural resources vital to their business, well being of customers; viability of suppliers; economic distress of communities in which the operate. </li></ul></ul></ul><ul><ul><li>Reacting to competition through waves of restructuring, reductions and relocation to Asia, China - lose touch even more with local concerns </li></ul></ul>

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Re-inventing Capitalism Porter and Kramer (HBR) <ul><li>Need a new framework to bring business and society closer </li></ul><ul><li>One that creates value for both (Shared Value) through: </li></ul><ul><ul><li>Re-conceiving products and markets </li></ul></ul><ul><ul><ul><li>Ecomagination, </li></ul></ul></ul><ul><ul><li>Redefining productivity in value chains </li></ul></ul><ul><ul><ul><li>Wal-Mart </li></ul></ul></ul><ul><ul><li>Enabling local cluster development </li></ul></ul><ul><ul><ul><li>Nestle ( See notes) </li></ul></ul></ul>

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For Further Reading and viewing <ul><li>Unilever </li></ul><ul><li>http://www.youtube.com/watch?v=vN0CI-Ata4M&feature=related </li></ul><ul><li>http://www.youtube.com/watch?v=cCZ4RGRXNOI&feature=related </li></ul><ul><li>Dow </li></ul><ul><li>http://storage.dow.com.edgesuite.net/podcast/Dow-CEO-Andrew-Liveris.mp3 </li></ul><ul><li>Interface </li></ul><ul><li>www.youtube.com/watch?v=OUG4JXE6K4A </li></ul><ul><li>Porter and Kramer </li></ul><ul><li>http://hbr.org/2006/12/strategy-and-society/ar/1 </li></ul><ul><li>http://hbr.org/2011/01/the-big-idea-creating-shared-value/ar/1 </li></ul>