THE BUSINESS CASE FOR SUSTAINABILITY September 12, 2012 bobwillard@sympatico.ca www.sustainabilityadvantage.com SUSTAINABLE DEVELOPMENT “Meeting the needs of the present generation without compromising the ability of future generations to meet their own needs.” Dr. Gro Harlem Brundtland SUSTAINABILITY “The possibility that human and other forms of life on earth will flourish forever.” Dr. John Ehrenfeld SUSTAINABILITY “Enough, for all, forever.” Dr. Chuck Hopkins CORE SUSTAINABILITY CONCEPTS Intergenerational responsibility Systems thinking Socio-economic justice SOCIETAL SUSTAINABILITY QUALITY OF LIFE Environmental MUNICIPAL SUSTAINABILITY Sustainable Municipality (28 Indicators) Economic Security Employment participation Unemployment rate Household shelter spending % Low income people Household debt Infrastructure & Built Environment Density Green buildings Green transportation use Local food production Renewable energy Clean tech business opportunity Ecological Integrity Water quality & consumption Green space Air quality Waste diversion, GHG emission reduction Urban biodiversity Social Well-being Life satisfaction Crime rate Health and access to care Cultural Events Homelessness Governance & Empowerment Education Voter turnout City council diversity Household garbage limit GHG reduction target Corporate Knights 5th Annual Sustainable Cities Rankings, Winter 2011 MOST SUSTAINABLE CANADIAN CITIES Ecological Integrity Economic Security Govern’ce & Empower’nt Infrastructure & Built Envir’t Social Well-Being Large Cities Total Toronto 5.5 6.2 7.9 7.3 7.7 6.9 Edmonton 7.1 6.2 5.3 4.7 7.2 6.1 Ottawa 4.8 7.3 6.0 4.1 7.6 6.0 Calgary 5.8 6.6 5.5 4.5 7.6 6.0 Montreal 5.2 4.4 5.3 6.8 7.5 5.8 Vancouver 6.5 6.0 7.6 7.7 7.5 7.1 Mississauga 5.5 7.6 5.7 5.3 7.6 6.3 Halifax 6.3 7.1 6.7 4.3 6.8 6.2 Hamilton 5.2 7.5 6.8 4.0 6.8 6.1 Quebec 4.5 8.4 5.9 3.7 7.7 6.1 Winnipeg 4.6 7.4 5.0 5.5 6.9 5.9 Medium Cities Corporate Knights 5th Annual Sustainable Cities Rankings, Feb. 2011 MOST SUSTAINABLE SMALL CITIES Ecological Integrity Economic Security Govern’ce & Empower’nt Infrastructure & Built Envir’t Social Well-Being Small Cities Total Victoria 5.2 7.2 7.2 7.6 8.2 7.1 Saskatoon 4.7 7.4 6.6 4.5 7.4 6.1 Saint John 4.6 8.2 5.5 4.6 7.5 6.1 Yellowknife 5.7 6.4 6.1 4.3 7.6 6.0 Charlottetown 4.6 6.3 5.2 5.4 7.3 5.8 Whitehorse 4.7 5.7 6.9 2.8 6.5 5.3 Corporate Knights 5th Annual Sustainable Cities Rankings, Feb. 2011 CORPORATE SUSTAINABILITY TRIPLE BOTTOM LINE Planet / Environment CORPORATE SUSTAINABILITY ESG Environmental CORPORATE SUSTAINABILITY GREEN +CSR Environmental CORPORATE SUSTAINABILITY ASSET MANAGEMENT Natural Capital SUSTAINABILITY JOURNEY 5. PURPOSE & PASSION 4. INTEGRATED STRATEGY 3. Beyond Compliance 2. Compliance 1. Pre-Compliance “Over the last 10 years, the ‘Sustainability Imperative’ has emerged, magnified by escalating public and governmental concern about climate change, industrial pollution, food safety, and natural resource depletion, among other issues.” David Lubin and Daniel Esty, HBR, May-June 2010 “Capitalism is under siege … The purpose of a business must be redefined around creating shared value (CSV)… How to reinvent capitalism—and unleash a wave of innovation and growth” Michael Porter and Daniel Kramer, HBR, Jan-Feb 2011 “Why Sustainability Is Now the Key Driver of Innovation” “Sustainability should be a touchstone for all innovation … In the future, only companies that make sustainability a goal will achieve competitive advantage. That means rethinking business models as well as products, technologies, and processes.” Nidumolu, Prahalad, and Rangaswami, HBR Sept.-Oct. 2009 CEO MINDSET IS SHIFTING Sustainability should be … fully embedded in strategies and operations 96% 72% 93% … acted upon by boards 69% 88% … embedded in supply chains 2010 50% 2007 UN Global Compact and Accenture study, survey of 766 worldwide CEOs, June 2010 STAKEHOLDERS INFLUENCE CEOs Consumers 50% Employees 39% Governments 32% 45% 39% 29% Commmunities 28% 26% Regulators 25% 2010 2007 UN Global Compact and Accenture study, survey of 766 worldwide CEOs, June 2010 58% CEOs’ SUSTAINABILITY DRIVERS UN Global Compact and Accenture study, survey of 766 worldwide CEOs, June 2010 STRATEGIES VS. ANOTHER GOAL Profit Talent wars Share price Productivity Growth Innovation Revenue Brand image Market share Expenses “SUSTAINABILITY” Quality Compliance Supply security SUSTAINABILITY STRATEGIES MORE COMPELLING BUSINESS CASE 9% 25% +51 to +81% PROFIT -16 to -36% 2. Reduced energy 75% 3. Reduced waste 20% 4. Reduced materials 10% 5. Increased productivity 6. Reduced turnover SUSTAINABILITY CAPITAL RESERVE Revenue Risks 7. Reduced revenue and increased expenses 1. Increased revenue Income Statement Expenses Opportunities 2% Company Data Profile Revenue Energy expense Materials and water expense Total salary / payroll expense Profit Average salary Number of employees Small Large Professional Manufacturing & Services Distribution Company Corporation $1,000,000 $500,000,000 $20,000 $10,000,000 $50,000 $150,000,000 $300,000 $70,000 $50,000 6 $150,000,000 $35,000,000 $40,000 3,750 Potential profit increase 51% 81% Potential profit at risk -16% -36% IN SUMMARY … SUSTAINABILITY IS $MART BUSINESS “The possibility that sustainable enterprises will flourish forever.” THE NEW ECONOMY • Lower-carbon economy • More local supply chains • Services vs. products • “Dematerialization” of everything • Sustainable consumption / thrift • Low- / No-growth / Steady-state economy • New company ownership models • New company purposes CLOSE TO “TIPPING POINT?” 5. PURPOSE & PASSION 4. INTEGRATED STRATEGY 3. Beyond Compliance 2. Compliance 1. Pre-Compliance 5. PURPOSE & PASSION 4. INTEGRATED STRATEGY How long will it be before we reach the SUSTAINABILITY TIPPING POINT in the business community? • • • • • 0-5 years 5-10 years 10-15 years More than 15 years Never SURVEY SAYS … Based on survey of 1,251 companies, in UN Global Compact Annual Review 2010 SUSTAINABILITY AT TIPPING POINT? • 70% say that sustainability was on the management agenda in 2011, and will stay there permanently. • 67% said that sustainabilityrelated strategies are necessary to stay competitive. • 24% are “Embracers” … the Tipping Point? MIT Sloan and the Boston Consulting, “2011 Sustainability & Innovation Global Executive Study and Research Project,” Jan. 2012. Surveyed 4,000 managers from 113 countries. “EMBRACERS” MIT Sloan and the Boston Consulting Group,survey of 3,000 worldwide executives in 2010, “Sustainability: The ‘Embracers’ Seize Advantage,” Feb. 2011 THE BUSINESS CASE FOR SUSTAINABILITY September 12, 2012 bobwillard@sympatico.ca www.sustainabilityadvantage.com