Sustainability: Why It Resonates
– and Why It Doesn’t –
Within Corporations
February 29, 2012
Greg Stine
President & CEO
SustainEdge
Copyright 2012 SustainEdge www.SustainEdge.com
Copyright 2012 SustainEdge www.SustainEdge.com
Elements
Megatrends
Business Philosophy Development & Evolution
Current Events
Copyright 2012 SustainEdge www.SustainEdge.com
Elements
Environmentalism
Corporate
Financial
Dominance
Risk: Securities
Insecurity
Quality
Strategic
Planning
Globalisation
Internet
Performance
Measurement
Systems
Thinking
Financial
Malfeasance
Corporate and
Individual Philanthropy
(Merck, Gates)
Governance
(Sarbanes-Oxley, etc)
Culture and Social Trends
(e.g. The 99%, Millenials)
Copyright 2012 SustainEdge www.SustainEdge.com
Asking WHY
Is Much More
Important!
Copyright 2012 SustainEdge www.SustainEdge.com
The CSR Alignment Matrix
Profitable
Socially
Irresponsible
Socially
Responsible
Not Profitable
Drivers for Sustainability
 Brand/Corporate
Reputation
 Cost Savings
 Market Opportunity
 Customer Expectations
 Statement of Intent
 Executive ‘Worldview’
 Legislation
 NGO/Watchdog Activities
 Compliance and Risk
Exposure
 Higher Return on Capital
 Investor Demands/Activism
 Climate Change
Copyright 2012 SustainEdge www.SustainEdge.com
Barriers to Sustainability
Investments
 Organizational Inertia
 Lack of Expertise
 Fiduciary Responsibility
 Up Front Costs
 Competing Priorities or
 Lacking “Conditions”
 Legislation
Expenditures
 Investor Demands/Activism
 Conceptual Disagreement
 NGO/Watchdog Activities
 Short-Term Thinking - Quarterly
 Executive ‘Social
Earnings and Growth Expectations
Alignment’
 Fear of the Unknown
 Customer Expectations
 Non-Exposure to Concepts
 Marketing “Catastrophe”
 Misinformation or Bias
Copyright 2012 SustainEdge www.SustainEdge.com
Barriers to Sustainability
Investments
The {wimp} Factor
“strength”
“healthy”
“gentle”
Sustainabl
e
Traditional
“Manly”
“toughness”
“mild”
“power”
“safe”
(The Sustainability Liability: Potential Negative Effects of Ethicality on Product Preference, Luchs, Michael
G., Naylor, Rebecca W., et al, Journal of Marketing – September 2010)
Copyright 2012 SustainEdge www.SustainEdge.com
Recent Data Supports
Sustainability
A recent Harvard Business School longitudinal study of
180 companies between 1993-2010 indicates that:
→High Sustainability companies significantly outperform their Traditional firms
over the long-term
→ Overall Financial Performance (23%)
→ Stock Price (47%)
→The outperformance is stronger in sectors where the customers are
individual consumers instead of companies,
→ Consumer product companies compete on the basis of brands and reputations
→ Suppliers and manufacturers significantly depend upon extracting large amounts
of natural resources
(The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance, Robert G.
Eccles, et. al, Harvard Business School – November 2011)
Copyright 2012 SustainEdge www.SustainEdge.com
Case Study: Apple (or “What happens
when you ignore sustainability”)
Ranking
– Ranked 117th in Newsweek’s 2011 Green 500 list.
Key Apple Financials
2011 Revenue:
$128 billion
2011 Net Income:
$33 billion
2012 1st Quarter
Revenue: $44 billion
Net Income:
$13 billion
Copyright 2012 SustainEdge www.SustainEdge.com
Case Study: Apple
Sustainability Issues Facing the Company
 Transparency
 Supply Chain
 Availability of Raw Materials
 Human Rights
 Toxic Substances in Products (e.g. arsenic, BFRs, PVC)
 Environmental Footprint
 Public Relations
 Sustainability Nazis
Copyright 2012 SustainEdge www.SustainEdge.com
Distribution of World Oil Reserves
Copyright 2012 SustainEdge www.SustainEdge.com
Distribution of Rare Earth Metals Deposits
Copyright 2012 SustainEdge www.SustainEdge.com
Case Study: Apple
Sustainability Issues Facing the Company
 Transparency
 Supply Chain
 Availability of Raw Materials
 Human Rights
 Toxic Substances in Products (e.g. arsenic, BFRs, PVC)
 Environmental Footprint
 Public Relations
 Wrath of the Sustainability Nazis
Copyright 2012 SustainEdge www.SustainEdge.com
Apple - Scenario Planning
Financial Performance
Equitable
Treatment of
Workers
Copyright 2012 SustainEdge www.SustainEdge.com
Apple - Scenario Planning
Sustainable Operations
Equitable
Treatment of
Workers
Copyright 2012 SustainEdge www.SustainEdge.com
Apple - Scenario Planning
Financial Performance
Sustainable
Operations
Copyright 2012 SustainEdge www.SustainEdge.com
Best Part: It Is Hard to Screw This Up
Copyright 2012 SustainEdge www.SustainEdge.com
About SustainEdge
Basics
– Formed in St. Louis in 2008.
– Offices in St. Louis & New York City Metro
– Only Sustainability Firm in: MO, KS, IA, OK, AR, TN, KY
– Selected by Institutional Investor Magazine to Provide Case Studies
on Corporate Sustainable Performance
Products & Services
– Strategic Sustainability Planning
– Return on Sustainability (ROS®)
– Sustainability Performance Measurement (Metrics & Technology)
Copyright 2012 SustainEdge www.SustainEdge.com
Sample Clients
Copyright 2012 SustainEdge www.SustainEdge.com
Greg Stine
President/CEO, SustainEdge
GStine@SustainEdge.com
Cell: 314.808.1104
SustainEdge
100 Chesterfield Business Parkway, Suite 200
Chesterfield, MO 63005
314.596.2764
Copyright 2012 SustainEdge www.SustainEdge.com
28
Harvard Study Sustainable
Company Criteria
Copyright 2012 SustainEdge www.SustainEdge.com