willard presentation forum oct06

8/4/2019 Willard Presentation Forum Oct06

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2/29

Economy / Profits

Sustainable business

Profits

Taxes, R&D

Jobs

Expenditures

Training

Fair trade

Core values

The Sustainability 3-Legged Stool

Environment / Planet

Eco-Efficiency

Manufacturing efficiencies

Operations efficiencies

Product efficiencies

Smart design

Cradle-to-cradle, take-back

Beyond compliance

Restorative to nature

Equity / People

Ethical business

Internal Employees

Human Rights

Health & Safety

Respect, Caring

Local Community &

Culture

Rest of the World

Sustainable Development (SD) Sustainability

Triple Bottom Line (TBL)

Environmental, Social, Governance (ESG)

Corporate Social Responsibility (CSR)

Corporate Responsibility (CR)

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3/29

Financial

Capital

Manufactured

Capital

The Smart Business 3-Legged Stool

Natural

Capital

Human

Capital

Social

Capital

Asset Management


4/29

5 Stages and Emerging Drivers

5. Purpose / Passion-------------------------------

4. Integrated Strategy

3. Beyond Compliance

2. Compliance

1. Pre-Compliance

Eco-efficiencies Regulatory Threat PR Crisis

Passionate Founder / CEO

Regulatory Pressure / Enforcement

ProactI

ve

React

Iv

e

Business Opportunities Carrots

Risk Management Sticks


5/29

The Value Iceberg

Organization Value

Intangibles/ Public Image

/Stakeholder Relationships

Tangibles

/ Financial Capital

/ Balance Sheet


6/29

The Company Value Iceberg: 1981

17%

83%

Company Value

Intangibles / Public Image

Tangibles / Financials

Arthur D. Little, The Business Case for Corporate Citizenship , 2002)


7/29

The Company Value Iceberg: 1998

71%

29%

Company Value


/ Stakeholder Relationships


Arthur D. Little, The Business Case for Corporate Citizenship , 2002)


8/29

The Business Case

Company Value


Stakeholder Relationships


Regulators

Customers

The Media

Suppliers

Unions

Community

NGOs

Investors

Employees

Biosphere

Competitors Governments


9/29


10/29

Perfect Storm of Risks

Market Forces RisksMega-Issues Demanding

Stakeholders

Climate Crisis /Change

Awakened

Public

Public Image Risks

Balance Sheet Risks

Operating Risks

Capital Cost Risks

Sustainability Risks

Pollution &Health

BusinessCommunity

Water Crisis Civil Society /NGOs

Energy

Crunch

Government

Regulators

Erosion of Trust FinancialSectors
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11/29

Carbon Disclosure Project

Mega-Issue DemandingStakeholders

Business Risks

Climate Crisis FinancialInvestors

Regulations Physical Litigation Competitiveness Reputation

2003 2004 2005 2006

Institutional Investors 35 95 155 225

Value of Assets Held $4.5T $10T $21T $31T

Companies Surveyed Financial Times 500 1,800

Response Rate 47% 59% 71% 72%

Plus 27 US institutional investors with $1T in assets have askedthe SEC to require listed companies to disclose the risks that global

warming poses to their financial performance (June 2006)
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12/29

EU Market: The tail that wags the dog?


Business Risks

Pollution &Health

EU Market Regulations Competitiveness Reputation Market access

Restriction on the use of Certain Hazardous Substances(RoHS): In force July 2006; lead, cadmium, mercury, hexavalent

chromium, and two flame retardants

Waste from Electrical and Electronic Equipment (WEEE):In force January 2007; take-back & disassembly of products &components

Registration, Evaluation, Authorisation and Restriction ofChemicals(REACH): In force April 2007; burden of proof onmanufacturers to prove chemicals are safe

Energy-using Products(EuP): In force mid-2007;

environmentally friendly design and energy consumption
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13/29

Supply Chain Pressures


Business Risks

Climate Crisis &Energy Crunch

Big Buyers Regulations Competitiveness Reputation Capital Costs

Wal-Mart: (#2 in Fortune 500; Oct. 2005 annt by CEO Lee Scott)Reduce GHGs from stores by 20% by 2012;Invest $500M annually in stores efficient energy;Increase truck fleet fuel efficiency by 25% over 3yrs; 100% in 10 yrs;Ask 60,000 suppliers to reduce packaging

GE: (#7 in Fortune 500; May 2005 annt CEO Jeffery Immelt)

30% GHG intensity reduction by 2008;30% betterenergy efficiency by 2012 over 2004;2x research investment in cleaner technologies, from $700M in2004 to $1.5B in 2010;Sell $20B of 17 ecomagination-tagged products per year by 2010,up from $10 billion in sales in 2004
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14/29

Other Interesting Sustainability Motivators

Mega-Issue

NationalSecurity

Stop addiction to foreignoil

Investment inAlternative energy

Explosion of wind, solar,battery, clean-technologies; $46B by2008; $167B by 2015

Demand forCorporateGrowth

Search for new revenuestreams

Carbon Tradingopportunity

$22.3B in EU in 2005

War for Talent Need employees whounderstand complexglobal issues

MBA Schoolsintegratingsustainability

Beyond Grey Pinstripes;BGI; Presidio

Erosion of Trust Demand fortransparency ingovernance

Sarbanes-Oxley &SustainabilityReporting

64% of Global 250 dosustainability reporting;GRI

Threats toImage / Brand

Show leadership onglobal issues

DJSI, Jantzi, etcindices

37 corps in US EPAClimate Leaders
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15/29

Market Forces

Market Forces

Mega-Issues DemandingStakeholders

Climate Change Awakened

PublicPollution & Health Business

Community


Energy

Crunch

GovernmentRegulators

Erosion of Trust Financial Sectors

Sea Change

Of

Rising

Expectations

of

Accountability
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16/29

A Perfect Storm of Opportunities

Innovati

on

Productivity

Growth

Public

Image

Competitive

Advantage

$aving$Revenue

Organization

Value

Market Forces

Mega-Issues DemandingStakeholders

Climate ChangeAwakened

Public

Pollution &Health

BusinessCommunity


Energy Crunch GovernmentRegulators

Erosion of TrustFinancialSectors
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llery.php?cat=clouds&subcat=whales_mouthhttp://www.weather-photography.com/Photos/gallery.php?cat=clouds&subcat=whales_mouthhttp://www.weather-photography.com/Photos/gallery.php?cat=clouds&subcat=whales_mouth


17/29

The Business Case

Organization Value



/ Relationships
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18/29

Business Priorities

Productivity Brand Image

Profit

Growth

Attracting &

RetainingTop Talent

Managing Risks Innovation

Speed to Market

Leadership

Market Share

Motivation

Share Price

Competitive

Advantage

Governance

Expense Savings

New MarketsComplying with

New Regulations

Attracting &

Retaining

Customers

Responding to Emerging

Market Forces

Revenue
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19/29

Dow Jones Sustainability Index - 4 years

50

60

70

80

90

100

110

120

Jun-01 Oct-01 Feb-02 Jun-02 Oct-02 Feb-03 Jun-03 Oct-03 Feb-04 Jun-04 Oct-04 Feb-05 Jun-05

DJSI World (TR, in USD) MSCI World (TR, in USD)
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20/29

Potential profit increase: 38%

+ Energized employees

+ Improved corporate image

+ Competitive advantage

+ Positioned for the future

Benefits to SD Inc.

Revenue $44,000,000,000Profit $3,000,000,000 (7% of Revenue)Workforce 120,000Avg. Employee Salary $60,000

Avg. Manager Salary $70,000
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21/29

1. Show seniorleadership

Include SD in vision / mission / strategies

Reinforce it is a business strategy vs. a complianceor philanthropy issue

Avoid green-washing hype Visible support: speeches, questions, actions

2. Educate the whole company

Solicit employee ideas

3. Align with measurement systems

Align with measurement / management systems

Integrate into recognition / reward systems

The Catch
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1. Reduced recruiting costs

2. Reduced attrition costs

3. Increased employee productivity

4. Reduced expenses in manufacturing

5. Reduced expenses at commercial sites

(energy, water, consumables)

6. Increased revenue / market share

7. Reduced risk, easier financing

7 Benefit Areas

Usual

focu

s
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23/29

1. Reduced recruiting costs -1%

2. Reduced attrition costs -2%

3. Increased employee productivity +10.5%

4. Reduced expenses in manufacturing -5%5. Reduced expenses at commercial sites -20%


6. Increased revenue / market share +5%

7. Reduced risk, easier financing -5%

7 Benefit Areas % Improvement

yielding a Profit increase of +38%
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24/29








What if


-2%

+35%


25/29








What if


+4%

+23%


26/29








What if


-2%

+4%

+20%
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The Business Case

Organizational Value



/ Relationships


28/29

Tipping Point?

5. Purpose / Passion-------------------------------

4. Integrated Strategy

3. Beyond Compliance

2. Compliance

1. Pre-Compliance

Eco-efficiencies Regulatory Threat

PR Crisis

Passionate Founder / CEO

Regulatory Pressure / Enforcement

ProactIv

e

React

Iv

e

Business Opportunities Carrots

Risk Management Sticks

20% at Stage 4 or 5
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Bob [email protected]

www.sustainabilityadvantage.com

Communicating the Business Case

For Sustainability

willard presentation forum oct06

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