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  • 1. Session Title Goes Right Here Sustainable Growth Toolkit: Opportunities and Risks from Environmental and Social Trends
  • 2. Format of the Toolkit 1 1. Finding the Right Place to Start 2. Opportunities and Risks from Environmental and Social Trends 3. Strategy Development 4. Goals and Metrics 5. Implementation Plans 6. Overcoming Barriers 7. Cross-Cutting Tool: External Engagement
  • 3. Overall Process & Guide to Tools 2 • 1. Finding the Right Place to Start • 2. Opportunities and Risks from Environmental and Social Trends • 3. Strategy Development • 4. Goals and Metrics • 5. Implementation Plans • 6. Overcoming Barriers • 7. Cross Cutting Tool: External Engagement
  • 4. 1. Finding the Right Place to Start 3 Goal: Establish the right starting place that will assure that sustainability efforts are rooted in the core business and will generate shareholder value. Steps: A. Decide scope of effort B. Start with the core values of the company C. Articulate the company’s business goals and strategies D. Define the operating environment in which the company does business E. Lay the internal groundwork for the initiative within the company F. Find the right words to describe your effort
  • 5. A. Decide Scope of Effort 4 ● Determine what type of sustainability strategy best suits the needs of your company: Company Wide Single Business Unit Combination of Company-Wide/Single Business Unit ● In establishing your starting place, be sure that there is support and a willingness from within your company.
  • 6. B. Start with the Core Values of the Company 5 ● Identify the social and environmental principles that the company has historically adopted (explicit or unstated). ● Catalogue past efforts to advance social and environmental goals. ● Define the relationship between core company values and success in the marketplace. ● Understand the current culture of the organization and the views of staff on sustainability and organizational culture and change.
  • 7. C. Connect to Business Goals & Strategies 6 ● To be sure that sustainability is anchored in the business and not an appendage, it is essential to integrate sustainability with the company’s broader business goals and strategies. ● To do this effectively, articulate these goals & strategies in the beginning of developing your sustainability approach.
  • 8. D. Define Company’s Operating Environment 7 Map the company’s operating environment: ● Identify competitive threats and pressures. ● Describe the expectations for social and environmental value of direct and end-use customers. ● Understand the social and environmental commitments and principles in use in your industry at both the company and industry levels.
  • 9. E. Lay the Internal Groundwork 8 ● Form an interdisciplinary team that includes leaders of key businesses, finance people and those with responsibility for external affairs. ● Seek a mandate from the senior leadership team to make them vested in success. ● Establish the right corporate governance and organizational structure.
  • 10. F. Find the Right Words to Describe Effort 9 ● A company should use the words and terminology that fits their needs, but define these terms up front to establish clarity. ● The term “sustainability” is widely used and too broadly defined. Derivatives of the term include “Sustainable Growth” (used in this toolkit), “Corporate Social Responsibility” (CSR) and “Triple Bottom Line” (TBL). ● Be cautious in using the term “initiative” to define your sustainability approach as that lends itself to be a short-term and limited effort.
  • 11. Overall Process & Guide to Tools 10 • 1. Finding the Right Place to Start • 2. Opportunities and Risks from Environmental and Social Trends • 3. Strategy Development • 4. Goals and Metrics • 5. Implementation Plans • 6. Overcoming Barriers • 7. Cross Cutting Tool: External Engagement
  • 12. 2. Opportunities and Risks from 11 Environmental and Social Trends Goal: A rigorous analysis of the market opportunities and risks the business faces as a result of environmental and social trends. Steps: A. How to think about sustainability: social and environmental trends as market forces that put business value at stake B. How sustainability strategies create value C. Identifying the issues on which the business has “value-at-stake” D. Describe the key trends in social and environmental issues E. Engaging stakeholders on value-at-stake Examples: JPMorgan Chase, Entergy, SC Johnson
  • 13. A. How to Think about Sustainability: Environmental and Social Trends as Business 12 Opportunities Social & Environmental Issues as Market Forces + Global Trends Magnify Market Forces = Changed Operating Conditions for Business • New Power of Civil Society • Changing Consumer • Climate Change • Connectedness Preferences • Forests & Biodiversity Loss • Globalization • Market Demand for Clean • Indigenous Peoples • Changing Role of Gov’t Energy & Products • Human Rights • Increasing Power & • Investor Interest in • Other Issues Declining Trust in Corps Sustainability Business Value at Stake Business Response: Seek out opportunities from social and environmental trends Integrate Social and Environmental Trends into Business Strategy Decision-making Copyright Ecos Corporation 2006
  • 14. B. How Sustainability Strategies Create Value 13 ● Review different approaches to how corporate sustainability strategies create financial value ● The following two illustrations take slightly different approaches ● These approaches can be used separately or in combination
  • 15. Strategies for Creating Environmental Strategies for Creating Environmental 14 Social Benefits with Business Value Social Benefits with Business Value Franchise Process Product New Market New Product Protection Changes Changes Development Development Business Customer Value Right to Cost & Liability Loyalty and Growth Growth Operate Reduction Reputation Focus Compliance Efficiency Value Chain Innovation Innovation Main Reduces Financial Risks Increases Increase Increase Margins Increase Impact May open Competitive Revenues & Revenues new Reduces Risks Advantage Diversification markets Adapted from WRI, Reed, Stalking the Elusive Business Case
  • 16. How Sustainability Strategies Create Value How Sustainability Strategies Create Value 15 Emphasizing Intangible Assets Emphasizing Intangible Assets GEMI, Clear Advantage
  • 17. C. Identifying the Issues on which the 16 Business has “Value-at-Stake” ● Take a broad view of value near-term tangibles intangibles such as reputation and trust (by customers and society) employee recruitment and retention, and being the “partner of choice” by those in and beyond your value chain ● What are the key social and environmental trends with the potential to act as market drivers in your business? ● Use tools that help you systematically look at a full range of issues ● Characterize most important risks and opportunities related to social and environmental trends
  • 18. D. Describe the Key Trends in the Social & 17 Environmental Trends Affecting Business ● Different approaches to trend analysis: Scenario analysis Projection ● Decide how to approach this analysis in your company ● Talk to: Internal strategy or forecasting group End-use Customers Experts on the key trends
  • 19. E. Engaging Stakeholders on 18 Opportunities and Risks ● External points of view important to understanding trends ● Identifying the right stakeholders ● Preparing for face-to-face engagements
  • 20. Value at Stake: JPMorgan Chase 19 ● JPMorgan Chase recognizes that balancing non-financial factors such as environmental and social issues with financial priorities is an essential part of good corporate citizenship, in addition to being fundamental to risk management and the protection of investors. ● “As part of its energy practice, our private equity group has invested in renewable energy generation projects and will continue to consider other investments in profitable renewable energy generation and technology.” Source: JPMorgan Chase – Pubic Environmental Policy Statement
  • 21. Overall Process & Guide to Tools 20 • 1. Finding the Right Place to Start • 2. Opportunities and Risks from Environmental and Social Trends • 3. Strategy Development • 4. Goals and Metrics • 5. Implementation Plans • 6. Overcoming Barriers • 7. Cross-Cutting Tool: External Engagement
  • 22. 3. Strategy Development 21 Goal: Develop robust sustainability strategies that create economic value for customers, employees and shareholders, while also benefiting society and the environment . Steps: A. Establish framework: strategies that create shareholder and societal value simultaneously. Corporate Example: Insurance Australia Group (IAG) B. Familiarize team with sustainability strategy frameworks in use C. Integrate assessment of opportunities and risks from sustainability into strategy D. Brainstorm strategic options for further investigation E. Refine and test strategic options F. Adopt strategies that combine sustainability goals and business objectives Examples: DuPont, General Electric, Wal-Mart
  • 23. A. Establish Framework: Strategies That Create 22 Shareholder & Societal Value Simultaneously ● There are powerful forces pushing business in the direction of strategies that : add more value to shareholders and add more value to society and the environment. ● The best strategies are those that add value to both (see following chart) because they benefit (and will be supported by) a broader array of stakeholders. ● The end goal remains the same: adding value for shareholders, but this helps identify which approaches are likely to serve shareholders best in the long run.
  • 24. Sustainability Strategy Guide 23 Societal Value + Unsustainable Sustainable Growth Sustainable High Societal and Strategies High Societal Value at a cost to the Company Shareholder Value Shareholder Value – + Unsustainable Unsustainable Low Societal and High Shareholder Value Traditional Shareholder Value at a cost to Society Strategies – Copyright Ecos Corporation © 2003
  • 25. Developing a Sustainability Strategy: Insurance 24 Group Australia (IAG) IAG is the largest insurer in Australia and New Zealand. They have historically operated in a market in which all insurance companies have placed a heavy emphasis on “claims control,” which essentially means aggressively resisting paying claims on every possible legal basis. This approach is good for shareholders, but tough for customers and society. IAG has explicitly moved to a strategy of partnering with society to reduce the incidence and severity of accidents while explicitly stating it will not resist paying claims on a technical basis. The goal is to lower overall claims by reducing insurable events, which is good for shareholders and society, while attracting new business. Source: Ecos Corporation
  • 26. B. Finding the Right Sustainability Approach 25 for Your Company ● Several different approaches that most companies find useful to review: Natural Capitalism Five Sustainability Strategies The Four Phases Sustainability Strategy ● Common elements: Include both opportunities and risks; Look to external stakeholders for guidance; Emulate natural systems; Apply “systems thinking” to solve problems before they occur; and Use the concept of “closed loops” to industrial and natural processes.
  • 27. The Four Principles of Natural Capitalism 26 ● Radically increase the productivity of resource use. ● Shift to biologically inspired production (“Biomimicry”) with closed loops, no waste, and no toxicity. ● Shift the business model away from the making and selling of "things" to providing the service that the "thing" delivers. ● Reinvest in natural and human capital. Source: http://www.natcap.org/
  • 28. Strategies for Creating Environmental 27 Social Benefits with Business Value Franchise Process Product New Market New Product Protection Changes Changes Development Development Business Customer Value Right to Cost & Liability Loyalty and Growth Growth Operate Reduction Reputation Focus Compliance Efficiency Value Chain Innovation Innovation Main Reduces Financial Risks Increases Increases Increases Margins Increases Impact May open Competitive Revenues & Revenues new Reduces Risks Advantage Diversification markets Adapted from WRI, Reed, Stalking the Elusive Business Case
  • 29. Four Phases of a Sustainability Strategy 28 Corporate Product/ Market Social Risk Market Responsibility Management Development Growth •Eco-efficiencies •Longer-term value •Proactive engagement •Near-term value •Limited growth Adapted from WRI, Reed, Stalking the Elusive Business Case Copyright Ecos Corporation © 2005
  • 30. C. Integrate Assessment of Opportunities and 29 Risks from Sustainability into Strategy ● Consolidate the conclusions about value at stake from the section on assessing risks and opportunities and use them to generate strategic options. ● Draft a statement of value creation for review by senior management: Take a distinct point of view about what environmental and social trends are most important to the business’s success State how management believes it will create value through sustainability Convey the intuition of senior management about how social and environmental trends are likely to affect the business
  • 31. D. Brainstorm Strategic Options for Further 30 Investigation ● Brainstorm approaches that would capitalize on opportunities or reduce risks based on either scenario ● Think of how any of the following would take advantage of the opportunities or reduce the risks: New applications of existing technologies, products and services Product extensions New products ● Develop specific strategic options: Variations on existing strategies New strategies that create value New markets in which you may have an advantage based on social and environmental trends ● Identify external stakeholders with whom the business can test and refine the strategies
  • 32. E. Refine and Test Strategic Options 31 ● Most companies have an established process for developing, refining and testing business strategies, and sustainable growth strategies should be part of the same decision-making process as these other kinds of strategies. ● Strategy decision-making process will typically test against value to direct consumer and to shareholders. Be sure that the process you use also tests against value to end-users and society.
  • 33. Sustainable Growth Business Strategy with 32 Metrics: DuPont Entering Biological Fuels Business Strategy Leverage existing competencies in plant biology, metabolic engineering, agriculture, chemicals and sustainability to profitably grow a biological fuels business Goals Diversify portfolio of feedstocks for products to include a substantial portion from non-depletable resources Significant new revenue from new products Metrics Derive 25% of revenue from non-depletable resources by 2010 Reduce GHG emissions 65% below 1990 levels by 2010; already achieved a 60% reduction when adjusted for Invista spin off Source 10% of global energy use from renewable energy sources by 2010 Source: http://www2.dupont.com/Sustainability/en_US/Footprint/index.html
  • 34. Sustainable Growth Business Strategy with 33 Metrics: General Electric’s “ecomagination” Business Strategy Increase revenue and profitability by providing a wide array of products across GE’s businesses to help today’s consumers and business customers meet their needs for energy efficiency and reduced environmental impact Goals Grow revenue from “ecomagination” products that meet environmental impact criteria to $20 billion by 2010 Increase investment in R&D of clean products Reduce GHG emissions and improve energy efficiency of operations Reduce the intensity of GHG emissions Metrics Grow revenue from “ecomagination” products to $20 billion by 2010 Double investment in clean R&D - from $700 million in 2005 to $1.5billion in 2010 Reduce GHG emissions 1% by 2012 Improve energy efficiency 20% by 2008 Source: http://ge.ecomagination.com
  • 35. Sustainable Growth Business Strategy with Metrics: DuPont's 2015 Sustainability Goals 34 ● Environmentally Smart Market Opportunities from R&D Efforts: DuPont will double its investment in R&D programs with direct, quantifiable environmental benefits for customers and consumers along the value chains. ● Products that Reduce Greenhouse Gas Emissions: DuPont will grow its annual revenues by at least $2 billion from products that create energy efficiency and/or significant greenhouse gas emissions reductions for customers. They estimate these products will contribute at least 40 million tonnes of additional CO2 equivalent reductions by their customers and consumers. ● Revenues from Non-Depletable Resources: DuPont will nearly double its revenues from non-depletable resources to at least $8 billion. ● Products that Protect People: DuPont will increase the amount of R&D spent on developing and bringing to market new products that will protect people from harm or threats. Between now and 2015, DuPont will introduce at least 1,000 new products or services that help make people safer globally. Source : http://www2.dupont.com/Sustainability/en_US/assets/downloads/FINAL_BROCHURE_9.28.06.pdf
  • 36. Sustainable Growth Business Strategy with 35 Metrics: Wal-Mart Wal-Mart has established three goals in its Sustainability Efforts: 1. To Be Supplied 100% By Renewable Energy Existing stores 25% more efficient in 7 years New stores 30% more efficient in 4 years 2. To Create Zero Waste Have a 25% reduction in solid waste in 3 years All private brand packaging improved in 2 years 3. To Sell Products That Sustain Resources & Environment To have 20% supply base aligned in 3 years Design and support Green Company Program in China Source: Wal-Mart Website: http://walmartstores.com/GlobalWMStoresWeb/navigate.do?catg=345
  • 37. III. Overall Process & Guide to Tools 36 • 1. Finding the Right Place to Start • 2. Opportunities and Risks from Environmental and Social Trends • 3. Strategy Development • 4. Goals and Metrics • 5. Implementation Plans • 6. Overcoming Barriers • 7. Cross-Cutting Tool: External Engagement
  • 38. 4. Goals and Metrics 37 Goal: Develop and implement goals and metrics that guide, accelerate and deepen the implementation of sustainability strategies. Steps: A. Review the S.E.E. Change approach to metrics B. Familiarize team with sustainability metric frameworks in use C. Review practical advice of those who’ve gone before you D. Based on the sustainability strategies articulated in the Strategic Options process, brainstorm specific sets of goals and metrics. Example: DuPont E. Refine and test sets of goals and metrics F. Getting the most out of metrics Examples: Bristol-Myers Squibb, Dow, Alcoa
  • 39. A. Review S.E.E. Change Approach to Metrics 38 Social Value Environmental Value Economic Value Expanding markets Social and economic well-being Improving energy efficiency New markets and offerings Creation of jobs & infrastructure Maximizing resource efficiency, reducing raw materials utilization Improving efficiency New products & technologies to meet essential needs Reducing waste Retaining and motivating talented employees Income growth Reducing emissions Increased return on investments Improved education Creating new products & technologies that benefit the Measurable benefits for the Prevention of disease bottom line (profits) environment Reduction of poverty Metrics Measure Progress Towards Goals Equal emphasis on social, environmental and business goals -- all Maximizing Water Resources* three are essential to sustainable growth Efficient management of water resources Do more with less metrics (quantify efficiency improvements) Business can deliver improved Do more good metrics (measure business contributions to efficiencies and innovative technologies society, environment and quality of life) Focus on water quality, quantity and Build business value (demonstrate benefits for shareholders, operations) availability * For those companies choosing water as a priority
  • 40. B. Familiarize Team with Sustainability 39 Metric Frameworks in Use ● Strategy determines goals and targets which in turn determine metrics • General reporting such as environmental, CSR, and sustainability reporting • Public reporting frameworks such as the Global Reporting Initiative • Reporting assurance systems • Voluntary public sign-on commitments • International standards and guidelines for aspects of sustainability • Benchmarking against other companies • Internal data management systems • Voluntary standards • Specific industry codes of practice ● Other key characteristics of metrics: • Level: facility versus whole of company • Leading versus lagging • Quantitative versus qualitative • Emission versus impact • Products versus processes • Useful, robust and feasible
  • 41. C. Practical Advice of Those Who Have 40 Already Gone Down This Path (1 of 2) ● Review social, environmental and economic metrics in use in your company ● Key Concepts for Success from GEMI Alignment Accountability Continuous Improvement
  • 42. C. Practical Advice of Those Who Have 41 Already Gone Down This Path (2 of 2) ● Planning Considerations from GEMI: One size doesn’t fit all Determine the internal and external audiences for your metrics Select metrics that drive performance Neither too few metrics to reflect success or failure nor too many to outweigh benefits Be consistent from year to year Select metrics that are understandable and compatible with the company’s operations Use data that are already being collected for other business purposes ● Metrics implementation: Get the support of business units Consider flexible systems for diverse operations Avoid using too many metrics ● Evaluation: Are the right data getting to key people in time to take action? Are the metrics consistent with other reporting measures? Are the metrics driving the right behavior?
  • 43. D. Based on Strategies, Brainstorm 42 Specific Sets of Goals and Metrics ● What would demonstrate that the strategy is working? ● See examples on following slides:
  • 44. Sustainability Metrics: DuPont Reducing 43 Environmental Footprint DuPont has developed environmental footprint goals to be achieved by 2015: Greenhouse Gas (GHG) Emissions: DuPont will further reduce its GHG emissions at least 15% from a base year of 2004. They have already reduced GHG emissions 72% since 1990. Water Conservation: DuPont commits to reducing water consumption by at least 30% over the next ten years at global sites that are located where the renewable freshwater supply is either scarce or stressed as determined by the United Nations analysis of river basins globally. Fleet Fuel Efficiency: DuPont will introduce fleet vehicles that represent the leading technologies for fuel efficiency and fossil fuel alternatives. By 2015, we will ensure that 100% of our off-site fleet of cars and light trucks meet these criteria. Air Carcinogens: DuPont will further reduce air carcinogen emissions at least 50% from a base year of 2004. This will bring total reductions since 1990 to 96%. Independent Verification: DuPont will ensure that 100% of global manufacturing sites have successfully completed an independent third-party verification of the effectiveness of their environmental management goals and systems. Source : http://www2.dupont.com/Sustainability/en_US/assets/downloads/FINAL_BROCHURE_9.28.06.pdf
  • 45. E. Refine and Test Sets of Goals and Metrics 44 ● Test metrics internally With those who will gather the data, Facility and business unit level, Mid-level managers, and Senior managers as users. ● Test goals and metrics with external stakeholders Privately with close and trusted external stakeholders, or Convene groups of external stakeholders to review planned public commitments.
  • 46. F. Getting the Most Out of Metrics 45 ● Metrics that matter are simple enough to be used in many situations while capturing enough of the essence to reflect reality ● Not all that is measured matters: Use a simplified set of metrics Create a “dashboard” for sustainability performance ● Assure that they are applied in the right situations to drive change ● Look to link sustainable growth to other company-wide efforts that revolve around metrics such as: Six Sigma Balanced Scorecard Scenario Planning
  • 47. Sustainability Goals: Bristol-Myers Squibb 46 After conferring with hundreds of internal and external stakeholders, Bristol-Myers Squibb adopted comprehensive sustainability goals for 2010. They will track their performance against these goals worldwide and report to the public on progress, whether negative or positive. Bristol-Myers Squibb strives to be more sustainable by meeting, and where relevant, exceeding these goals. Source: http://www.bms.com/static/ehs/vision/data/sustai.html
  • 48. Sustainability Goals: Alcoa 47 Alcoa’s 2020 Strategic Framework for Sustainability, developed in 2000, has been very successful in raising awareness of environment, health and safety issues at all levels of the company and driving improvement in these areas. As part of the company’s systematic approach to integrating economic, social, and environmental aspects throughout the business, Alcoa reviewed and updated the existing framework and supporting targets and metrics in 2005 to make them more comprehensive in terms of sustainability principles. In January 2006, the Alcoa Executive Council approved the interim framework. Throughout this year, the company sought input from external stakeholders regarding the framework and supporting targets and metrics before finalization. Source: http://www.alcoa.com/global/en/about_alcoa/sustainability/2020_Framework.asp
  • 49. Sustainable Growth Goals: Dow 48 ● Dow’s 2015 Sustainability Goals reflect the company’s commitment to the principles of Responsible Care® and have a broad external focus: strengthening the company’s relationships with the communities in which it operates, continuing to improve product stewardship and innovation, and reducing global footprint. ●The goals align to three areas of focus: Collaborate, Innovate and Elevate. Source: www.dowattainability.com
  • 50. III. Overall Process & Guide to Tools 49 • 1. Finding the Right Place to Start • 2. Opportunities and Risks from Environmental and Social Trends • 3. Strategy Development • 4. Goals and Metrics • 5. Implementation Plans • 6. Overcoming Barriers • 7. Cross-Cutting Tool: External Engagement
  • 51. 5. Implementation Plans 50 Goal: Successfully implement sustainability strategies. Steps: A. Establish and maintain a clear expression of senior management commitment to the sustainability strategies B. Engage employees and build team C. Drive sustainability into businesses through the business planning process and regular reviews. Continue focus on metrics and data. Examples: Nike, DuPont D. Develop an external communications plan E. Capture and apply the lessons learned F. Re-visit getting the right corporate governance and organizational structure Examples: Unilever, Weyerhaeuser
  • 52. A. Establish and Maintain a Clear Expression of 51 Senior Management Commitment ● Continue communications with senior management that were established when you originally initiated effort. ● Essential to continually provide senior management with update on progress and review expectations as the effort progresses, particularly when metrics are put in place.
  • 53. B. Employee Engagement: Starting Out 52 While each company has its own approach to engaging with employees, there are several common characteristics of an implementation strategy: Understand your culture and the views of staff on sustainability. Identify strong elements of culture that provide a basis for extension into sustainability. Identify key employees in terms of their influence on others (regardless of title) and extend team to include those that are necessary for implementation. Review business outcomes (and specific measurable goals). Translate business outcomes into behavioral terms – what do employees need to do differently to achieve business outcomes? Recognize tools that will lead to success, including training programs.
  • 54. B. Employee Engagement: 53 Overview of Phases of Engagement Phase 1: FOCUS ON Phase 2: GENERATE Phase 3: CREATE Phase 4: BUSINESS OUTCOMES ENERGY AND MEANING WITHIN LIVE IT AWARENESS THE BUSINESS • What are the business • Set the context – • Identify the • Embed in the system outcomes being sought? Connect to current changes for individuals. • Demonstrate through • Help them work through actions & symbols • Who is the target initiatives audience? • Link to organisational what it means for their job • Measure the business • What does success look results • What do they need to values do differently to achieve • Build commitment like? • Celebrate success • Individuals make a choice the change? with change leaders, • Strong leadership from all • Develop initial vision. both management & levels across the company network of influencers • Connect with target • Brand the change audience COMMUNICATION, ENGAGEMENT & LEADERSHIP
  • 55. C. Sustainability in the Business Planning 54 Process and Regular Reviews ● This topic is closely linked to the metrics section, but the mere existence of metrics does not necessarily deliver the desired results. ● Not all metrics are created equal and some clearly enjoy more favored status because of where and how they are applied. ● Integrate creating value through sustainability into: regular business review process, balanced scorecards, and new product development stage-gates.
  • 56. D. Develop an External Communications Plan 55 ● Create an external communications strategy. ● Recognize that media who cover social and environmental trends in business will be particularly interested in your story. ● Consider working with external stakeholders who appreciate the value of your initiatives.
  • 57. E. Capturing and Applying Lessons Learned 56 ● Develop continuous feedback loop between those implementing the change and those responsible for overseeing it. Create a cross-functional and cross-business unit team that harvests and shares lessons learned. ● It is not enough to simply have metrics, you need to use them.
  • 58. F. Re-Visit Getting the Right Corporate 57 Governance and Organizational Structure ● Review the initial approach to corporate governance and organizational structure for sustainability that you developed earlier in the process. ● Will this original approach support your current activities or are updates needed?
  • 59. Unilever: Implementation of a Sustainability Strategy 58 Following a reorganization in 2005, the Unilever executive (UEx) became the principal decision-making body which included reviewing the company’s corporate responsibility strategy. UEx helped to develop Unilever’s three-tier strategy for corporate responsibility: to maintain and build on existing activities, with renewed targets; to integrate social, economic and environmental considerations into the development plans of brands, beginning by mapping the ‘imprint’ of four of the global brands; and to focus external partnerships on two main vitality themes, nutrition and hygiene, where Unilever can make the most impact. A new Corporate Responsibility Council leads and co-ordinates activity, aligning it with business priorities. Source : Unilever 2005 Environmental & Social Report, pg. 28 http://www.unilever.com/Images/Environmental_and_social_report_bkmks_tcm13-39279.pdf
  • 60. Weyerhaeuser: Sustainability Training 59 ● Weyerhaeuser maintains a centrally-managed, company-wide training resource. The purpose is to help employees develop the knowledge and skills to safely and effectively achieve business goals. ● Training packages on more than 50 environment, health and safety topics are provided through Strategic Education, but the training is conducted and tracked by individual business units. In 2004, approximately 6,000 Environment, Health & Safety kits were distributed (up from 188 in 2003). Source: http://www.weyerhaeuser.com/environment/sustainability/2004/honoringresponsibilities/introduction.asp
  • 61. III. Overall Process & Guide to Tools 60 • 1. Finding the Right Place to Start • 2. Opportunities and Risks from Environmental and Social Trends • 3. Strategy Development • 4. Goals and Metrics • 5. Implementation Plans • 6. Overcoming Barriers • 7. Cross Cutting Tool: External Engagement
  • 62. 6. Overcoming Barriers 61 Goal: To anticipate, recognize and overcome the typical barriers to successful implementation of sustainable growth initiatives. Steps: A. Understand the role that barriers play B. What are the most common barriers C. Setting a strong foundation to overcome barriers D. Tactics to help conquer barriers
  • 63. A. Understanding the Role of Barriers 62 Barriers are attitudes about why the business cannot or should not pursue a sustainable growth initiative or organizational dysfunction. Barriers are not the same as failing to follow the right implementation steps. Identifying barriers is important as they can stymie, stall or even stop a sustainability initiative. Anticipating potential barriers and having plans for overcoming them saves time and frustration in the long run.
  • 64. B. The Most Common Barriers 63 Common barriers to sustainability include: Challenges to the underlying premises of having a sustainability effort, and Not understanding or believing in the value at stake analysis.
  • 65. C. Setting the Foundation to Overcome Barriers 64 Ensure clarity, consistency and support for initiative start and remain with the leadership of the organization. Get middle management on your side Avoid the Corporate Social Responsibility (CSR) & Triple Bottom Line (TBL) cul-de-sacs Have the right team
  • 66. D. Tactics to Help Conquer Barriers 65 Suggestions on how to navigate around barriers: Provide counter examples that show sustainability providing a competitive edge in relevant industries; Re-frame the issue to be sure that it is understood as practical and not philosophical; Seek explicit support from top financial people in company; and Conduct workshops on an overview of the value-at-stake for the company.
  • 67. III. Overall Process & Guide to Tools 66 • 1. Finding the Right Place to Start • 2. Opportunities and Risks from Environmental and Social Trends • 3. Strategy Development • 4. Goals and Metrics • 5. Implementation Plans • 6. Overcoming Barriers • 7. Cross Cutting Tool: External Engagement
  • 68. 7. External Engagement 67 Goal: To develop the broad capability to effectively understand and collaborate with external stakeholders including non- commercial entities. Steps: A. Introduction to external engagement B. Where external engagement is most important C. First steps towards engagement Examples: DuPont, FedEx, The Home Depot, 3M, Proctor & Gamble
  • 69. A. Introduction to External Engagement 68 External engagement is very important in helping a company fully understand sustainability because an internal perspective rarely provides an accurate assessment. Engaging with external stakeholders has proven to be one of the greater challenges of sustainability and the value of these engagements is not always understood by many in the company. However, many companies have found external engagement to be essential in realizing their value from social and environmental issues and have now integrated engagement into their business strategy. There are many different approaches on how to engage external stakeholders, and it is important to be flexible in integrating it into your sustainability strategy. See examples at end of module.
  • 70. B. Where External Engagement is Most Important 69 External engagement can be most valuable in: Analyzing sustainability in the marketplace and value-at-stake for a specific company Developing a company’s strategic response to these changes in the marketplace Implementing corporate strategy and developing offerings
  • 71. C. First Steps Towards Engagement 70 Business objective(s) will guide engagement: What does the business hope to achieve through engagement? Is the business ready for a dialogue versus just providing information? What is the business already doing around external engagement? The most successful engagements have strong mutual value propositions for both the business and the stakeholders.
  • 72. Advisory Councils – DuPont’s Biotechnology 71 Panel and Health Advisory Board The Biotechnology Panel helps the company: consider and address important issues related to biotechnology; guide and challenge them in the development, testing and commercialization of new products based on biotechnology; provides a regular audit of their progress and submits a public report. The Health Advisory Board (HAB) helps the company by: providing strategic advice on health and health related issues relevant to DuPont businesses; supporting the company’s efforts in approaching health and health related issues in a manner that is well informed, proactive, scientifically sound and ethical. Source: DuPont
  • 73. A Comprehensive Approach to Engaging 72 with Stakeholders Set Objectives Scoping Analysis & Alignment Outcome What are Identify and Assess Prioritize current Find mutual company’s interview Strategy aligning issues and relationship: value objectives for those who business stakeholders locate gaps proposition stakeholder can help or priorities with based on & for business engagement? hinder the societal values value opportunities and society business Building your business’s capacity to understand the changing operational environment and develop a strategic corporate response. Copyright Ecos Corporation © 2004
  • 74. Partnership with External Stakeholders: 73 FedEx – Environmental Defense – Eaton Corp. FedEx Express, Environmental Defense and Eaton Corporation worked together to introduce an environmentally superior delivery truck that could become a standard medium-duty delivery truck in the FedEx Express fleet. The main goals of the project were to: develop a delivery truck that significantly decreases particulate emissions and smog causing emissions (nitrogen oxides), and increases fuel economy; prove that significant environmental benefits are economically and functionally viable for FedEx Express vehicles; and, accelerate the commercialization of environmentally preferable trucks. Source: http://www.environmentaldefense.org/documents/3526_FedExProjectFactSheet.pdf
  • 75. External Input into Corporate Policy: 74 The Home Depot’s Wood Purchasing Policy In 1999, The Home Depot (THD) pledged to give preference to wood that came from forests managed in a responsible way and to eliminate wood purchases from endangered regions of the world by the end of 2002. In developing this policy, THD worked with a range of external organizations and individuals. In addition to informing policy, these external groups also helped THD to educate and motivate the local communities in various parts of the world to promote sustainable timber harvest. Source: http://corporate.homedepot.com/wps/portal/Wood_Purchasing
  • 76. Engaging Stakeholders: 3M 75 In 2005, 3M developed a new, more systematic, local stakeholder engagement process to not only provide insight into local operations but inform the corporation as a whole concerning issues such as environmental performance, management systems and community interaction. In 3M’s words, “The feedback we receive from our stakeholders is invaluable in shaping our sustainability strategies and helps to ensure that we continue to operate in a way that is sensitive to their needs.” Source: http://solutions.3m.com/wps/portal/3M/en_US/global/sustainability/s/governance-systems/stakeholder-interaction/engaging stakeholders
  • 77. Partnership for Sustainability: Proctor & Gamble’s 76 PUR® Technology Working with the U.S. Centers for Disease Control (CDC), Proctor & Gamble (P&G) developed a low cost technology, PUR®, to purify water in the homes of rural villages and urban slums of the developing world. P&G is working with a variety of partners, both public and private, to create sustainable market-based approaches to safe drinking water through in-home purification. Source: http://www.pghsi.com/safewater/index.html.

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