Engaging your Organization for  Environmental Social Governance

TBLI Academy Engaging your Organization for Environmental Social Governance (ESG) 2008 TBLI conference, Europe Amsterdam, 13-14 November 2008 By Tom Cummings Copyright © by Executive Learning Partnership, CVBA, 2007. All Rights Reserved. No part of this publication may be reproduced, stored in any retrieval system, or transmitted in any form or by any means –electronic, mechanical, photocopying, recording, or otherwise –without the express written permission of Executive Learning Partnership.

The ELP – TBLI Business Case

Systems Maps - Only Useful if we do it together!

Leadership Landscapes Individuals Team Organisation Industry, Markets and Customers Macro Business Perspective

What the ELP – TBLI Academy stands for

1) Informing companies - the landscape and next gen business

2) Engaging with leaders and their teams at both the rational and emotional levels

3) Enacting the business plan in a sustainable way

Ministers’ Lunch Réunions informelles des ministres en charge de l'environnement et de l'énergie

Learning Journeys

CSR and Strategy “ The current economic cycle doesn’t represent a cycle, but a reset – CSR and strategy have to become part of the same conversation instead of competing ones.”- Jeff Immelt, CEO GE, BSR conference, 2008 New York

Next Generation Business

Existing Paradigm – Existing Business and Organizational Models

Vs.

New Paradigm – New Business and Organizational Models

ROI on Sustainable Investment Source: Lawrence M. Miller: Sustainable Wealth, 2008

Assumptions of the Existing Business Models

Size = Comfort, Safety

Experience = Competency

Knowledge = Formal Education, Diplomas

Measurement = Money

Existing Business Models

What rights are being sold (and bought)?

What assets are involved?

(physical, financial, intellectual, human)

Things are created or invented, distributed, used and brokered or matched with buyers

Beyond serving needs

To what extent was scarcity vs. plenty considered

What is the lifecycle of this business model?

Leadership Landscapes Individuals Team Motivational States Mindtalk MBTI - Insights Equanimity shift/Dynamic Equilibrium Logos, Ethos, Pathos Competing Commitments Attention Units, Motivational States “ User Guide” Diagnostics Organisation “ Why Behaviors matter” values and behavior exercise Desired Behaviors Leading Change Convening Authority/ Organisational Uniqueness Branding, Engaging Industry, Markets and Customers Value mapping Hero’s Journey Landscape Orientation Must-win Battles Macro Business Perspective 20-20 view New External Realities Future Facts Forecasting and Backcasting Trendpulling Stakeholder Mapping

Commitment Curve Supporters Agnostics Antagonists Champions Cynics Isolate Convert Surround Encourage Stimulate “ They” “ We” “ It’s a job” “ Yes, but” “ I’m proud” Contact Awareness Understanding Positive Perception Implementation Adoption Institutionalization Internalization Contact

Business Model Canvas Source: Alex Osterwalder

Business 3.2

New Business Models

For the TRANSITION in which the incentive system will remain

Shareholders Stakeholders

Production costs True costs

Efficiency Effectiveness and Efficiency

Monetary value Overall value

New measures of well-being, beyond GDP

New Business Models

Shareholders Stakeholders

Production costs True costs

Efficiency Effectiveness

Monetary value Overall value

New measures of well-being, beyond GDP

Sustainability vs. Sustainability Unsustainable Behavior Sustainable Behavior Sustainable Company Unsustainable Company Companies with a success formula that no longer works Strategy & Financial Perspective Industry Laggards e.g., Body Shop after 10 years Greenmail Business 3.2 Behavioral Perspective

Aspen Principles for Long Term Value Creation

1) Define metrics of long term value creation

Maximize future value – even at the expense of lower near-term earnings

Understand firm-specific issues

Look into industry best practices

2) Communications

Frequent corporate – investor communication

Avoid focus on quarterly earnings

3) Compensation

Align company and investor compensation policies with long-term metrics

Source: Aspen Institute

Engagement beyond traditional borders of leadership

Over the last two decades, large companies have moved through five stages:

Being world class Role model Proactive CSR Stage 3 Helping out where governments fail Activist local citizen Development agent Stage 4 Joining others in moving urgent global problem-solving along Global citizen Global problem-solver Stage 5 Reputation protection Good corporate citizen Defensive CSR Stage 2 Philanthropy Patron Charity Stage 1 Motivation Role Category Stage

New Leadership Qualities

Flat organizations-style personality

Vision and charisma, great communicator

A pattern-seeing mind, providing structure amidst complexity

Creating an opportunities-grabbing rather than issues-raising culture

Innovation-friendly traits

More emphasis on right brain-based skills and attitudes

Innovation-friendly values: “workmanship mistakes no, innovation errors yes”, “management by asking to be stunned”

Structuring for innovation: hotspot teams, open innovation setup

Managerial bends

Numerator management rather than denominator management

A relentless enemy of internal process overgrowth

Yet a stickler for compliance

And a builder of dream teams

Identity and Mindset

Cosmopolitan, broad based, world-aware

Re-energizes through outside networking and scanning

Fearless in fearsome times

Business 3.2 – constant reframing

Transitions Time Pioneers Followers “ Laggards” 20% 60% 20%

Senior sponsors Champions Multi-Level Commitment ‘ initiate’ ‘ involve’ ‘ inspire’ ‘ integrate ’ ‘ infiltrate ’ All employees Cross-functional core team Board members and senior management senior managers able to influence and make recommendations to the sponsors Brand workshop champions challenge current practice and act as catalysts in the team workshops Source: ELP and The Brand Inside

The ELP/TBLI – ESG Tool Box