Think broadly about value! Alcan is already doing many things to create social, environmental and economic value. Value now needs to be considered in much broader manner - not simply shareholder value, but value for all stakeholders (e.g.; social and environmental value along with financial and economic value). Our focus on sustainability allows us to leverage these efforts and create and deliver additional value in these areas. To do this, however, we must: Think broadly about social, economic and environmental issues that could affect our business, and the impacts our business has on society, the global economy and the environment. Systematically engage stakeholders about the kind of value they want us to create and develop strategic partnerships to create and deliver that value. Aggressively make connections across our company and integrate sustainability considerations further into our business processes and practices.
What does this mean in practice? First, let’s consider this model. At the base is the foundation of Alcan’s values and focus. The red and yellow areas represent much of what we have traditionally done: reducing costs and risks, doing less bad Our objective is to reach the green area. This is where value is not simply protected, but is created. It is about innovation in our operations, rethinking how we can go beyond simply “doing less bad” and move to “doing good” Nevertheless, the base and the area in the red circle are essential to us. We cannot neglect this base as we move towards greater sustainability. It is taking both of these concepts together that we move towards a long-term sustainable business model
Sustainability allows us to look at the long term impacts of our business, and to find ways to operate our business so that it produces economic, social and environmental value in addition to financial value. Sustainability also gives us a chance to explore how to create value for shareholders and all of our other stakeholders. By adding sustainability into our integrated management framework, we are able to create more value, for more people over a long period of time.
Sustainability in Business: Challenges and Actions (PPT - 2.6 mb)
Sustainability in Business Challenges and Action Ottawa 19 October 2007 Ron Nielsen Sustainability & Strategic Partnerships
Challenges … <ul><li>The prevailing mindset </li></ul><ul><li>Inertia of organizational arrangements </li></ul><ul><li>WIIFM …? (What’s in it for me?) </li></ul>“… the current system in government rewards caution, … not boldness …” “… government’s goal … avoidance of defeat (e.g.; risk averse)”
“ Shaping New Rules of Competition” UN Global Compact Participant Mirror, July 2007 – McKinsey <ul><li>“ The complexity of implementing an ESG strategy is another important barrier . There are material practical challenges in translating good intentions into good deeds. While 72 percent of the CEOs we surveyed said that a corporate stance on ESG issues should be fully embedded into the strategy and operations, only 50 percent think their firms actually do so.” </li></ul>“ Sustainability … all the worlds problems, and all of their solutions.” CitiGroup, “Towards Sustainable Mining” March 2006 “… the concept is valid, but the phrase sustainability / SD may be overused. It’s too comfortable and deceptively simple. We have not looked hard enough at what it takes … interdisciplinary, complexity, value judgments on equity, long-term, change attitudes …”
Alcan’s Interpretation of sustainability – Addressing key Alcan business issues , linking global and local issues, trends and developments with business strategy and activities <ul><li>Think broadly about issues and impacts </li></ul><ul><li>Engage and partner with stakeholders </li></ul><ul><li>Make connections & integrate sustainability within and across our business </li></ul>Think broadly about Value . “… if a policy concept is so general that it means everything, then it means nothing …” “… a huge challenge – policy integration and intergenerational equity …”
Sustainability … a driver for innovation? + “… if sustainable development is about change, then we need to be the masters of change, with the right people in the right places at the right time …” Driving for Zero, Doing Less Bad, traditional approach, reducing costs & risks, continually improving EHS Doing Good, Beyond Zero; new sustainability derived business models; not just doing what we’ve always done – but with some improvement; rather doing something altogether different, etc. = Sustainable Business Model
Creating Value – a new perspective “… it’s not about avoiding of bankruptcy …
“ The Link Between Competitive Advantage and CSR” Michael E. Porter and Mark R. Kramer, Harvard Business Review, December 2006 <ul><li>“ Addressing social issues by creating shared value will lead to self-sustaining solutions that do not depend on private or government subsidies. When a well-run business applies its vast resources, expertise, and management talent to problems that it understands and in which it has a stake, it can have a greater impact on social good than any other institution or philanthropic organization.” </li></ul>
Business and Sustainability Business Human Resources VBM EHS FIRST Finance Operations Continuous Improvement Government Relations Marketing Procurement R&D … … Climate Change Human Rights Economic Diversification Water Corruption Governance Biodiversity Outsourcing Low Cost Country Supply … Evolution from good to best practice … Necessary for business continuity … Requirements for embedding sustainability … <ul><li>Developing People </li></ul><ul><li>Recruitment and retention strategies </li></ul><ul><li>Leadership and individual development </li></ul><ul><li>Training </li></ul><ul><li>Competencies based on sustainability </li></ul><ul><li>Annual objectives </li></ul><ul><li>Compensation </li></ul><ul><li>Evolving Business Systems & Valuation Approach </li></ul><ul><li>5 year plan, </li></ul><ul><li>Annual plan </li></ul><ul><li>Capital Allocation </li></ul><ul><li>Quarterly Business Performance Review </li></ul><ul><li>Intangible value determined and included in business decisions </li></ul><ul><li>Enhancing Stakeholder Capabilities </li></ul><ul><li>Company-wide guidance </li></ul><ul><li>Indigenous Policy </li></ul><ul><li>Human Rights aspects integrated in current practices </li></ul>“… it’s not about managing issues. Rather it’s about being equipped to succeed in a more complex setting …” Developing People Evolving Business Systems Enhancing Stakeholder Capabilities
Operationalizing Sustainability: development and training for key internal personnel … communication … internal … engagement … personal experience … expectations … requirements … application … systems, tools “… tinkering in the margins …”
… and Action? <ul><li>Cultivate the courage to lead on this topic with senior managers </li></ul><ul><li>Recruit and work with new, younger employees and business leaders </li></ul><ul><li>Support, encourage and catalyze integration and embedding of sustainability considerations in mainstream business activities, particularly strategy and decision-making aspects </li></ul><ul><li>Develop capability to identify, target and capture broader value </li></ul><ul><li>Question the current approach, and be prepared to re-examine the business model </li></ul><ul><li>… </li></ul>“… the status quo has enormous momentum, and the key players have enormous power and influence to press for more of the same, ever faster … The world wants business to act. THERE HAS BEEN A CHANGE. Governments and NGOs told us they urgently want business to play a role in solving global challenges; Governments and society say they want to work with business on solutions to global issues; and Some leading companies are profitably pursuing such opportunities and enhancing brand value delivering sustainability. WBCSD Business Role in Society Focus Area, 2007
… Action II <ul><li>Tomorrow’s Global Company ( www.tomorrowscompany.com ) </li></ul><ul><li>SustainAbility “Raising Our Game” ( www.sustainability.com ) </li></ul><ul><li>Aspen Institute “Guiding Principles for Long-Term Value Creation” ( http://www.aspeninstitute.org/site/c.huLWJeMRKpH/b.2286629/k.5EAB/Corporate_Values_and_Strategy_Group.htm ) </li></ul><ul><li>Corporation 2020 ( www.corporation2020.org ) </li></ul><ul><li>RESPONSE Project – EABIS ( www.insead.edu/ibis/response_project ) </li></ul><ul><li>Research Network for Business Sustainability ( www.sustainabilityresearch.org ) </li></ul>