Presentation defines Sustainability, Sustainability Management, and presents some basic tools the Sustainability Professional can use to design and implement a Sustainability strategy.

1. Sustainability Defined Sustainability Defined Hector R Rodriguez Director of Sustainability at Biogen Idec Adjunct Professor, School of Business at Mount Ida College

2. Objectives of this Talk – An Overview of… What is Sustainability? What is Sustainability Management? Review of tools that assist in developing and implementing a Sustainability Strategy

3. Challenges of this Definition Does not address resource consumption issues, nor the distinction between renewable resources and non-renewable resources. Does not really answer the question of what sustainability means and also leaves it to our imagination to determine which “needs” are legitimate and which ones are not. 2 Part I - What is Sustainability? Traditional Definition Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. 1 Philosophically, Sustainability could be thought of as the goal and Sustainable Development one of the requirements needed to achieve it… 1. “Our Common Future.” World Commission on Environment and Development . Aug. 1987. 2. “Re-Casting the Triple Bottom Line.” Center for Sustainable Innovation. Jun. 2007

7. This is the capitals-based theory of sustainability, the foundation for most of what passes for mainstream practice in Sustainability Management. Vital Capitals and Well-Being Economic Capital Social Capital Environmental Capital Available flows of beneficial goods and services Appropriated by individuals and collectives Resulting in levels of individual and collective well-being CAPITAL FLOWS

12. What is then Sustainability? 5. McElroy, M. Social Footprints – Measuring the Social Sustainability Performance of Organizations. Dissertation, 2008 The Sustainability Professional studies and manages the impacts of an organizations’ activities on the quality and sufficiency of vital capitals wherever it operates, as required to ensure human well-being. Sustainability is the subject of a social or management science that studies and manages the impacts of human activity on the quality and sufficiency of vital capitals in the world, as required to ensure human well-being . 5

13. Part II - What is Sustainability Management (SM)? Sustainability Management Enterprise Orientation Social Benevolence Eco-efficiency Triple Bottom-Line Context Based Orientation Life Cycle Orientation Environmental Capital Economic Capital Social Capital LCA’s of Products and Services Environmental Capital Social Capital (Emerging) Refresher: to achieve Sustainability, SM must address all three vital capitals 1 2 3 4 5

20. Here’s the Company X performance with context missing Context-Based vs. Context-Free Example Source: Center for Sustainable Innovation

21. Sustainability Threshold (performance above threshold is unsustainable) Here’s the Company X performance with context added Context-Based vs. Context-Free Example (cont.) Source: Center for Sustainable Innovation

22. Another hypothetical scenario Context-Based vs. Context-Free Example (cont.) Source: Center for Sustainable Innovation Sustainability Threshold (performance above threshold is unsustainable)

23. The Sustainability Quotient Source: Center for Sustainable Innovation The Sustainability Quotient A formula for Measuring and Reporting Corporate Sustainability Performance S = A/N Where: S = Sustainability Performance* A = Net Actual Impacts on the Carrying Capacities of Vital Capitals N = Net Normative Impacts on the Carrying Capacities of Vital Capitals *For Ecological Quotients, S scores of ≤ 1 are sustainable, ≥ 1 unsustainable; for Societal Quotients, S scores of ≥ 1 are sustainable, <1 are unsustainable Source: Center for Sustainable Innovation

24. Sample of Context-Based Metrics *Note: All standards of performance must be grounded in levels required to ensure human well-being. Areas of Impact Example/Description* Environmental - Water Use A metric that measures an organization’s use of water resources against an allocated and proportionate share of locally renewable supplies. - Solid Waste A metric that measures an organization’s use of local landfill resources against an allocated and proportionate share of available capacity. Social - Work/Life Balance A metric that measures an organization’s impacts on employee work/life balance against standards grounded in employee family well-being. - Community Involvement A metric that measures an organization’s contributions to community well-being against a standard expressed as a percentage of profits. Economic - Livable Wages A metric that measures an organization’s compensation practices against locally-relevant livable wage standards. - Economic Institutions A metric that measures an organization’s contributions to economic institutions (e.g., regulatory bodies) as a percentage of profits.

27. Profit Margin Profit Margin Infrastructure Human Resource Management Technology Development Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service Support Activities Primary Activities Education and job training Diversity and discrimination Philanthropy Work-Life Balance Transportation impacts Pricing practices Marketing practices Product Safety Transparency Lobbying Tax Planning Stakeholder Alliances Supply chain practices Utilization of natural resources Trading Practices Commerce Impacts Emissions and waste Energy and water usage Worker safety and labor relations Hazardous materials Packaging use Transportation impacts Customer Assistance Quality of Life Relationships with universities Ethical research practices Conservation of raw materials Recycling Assessing Vital Capital Impacts – Value Chain 10 10. Porter, M. E., “Strategy & Society.” Harvard Business Review, Dec. 2006 SAMPLE

28. Other Useful Business Frameworks Porter’s Model Hambrick & Fredrickson McKinsey’s 7-S

30. Summary and Conclusion Sustainability is defined as that subject of management science that studies the impacts of human activity on the quality and sufficiency of vital capitals in the world as required to ensure human well-being . The Sustainability Professional studies and manages the impacts of corporate activities on the quality and sufficiency of vital capitals wherever it operates. Vital capitals include Social, Environmental and Economic capitals . The Triple Bottom Line approach, together with Context-Based Sustainability, is the Sustainability Management framework which most appropriately studies and manages those vital capitals Management frameworks such as the “Value Chain,” Hambrick and Fredrickson’s model, “McKinsey’s 7-S,” “Five Forces” and SWOT’s are of help in developing a Sustainability Strategy.