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Towards Zero Impact Growth
                            Strategies of leading
                            companies in 10 industries




Introducing the Deloitte Zero Impact Growth Monitor
Summarizing the first Zeronauts Symposium
Content

    1.	Introduction 	
      1.1. The future we (didn’t yet dare to) want	                                      3
      1.2. Growth, no growth, or simply happiness	                                       4
      1.3. Zeronauts taking action	                                                      5
      1.4. Zero Impact Growth – a joint minimum achievement	                             6

    2. The Zero Impact Growth Monitor (ZIG-M) 	                                         9
      2.1. Background and inspiration	                                                   9
      2.2. Complementarity of the approach	
           2.2.1. WBCSD Vision 2050	                                                    10
           2.2.2. GRI G 3.1 and G4 Guidelines	                                          10
           2.2.3. UN Global Compact	                                                    10
           2.2.4. ISO 26000	                                                            11
           2.2.5. Other networks and initiatives	                                       11
      2.3. Methodological approach	                                                     11
      2.4. Research sample	                                                             13
      2.5. Disclaimers	                                                                 14

    3. ZIG-M Results 2012
      3.1. Overall results according to level of maturity	                              15
      3.2. Industry results	                                                            16
      3.3. Gap analysis	                                                                17
           3.3.1. ‘Lost in space’ – comparability gap	                                  18
           3.3.2. ‘So much talk, (still) too little action’ – implementation gap	       18
           3.3.3. ‘Money counts’ – balance gap	                                         19
           3.3.4. ‘Some like it hot’ – gaps in performance in and between industries	   20
      3.4. Research summary	                                                            21

    4. Recommendations	
      4.1. Loosening the brakes	                                                        23
      4.2. Acceleration	                                                                23
      4.3. Joint flight	                                                                24

    5. Annexes 	
      5.1. The Zeronauts Symposium 2012 	                                               25
      5.2. Individual company ZIG-M scores in 10 industries 	                           28
      5.3. Bibliography	                                                                52
      5.4. List of figures and tables	                                                  53
      5.5. Colophon 	                                                                   54
      5.6. About Deloitte Innovation Sustainability Services (Netherlands)	             55




2
1.	Introduction



                                                                        1.1. The future we (didn’t yet dare to) want
        “Capitalism is the astounding belief                            June 2012 also gave us the Rio+20 Summit. More than
        that the most wickedest of men will do                          50.000 people from business, civil society and governments
                                                                        met in Rio de Janeiro to decide upon actions towards a
        the most wickedest things for the                               more sustainable world. ‘Rio+20’ actually took place in
        greater good of everyone.”                                      the same city where 20 years earlier the ‘Agenda 21’1 and
                                                                        the convention on biodiversity2 were agreed upon. Hopes
                                            John Maynard Keynes         were there of the spirit of Rio once again working its magic
        Sustainable development in the last twenty years has            and putting an end to the disappointing summits of earlier
        not brought about the change we needed towards a                years, especially the various UN COP summits on climate
        more stable global economic model. Instead, there is an         change.
        increased sense of urgency that our way of capitalism is
        on a path of slow demise. Economic growth faces scrutiny        Already in November 2011, the first draft of ‘The Future
        and many of us are still fighting the remnants of a deep-       We Want’3 was developed, and over many rounds of
        rooted global economic crisis. The unsustainability of          negotiations, until shortly before the conference ended,
        our production and consumption patterns is increasingly         this became the 49 pages closing document in which the
        clarified through a plethora of reports from global             governments of the participating countries reaffirmed
        think tanks, networks and initiatives. The latest wave          the importance of many facts known about sustainability.
        was published due to the occasion of the Rio+20 UN              Still, apart from some institutional strengthening, the text
        Conference on Sustainable Development, which was held           contains only a few commitments, such as the delegates’
        on 20-22 June, 2012, in Rio de Janeiro, Brazil.                 vote for developing sustainable development goals until
                                                                        2015, strengthening a ‘green economy’ and, related to
        In 2011, Deloitte Innovation started to collaborate             that, more support for UNEP.
        with John Elkington (Volans) to envisage a new breed
        of inventors, innovators, entrepreneurs, intrapreneurs,         On the other hand, Rio+20 had more than a thousand
        investors, managers, or educators who promote wealth            side events, mainly organized by business and civil society
        creation while driving adverse environmental, social, and       groups. The biggest event was the Rio+20 Corporate
        economic impacts towards zero. John Elkington named             Sustainability Forum, a four day platform organized by the
        them ‘Zeronauts’, archetypes needed for a new economic          UN Global Compact. During the Forum various initiatives
        model that would achieve at least a ‘Zero Impact Growth’        and mandates were launched, showing that business
        economy, ensuring a baseline on how to produce and              is willing to step up to various challenges, wanting
        consume in a 1-Earth-Economy, respecting planetary limits       to implement sustainability deeper in their corporate
        and societal well-being.                                        strategies. In ‘Overview And Outcomes – Innovation
                                                                        & Collaborative Public Policy Recommendations &
        In June 2012, Deloitte Innovation and Volans held the first-    Commitments to Action’4 the UN GC describes the process
        ever ‘Zeronauts Symposium’ in Rotterdam, the Netherlands,       and outcomes of this event in various fields of action.
        during which John Elkington’s book ‘The Zeronauts –             One of the terms used most at Rio+20 was the idea of a
        Breaking the sustainability barrier’ was launched – a day       ‘green and inclusive economy’5, touching one of the
        filled with inspirational plenary discussions and workshops.
        Deloitte Innovation presented the outcomes of the ‘2012         1
                                                                         	 United Nations (1993): Agenda 21 – The Earth Summit Strategy to
        Zero Impact Growth Monitor’, an assessment of 65 leading           Save Our Planet.
                                                                        2
                                                                         	 For detailed information on the ‘Convention on biodiversity’,
        companies and how their strategies align with the idea of
                                                                           see: http://www.cbd.int/
        Zero Impact Growth as a sustainable growth paradigm.            3
                                                                         	 The document ‘The Future We Want: Outcome document adopted
        This report summarizes the outcomes of the Zeronauts               at Rio+20’ can be downloaded via
                                                                           http://www.un.org/en/sustainablefuture/
        Symposium and the Zero Impact Growth Monitor 2012.              4
                                                                         	 The document ‘Overview And Outcomes – Innovation &
        Deloitte Innovation and Volans offer to continue to                Collaborative Public Policy Recommendations & Commitments to
        build a Zero Impact Growth Community, focusing mainly              Action’ can be downloaded via
                                                                           http://www.unglobalcompact.org/news/249-06-21-2012
        on innovations in measurement, leadership and new               5
                                                                         	 For more information on that concept, see: The World Bank (2012):
        business models.                                                   Inclusive Green Growth – The Pathway to Sustainable Development.




                                                           Towards Zero Impact Growth Strategies of Leading Companies in 10 Industries    3
biggest problems we need to solve collectively. It is the idea         The conclusion is obvious: we need a new paradigm,
    of an economic system that allows mankind to continue to               underpinning new mindsets and tools to survive
    live on planet earth with 9-10 billion people while stopping           and thrive in the twenty-first century. We need to
    to overstretch the natural limits (as we have done since the           move from a fundamentally unsustainable path to a
    mid 1980ies). Combined with the strengthened role of UN                fundamentally more sustainable one.
    institutions to develop sustainability goals and measuring
    success beyond GDP-like indicators by no later than 2015,              In the last decade we saw various initiatives to try and
    there is now a strong bedrock for the development of a                 develop a counter model to the growing division between
    sustainability context that can derive from a practicable              economic growth on the one hand and nature and societal
    paradigm. Zeronauts would suggest ‘Zero Impact Growth’                 degradation on the other hand. They included:
    to be that paradigm (see 1.4.).                                        •	The UK Sustainable Development Commission which
                                                                             published a report called ‘Prosperity Without Growth’
    1.2. Growth, no growth, or simply happiness                              in 2010 and developed the concept of a steady state
                                                                             economy8;
                                                                           •	The French Enquete Commission, put in place by the
    “We are treating this planet like a                                      former prime minister Nicolas Sarkozy and led by Joseph
    company in liquidation.”                                                 Stiglitz, Amartya Sen and Jean-Paul Fitoussi, which
                                                                             published a report and a book titled ‘Mismeasuring our
                                                                 Al Gore     lives – why GDP doesn’t add up’9;
                                                                           •	The Enquete Commission on ‘Growth, welfare and
    Presently, our footprints on this planet constantly expand,              quality of life’ installed in Germany in late 201010,
    while the absorptive capacity and natural resources of                 •	A concept called ‘Gross National Happiness’ implemented
    planet earth – measured by the availability per head                     in Bhutan since many years, creating an economy of well-
    of population – continuously shrink. In 2010, Ban Ki                     being rather than unending physical growth that is simply
    Moon, UN Secretary General, called the current model of                  impossible11.
    economic development and growth a ‘global suicide pact’.
    He referred to the fact that our economic model – based                Beyond these different initiatives that address change to
    on quantitative growth – is deeply unsustainable, especially           the current quantitative growth model, many additional
    when recognizing that the demographic development                      indexes have already been developed to contrast the
    expects at least 3 billion more people until 2050, mostly              current GDP model. They include the Green GDP Concept,
    raised and living in developing and emerging market                    the Human Development Index, Index of Social Economic
    countries.                                                             Welfare, Natural Capital Index, Living Planet Index, and, in
                                                                           addition, many country-specific national indicator systems
    The discussion on quantitative growth already started some             on progress towards sustainable development.
    40 years ago with the publication to the Club of Rome,
    called ‘Limits to Growth’6, authored by Dennis and Donella
    Meadows and Jorgen Randers. While heavily questioned in
    all the decades to come, their forecast then – considering
    the technical forecasting capabilities 40 years ago – should
    be revised as being fairly realistic today. In June 2012,
    just weeks before the Rio+20 Summit, ‘2052 – A Global
                                                                           8
                                                                            	 The document ‘Prosperity without growth – the transition to a
    Forecast for the next 40 Years’7 was published, in which
                                                                               sustainable economy’ can be downloaded via
    Jorgen Randers raises the possibility that humankind might                 http://www.sd-commission.org.uk/publications.php?id=914
    not survive on the planet if it continues on its path of over-         9
                                                                            	 The document ‘Report by the Commission on the Measurement of
                                                                               Economic Performance and Social Progress’ can be downloaded via
    consumption and short-termism.
                                                                               www.stiglitz-sen-fitoussi.fr
                                                                           10
                                                                             	 For more information on the German enquete commission on
                                                                               “Growth and Welfare” of the German Federal Parliament, see:
    6
     	 Meadows et al. (1972): Limits to Growth – a report of the Club of       http://www.bundestag.de/bundestag/ausschuesse17/gremien/
       Rome’s project on the predicament of mankind.                           enquete/wachstum/index.jsp (available only in German language)
    7	
       Randers (2012): 2052: A Global Forecast for the Next Forty Years    11	
                                                                               For more information, see: http://www.gnh-movement.org/




4
However, until today the corporate sector’s visible                   This proliferation of concepts on both macroeconomic
involvement is relatively small, both in terms of helping to          and microeconomic level clearly expresses the search and
develop these alternatives to GDP, and in terms of using              the appetite of the corporate sector and civil society to
them as a benchmark for scenarios that link individual                find sustainable solutions on various levels. The urge to
corporate strategies to any of the models. The Rio+20                 become more sustainable is most certainly there. And yet,
Conference outcomes could at least help to mark a turning             an overall, globally accepted paradigm with the ability to
point here.                                                           serve as a starting point and an implementable benchmark
                                                                      for various industry clusters is still lacking. We can state
1.3. Zeronauts taking action                                          that sustainability, the triple bottom line, and corporate
                                                                      social responsibility have helped to define directions,
                                                                      but have not yet led to a common understanding of a
“A world of 9 billion by mid-century                                  necessary joint (minimum) effort by all industries. So
will demand fundamental changes in                                    far no process has been devised to help define clear roles
                                                                      & responsibilities for the various global industry clusters in
our mindsets, behaviors, cultures and                                 an overall paradigm based on overall effectiveness motives
overarching paradigm.”                                                rather than industry-specific efficiency programs.

                         John Elkington in ‘The Zeronauts –
                         Breaking the Sustainability Barrier’


Similar to various concepts at the macroeconomic level
(as discussed in 1.2.) new developments towards more
sustainable business (models) on microeconomic level
have emerged in the last decade. The following table
shows an overview of various streams, including both the
macroeconomic and microeconomic levels:
 Macroeconomic Approaches (see 1.2.)                                  Academic/Science Approaches)
 •	Green Growth                                                       •	Sustainable Capitalism
 •	Green Economy                                                      •	Creative Capitalism
 •	Circular Economy                                                   •	Environmental Economics
 •	Beyond GDP (Happiness)                                             •	Bio-based Economy
 •	New indicator systems                                              •	Behavioural Economics
 •	Global Governance                                                  •	Ecological Footprint


 Organizational Approaches                                            Enlightened Individuals & Societal Approaches

 •	Resource efficiency                                                •	LOHAS movement
 •	Cradle to Cradle                                                   •	SRI market developments
 •	Base of the pyramid                                                •	Open source developments
 •	Zero targets                                                       •	‘Blessed Unrest’ communities
 •	Social purpose definition                                          •	Social entrepreneurship
 •	B-Corporations

Table 1: Concepts and initiatives contributing to a more sustainable economy




                                                         Towards Zero Impact Growth Strategies of Leading Companies in 10 Industries   5
ZERONAUT,

                                          n.:
                                           1. An inventor, innovator, entrepreneur, intrapreneur, investor, manager, or educator who
                                              promotes wealth creation while driving adverse environmental, social, and economic
                                              impacts towards zero.
                                           2. Someone who finds, investigates, and develops breakthrough, footprint-shrinking
                                              solutions for the growing tensions between demography, consumerist lifestyles, and
                                              sustainability.
                                           3. Political leader or policy-maker who helps to create the regulator frameworks and
                                              incentives needed to drive related ‘1-Earth’ solutions to scale.


    In 2011, Deloitte Innovation and John Elkington (through                      1.4. Zero Impact Growth – a joint minimum
    his organization Volans) started to collaborate on what                       achievement
    John Elkington calls ‘the Zeronauts’12, individuals and/or
    organizations that try to minimize their natural and societal
    impact to a zero level.                                                       “It is time we steered by the stars, not
                                                                                  by the light of each passing ship.”
    The late Ray Anderson, founder of InterfaceFlor, was seen
    as one of the early archetypes of a corporate leader who                                                                         Omar Bradley
    went through an ‘epiphany’ experience that changed his
    entire attitude towards the role of business in society. His                  As a logic consequence of the Zeronauts’ thinking, the
    ‘mission zero13 by 2020’ has become a blueprint initiative.                   question was raised which economic model this new breed
                                                                                  of sustainability leaders would follow. We tested the idea
    The book ‘The Zeronauts – Breaking the Sustainability                         of ‘Zero Impact Growth’, a growth paradigm that would
    Barrier’ also refers to the ‘Zero Hub’ concept, a platform                    help us set up an economic model that allows 9-10 billion
    to discuss the implications of Zero Impact Growth as                          people to live in harmony with nature and in well-being.
    the underlying economic paradigm the community                                During visits at and discussions with more than
    of Zeronauts would strive towards.14 The Zeronauts
    Symposium, held on 5 June 2012, at Deloitte’s Dutch
    headquarters in Rotterdam, was the first event to help
    shape the idea of the Zero Hub (see Annex 5.1. for further
    guidance on the Zeronauts Symposium).

    The book also contains a first ‘Roll of Honor’, a
    collection of 50 individuals and organisations that are
    shining examples of the new breed of individual or
    organizational Zeronauts15.




                                                                                  Source: Picture taken by Ralph Thurm during a visit at InterfaceFlor
    12
       	 Elkington (2012): The Zeronauts – Breaking the Sustainability Barrier.   Netherlands, together with John Elkington, December 2011.
    13
       	 For more information on ‘mission zero’, see: http://www.interface-
         global.com/Sustainability/Interface-Story.aspx
    14	
         Elkington (2012): The Zeronauts – Breaking the Sustainability
         Barrier, p. 12/13
    15	
         Ibid.: 45/46




6
60 companies, we found the people there considered it an           •	Progress & success: In a Zero Impact Growth world,
interesting concept, simply because it has the potential to          progress can only be made in global value cycles,
guide companies in different industry clusters towards a             factoring in the thinking of a circular economy and zero
process of alignment and can potentially be operationalized          tolerance towards social injustice. A new definition
through benchmarks.                                                  of success would be needed, enlarging today’s
                                                                     one-dimensional financial success thinking through
The discussions showed us that thinking about ‘Zero                  additional aspects, especially looking at ‘synchronized,
Impact Growth’ triggered a renewed quest for clarity about           joint and balanced’ success measures that show how a
several basic questions for corporations as the basis of             company adds to the success of others (assuming a joint
finding a commonly shared direction. These are:                      adaptation plan exists) or how the company has been
                                                                     affected by others; both figures could show positive and
•	Intention: Companies need to ponder on the societal                negative values.
  purpose of their existence beyond a simple license to
  operate. In a 1-Earth Economy, only those players would          •	Effectiveness: At this moment most industry sectors,
  stay in business that clearly define their intention to give       through the discussion and negotiation processes they
  back at least as much as they take from planet earth and           are used to, interpret sustainability from their respective
  society, and possibly even more in the future (already             perspectives. This has led to increasing efficiency or
  referred to as ‘regenerative growth’ by some).                     better reputation (proving the basic business case for
                                                                     sustainability), but often these successes are neutralized
•	Ambition: In the understanding that Zero Impact                    or even overshadowed globally by rebound effects
  Growth would only be a viable concept if there is a clear          (demography, more resource use per capita, etc.) and
  understanding about achievement levels required in                 steered by an existing economic growth model that
  different industries, companies are tasked to think about          simply sees ‘more’ as success. Until now, we are not able
  their roadmap towards achieving Zero Impact Growth,                to measure whether what has altogether been achieved
  defining their long-term targets, timelines and areas to           in the different industries is actually ‘good’. The only
  get there. A joint adaptation plan on how to get there             thing we can state so far is that we became ‘less bad’,
  would have to be the basis for that alignment.                     so the question Zero Impact Growth tries to answer is:
                                                                     what, as a minimum, constitutes ‘enough’?
•	Bottom line: In a Zero Impact Growth economy, a
  new bottom line would arise, not allowing economic               •	Roles & responsibilities: Thinking in terms of Zero
  success on the back of nature and society. It would                Impact Growth helps to redefine roles and responsibilities
  be challenging to define the ‘Zeronautics’ of this new             that certain industries need to take over, or hand over
  paradigm, but some steps in the monetization of                    to other industries. For example, is it necessary that
  ecosystem services already show signs towards a new                companies in consumer business, an industry that would
  consolidation. The internalization of all possible external        have a negative EBITDA if all external effects they cause
  effects into the profit and loss accounts of companies             were to be internalized (see Trucost study in KPMG –
  is one foreseeable way, but others could be explored               ‘Expect the unexpected’16), shrink their direct ecological
  as well.                                                           footprint to zero if other industries could achieve more,
                                                                     more effectively? We do not have these answers available
                                                                     right now.




                                                                   16	
                                                                         The KPMG report ‘Expect the Unexpected: Building business value
                                                                         in a changing world’ can be downloaded via http://www.kpmg.
                                                                         com/nl/nl/issuesandinsights/articlespublications/pages/expect-the-
                                                                         unexpected.aspx




                                                      Towards Zero Impact Growth Strategies of Leading Companies in 10 Industries             7
Given these considerations and in an attempt to define a      Then what does Zero Impact Growth constitute in
    basic consensus about Zero Impact Growth, we have found       our view:
    the following aspects of a definition useful in our diverse   •	A ‘North Star’ definition of joint progress and success in
    discussions, first by clarifying what Zero Impact Growth        sustainability
    actually is not, and then looking at what Zero Impact         •	Help for existing initiatives to position themselves in
    Growth in our view indeed is:                                   a need for the overall consolidation of networks and
                                                                    initiatives
    Zero Impact Growth is not:                                    •	The basis for an overall adaptation plan
    •	A completely new idea – We look at it as an attempt to      •	A means to help define roles and responsibilities of
      consolidate views towards a minimum joint ‘North Star’        industries and companies
      idea, offering openings for innovation and measurable       •	A trigger to nurture cross-industry collaboration,
      sustainable growth.                                           co-creation and co-venturing
    •	Zero Growth – Unrealistic in the view of many, given        •	Adding scope and purpose to reporting, finally building
      demographic realities.                                        useful sustainability context in an organization’s
    •	Zero targets for everything – Not effective and more an       performance measurement
      effect of not knowing better.                               •	A door opener to a world beyond Zero Impact Growth,
    •	Competitive towards other developments – It can               e.g. regenerative growth
      better serve as a calibration criteria for clarifying the   •	Input into future legislation and boundary-setting for
      contribution of other concepts.                               ‘sustainable capitalism’
    •	An ultimate plea for legislation – As legislation is        •	Support messaging that consumers can follow and that
      normally a lowest common denominator, we think Zero           can create positivism around sustainability
      Impact Growth is too challenging in the short term          •	The basis for a top-down & bottom-up movement
      for many, but it could become the basis for later legal     •	A concept that leads to clear and implementable action
      actions.
    •	The ultimate goal – Clearly, there is more than just Zero
      Impact Growth, e.g. the concept of regenerative growth
      (giving back more than taking from the earth and from
      society). As a milestone we think Zero Impact Growth
      paves the way and defines the boundaries for further
      innovation and functioning of markets.
    •	A doom scenario – Not working on Zero Impact Growth
      as a common denominator of necessary achievements
      could lead to doom scenarios, we think that Zero Impact
      Growth can be the opposite.




8
2. The Zero Impact Growth
Monitor (ZIG-M)


2.1. Background and inspiration                                                                  Definition from ‘The      Analogy: Characteristics of a company on
                                                                             Maturity Level
                                                                                                 Zeronauts’                that level
“Sustainability is the primary moral                                         No strategy         No definition             The company barely understands the relevance
                                                                             and goals                                     of restructuring its actions towards sustainable
and economic imperative for the                                                                                            solutions and hardly reports on sustainability.
21st Century and it is one of the                                                                                          Furthermore, no strategy has been defined and
                                                                                                                           no targets have been set.
most important sources of
                                                                             Eureka              Opportunity is            The company understands the relevance of
both opportunities and risks                                                                     revealed via the          restructuring its actions towards sustainable
for businesses”                                                                                  growing dysfunction       solutions. No considerable actions have been
                                                                                                 of the existing order.    taken yet and almost no strategies and targets
                                            King III report, 2009                                                          have been set. The company does already
                                                                                                                           understand the relevance of the topic though,
In preparation of the Zeronauts Symposium, Deloitte                                                                        has started reporting and communicates plans to
Innovation performed a research of 65 UN Global                                                                            ameliorate its sustainability performance in the
                                                                                                                           future.
Compact member companies that are seen as ‘leaders’ in
sustainability since they are either active members of the                   Experiment          Innovators and entre-     Although the company has started its first inno-
UN Global Compact, the Global Compact Lead program,                                              preneurs begin to         vation efforts and internal programs in certain
the Caring 4 Climate Program or the CEO Water Mandate.                                           experiment, a period      sustainability areas and has developed initial
                                                                                                 of trial and error.       policies and strategies, no concrete milestones
                                                                                                                           and an overarching future vision have been
The research was inspired by John Elkington’s ‘Pathway
                                                                                                                           defined yet.
to Zero’ model as described in ‘The Zeronauts’ 17. His five
stepping-stones model is characterized by specific mindsets                  Enterprise          Investors and             The company has developed a short- to mid-term
                                                                                                 managers build new        strategy ( ≤ 2020) for specific areas and has
that Zeronauts develop while exploring their journey
                                                                                                 business models           set measureable targets. Nevertheless, almost
towards Zero Impact Growth. The five levels are called
                                                                                                 creating new forms of     no long-term milestones have been defined.
as follows:                                                                                      value.                    Furthermore, they do not communicate an over-
1.	 ureka – Seeing the opportunity
  E                                                                                                                        arching future vision.
2.	 xperiment – Exploring new ways of doing business
  E
                                                                             Ecosystem           Critical mass and part-   Measureable, ambitious (zero) targets based
3.	 nterprise – Creation of new business models
  E
                                                                                                 nerships create new       on a mid- to long-term vision (≥2020) are set.
4.	 cosystem – Start of new and collaborative markets
  E                                                                                              markets and institu-      Nevertheless, a conjoint approach and some
5.	 conomy – Flipping the economic system to a more
  E                                                                                              tional arrangements.      collaborative aspects are still missing since the
sustainable state                                                                                                          holistic zero impact growth vision has not been
                                                                                                                           (fully) adapted.
Deloitte Innovation has aligned analogies to these five                      Economy             The economic system       The company has fully adapted the zero impact
mindsets with levels of strategic readiness for a Zero Impact                                    flips to a more           growth vision. Measureable zero targets that
Growth paradigm world, assuming that different attitudes,                                        sustainable state,        have been adapted jointly are set out for each
mindsets and organizational cultures lead to different                                           supported by cultural     field of action. A clearly defined strategy is in
strategies, targets and ways of implementation. Thus, for                                        change.                   place on how to achieve these targets, with
the Zero Impact Growth Monitor (ZIG-M), we derived five                                                                    defined short- and long-term milestones. The
different maturity levels as prompters/descriptors of the                                                                  underlying benchmarks are clearly defined.
existing mindset in an organization:                                        Table 2: Pathway to zero model and conceptual strategic analogies




 	 Elkington (2012): The Zeronauts – Breaking the Sustainability Barrier,
17

   p. 123 seqq.



                                                                                                 Towards Zero Impact Growth Strategies of Leading Companies in 10 Industries   9
2.2. Complementarity of the approach                                  performance information at this point is more or less
     The Zero Impact Growth Monitor attempts to make a                     relative since defining materiality is mostly a matter of
     valuable contribution towards instigating the discussion              negotiation between the reporting organization and its
     about Zero Impact Growth as a useful umbrella and                     stakeholders. Both sides still lack important information
     paradigm to jointly work towards in all industries (and by            about ‘sustainability context’, actually the most neglected
     that including their stakeholders) and to show a maturity             GRI report content principle. Consequently, at this
     pattern on how to close gaps to get there. We also                    moment all rankings and ratings can only define ‘best in
     want to stimulate and build a community that can have                 class performance’, while nobody is able to assess ‘good
     valuable input for other important networks and initiatives           performance’ – we actually lack knowledge of what ‘is
     in order to help the corporate sector to work towards a               good (or good enough)’. Zero Impact Growth and the
     1-Earth-Economy. Zero Impact Growth would be the basic                necessary Zeronautics could be a bridge towards the
     paradigm to develop the necessary Zeronautics18, and by               ‘age of context’. There is a notion that if G4 misses out
     doing so it would be serving as a benchmark to measure                on relevant context indicators, we will remain locked in
     success.                                                              another decade of context-free performance description
                                                                           with limited value for the necessary success measurement.
     Here are some suggestions on how far the Zero Impact
     Growth Monitor and the community of active Zeronauts                  2.2.3. UN Global Compact
     may contribute to existing movements:                                 The UN Global Compact and the ten inherent principles
                                                                           have given all leading (and following) companies
     2.2.1. WBCSD Vision 2050                                              policy guidance on why and how to tackle the areas of
     In 2010, the WBCSD published Vision 205019, a                         environmental stewardship, labour rights, human rights
     comprehensive overview of the pathways of many different              and anti-corruption21. Furthermore, the Global Compact
     industries from 2010-2050. While this vision already                  (GC) has introduced the Communication on Progress (CoP)
     contained various aspects of zero strategies, e.g. zero               as the main reporting mechanism. GC member companies
     waste or zero carbon, many of the envisaged industry                  can actually fulfil their CoP duties by publishing a GRI-based
     pathways were still separated in silos and disconnected               sustainability report. The sustainability context problem
     from an overall growth paradigm perspective. While many               therefore is also true for the GC CoPs.
     strategies to get there can be described as efficiency
     pathways, Vision 2050 is less radical in the potential of             Beyond that, the Global Compact has created local
     cross-fertilization between industries (bridging the silos). A        networks and has started important initiatives like LEAD,
     better understanding of Zero Impact Growth by clarifying              the Caring for Climate Program (C4C) or the CEO Water
     the roles and responsibilities of various industries in this          Mandate, just to name a few. Through these activities
     paradigm and developing an adaptation plan on how                     the GC tries to further build collective programs, public
     to get there would benefit further implementation of                  private partnerships and other alliances. Using Zero
     Vision 2050 and would add to the needed Zeronautics as                Impact Growth as a litmus test for the effectiveness of
     measures of success in a 1-Earth-Economy.                             these programs could be helpful as an umbrella. Certainly,
                                                                           the Zero Impact Growth Monitor, as explained below,
     2.2.2. GRI G 3.1 and G4 Guidelines                                    delivers very valuable information on the state of the art of
     The current G3.1 Guidelines of the Global Reporting                   strategy implementation and the various gaps that prevent
     Initiative will be replaced by G4 in May 201320. G3.1 can             ‘breaking the sustainability barrier’. Working with the GC
     still be characterized by one major weakness: all                     programs and/or in the GC local networks could enhance
                                                                           their effectiveness.

     18
       	 Zeronautics: ‘The science of conceiving, designing, engineering
         and operating technologies, business models, value chains and
         economies on 1-Earth principles.’ (Elkington 2012)
     19	
         The WBCSD report ‘Vision 2050 – the new agenda for business’
         can be downloaded via http://www.wbcsd.org/pages/edocument/
         edocumentdetails.aspx?id=219&nosearchcontextkey=true               	 For more information on the UN Global Compact and its ten prin-
                                                                           21

     20	
         For more information on the GRI Guidelines, see: http://www.         ciples, see: http://www.unglobalcompact.org/aboutthegc/theten-
         globalreporting.org/                                                 principles/index.html




10
2.2.4. ISO 26000                                                  2.3. Methodological approach
ISO 26000 was published in 2010 to cover a gap in the ISO         The Zero Impact Growth Monitor looks at a total of 18
family of documents, now covering quality, environment            components of strategic relevance, in three main areas:
and adding social guidance. It is worthwhile to note that         •	Vision and strategic ambition – the generic research
ISO 26000 is a guidance standard only, while ISO 14001              area to assess the extent of a company’s overall vision on
and ISO 9001/9002 are certifiable standards. After nearly 7         sustainable growth.
years of development, ISO 26000 can be seen as a valuable         •	Environmental aspects – a total of eight components
contribution on how to develop, structure and organize              that look at the characteristic sub-strategies and how
sustainability within an organization. The guidance                 they link to the overall strategy.
document covers a very broad range of topics in several           •	Social aspects – a total of seven components, covering
sustainability issue areas. However, ISO 26000 is relatively        labour rights, human rights and societal engagement and
light on the connection to an effective measurement                 how they contribute to the overall strategy.
of success. Once again, linking the effectiveness of an
organization’s approach to a benchmarkable set of                 The components follow the overall logic of GRI’s G3.1
targets based on Zero Impact Growth as the overarching            Guidelines, taking into account the whole holistic concept
paradigm, could be a major step forward.                          of sustainability, and using the transparency through the
                                                                  company’s publicly available information.
2.2.5. Other networks and initiatives
As already indicated in Chapter 1, there are many                 All components are assessed through an underlying scoring
other networks, initiatives and organizations that play           scheme from 0 to 5, based on the maturity model as
an important role in the development of sustainable               described above. For all 65 companies a spider web has
capitalism, many of them active as pieces of the puzzle           been prepared to show scores in all 18 components. Also,
of the still to-be-developed journey. The Zeronauts               a total score indicates how far we think companies are in
community and the Zero Impact Growth Monitor offer a              their thinking on long-term growth strategies and how they
complementary approach on developing a joint growth               are implemented (vision & strategic ambition counts for
paradigm. The organizations, networks and initiatives we          20% of the total score, environmental aspects and social
have identified as being additional players include, e.g.,        aspects get 40% each). In Chapter 3, we discuss overall
Trucost, VERGE (part of GreenBizz), True Price Foundation,        outcomes and gaps, all industry and individual company
TEEB Foundation, WWF, Global Footprint Network (GFN),             scores are shown in Annex 5.2.
Greenpeace, CERES, Sustainability Context Group (in
formation), International Integrated Reporting Council
(IIRC), Prince of Wales Accounting for Sustainability Project,
Global Green Growth Institute, Green Economy Coalition,
2degrees network, the Regeneration Project, Circle
Economy, Cost of Planet.




                                                    Towards Zero Impact Growth Strategies of Leading Companies in 10 Industries   11
Area              Sub-area        Component              Focus and Definition of Items
                                        Holistic approach      Assesses how many components regarding environmental and social
                                                               sustainability are covered through the company's overall sustainability
                                                               approach and how these areas are tackled.
      Vision &
                                        Defined strategy       Assesses whether a concrete sustainability strategy is in place that
      strategic
                                                               embraces the company's sustainability efforts towards a zero impact
      ambition
                                                               growth paradigm.
                                        Level of integration   Assesses the extent in which the sustainability strategy is part of the
                                                               company's business strategy.
                                                               Efforts, strategies and targets of a company to reduce the annual direct
                                        Emissions
                                                               and indirect GHG emissions.
                                                               Efforts, strategies and targets of a company to reduce the annual direct
                                        Energy                 and indirect energy consumption and to move towards the use of
                                                               more sustainable energies.
                                                               Efforts, strategies and targets of a company to reduce the annual waste
                                        Waste
                                                               streams & effluents and to increase the recycling rate of materials.
                                                               Efforts, strategies and targets of a company to reduce the annual water
                                        Water
                                                               consumption and to move towards a more sustainable use of water.

      Environmental                                            Efforts, strategies and targets of a company to reduce the negative
      aspects                           Biodiversity           impact of activities, products, and services on biodiversity in protected
                                                               areas and areas of high biodiversity value outside protected areas.
                                                               Efforts, strategies and targets of a company to increase the use of
                                        Materials
                                                               sustainable and/or recycled materials.
                                                               Efforts, strategies and targets of a company to reduce the negative
                                        Logistics              environmental impact of the logistics network, transportation and
                                                               packaging materials.
                                                               Efforts, strategies and targets of a company to reduce the negative
                                                               environmental impact throughout the entire supply chain and to
                                        Supply Chain
                                                               include the suppliers into the company's environmental sustainability
                                                               approach.
                                                               Efforts, strategies and targets of a company to ameliorate their health
                                                               & safety performance as regards rates of injury, occupational diseases,
                                        Health & Safety
                                                               lost days, and absenteeism, and number of work related fatalities. Also
                        Labour                                 included are education & training regarding health & safety.
                        Practices &
                                        Training &             Efforts, strategies and targets of a company to ameliorate their perfor-
                        Decent Work
                                        Education              mance regarding the training and education of its employees.
                                        Diversity & Equal      Efforts, strategies and targets to increase equal opportunities and to
                                        opportunities          achieve the desirable level of diversity within the company.
                                                               Operations to identify any significant risks of incidents of child and
                                        Child & Forced
      Social aspects                                           forced labour and efforts, strategies and targets to contribute to the
                                        Labour
                        Human                                  effective abolition of child labour.
                        Rights          Investment &
                                                               Investment agreements and contracts that include human rights
                                        Procurement
                                                               concerns. Efforts, strategies and targets to ameliorate the performance.
                                        Practices
                                                               Efforts, strategies and targets regarding the implementation of local
                                        Local Community
                                                               community engagement and development programs (e.g. including
                                        Engagement
                        Society                                corporate donation activities).
                                        Anti-Corruption &      Efforts, strategies and targets to decrease the risks for incidents of
                                        Compliance             corruption and to increase compliance.

     Table 3: The 18 components of the Zero Impact Growth Monitor (ZIG-M)




12
2.4. Research sample
Deloitte Innovation assessed a sample that included a total                 sample, given their outstanding roles regarding the
of 65 companies from 10 core industries and 25 sectors                      creation of shared value (Nestlé), sustainable innovation
(according to the ICB definition22). All companies are part                 (Nike) and the pioneer role on developing environmental
of the UN Global Compact. Furthermore, most of them                         profit/loss accounts (Puma). We also added Deloitte
are either part of the UNGC LEAD initiative, the Caring                     Netherlands to the sample since we think we need to
for Climate (C4C) Initiative, the CEO Water Mandate and/                    ‘practice what we preach’ on top of which we can learn
or report pursuant to the UNGC Advanced Level CoP.                          something from the assessment ourselves.
62 companies were proposed directly by the UN GC
secretariat, we added Puma, Nestlé and Nike to the

                                                     Technology                             Oil & Gas




                                                                                                                         Basic
                 Financial &                                                                                             Materials
                 Support
                 Services*




            Utilities
                                                                           Sample




                                                                                                                                 Industrials


Telecommunications




                            Consumer
                            Services

                                                   Health
                                                   Care                          Consumer Goods


Figurethe Sample of Zero Impactservices companies Deloitte and Abreu Advogados Classification Benchmark (ICB). from the financials.
* For 1: analysis the support Growth Monitor. Classification according to Industry have been treated separately




22	
      For detailed information on the Industry Classification Benchmark,
      see: http://www.icbenchmark.com




                                                              Towards Zero Impact Growth Strategies of Leading Companies in 10 Industries   13
2.5. Disclaimers                                                   •	We have not performed interviews with the companies;
     The Zero Impact Growth Monitor has been applied to a                 that remains optional for a more in-depth analysis.
     broad sample of industries, but the research sample and its        •	We have not used normalization factors based on
     related outcomes have limitations, for several reasons:              existing materiality discussions included in the reports. In
     •	The sample is incomplete, not entirely balanced and not            order to get a balanced view we have taken into account
       representative as it includes mainly companies with a              relevant omissions (as requested by GRI) when scoring
       leading role in sustainability in their respective industries.     sub-strategies and implementation efforts.
       However, the outcome is interesting as it helps to               •	Two areas that the GRI Guidelines recommend have not
       understand challenges in entire industries when looking            been evaluated: employment & labour/management
       at the existing gaps of their respective leaders.                  relations and non-discrimination & collective bargaining.
     •	The samples used in the 10 different categories are not            Our assessment led us to the conclusion that disclosure
       of equal size and – given the information available – can          on these two items is generally too weak to be assessed
       show considerable shortcomings in some components                  in a 0-5 scale scoring scheme.
       of the assessment, which may not be typical for certain
       industries.
     •	All data used for the Zero Impact Growth Monitor rely on
       publicly available information only, derived from:
       -- Sustainability reports from 2009 to 2011 (up to
          publication in June 2012);
       -- Additional website coverage (when indicated in the
          reports);
       -- Other documents (e.g. Code of Conduct, Supplier
          Guidelines) insofar they have been published.




14
3.	ZIG-M Results 2012



       The outcomes of the first-ever Zero Impact Growth Monitor                    sustainability areas at least via internal programs and
       are showing interesting results regarding the positioning of                 initial innovation efforts, while in most cases they are busy
       65 leading companies in 10 industries towards Zero Impact                    developing specific policies. However, they lack clearly
       Growth (or other growth perspectives23). Furthermore,                        defined and operationalized targets in most areas and do
       the results reveal several gaps that need to be overcome                     not communicate a concrete long-term strategic vision.
       to effectively and jointly move forward towards a
       1-Earth-Economy.                                                             The majority of the assessed companies have reached the
                                                                                    ‘Enterprise’ level: 70%. These companies have defined a
       3.1. Overall results according to level of maturity                          clear vision of what they attempt to achieve in a short-
       All 65 companies were assessed and scored according                          to mid-term perspective (≤ 2020). They have defined
       to the 0 to 5 scoring model, and comprised the 18                            measurable milestones in several areas that provide a
       components regarding vision & strategic ambition as well                     concrete outlook on their actions and measures. While
       as related environmental and social strategies and goals.                    all of them have chosen certain focus areas based on
       Figure 2 shows an overview of the classification of the                      a materiality analysis developed in dialog with their
       company results according to the five maturity levels of the                 stakeholders, most of them limit their sustainability
       Zero Impact Growth Monitor (see chapter 2.1.).                               approaches strongly to their focus areas, resulting in a
       Bar one, all companies have at least reached the                             less holistic approach with a long-term vision and legacy.
       ‘Experimentation’ level, with some 20% of the companies                      Materiality discussions are therefore not visibly based on
       being exactly in that group. The companies on the                            long-term views.
       experimentation level have started to tackle most

       50
                                                                                  45



       40




       30




       20

                                                      13



       10
                                                                                                              6

                           1
                                                                                                                                        0
         0
                        Eureka!                Experimentation                 Enterprise                Ecosystem                  Economy
       Figure 2: Overview of company classification according to the 5 maturity levels of the Zero Impact Growth Monitor




       23	
             Cf. Chapter 1 for the broad variety of concepts discussed.




                                                                      Towards Zero Impact Growth Strategies of Leading Companies in 10 Industries   15
Six companies of our research sample (9%) have already
     Best Practice: Holistic Approach                                                          reached the ‘Ecosystem’ level: Unilever, Puma, Nike,
                                                                                               Nestlé, Natura, and Ricoh. These pioneering companies
     In the final ranking of the ZIG-M 2012, Unilever ranks first due to its truly holistic    have not only set measurable and ambitious mid- to
     approach. The Unilever Sustainable Living Plan advocates a holistic long-term             long-term targets (≥ 2020), but have also embedded
     strategy, based on the overarching vision ‘to create a better future in which people      their sub-policies in a holistic strategic vision of their
     can improve their quality of life without increasing their environmental footprint’
                                                                                               attempt to minimize their negative environmental and
     (Unilever Sustainable Living Plan). Their actions are led by three overarching
                                                                                               societal impacts. Furthermore, they are in the process
     2020 goals:
     1. 	 We will help more than a billion people take action to improve their health and      of establishing sustainable business ecosystems and
          well-being.                                                                          creating truly shared value by also involving their suppliers
     2. 	 We will decouple our growth from our environmental impact, achieving absolute        and other stakeholders in their actions. However,
          reductions across the product lifecycle. Our goal is to halve the environmental      aspects of a conjoint approach and (cross-industrial)
          footprint of the making and use of our products.                                     collaborative aspects as a necessary condition to achieve a
     3. 	 We will enhance the livelihoods of hundreds of thousands of people in our            1-Earth‑Economy are still missing to a large extent.
          supply chain.’ (Unilever Sustainable Living Plan)
     These general ambitions have been broken down into measurable milestones and              This overall result of the Zero Impact Growth Monitor
     sub-targets in all sustainability content areas. In this way, Unilever provides a clear   is a clear reflection of some of the remarks made in
     framework on how to embed sustainability in all of its business operations and which
                                                                                               Chapter 1 regarding the sheer proliferation of different
     allows the company to move towards a zero impact level. For more information visit:
                                                                                               growth concepts, industry-specific interpretations and
     http://www.unilever.com/sustainable-living
                                                                                               definitions of material sustainability issue areas, as well as
                                                                                               the lack of concrete sustainability context information in a
                                                                                               company’s reporting approach. This patchwork of different
     Best Practice: Collaborative Actions                                                      approaches and definitions leads to non-comparability
                                                                                               and a lack of information regarding which actions may
     The apparel manufacturers Adidas Group, C&A, H&M, Li-Ning, G-Star, Nike Inc. and          be classified as ‘being truly good’ and which as ‘being
     Puma – three of them also in the ZIG-M sample – show how breaking down compet-            less bad’. Once again, we think that consolidation and
     itive barriers and joining forces can have a catalyst effect on achieving solutions for   alignment towards Zero Impact Growth would be a great
     sustainability issues. In 2011, they made a joint commitment to help lead the apparel     opportunity to help get a clear answer to that contextual
     and footwear industry towards Zero Discharge of Hazardous Chemicals (ZDHC) for            question.
     all products across all pathways by 2020. Published in November 2011, their ‘Joint
     Roadmap’ explains the group’s collaborative efforts and sets the standards for future
     actions. It also includes concrete commitments and measurable milestones. For more
     information visit: http://www.roadmaptozero.com/



     Best Practice: Internalization of Externalities
     In 2011, Puma (ranked 2nd in the ZIG-M) released the first environmental profit
     and loss account. Supported by Pricewaterhouse Coopers LLP and Trucost PLC, they
     developed a methodology to use well-known ecological and economic techniques to
     monetize their environmental impact for the key areas of greenhouse gas emissions
     (GHG), water use, land use, air pollution and waste, generated through the Puma
     operations and supply chain. Thereby, the overall environmental impact of Puma is
     valued at € 145 million in 2010, with the majority (94%/€ 137m) occuring within
     its supply chain of external partners. This radical method of internalization of exter-
     nalities clearly reveals the necessity for building sustainable business ecosystems by
     taking collaborative actions. For more information visit: http://safe.puma.com




16
Average of Total Scores per Industry

                                                    3.5



                                                      3
  Industry Mean of Total Score




                                                    2.5



                                                      2



                                                    1.5



                                                      1



                                                    0.5



                                                      0
                                                             Consumer                                         Basic                    Telecommu                 Consumer
                                                                        Health Care Technology   Oil & Gas               Industrials                Financials               Utilities
                                                              Goods                                          Materials                  nications                 Services
                                 Overall Score Total Score     2.9         2.84        2.71        2.45        2.34         2.27          2.17        2.07         2.05        2.05



Figure 3: Average industry-specific results

3.2. Industry results                                                                                                         3.3. Gap analysis
Let’s have a look at the average industry scores. Consumer                                                                    Our assessment has revealed additional insights on
goods companies on average scored highest, with 2.9,                                                                          four major gaps. These can be classified and described
followed by the health care industry, 2.8, consisting                                                                         as follows:
of Novo Nordisk and Novartis, and the technology
sector, with 2.7.
                                                                                                                                                                                                 GAP 2:
                                                                                                                                                 GAP 1:
In every industry the average score of the environmental
components exceeded the average score of the social                                                                                                                                           ‘So much talk,
                                                                                                                                         ‘Lost in space’
aspects. We will refer to this effect and the reasons for this                                                                                                                           (still) too little action’
                                                                                                                                       Comparability Gap
outcome in the gap analysis below (see 3.3.3).                                                                                                                                            Implementation Gap

As regards the environmental components, the technology
industry, including e.g. Philips, SAP, RICOH and Siemens,                                                                                                                                        GAP 3:
                                                                                                                                                 GAP 3:
tops with an average score of 2.8, while in terms of the
social components the consumer goods and health care                                                                                                                                     ‘Some like it hot’
                                                                                                                                         ‘Money counts’
industries once again take the lead, with an average                                                                                                                                  Gap in performance in
                                                                                                                                          Balance Gap
score of 2.6.                                                                                                                                                                         and between industries
On the lower end the consumer services and the utilities
industry scored the lowest on average with 2.05. As
regards environmental components, the financial industry
is at the lower end of the ranking with an average score
of 2.03. The worst performing industry as regards social
components is consumer services with a score 1.86
on average.




                                                                                                          Towards Zero Impact Growth Strategies of Leading Companies in 10 Industries                             17
3.3.1. ‘Lost in space’ – comparability gap                                      some degree caused by inconsistency due to a missing
     The research among the 65 companies in 10 industries has                        performance ‘North Star’, broken down into industry sector
     revealed a lack of consistent definitions and descriptions                      roles & responsibilities and aligned to ‘Zeronautics’, thus
     that companies use to explain their sustainability efforts                      translating the sustainability context into measurable and
     in the various components we have examined. Hence,                              comparable benchmarks.
     while it is difficult to compare their performance and, in
     addition, to seek consistency towards Zero Impact Growth                        The figure below exemplifies descriptions in the area
     strategies within an industry or towards a certain other                        of carbon reduction or zero carbon programs by the
     growth paradigm, this becomes even more difficult among                         companies assessed.
     different industries. Rating and ranking organizations thus
     use questionnaires as their primary source of information                       The challenge: in a Zero Impact Growth economy
     in order to be able to compare performance on same                              it is essential to find jointly-adapted definitions and
     denominators. It is fair to say that the ‘questionnaire                         measurement methods that enable comparable and
     fatigue’ that companies sometimes experience, is to                             transparent target setting (Zeronautics).



                                                                              “(...) will reduce its cradle-to-
                                          “Cutting CO2 emissions               gate carbon footprint by 10
                                            by 80% by 2050.”                  % per metric ton of product by
                     “Reduce CO2 emissions by 30%                               2015 compared to 2009.”
                 throughout all product life cycles by 30%         By 2012: 20% reduction in
                      against 2005 levels by 2020.”               CO2 emissions per employee.               “Besides offsetting our emissions
                                                                                                                   through support to
                                                                    “Reduce direct greenhouse gas
                    “50% reduction in CO2 and volatile organic                                              socio-environmental projects, we
                                                                    emissions by 5% relative to sales
                      compound (VOC) emissions by 2020.”                                                   committed to reducing our relative
                                                                        each year until 2012.”
                                                                                                            greenhouse gas (GHG) emissions
                     “Reduce the total lifecycle CO2 emissions by (...)                                    by 33% between 2007 and 2011.”
                                                                            “By 2013: Reduce carbon
                  (including emissions of the “five gasses” converted
                                                                              emissions by 10% with
                  into CO2) by 30%* by 2020 and by 87.5% by 2050                                                   “Decrease CO2 emissions by 10% by
                                                                             respect to 2009. Increase
                              from the fiscal 2000 level.”                                                          2015, based on 2010 level. Reduce
                                                                           avoided emissions by 80%.”
            “Our goal is a generation portfolio                                                                      total GHG emissions by 15% by
            that is 75 % low-carbon or carbon-        “Our goal is to reduce by 10% our carbon emissions           2015 and 20% by 2020, including
              free by 2025, most of it either          by 2012, through a more efficient and rational use                    carbon offsets.”
               renewables- or gas-based. “             of the resources. Therefore, in 2011 and 2012, we
                                                        will be launching a communication campaign to               “We aim to reduce carbon dioxide
              “Our long-term goal is to reduce       encourage Team Members to adopt good environmental            (CO2) emissions by 170kg per tonne
                 our emissions to their 2000          practices at their workplaces and in their daily lives.”    of steel by 2020, equivalent to an 8%
               level by 2020 in ways that best                                                                      reduction in normalised emissions
                    support profitability.”                      “-300,000 metric tons of CO2 per                       (from the 2007 baseline).”
                               “Reduction of particulate        year by 2012 and -500,000 metric
                               emissions to 0.23 kg/MWh           tons of CO2 per year by 2020.”           “Improve our operational energy
                                sent out by 2015/2016.”                                                   efficiency by 25% and reduce CO2
                                                                 “Reduction in fossil CO2
                                                                                                         emissions by 25%, all compared with
                  “By 2015: Reduce emissions per ton               with 20% by 2020.”
                                                                                                                  the base year 2007.”
                   of cementitious product by 25% to
                           602kg CO2/ton.”
                                                                                                             “Reduce CO2 emissions
                                                                                                             by 20% by 2020 vs 2004
                                                                                                                   baseline.”

     Figure 4: Lack of consistent definition leads to lack of comparability



     3.3.2. ‘So much talk, (still) too little action’ –                              an implementation gap arises between the definition of
     implementation gap                                                              overall strategies and targets and their implementation.
     Some of the companies have proposed ambitious strategies                        These findings are not just the result of timing (since
     that have scored high in the Zero Impact Growth Monitor.                        implementation often takes 2-3 years), as the scoring
     However, the degree of implementation of these overall                          model looks at logical contributions of the different
     strategies often does not receive similar scores when                           components to an overall growth or zero impact growth
     assessing the different components. Our research therefore                      strategy. In short, the combination of the environmental
     suggests that in quite a considerable number of cases                           goals and social goals set by a company are often less



18
ambitious than the overall disclosed strategy suggests.                                      (53.8%) have even been evaluated with a score on the
We believe that these findings also correlate with earlier                                   strategic ambitions of 3 or above, which already puts them
findings by Accenture in which more than 700 CEO’s                                           on the ‘Enterprise’ maturity level in that area. In terms of
responded, in 2010, that they thought they had already                                       implementation only 6 companies achieved that level.
fully implemented a challenging sustainability strategy,
whereas reality showed their implementation to still be                                      The challenge: use Zero Impact Growth as a ‘North
lacking the same consistent ambition. The figure below                                       Star’ to clarify the overall strategic ambition and how
shows that companies generally score higher in the area                                      to implement it through clear targets and milestones
of vision and strategic ambition, with an average score of                                   in a way that ensures a consistent approach between
2.86 (blue dots), while in terms of implementation they                                      targets of the various activity areas and the overall
score 2.4 points on average on environmental aspects and                                     company strategy.
2.2 points on social aspects (green dots). 35 companies
                                                                                                                          Zero Impact Growth

                                  5



                                  4
          Environmental Aspects




                                  3




                                  2



                                  1



                                  0
                                      0                   1                   2                    3                4                   5

                                                                                  Social Aspects

                                              Average scores environmental                                  Average scores in vision and general
                                             and social aspects per company                                 approach (companies with same scores
                                                                                                            aggregated)
                                          Sample mean general approach: 2,85
                                          Sample mean implementation aspects: 2,30

Figure 5: Implementation Gap


3.3.3. ‘Money counts’ – balance gap                                                          assessment that more efforts to calculate the use of natural
A third finding describes an overall tendency that                                           resources (including absorption capacity of greenhouse
environmental goal-setting is more consistent towards                                        gases) can help boost the implementation of Zero Impact
supporting overall strategies than social goal setting.                                      Growth strategies, whereas more effort needs to be
This finding is understandable to a certain degree, since                                    put into the social aspects, which – as the image below
environmental strategies and their financial contribution to                                 suggests – score considerably lower, apart from some
value creation are more advanced than the ‘softer’, social                                   peaks like health & safety and community engagement.
contributions. But, we also think that the reason for these                                  Once again, those two exceptions are logic since they are
better scores has to do with the advanced possibilities to                                   closest to monetization and measurability.
monetize environmental strategy contributions to overall
economic value added. We derive from this qualitative



                                                                              Towards Zero Impact Growth Strategies of Leading Companies in 10 Industries   19
Balance Gap

           5


           4


           3


           2


           1


           0
                Emissions


                            Energy


                                     Waste


                                             Water


                                                     Biodiversity


                                                                    Materials


                                                                                Packaging Transport


                                                                                                      Suppliers Environ.


                                                                                                                               Health & Safety


                                                                                                                                                 Training & Education


                                                                                                                                                                        Diversity & Opportunities


                                                                                                                                                                                                    Child & Forced Labor


                                                                                                                                                                                                                           Investment & Procurement


                                                                                                                                                                                                                                                      Community Engagement


                                                                                                                                                                                                                                                                             Corruption & Compliance
                  Sample Mean

     Figure 6: Balance gap


     The challenge: To deliver value in a Zero Impact                                                                      transformation will in our view lead to rather rough market
     Growth economy, find the balance between                                                                              developments, affecting the profitability of many players
     environmental and social issues by exploring further                                                                  and leading to market consolidation at considerable scale.
     monetization of the different activity areas and accept
     the need for the internalization of external effects.                                                                 During our research we have also observed considerable
                                                                                                                           differences in the scores of various industries. Consumer
     3.3.4. ‘Some like it hot’ – gaps in performance in and                                                                goods and basic materials (while having huge variations
     between industries                                                                                                    within their industry) score higher on average than, e.g. the
     All industries have leaders and followers when it comes to                                                            financials, telecommunications or utilities. In our view this
     sustainability performance. Since we have only researched                                                             constitutes a gap in potential innovation and collaboration
     the so-called ‘leading companies’ we were surprised by the                                                            in and between the industries, given different ‘views’
     considerable differences in scores – even within the same                                                             on the necessary contributions to a joint Zero Impact
     industry. These differences can run up to 2 full points in our                                                        Growth paradigm.
     scoring model. While competition between companies may
     obviously limit collaboration on sustainability, we do think                                                          The challenge: a Zero Impact Growth economy needs
     this is a considerable concern.                                                                                       more clarity on the different industries’ roles and
                                                                                                                           responsibilities. This could be achieved through a
     We have seen the biggest gaps in consumer goods,                                                                      stronger focus on sustainability context.
     consumer services, basic materials and industrials, some
     of those industries that will see the highest EBITDA loss in
     case of the internalization of additional external costs (see
     Trucost study24). If this materializes in the next decade,

     24	
           The KPMG report ‘Expect the Unexpected: Building business value
           in a changing world’ can be downloaded via http://www.kpmg.
           com/nl/nl/issuesandinsights/articlespublications/pages/expect-the-
           unexpected.aspx




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Deloitte zero impact_monitor_2012

  • 1. Towards Zero Impact Growth Strategies of leading companies in 10 industries Introducing the Deloitte Zero Impact Growth Monitor Summarizing the first Zeronauts Symposium
  • 2. Content 1. Introduction 1.1. The future we (didn’t yet dare to) want 3 1.2. Growth, no growth, or simply happiness 4 1.3. Zeronauts taking action 5 1.4. Zero Impact Growth – a joint minimum achievement 6 2. The Zero Impact Growth Monitor (ZIG-M) 9 2.1. Background and inspiration 9 2.2. Complementarity of the approach 2.2.1. WBCSD Vision 2050 10 2.2.2. GRI G 3.1 and G4 Guidelines 10 2.2.3. UN Global Compact 10 2.2.4. ISO 26000 11 2.2.5. Other networks and initiatives 11 2.3. Methodological approach 11 2.4. Research sample 13 2.5. Disclaimers 14 3. ZIG-M Results 2012 3.1. Overall results according to level of maturity 15 3.2. Industry results 16 3.3. Gap analysis 17 3.3.1. ‘Lost in space’ – comparability gap 18 3.3.2. ‘So much talk, (still) too little action’ – implementation gap 18 3.3.3. ‘Money counts’ – balance gap 19 3.3.4. ‘Some like it hot’ – gaps in performance in and between industries 20 3.4. Research summary 21 4. Recommendations 4.1. Loosening the brakes 23 4.2. Acceleration 23 4.3. Joint flight 24 5. Annexes 5.1. The Zeronauts Symposium 2012 25 5.2. Individual company ZIG-M scores in 10 industries 28 5.3. Bibliography 52 5.4. List of figures and tables 53 5.5. Colophon 54 5.6. About Deloitte Innovation Sustainability Services (Netherlands) 55 2
  • 3. 1. Introduction 1.1. The future we (didn’t yet dare to) want “Capitalism is the astounding belief June 2012 also gave us the Rio+20 Summit. More than that the most wickedest of men will do 50.000 people from business, civil society and governments met in Rio de Janeiro to decide upon actions towards a the most wickedest things for the more sustainable world. ‘Rio+20’ actually took place in greater good of everyone.” the same city where 20 years earlier the ‘Agenda 21’1 and the convention on biodiversity2 were agreed upon. Hopes John Maynard Keynes were there of the spirit of Rio once again working its magic Sustainable development in the last twenty years has and putting an end to the disappointing summits of earlier not brought about the change we needed towards a years, especially the various UN COP summits on climate more stable global economic model. Instead, there is an change. increased sense of urgency that our way of capitalism is on a path of slow demise. Economic growth faces scrutiny Already in November 2011, the first draft of ‘The Future and many of us are still fighting the remnants of a deep- We Want’3 was developed, and over many rounds of rooted global economic crisis. The unsustainability of negotiations, until shortly before the conference ended, our production and consumption patterns is increasingly this became the 49 pages closing document in which the clarified through a plethora of reports from global governments of the participating countries reaffirmed think tanks, networks and initiatives. The latest wave the importance of many facts known about sustainability. was published due to the occasion of the Rio+20 UN Still, apart from some institutional strengthening, the text Conference on Sustainable Development, which was held contains only a few commitments, such as the delegates’ on 20-22 June, 2012, in Rio de Janeiro, Brazil. vote for developing sustainable development goals until 2015, strengthening a ‘green economy’ and, related to In 2011, Deloitte Innovation started to collaborate that, more support for UNEP. with John Elkington (Volans) to envisage a new breed of inventors, innovators, entrepreneurs, intrapreneurs, On the other hand, Rio+20 had more than a thousand investors, managers, or educators who promote wealth side events, mainly organized by business and civil society creation while driving adverse environmental, social, and groups. The biggest event was the Rio+20 Corporate economic impacts towards zero. John Elkington named Sustainability Forum, a four day platform organized by the them ‘Zeronauts’, archetypes needed for a new economic UN Global Compact. During the Forum various initiatives model that would achieve at least a ‘Zero Impact Growth’ and mandates were launched, showing that business economy, ensuring a baseline on how to produce and is willing to step up to various challenges, wanting consume in a 1-Earth-Economy, respecting planetary limits to implement sustainability deeper in their corporate and societal well-being. strategies. In ‘Overview And Outcomes – Innovation & Collaborative Public Policy Recommendations & In June 2012, Deloitte Innovation and Volans held the first- Commitments to Action’4 the UN GC describes the process ever ‘Zeronauts Symposium’ in Rotterdam, the Netherlands, and outcomes of this event in various fields of action. during which John Elkington’s book ‘The Zeronauts – One of the terms used most at Rio+20 was the idea of a Breaking the sustainability barrier’ was launched – a day ‘green and inclusive economy’5, touching one of the filled with inspirational plenary discussions and workshops. Deloitte Innovation presented the outcomes of the ‘2012 1 United Nations (1993): Agenda 21 – The Earth Summit Strategy to Zero Impact Growth Monitor’, an assessment of 65 leading Save Our Planet. 2 For detailed information on the ‘Convention on biodiversity’, companies and how their strategies align with the idea of see: http://www.cbd.int/ Zero Impact Growth as a sustainable growth paradigm. 3 The document ‘The Future We Want: Outcome document adopted This report summarizes the outcomes of the Zeronauts at Rio+20’ can be downloaded via http://www.un.org/en/sustainablefuture/ Symposium and the Zero Impact Growth Monitor 2012. 4 The document ‘Overview And Outcomes – Innovation & Deloitte Innovation and Volans offer to continue to Collaborative Public Policy Recommendations & Commitments to build a Zero Impact Growth Community, focusing mainly Action’ can be downloaded via http://www.unglobalcompact.org/news/249-06-21-2012 on innovations in measurement, leadership and new 5 For more information on that concept, see: The World Bank (2012): business models. Inclusive Green Growth – The Pathway to Sustainable Development. Towards Zero Impact Growth Strategies of Leading Companies in 10 Industries 3
  • 4. biggest problems we need to solve collectively. It is the idea The conclusion is obvious: we need a new paradigm, of an economic system that allows mankind to continue to underpinning new mindsets and tools to survive live on planet earth with 9-10 billion people while stopping and thrive in the twenty-first century. We need to to overstretch the natural limits (as we have done since the move from a fundamentally unsustainable path to a mid 1980ies). Combined with the strengthened role of UN fundamentally more sustainable one. institutions to develop sustainability goals and measuring success beyond GDP-like indicators by no later than 2015, In the last decade we saw various initiatives to try and there is now a strong bedrock for the development of a develop a counter model to the growing division between sustainability context that can derive from a practicable economic growth on the one hand and nature and societal paradigm. Zeronauts would suggest ‘Zero Impact Growth’ degradation on the other hand. They included: to be that paradigm (see 1.4.). • The UK Sustainable Development Commission which published a report called ‘Prosperity Without Growth’ 1.2. Growth, no growth, or simply happiness in 2010 and developed the concept of a steady state economy8; • The French Enquete Commission, put in place by the “We are treating this planet like a former prime minister Nicolas Sarkozy and led by Joseph company in liquidation.” Stiglitz, Amartya Sen and Jean-Paul Fitoussi, which published a report and a book titled ‘Mismeasuring our Al Gore lives – why GDP doesn’t add up’9; • The Enquete Commission on ‘Growth, welfare and Presently, our footprints on this planet constantly expand, quality of life’ installed in Germany in late 201010, while the absorptive capacity and natural resources of • A concept called ‘Gross National Happiness’ implemented planet earth – measured by the availability per head in Bhutan since many years, creating an economy of well- of population – continuously shrink. In 2010, Ban Ki being rather than unending physical growth that is simply Moon, UN Secretary General, called the current model of impossible11. economic development and growth a ‘global suicide pact’. He referred to the fact that our economic model – based Beyond these different initiatives that address change to on quantitative growth – is deeply unsustainable, especially the current quantitative growth model, many additional when recognizing that the demographic development indexes have already been developed to contrast the expects at least 3 billion more people until 2050, mostly current GDP model. They include the Green GDP Concept, raised and living in developing and emerging market the Human Development Index, Index of Social Economic countries. Welfare, Natural Capital Index, Living Planet Index, and, in addition, many country-specific national indicator systems The discussion on quantitative growth already started some on progress towards sustainable development. 40 years ago with the publication to the Club of Rome, called ‘Limits to Growth’6, authored by Dennis and Donella Meadows and Jorgen Randers. While heavily questioned in all the decades to come, their forecast then – considering the technical forecasting capabilities 40 years ago – should be revised as being fairly realistic today. In June 2012, just weeks before the Rio+20 Summit, ‘2052 – A Global 8 The document ‘Prosperity without growth – the transition to a Forecast for the next 40 Years’7 was published, in which sustainable economy’ can be downloaded via Jorgen Randers raises the possibility that humankind might http://www.sd-commission.org.uk/publications.php?id=914 not survive on the planet if it continues on its path of over- 9 The document ‘Report by the Commission on the Measurement of Economic Performance and Social Progress’ can be downloaded via consumption and short-termism. www.stiglitz-sen-fitoussi.fr 10 For more information on the German enquete commission on “Growth and Welfare” of the German Federal Parliament, see: 6 Meadows et al. (1972): Limits to Growth – a report of the Club of http://www.bundestag.de/bundestag/ausschuesse17/gremien/ Rome’s project on the predicament of mankind. enquete/wachstum/index.jsp (available only in German language) 7 Randers (2012): 2052: A Global Forecast for the Next Forty Years 11 For more information, see: http://www.gnh-movement.org/ 4
  • 5. However, until today the corporate sector’s visible This proliferation of concepts on both macroeconomic involvement is relatively small, both in terms of helping to and microeconomic level clearly expresses the search and develop these alternatives to GDP, and in terms of using the appetite of the corporate sector and civil society to them as a benchmark for scenarios that link individual find sustainable solutions on various levels. The urge to corporate strategies to any of the models. The Rio+20 become more sustainable is most certainly there. And yet, Conference outcomes could at least help to mark a turning an overall, globally accepted paradigm with the ability to point here. serve as a starting point and an implementable benchmark for various industry clusters is still lacking. We can state 1.3. Zeronauts taking action that sustainability, the triple bottom line, and corporate social responsibility have helped to define directions, but have not yet led to a common understanding of a “A world of 9 billion by mid-century necessary joint (minimum) effort by all industries. So will demand fundamental changes in far no process has been devised to help define clear roles & responsibilities for the various global industry clusters in our mindsets, behaviors, cultures and an overall paradigm based on overall effectiveness motives overarching paradigm.” rather than industry-specific efficiency programs. John Elkington in ‘The Zeronauts – Breaking the Sustainability Barrier’ Similar to various concepts at the macroeconomic level (as discussed in 1.2.) new developments towards more sustainable business (models) on microeconomic level have emerged in the last decade. The following table shows an overview of various streams, including both the macroeconomic and microeconomic levels: Macroeconomic Approaches (see 1.2.) Academic/Science Approaches) • Green Growth • Sustainable Capitalism • Green Economy • Creative Capitalism • Circular Economy • Environmental Economics • Beyond GDP (Happiness) • Bio-based Economy • New indicator systems • Behavioural Economics • Global Governance • Ecological Footprint Organizational Approaches Enlightened Individuals & Societal Approaches • Resource efficiency • LOHAS movement • Cradle to Cradle • SRI market developments • Base of the pyramid • Open source developments • Zero targets • ‘Blessed Unrest’ communities • Social purpose definition • Social entrepreneurship • B-Corporations Table 1: Concepts and initiatives contributing to a more sustainable economy Towards Zero Impact Growth Strategies of Leading Companies in 10 Industries 5
  • 6. ZERONAUT, n.: 1. An inventor, innovator, entrepreneur, intrapreneur, investor, manager, or educator who promotes wealth creation while driving adverse environmental, social, and economic impacts towards zero. 2. Someone who finds, investigates, and develops breakthrough, footprint-shrinking solutions for the growing tensions between demography, consumerist lifestyles, and sustainability. 3. Political leader or policy-maker who helps to create the regulator frameworks and incentives needed to drive related ‘1-Earth’ solutions to scale. In 2011, Deloitte Innovation and John Elkington (through 1.4. Zero Impact Growth – a joint minimum his organization Volans) started to collaborate on what achievement John Elkington calls ‘the Zeronauts’12, individuals and/or organizations that try to minimize their natural and societal impact to a zero level. “It is time we steered by the stars, not by the light of each passing ship.” The late Ray Anderson, founder of InterfaceFlor, was seen as one of the early archetypes of a corporate leader who Omar Bradley went through an ‘epiphany’ experience that changed his entire attitude towards the role of business in society. His As a logic consequence of the Zeronauts’ thinking, the ‘mission zero13 by 2020’ has become a blueprint initiative. question was raised which economic model this new breed of sustainability leaders would follow. We tested the idea The book ‘The Zeronauts – Breaking the Sustainability of ‘Zero Impact Growth’, a growth paradigm that would Barrier’ also refers to the ‘Zero Hub’ concept, a platform help us set up an economic model that allows 9-10 billion to discuss the implications of Zero Impact Growth as people to live in harmony with nature and in well-being. the underlying economic paradigm the community During visits at and discussions with more than of Zeronauts would strive towards.14 The Zeronauts Symposium, held on 5 June 2012, at Deloitte’s Dutch headquarters in Rotterdam, was the first event to help shape the idea of the Zero Hub (see Annex 5.1. for further guidance on the Zeronauts Symposium). The book also contains a first ‘Roll of Honor’, a collection of 50 individuals and organisations that are shining examples of the new breed of individual or organizational Zeronauts15. Source: Picture taken by Ralph Thurm during a visit at InterfaceFlor 12 Elkington (2012): The Zeronauts – Breaking the Sustainability Barrier. Netherlands, together with John Elkington, December 2011. 13 For more information on ‘mission zero’, see: http://www.interface- global.com/Sustainability/Interface-Story.aspx 14 Elkington (2012): The Zeronauts – Breaking the Sustainability Barrier, p. 12/13 15 Ibid.: 45/46 6
  • 7. 60 companies, we found the people there considered it an • Progress & success: In a Zero Impact Growth world, interesting concept, simply because it has the potential to progress can only be made in global value cycles, guide companies in different industry clusters towards a factoring in the thinking of a circular economy and zero process of alignment and can potentially be operationalized tolerance towards social injustice. A new definition through benchmarks. of success would be needed, enlarging today’s one-dimensional financial success thinking through The discussions showed us that thinking about ‘Zero additional aspects, especially looking at ‘synchronized, Impact Growth’ triggered a renewed quest for clarity about joint and balanced’ success measures that show how a several basic questions for corporations as the basis of company adds to the success of others (assuming a joint finding a commonly shared direction. These are: adaptation plan exists) or how the company has been affected by others; both figures could show positive and • Intention: Companies need to ponder on the societal negative values. purpose of their existence beyond a simple license to operate. In a 1-Earth Economy, only those players would • Effectiveness: At this moment most industry sectors, stay in business that clearly define their intention to give through the discussion and negotiation processes they back at least as much as they take from planet earth and are used to, interpret sustainability from their respective society, and possibly even more in the future (already perspectives. This has led to increasing efficiency or referred to as ‘regenerative growth’ by some). better reputation (proving the basic business case for sustainability), but often these successes are neutralized • Ambition: In the understanding that Zero Impact or even overshadowed globally by rebound effects Growth would only be a viable concept if there is a clear (demography, more resource use per capita, etc.) and understanding about achievement levels required in steered by an existing economic growth model that different industries, companies are tasked to think about simply sees ‘more’ as success. Until now, we are not able their roadmap towards achieving Zero Impact Growth, to measure whether what has altogether been achieved defining their long-term targets, timelines and areas to in the different industries is actually ‘good’. The only get there. A joint adaptation plan on how to get there thing we can state so far is that we became ‘less bad’, would have to be the basis for that alignment. so the question Zero Impact Growth tries to answer is: what, as a minimum, constitutes ‘enough’? • Bottom line: In a Zero Impact Growth economy, a new bottom line would arise, not allowing economic • Roles & responsibilities: Thinking in terms of Zero success on the back of nature and society. It would Impact Growth helps to redefine roles and responsibilities be challenging to define the ‘Zeronautics’ of this new that certain industries need to take over, or hand over paradigm, but some steps in the monetization of to other industries. For example, is it necessary that ecosystem services already show signs towards a new companies in consumer business, an industry that would consolidation. The internalization of all possible external have a negative EBITDA if all external effects they cause effects into the profit and loss accounts of companies were to be internalized (see Trucost study in KPMG – is one foreseeable way, but others could be explored ‘Expect the unexpected’16), shrink their direct ecological as well. footprint to zero if other industries could achieve more, more effectively? We do not have these answers available right now. 16 The KPMG report ‘Expect the Unexpected: Building business value in a changing world’ can be downloaded via http://www.kpmg. com/nl/nl/issuesandinsights/articlespublications/pages/expect-the- unexpected.aspx Towards Zero Impact Growth Strategies of Leading Companies in 10 Industries 7
  • 8. Given these considerations and in an attempt to define a Then what does Zero Impact Growth constitute in basic consensus about Zero Impact Growth, we have found our view: the following aspects of a definition useful in our diverse • A ‘North Star’ definition of joint progress and success in discussions, first by clarifying what Zero Impact Growth sustainability actually is not, and then looking at what Zero Impact • Help for existing initiatives to position themselves in Growth in our view indeed is: a need for the overall consolidation of networks and initiatives Zero Impact Growth is not: • The basis for an overall adaptation plan • A completely new idea – We look at it as an attempt to • A means to help define roles and responsibilities of consolidate views towards a minimum joint ‘North Star’ industries and companies idea, offering openings for innovation and measurable • A trigger to nurture cross-industry collaboration, sustainable growth. co-creation and co-venturing • Zero Growth – Unrealistic in the view of many, given • Adding scope and purpose to reporting, finally building demographic realities. useful sustainability context in an organization’s • Zero targets for everything – Not effective and more an performance measurement effect of not knowing better. • A door opener to a world beyond Zero Impact Growth, • Competitive towards other developments – It can e.g. regenerative growth better serve as a calibration criteria for clarifying the • Input into future legislation and boundary-setting for contribution of other concepts. ‘sustainable capitalism’ • An ultimate plea for legislation – As legislation is • Support messaging that consumers can follow and that normally a lowest common denominator, we think Zero can create positivism around sustainability Impact Growth is too challenging in the short term • The basis for a top-down & bottom-up movement for many, but it could become the basis for later legal • A concept that leads to clear and implementable action actions. • The ultimate goal – Clearly, there is more than just Zero Impact Growth, e.g. the concept of regenerative growth (giving back more than taking from the earth and from society). As a milestone we think Zero Impact Growth paves the way and defines the boundaries for further innovation and functioning of markets. • A doom scenario – Not working on Zero Impact Growth as a common denominator of necessary achievements could lead to doom scenarios, we think that Zero Impact Growth can be the opposite. 8
  • 9. 2. The Zero Impact Growth Monitor (ZIG-M) 2.1. Background and inspiration Definition from ‘The Analogy: Characteristics of a company on Maturity Level Zeronauts’ that level “Sustainability is the primary moral No strategy No definition The company barely understands the relevance and goals of restructuring its actions towards sustainable and economic imperative for the solutions and hardly reports on sustainability. 21st Century and it is one of the Furthermore, no strategy has been defined and no targets have been set. most important sources of Eureka Opportunity is The company understands the relevance of both opportunities and risks revealed via the restructuring its actions towards sustainable for businesses” growing dysfunction solutions. No considerable actions have been of the existing order. taken yet and almost no strategies and targets King III report, 2009 have been set. The company does already understand the relevance of the topic though, In preparation of the Zeronauts Symposium, Deloitte has started reporting and communicates plans to Innovation performed a research of 65 UN Global ameliorate its sustainability performance in the future. Compact member companies that are seen as ‘leaders’ in sustainability since they are either active members of the Experiment Innovators and entre- Although the company has started its first inno- UN Global Compact, the Global Compact Lead program, preneurs begin to vation efforts and internal programs in certain the Caring 4 Climate Program or the CEO Water Mandate. experiment, a period sustainability areas and has developed initial of trial and error. policies and strategies, no concrete milestones and an overarching future vision have been The research was inspired by John Elkington’s ‘Pathway defined yet. to Zero’ model as described in ‘The Zeronauts’ 17. His five stepping-stones model is characterized by specific mindsets Enterprise Investors and The company has developed a short- to mid-term managers build new strategy ( ≤ 2020) for specific areas and has that Zeronauts develop while exploring their journey business models set measureable targets. Nevertheless, almost towards Zero Impact Growth. The five levels are called creating new forms of no long-term milestones have been defined. as follows: value. Furthermore, they do not communicate an over- 1. ureka – Seeing the opportunity E arching future vision. 2. xperiment – Exploring new ways of doing business E Ecosystem Critical mass and part- Measureable, ambitious (zero) targets based 3. nterprise – Creation of new business models E nerships create new on a mid- to long-term vision (≥2020) are set. 4. cosystem – Start of new and collaborative markets E markets and institu- Nevertheless, a conjoint approach and some 5. conomy – Flipping the economic system to a more E tional arrangements. collaborative aspects are still missing since the sustainable state holistic zero impact growth vision has not been (fully) adapted. Deloitte Innovation has aligned analogies to these five Economy The economic system The company has fully adapted the zero impact mindsets with levels of strategic readiness for a Zero Impact flips to a more growth vision. Measureable zero targets that Growth paradigm world, assuming that different attitudes, sustainable state, have been adapted jointly are set out for each mindsets and organizational cultures lead to different supported by cultural field of action. A clearly defined strategy is in strategies, targets and ways of implementation. Thus, for change. place on how to achieve these targets, with the Zero Impact Growth Monitor (ZIG-M), we derived five defined short- and long-term milestones. The different maturity levels as prompters/descriptors of the underlying benchmarks are clearly defined. existing mindset in an organization: Table 2: Pathway to zero model and conceptual strategic analogies Elkington (2012): The Zeronauts – Breaking the Sustainability Barrier, 17 p. 123 seqq. Towards Zero Impact Growth Strategies of Leading Companies in 10 Industries 9
  • 10. 2.2. Complementarity of the approach performance information at this point is more or less The Zero Impact Growth Monitor attempts to make a relative since defining materiality is mostly a matter of valuable contribution towards instigating the discussion negotiation between the reporting organization and its about Zero Impact Growth as a useful umbrella and stakeholders. Both sides still lack important information paradigm to jointly work towards in all industries (and by about ‘sustainability context’, actually the most neglected that including their stakeholders) and to show a maturity GRI report content principle. Consequently, at this pattern on how to close gaps to get there. We also moment all rankings and ratings can only define ‘best in want to stimulate and build a community that can have class performance’, while nobody is able to assess ‘good valuable input for other important networks and initiatives performance’ – we actually lack knowledge of what ‘is in order to help the corporate sector to work towards a good (or good enough)’. Zero Impact Growth and the 1-Earth-Economy. Zero Impact Growth would be the basic necessary Zeronautics could be a bridge towards the paradigm to develop the necessary Zeronautics18, and by ‘age of context’. There is a notion that if G4 misses out doing so it would be serving as a benchmark to measure on relevant context indicators, we will remain locked in success. another decade of context-free performance description with limited value for the necessary success measurement. Here are some suggestions on how far the Zero Impact Growth Monitor and the community of active Zeronauts 2.2.3. UN Global Compact may contribute to existing movements: The UN Global Compact and the ten inherent principles have given all leading (and following) companies 2.2.1. WBCSD Vision 2050 policy guidance on why and how to tackle the areas of In 2010, the WBCSD published Vision 205019, a environmental stewardship, labour rights, human rights comprehensive overview of the pathways of many different and anti-corruption21. Furthermore, the Global Compact industries from 2010-2050. While this vision already (GC) has introduced the Communication on Progress (CoP) contained various aspects of zero strategies, e.g. zero as the main reporting mechanism. GC member companies waste or zero carbon, many of the envisaged industry can actually fulfil their CoP duties by publishing a GRI-based pathways were still separated in silos and disconnected sustainability report. The sustainability context problem from an overall growth paradigm perspective. While many therefore is also true for the GC CoPs. strategies to get there can be described as efficiency pathways, Vision 2050 is less radical in the potential of Beyond that, the Global Compact has created local cross-fertilization between industries (bridging the silos). A networks and has started important initiatives like LEAD, better understanding of Zero Impact Growth by clarifying the Caring for Climate Program (C4C) or the CEO Water the roles and responsibilities of various industries in this Mandate, just to name a few. Through these activities paradigm and developing an adaptation plan on how the GC tries to further build collective programs, public to get there would benefit further implementation of private partnerships and other alliances. Using Zero Vision 2050 and would add to the needed Zeronautics as Impact Growth as a litmus test for the effectiveness of measures of success in a 1-Earth-Economy. these programs could be helpful as an umbrella. Certainly, the Zero Impact Growth Monitor, as explained below, 2.2.2. GRI G 3.1 and G4 Guidelines delivers very valuable information on the state of the art of The current G3.1 Guidelines of the Global Reporting strategy implementation and the various gaps that prevent Initiative will be replaced by G4 in May 201320. G3.1 can ‘breaking the sustainability barrier’. Working with the GC still be characterized by one major weakness: all programs and/or in the GC local networks could enhance their effectiveness. 18 Zeronautics: ‘The science of conceiving, designing, engineering and operating technologies, business models, value chains and economies on 1-Earth principles.’ (Elkington 2012) 19 The WBCSD report ‘Vision 2050 – the new agenda for business’ can be downloaded via http://www.wbcsd.org/pages/edocument/ edocumentdetails.aspx?id=219&nosearchcontextkey=true For more information on the UN Global Compact and its ten prin- 21 20 For more information on the GRI Guidelines, see: http://www. ciples, see: http://www.unglobalcompact.org/aboutthegc/theten- globalreporting.org/ principles/index.html 10
  • 11. 2.2.4. ISO 26000 2.3. Methodological approach ISO 26000 was published in 2010 to cover a gap in the ISO The Zero Impact Growth Monitor looks at a total of 18 family of documents, now covering quality, environment components of strategic relevance, in three main areas: and adding social guidance. It is worthwhile to note that • Vision and strategic ambition – the generic research ISO 26000 is a guidance standard only, while ISO 14001 area to assess the extent of a company’s overall vision on and ISO 9001/9002 are certifiable standards. After nearly 7 sustainable growth. years of development, ISO 26000 can be seen as a valuable • Environmental aspects – a total of eight components contribution on how to develop, structure and organize that look at the characteristic sub-strategies and how sustainability within an organization. The guidance they link to the overall strategy. document covers a very broad range of topics in several • Social aspects – a total of seven components, covering sustainability issue areas. However, ISO 26000 is relatively labour rights, human rights and societal engagement and light on the connection to an effective measurement how they contribute to the overall strategy. of success. Once again, linking the effectiveness of an organization’s approach to a benchmarkable set of The components follow the overall logic of GRI’s G3.1 targets based on Zero Impact Growth as the overarching Guidelines, taking into account the whole holistic concept paradigm, could be a major step forward. of sustainability, and using the transparency through the company’s publicly available information. 2.2.5. Other networks and initiatives As already indicated in Chapter 1, there are many All components are assessed through an underlying scoring other networks, initiatives and organizations that play scheme from 0 to 5, based on the maturity model as an important role in the development of sustainable described above. For all 65 companies a spider web has capitalism, many of them active as pieces of the puzzle been prepared to show scores in all 18 components. Also, of the still to-be-developed journey. The Zeronauts a total score indicates how far we think companies are in community and the Zero Impact Growth Monitor offer a their thinking on long-term growth strategies and how they complementary approach on developing a joint growth are implemented (vision & strategic ambition counts for paradigm. The organizations, networks and initiatives we 20% of the total score, environmental aspects and social have identified as being additional players include, e.g., aspects get 40% each). In Chapter 3, we discuss overall Trucost, VERGE (part of GreenBizz), True Price Foundation, outcomes and gaps, all industry and individual company TEEB Foundation, WWF, Global Footprint Network (GFN), scores are shown in Annex 5.2. Greenpeace, CERES, Sustainability Context Group (in formation), International Integrated Reporting Council (IIRC), Prince of Wales Accounting for Sustainability Project, Global Green Growth Institute, Green Economy Coalition, 2degrees network, the Regeneration Project, Circle Economy, Cost of Planet. Towards Zero Impact Growth Strategies of Leading Companies in 10 Industries 11
  • 12. Area Sub-area Component Focus and Definition of Items Holistic approach Assesses how many components regarding environmental and social sustainability are covered through the company's overall sustainability approach and how these areas are tackled. Vision & Defined strategy Assesses whether a concrete sustainability strategy is in place that strategic embraces the company's sustainability efforts towards a zero impact ambition growth paradigm. Level of integration Assesses the extent in which the sustainability strategy is part of the company's business strategy. Efforts, strategies and targets of a company to reduce the annual direct Emissions and indirect GHG emissions. Efforts, strategies and targets of a company to reduce the annual direct Energy and indirect energy consumption and to move towards the use of more sustainable energies. Efforts, strategies and targets of a company to reduce the annual waste Waste streams & effluents and to increase the recycling rate of materials. Efforts, strategies and targets of a company to reduce the annual water Water consumption and to move towards a more sustainable use of water. Environmental Efforts, strategies and targets of a company to reduce the negative aspects Biodiversity impact of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas. Efforts, strategies and targets of a company to increase the use of Materials sustainable and/or recycled materials. Efforts, strategies and targets of a company to reduce the negative Logistics environmental impact of the logistics network, transportation and packaging materials. Efforts, strategies and targets of a company to reduce the negative environmental impact throughout the entire supply chain and to Supply Chain include the suppliers into the company's environmental sustainability approach. Efforts, strategies and targets of a company to ameliorate their health & safety performance as regards rates of injury, occupational diseases, Health & Safety lost days, and absenteeism, and number of work related fatalities. Also Labour included are education & training regarding health & safety. Practices & Training & Efforts, strategies and targets of a company to ameliorate their perfor- Decent Work Education mance regarding the training and education of its employees. Diversity & Equal Efforts, strategies and targets to increase equal opportunities and to opportunities achieve the desirable level of diversity within the company. Operations to identify any significant risks of incidents of child and Child & Forced Social aspects forced labour and efforts, strategies and targets to contribute to the Labour Human effective abolition of child labour. Rights Investment & Investment agreements and contracts that include human rights Procurement concerns. Efforts, strategies and targets to ameliorate the performance. Practices Efforts, strategies and targets regarding the implementation of local Local Community community engagement and development programs (e.g. including Engagement Society corporate donation activities). Anti-Corruption & Efforts, strategies and targets to decrease the risks for incidents of Compliance corruption and to increase compliance. Table 3: The 18 components of the Zero Impact Growth Monitor (ZIG-M) 12
  • 13. 2.4. Research sample Deloitte Innovation assessed a sample that included a total sample, given their outstanding roles regarding the of 65 companies from 10 core industries and 25 sectors creation of shared value (Nestlé), sustainable innovation (according to the ICB definition22). All companies are part (Nike) and the pioneer role on developing environmental of the UN Global Compact. Furthermore, most of them profit/loss accounts (Puma). We also added Deloitte are either part of the UNGC LEAD initiative, the Caring Netherlands to the sample since we think we need to for Climate (C4C) Initiative, the CEO Water Mandate and/ ‘practice what we preach’ on top of which we can learn or report pursuant to the UNGC Advanced Level CoP. something from the assessment ourselves. 62 companies were proposed directly by the UN GC secretariat, we added Puma, Nestlé and Nike to the Technology Oil & Gas Basic Financial & Materials Support Services* Utilities Sample Industrials Telecommunications Consumer Services Health Care Consumer Goods Figurethe Sample of Zero Impactservices companies Deloitte and Abreu Advogados Classification Benchmark (ICB). from the financials. * For 1: analysis the support Growth Monitor. Classification according to Industry have been treated separately 22 For detailed information on the Industry Classification Benchmark, see: http://www.icbenchmark.com Towards Zero Impact Growth Strategies of Leading Companies in 10 Industries 13
  • 14. 2.5. Disclaimers • We have not performed interviews with the companies; The Zero Impact Growth Monitor has been applied to a that remains optional for a more in-depth analysis. broad sample of industries, but the research sample and its • We have not used normalization factors based on related outcomes have limitations, for several reasons: existing materiality discussions included in the reports. In • The sample is incomplete, not entirely balanced and not order to get a balanced view we have taken into account representative as it includes mainly companies with a relevant omissions (as requested by GRI) when scoring leading role in sustainability in their respective industries. sub-strategies and implementation efforts. However, the outcome is interesting as it helps to • Two areas that the GRI Guidelines recommend have not understand challenges in entire industries when looking been evaluated: employment & labour/management at the existing gaps of their respective leaders. relations and non-discrimination & collective bargaining. • The samples used in the 10 different categories are not Our assessment led us to the conclusion that disclosure of equal size and – given the information available – can on these two items is generally too weak to be assessed show considerable shortcomings in some components in a 0-5 scale scoring scheme. of the assessment, which may not be typical for certain industries. • All data used for the Zero Impact Growth Monitor rely on publicly available information only, derived from: -- Sustainability reports from 2009 to 2011 (up to publication in June 2012); -- Additional website coverage (when indicated in the reports); -- Other documents (e.g. Code of Conduct, Supplier Guidelines) insofar they have been published. 14
  • 15. 3. ZIG-M Results 2012 The outcomes of the first-ever Zero Impact Growth Monitor sustainability areas at least via internal programs and are showing interesting results regarding the positioning of initial innovation efforts, while in most cases they are busy 65 leading companies in 10 industries towards Zero Impact developing specific policies. However, they lack clearly Growth (or other growth perspectives23). Furthermore, defined and operationalized targets in most areas and do the results reveal several gaps that need to be overcome not communicate a concrete long-term strategic vision. to effectively and jointly move forward towards a 1-Earth-Economy. The majority of the assessed companies have reached the ‘Enterprise’ level: 70%. These companies have defined a 3.1. Overall results according to level of maturity clear vision of what they attempt to achieve in a short- All 65 companies were assessed and scored according to mid-term perspective (≤ 2020). They have defined to the 0 to 5 scoring model, and comprised the 18 measurable milestones in several areas that provide a components regarding vision & strategic ambition as well concrete outlook on their actions and measures. While as related environmental and social strategies and goals. all of them have chosen certain focus areas based on Figure 2 shows an overview of the classification of the a materiality analysis developed in dialog with their company results according to the five maturity levels of the stakeholders, most of them limit their sustainability Zero Impact Growth Monitor (see chapter 2.1.). approaches strongly to their focus areas, resulting in a Bar one, all companies have at least reached the less holistic approach with a long-term vision and legacy. ‘Experimentation’ level, with some 20% of the companies Materiality discussions are therefore not visibly based on being exactly in that group. The companies on the long-term views. experimentation level have started to tackle most 50 45 40 30 20 13 10 6 1 0 0 Eureka! Experimentation Enterprise Ecosystem Economy Figure 2: Overview of company classification according to the 5 maturity levels of the Zero Impact Growth Monitor 23 Cf. Chapter 1 for the broad variety of concepts discussed. Towards Zero Impact Growth Strategies of Leading Companies in 10 Industries 15
  • 16. Six companies of our research sample (9%) have already Best Practice: Holistic Approach reached the ‘Ecosystem’ level: Unilever, Puma, Nike, Nestlé, Natura, and Ricoh. These pioneering companies In the final ranking of the ZIG-M 2012, Unilever ranks first due to its truly holistic have not only set measurable and ambitious mid- to approach. The Unilever Sustainable Living Plan advocates a holistic long-term long-term targets (≥ 2020), but have also embedded strategy, based on the overarching vision ‘to create a better future in which people their sub-policies in a holistic strategic vision of their can improve their quality of life without increasing their environmental footprint’ attempt to minimize their negative environmental and (Unilever Sustainable Living Plan). Their actions are led by three overarching societal impacts. Furthermore, they are in the process 2020 goals: 1. We will help more than a billion people take action to improve their health and of establishing sustainable business ecosystems and well-being. creating truly shared value by also involving their suppliers 2. We will decouple our growth from our environmental impact, achieving absolute and other stakeholders in their actions. However, reductions across the product lifecycle. Our goal is to halve the environmental aspects of a conjoint approach and (cross-industrial) footprint of the making and use of our products. collaborative aspects as a necessary condition to achieve a 3. We will enhance the livelihoods of hundreds of thousands of people in our 1-Earth‑Economy are still missing to a large extent. supply chain.’ (Unilever Sustainable Living Plan) These general ambitions have been broken down into measurable milestones and This overall result of the Zero Impact Growth Monitor sub-targets in all sustainability content areas. In this way, Unilever provides a clear is a clear reflection of some of the remarks made in framework on how to embed sustainability in all of its business operations and which Chapter 1 regarding the sheer proliferation of different allows the company to move towards a zero impact level. For more information visit: growth concepts, industry-specific interpretations and http://www.unilever.com/sustainable-living definitions of material sustainability issue areas, as well as the lack of concrete sustainability context information in a company’s reporting approach. This patchwork of different Best Practice: Collaborative Actions approaches and definitions leads to non-comparability and a lack of information regarding which actions may The apparel manufacturers Adidas Group, C&A, H&M, Li-Ning, G-Star, Nike Inc. and be classified as ‘being truly good’ and which as ‘being Puma – three of them also in the ZIG-M sample – show how breaking down compet- less bad’. Once again, we think that consolidation and itive barriers and joining forces can have a catalyst effect on achieving solutions for alignment towards Zero Impact Growth would be a great sustainability issues. In 2011, they made a joint commitment to help lead the apparel opportunity to help get a clear answer to that contextual and footwear industry towards Zero Discharge of Hazardous Chemicals (ZDHC) for question. all products across all pathways by 2020. Published in November 2011, their ‘Joint Roadmap’ explains the group’s collaborative efforts and sets the standards for future actions. It also includes concrete commitments and measurable milestones. For more information visit: http://www.roadmaptozero.com/ Best Practice: Internalization of Externalities In 2011, Puma (ranked 2nd in the ZIG-M) released the first environmental profit and loss account. Supported by Pricewaterhouse Coopers LLP and Trucost PLC, they developed a methodology to use well-known ecological and economic techniques to monetize their environmental impact for the key areas of greenhouse gas emissions (GHG), water use, land use, air pollution and waste, generated through the Puma operations and supply chain. Thereby, the overall environmental impact of Puma is valued at € 145 million in 2010, with the majority (94%/€ 137m) occuring within its supply chain of external partners. This radical method of internalization of exter- nalities clearly reveals the necessity for building sustainable business ecosystems by taking collaborative actions. For more information visit: http://safe.puma.com 16
  • 17. Average of Total Scores per Industry 3.5 3 Industry Mean of Total Score 2.5 2 1.5 1 0.5 0 Consumer Basic Telecommu Consumer Health Care Technology Oil & Gas Industrials Financials Utilities Goods Materials nications Services Overall Score Total Score 2.9 2.84 2.71 2.45 2.34 2.27 2.17 2.07 2.05 2.05 Figure 3: Average industry-specific results 3.2. Industry results 3.3. Gap analysis Let’s have a look at the average industry scores. Consumer Our assessment has revealed additional insights on goods companies on average scored highest, with 2.9, four major gaps. These can be classified and described followed by the health care industry, 2.8, consisting as follows: of Novo Nordisk and Novartis, and the technology sector, with 2.7. GAP 2: GAP 1: In every industry the average score of the environmental components exceeded the average score of the social ‘So much talk, ‘Lost in space’ aspects. We will refer to this effect and the reasons for this (still) too little action’ Comparability Gap outcome in the gap analysis below (see 3.3.3). Implementation Gap As regards the environmental components, the technology industry, including e.g. Philips, SAP, RICOH and Siemens, GAP 3: GAP 3: tops with an average score of 2.8, while in terms of the social components the consumer goods and health care ‘Some like it hot’ ‘Money counts’ industries once again take the lead, with an average Gap in performance in Balance Gap score of 2.6. and between industries On the lower end the consumer services and the utilities industry scored the lowest on average with 2.05. As regards environmental components, the financial industry is at the lower end of the ranking with an average score of 2.03. The worst performing industry as regards social components is consumer services with a score 1.86 on average. Towards Zero Impact Growth Strategies of Leading Companies in 10 Industries 17
  • 18. 3.3.1. ‘Lost in space’ – comparability gap some degree caused by inconsistency due to a missing The research among the 65 companies in 10 industries has performance ‘North Star’, broken down into industry sector revealed a lack of consistent definitions and descriptions roles & responsibilities and aligned to ‘Zeronautics’, thus that companies use to explain their sustainability efforts translating the sustainability context into measurable and in the various components we have examined. Hence, comparable benchmarks. while it is difficult to compare their performance and, in addition, to seek consistency towards Zero Impact Growth The figure below exemplifies descriptions in the area strategies within an industry or towards a certain other of carbon reduction or zero carbon programs by the growth paradigm, this becomes even more difficult among companies assessed. different industries. Rating and ranking organizations thus use questionnaires as their primary source of information The challenge: in a Zero Impact Growth economy in order to be able to compare performance on same it is essential to find jointly-adapted definitions and denominators. It is fair to say that the ‘questionnaire measurement methods that enable comparable and fatigue’ that companies sometimes experience, is to transparent target setting (Zeronautics). “(...) will reduce its cradle-to- “Cutting CO2 emissions gate carbon footprint by 10 by 80% by 2050.” % per metric ton of product by “Reduce CO2 emissions by 30% 2015 compared to 2009.” throughout all product life cycles by 30% By 2012: 20% reduction in against 2005 levels by 2020.” CO2 emissions per employee. “Besides offsetting our emissions through support to “Reduce direct greenhouse gas “50% reduction in CO2 and volatile organic socio-environmental projects, we emissions by 5% relative to sales compound (VOC) emissions by 2020.” committed to reducing our relative each year until 2012.” greenhouse gas (GHG) emissions “Reduce the total lifecycle CO2 emissions by (...) by 33% between 2007 and 2011.” “By 2013: Reduce carbon (including emissions of the “five gasses” converted emissions by 10% with into CO2) by 30%* by 2020 and by 87.5% by 2050 “Decrease CO2 emissions by 10% by respect to 2009. Increase from the fiscal 2000 level.” 2015, based on 2010 level. Reduce avoided emissions by 80%.” “Our goal is a generation portfolio total GHG emissions by 15% by that is 75 % low-carbon or carbon- “Our goal is to reduce by 10% our carbon emissions 2015 and 20% by 2020, including free by 2025, most of it either by 2012, through a more efficient and rational use carbon offsets.” renewables- or gas-based. “ of the resources. Therefore, in 2011 and 2012, we will be launching a communication campaign to “We aim to reduce carbon dioxide “Our long-term goal is to reduce encourage Team Members to adopt good environmental (CO2) emissions by 170kg per tonne our emissions to their 2000 practices at their workplaces and in their daily lives.” of steel by 2020, equivalent to an 8% level by 2020 in ways that best reduction in normalised emissions support profitability.” “-300,000 metric tons of CO2 per (from the 2007 baseline).” “Reduction of particulate year by 2012 and -500,000 metric emissions to 0.23 kg/MWh tons of CO2 per year by 2020.” “Improve our operational energy sent out by 2015/2016.” efficiency by 25% and reduce CO2 “Reduction in fossil CO2 emissions by 25%, all compared with “By 2015: Reduce emissions per ton with 20% by 2020.” the base year 2007.” of cementitious product by 25% to 602kg CO2/ton.” “Reduce CO2 emissions by 20% by 2020 vs 2004 baseline.” Figure 4: Lack of consistent definition leads to lack of comparability 3.3.2. ‘So much talk, (still) too little action’ – an implementation gap arises between the definition of implementation gap overall strategies and targets and their implementation. Some of the companies have proposed ambitious strategies These findings are not just the result of timing (since that have scored high in the Zero Impact Growth Monitor. implementation often takes 2-3 years), as the scoring However, the degree of implementation of these overall model looks at logical contributions of the different strategies often does not receive similar scores when components to an overall growth or zero impact growth assessing the different components. Our research therefore strategy. In short, the combination of the environmental suggests that in quite a considerable number of cases goals and social goals set by a company are often less 18
  • 19. ambitious than the overall disclosed strategy suggests. (53.8%) have even been evaluated with a score on the We believe that these findings also correlate with earlier strategic ambitions of 3 or above, which already puts them findings by Accenture in which more than 700 CEO’s on the ‘Enterprise’ maturity level in that area. In terms of responded, in 2010, that they thought they had already implementation only 6 companies achieved that level. fully implemented a challenging sustainability strategy, whereas reality showed their implementation to still be The challenge: use Zero Impact Growth as a ‘North lacking the same consistent ambition. The figure below Star’ to clarify the overall strategic ambition and how shows that companies generally score higher in the area to implement it through clear targets and milestones of vision and strategic ambition, with an average score of in a way that ensures a consistent approach between 2.86 (blue dots), while in terms of implementation they targets of the various activity areas and the overall score 2.4 points on average on environmental aspects and company strategy. 2.2 points on social aspects (green dots). 35 companies Zero Impact Growth 5 4 Environmental Aspects 3 2 1 0 0 1 2 3 4 5 Social Aspects Average scores environmental Average scores in vision and general and social aspects per company approach (companies with same scores aggregated) Sample mean general approach: 2,85 Sample mean implementation aspects: 2,30 Figure 5: Implementation Gap 3.3.3. ‘Money counts’ – balance gap assessment that more efforts to calculate the use of natural A third finding describes an overall tendency that resources (including absorption capacity of greenhouse environmental goal-setting is more consistent towards gases) can help boost the implementation of Zero Impact supporting overall strategies than social goal setting. Growth strategies, whereas more effort needs to be This finding is understandable to a certain degree, since put into the social aspects, which – as the image below environmental strategies and their financial contribution to suggests – score considerably lower, apart from some value creation are more advanced than the ‘softer’, social peaks like health & safety and community engagement. contributions. But, we also think that the reason for these Once again, those two exceptions are logic since they are better scores has to do with the advanced possibilities to closest to monetization and measurability. monetize environmental strategy contributions to overall economic value added. We derive from this qualitative Towards Zero Impact Growth Strategies of Leading Companies in 10 Industries 19
  • 20. Balance Gap 5 4 3 2 1 0 Emissions Energy Waste Water Biodiversity Materials Packaging Transport Suppliers Environ. Health & Safety Training & Education Diversity & Opportunities Child & Forced Labor Investment & Procurement Community Engagement Corruption & Compliance Sample Mean Figure 6: Balance gap The challenge: To deliver value in a Zero Impact transformation will in our view lead to rather rough market Growth economy, find the balance between developments, affecting the profitability of many players environmental and social issues by exploring further and leading to market consolidation at considerable scale. monetization of the different activity areas and accept the need for the internalization of external effects. During our research we have also observed considerable differences in the scores of various industries. Consumer 3.3.4. ‘Some like it hot’ – gaps in performance in and goods and basic materials (while having huge variations between industries within their industry) score higher on average than, e.g. the All industries have leaders and followers when it comes to financials, telecommunications or utilities. In our view this sustainability performance. Since we have only researched constitutes a gap in potential innovation and collaboration the so-called ‘leading companies’ we were surprised by the in and between the industries, given different ‘views’ considerable differences in scores – even within the same on the necessary contributions to a joint Zero Impact industry. These differences can run up to 2 full points in our Growth paradigm. scoring model. While competition between companies may obviously limit collaboration on sustainability, we do think The challenge: a Zero Impact Growth economy needs this is a considerable concern. more clarity on the different industries’ roles and responsibilities. This could be achieved through a We have seen the biggest gaps in consumer goods, stronger focus on sustainability context. consumer services, basic materials and industrials, some of those industries that will see the highest EBITDA loss in case of the internalization of additional external costs (see Trucost study24). If this materializes in the next decade, 24 The KPMG report ‘Expect the Unexpected: Building business value in a changing world’ can be downloaded via http://www.kpmg. com/nl/nl/issuesandinsights/articlespublications/pages/expect-the- unexpected.aspx 20