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Carbon Economy Summit Sept 21, 2010
- 1. The Sustainability Advantage Canadian companies can become leaders :: September 21, 2010 :: Carbon Economy Summit Susan Sheehan motum b2b
- 2. • b2b and sustainability marketing advisory group motum b2b 2
- 3. • Sustainability-driven companies do so for competitive advantage • Canadian companies not doing so, yet • What to do (mimic the leaders) The message 3
- 4. • 76% of executives said sustainability contributes to shareholder value in the long run; 50% said delivers short- term value too • More than 70% rank sustainability as very or extremely important to corporate reputation and brand • 60% said sustainability important to corporate strategy Source: McKinsey & Company, “How companies manage sustainability”, Feb. 2010 global survey of 1,946 non-energy execs Apparently: investing in sustainability management DOES deliver value 4
- 5. • 25% of executives say sustainability is a top-three priority in their CEO’s agenda • use sustainability as competitive driver: formally embedded in business practices; extremely effective at managing it • actively seek opportunities to invest in sustainability • Track sustainability indicators of their customers and suppliers • Aggressively communicate their sustainability investments Source: McKinsey & Company, “How companies manage sustainability”, Feb. 2010 global survey of 1,946 non-energy execs Also: leading companies tend to exhibit leadership 5
- 6. What are Canadian companies saying….. 6
- 7. • What are Canadian companies BUYING to improve their sustainability performance • How intense is this activity (current and future)? • Intensity = Action • motum b2b, Innovative Research Group, Roger’s Publishing collaboration Our study: assess the intensity of sustainability investment in Canada? 7
- 8. Manufacturing Transportation & Warehousing Wholesale & Retail Trade Other Agriculture, Forestry and Fishing Utilities Construction Who did we interview? 268 senior decision makers 8
- 9. 17% 34% 49% < $10M <$100M + $100M Who did we interview? role and size 9 27% 36%37% C-Suite Operations Manager Non C-Suite Manager Respondent’s Role Company Size
- 11. 51% 46% 41% 34% 28% 18% 18% 13% 6% 10% 3% Waste management “Green” IT Energy efficiency in operations Water management Air emissions management Clean or alternative energy Sustainable supply chain ‘Green’ buildings Other None Don’t know 11 What have you done for green lately? 87% have implemented some form of a sustainability initiative over the past two years 87% have implemented some form of a sustainability initiative over the past two years Q
- 12. 32% 29% 28% 25% 22% 21% 21% 18% 6% 12% 7% Energy efficiency in operations ‘Green’ buildings Clean or alternative energy Sustainable supply chain Water management Waste management “Green” IT Air emissions management Other None Don’t know 12 What do you plan to do soon-ish? 81% will implement some form of sustainability initiative in 2010 and/or 2011 81% will implement some form of sustainability initiative in 2010 and/or 2011 Q Carbon management initiatives…
- 13. 13 What’s going to happen now (in 2010)? Supply Chain Position Company Size Overall B2B B2B+B2C B2C Small Medium Large Increase 38% 31% 42% 57% 29% 43% 43% Stay about the same 50% 55% 54% 30% 60% 47% 41% Decrease 5% 6% 1% 3% 7% 1% 11% Note: ‘Don’t know’ not shown Q
- 14. Supply Chain Position Company Size Overall B2B B2B+B2C B2C Small Medium Large Cost savings or efficiencies 77% 81% 78% 73% 71% 83% 81% Competitive positioning 39% 37% 39% 53% 37% 47% 24% Regulatory compliance 34% 31% 35% 50% 25% 43% 38% Employee morale/retention 32% 31% 35% 30% 29% 36% 27% Government and utility financial incentive programs 28% 33% 26% 33% 26% 34% 30% Individual leadership/legacy of key executive(s) 27% 33% 25% 17% 25% 29% 38% Corporate Social Responsibility (CSR) programs 26% 31% 26% 17% 15% 38% 38% Brand enhancement 25% 24% 29% 17% 17% 32% 30% Product differentiation 22% 23% 21% 17% 25% 21% 16% Risk mitigation 16% 16% 19% 17% 10% 20% 30% Community pressure/Community relations 12% 13% 15% 10% 9% 16% 22% Potential new revenue stream (e.g. carbon credits) 10% 9% 11% 13% 10% 13% 5% Other reporting requirements 2% 3% 0% 3% 2% 0% 8% Other 2% 2% 1% 3% 3% 1% 3% There are no motivations to be sustainable at my company 4% 4% 5% 0% 5% 4% 3% 14 What’s driving your investments?Q
- 15. “My company’s commitment to environmental sustainability is strong.” 15 What’s your firm’s commitment to sustainability at this time? Supply Chain Position Company Size Overall B2B B2B+B2C B2C Small Medium Large Strongly agree 28% 24% 39% 27% 25% 28% 42% Somewhat agree 50% 54% 42% 57% 55% 49% 39% Somewhat disagree 13% 13% 13% 13% 15% 17% 6% Strongly disagree 6% 7% 6% 0% 5% 4% 8% Total Agree 78% 78% 81% 83% 80% 76% 81% Q
- 16. “How important is the adoption of corporate sustainability practices and policies to your company’s long-term success?” 16 Sustainability and long-term success Supply Chain Position Company Size Overall B2B B2B+B2C B2C Small Medium Large Extremely important 10% 7% 15% 7% 8% 9% 8% Very important 35% 30% 37% 50% 28% 39% 38% Somewhat important 31% 35% 27% 30% 35% 32% 30% Not very important 14% 16% 13% 13% 18% 14% 11% Not important at all 6% 7% 6% 0% 6% 4% 8% Don’t know 4% 4% 2% 0% 4% 1% 5% Extremely + Very Important 45% 38% 52% 57% 37% 49% 46% Q
- 17. 17 Is environmental performance of products/services/processes a significant factor in what your company buys? 13% 40% 30% 13% Very significant Somewhat significant Not very significant Not significant at all 53% say significant 42% say ‘not so’ significant Q
- 18. Q 18 Sustainable supply-chain Do we demand ‘it’ from suppliers? Do our customers demand ‘it’ from us? Supply Chain Position Company Size Our suppliers should have sustainability practices B2B B2B+B2C B2C Small Medium Large Extremely important 3% 2% 3% 7% 3% 4% 3% Very important 16% 15% 17% 20% 12% 16% 22% Somewhat important 39% 35% 43% 47% 41% 39% 32% Not very important 27% 29% 26% 17% 31% 25% 14% Not important at all 12% 17% 9% 3% 11% 11% 22% Don’t know 4% 2% 2% 7% 2% 5% 8% Extremely + Very Important 19% 17% 20% 27% 15% 20% 24% Supply Chain P Our customers expect us to have sustainability practices B2B B2B+B2 Extremely important 5% 2% 7% Very important 21% 17% 26% Somewhat important 35% 41% 28% Not very important 25% 23% 27% Not important at all 8% 12% 6% Don’t know 7% 4% 6% Extremely + Very Important 26% 20% 33%
- 19. How confident are you that your organization knows where to find ‘enabling green technologies’?Q 19 Low confidence finding green solutions = in theory we get it; but it’s not embedded in strategy yet Supply Chain Position Company Size Overall B2B B2B+B2C B2C Small Medium Large Very confident 14% 15% 19% 3% 14% 11% 16% Somewhat confident 48% 50% 45% 57% 48% 46% 62% Not very confident 22% 21% 22% 33% 24% 33% 11% Not confident at all 6% 6% 6% 3% 7% 4% 5% Don’t know 9% 8% 7% 3% 7% 7% 5% Confident 63% 65% 64% 60% 61% 57% 78% Not Confident 28% 27% 29% 37% 31% 37% 16% Net Confidence 35% 38% 35% 23% 30% 20% 62%
- 20. Gap analysis….. 20 Global • 88% of sustainability leadings execs seeking opportunities to invest Local (Canada) • 45% extremely-very important to long-term success • 38% planning to increase investment • 28% strongly committed to sustainability • 14% Canadian companies very confident finding enabling technologies…..
- 21. What to do, what to do….. 21
- 22. 22 Step 1: Treat sustainability as a strategic opportunity Barriers to investing in green? 49% 33% 27% 22% 13% 10% 8% 11% Lack of capital budget or financing Unacceptable payback periods Don’t have a green technology investment strategy Don’t know what technology to look for Technology risk/unproven Don’t know where to source these technologies Don’t Know Don’t have purchasing policies that allows for evaluating the unique benefits of green technologies Q
- 23. • 62% don’t report sustainability metrics to investors or are unaware of their reporting practices; even though 50% of them keep track of value creation from these investments • Only 18% of Canadian companies feel they do sustainability communications “extremely or very well” Step 2: Tell people about it How good are you at sustainability communications? 23 Q
- 24. • Formally embedding sustainability in business practices (supply chain, capital allocation, HR, product development, differentiation) • Actively investing in enabling technology • Measuring results and benefits • Actively seeking external assessment • Proactively communicating what you are doing Sustainability Advantage means 24
- 25. Sustainability leadership takes leadership 25 PS: Only 6% of our Canadian respondents feel they significantly exceed customer expectations…..
Editor's Notes
- Sustainability management - of environmental, social and governance issues Yet only 30% actively seek opportunities to invest in it or embed in business practises
- Where sustainability is a top-three CEO priority – they are likelier to pursue it due to alignment with business goals rather than to build reputation. 105 companies of the 1946 = 6%
- In our survey only 6% said they significantly exceed customer expectations wrt sustainability!! 94% are leaving strategic opportunity on the table for their competitors to take. Another 29% say they ‘somewhat’ exceed customer expectations – ho humm.
- Juxtaposed against this global study are the results of our own study, conducted in a partnership between my company, motum b2b, Innovative Research Group, a dedicated research company, and Rogers Publishing. The purpose of this research is to get a handle on domestic demand for clean or environmental technologies and services in Canada. This research would provide insight into how Canadian cleatech marketers can approach their domestic market, as wells as provide a way for Canadian companies to benchmark their sustainability/carbon activities and possibly share opportunities and risks related to sustainability management. The Supply side for clean tech in Canada well documented – healthy and growing – through research sponsored by Sustainable Development Technology Canada Survey Advisory Group – STDC, OCETA, TSX Venture
- These are the findings of an online survey conducted in January-February 2010 (around same time the McKinsey study was released) 268 senior decision-makers from industrial firms across Canada was conducted on Roger’s Publishing industrial B2B online research panel. Panelists consist predominately of subscribers to Roger Publishing industrial trade magazines.
- Non C-Suite Managers include: Finance/Accounting Marketing/Communications Information Technology Human Resources Sales/Business Development Procurement Environment, Health and Safety Property/Plant Services 45 companies in the $100M+ category 131 companies in the less than $10 M category
- Still lots to do in areas where there would normally be low hanging fruit – green buildings, supply chain, energy
- Intent going forward is focus on energy efficiency, green buildings and clean energy Comment on lag factor between public policy and incentives vs implementation and between intention vs implementation
- B2C more likely to increase. This counter’s McKinsey findings that b2b more likely to seek growth opportunities via sustainability investments. And size matters – smaller companies less likely increase in 2010 If you are a marketer of green solutions – looks like your b2c prospects are better short-term targets than b2b in Canada.
- At the end of day, executives are saying “show me the cost savings”! An overwhelming majority (77%) cite cost savings as the key motivation for investing in sustainability; 3 times more likely to be cited than corporate social responsibility (26%) as a key driver for investment in sustainability. To me this suggests that Canadian industry still not getting the strategic opportunity of sustainability management in terms of new revenue streams, brand enhancement, product differentiation. In the McKinsey study 88% of the top performers seek opportunities to invest in sustainability actively Larger B2B firms are most likely to say sustainability initiatives are about reducing costs/increasing efficiencies. When it comes to competitive positioning and regulatory compliance, a majority of B2C firms say this is a key driver to be sustainable.
- Almost 3-in-10 respondents say their companies are strongly committed to environmental sustainability.
- Regardless of why industrial firms are investing in sustainability, it’s clear that it’s considered critical to future success. But again in Canada there is a much stronger b2c focus than the global studies suggest.
- Green Supply Chain: Environmental performance (i.e. energy, water, waste etc) of a product/service in your company’s purchasing decisions A majority, 54% said it was significant while a surprising 42% said it wasn’t significant?! and 4% didn’t know. So 46% don’t look for env. Performance in the things they buy.
- So our companies are talking the talk; but are they walking the walk? Perhaps not. Only 1-in-5 (19%) of respondents say it’s extremely or very important to their company that their suppliers had environmentally sustainable practices in place. So half of us look for environmental characteristics – water, energy, waste characteristics. But we don’t care if our suppliers if they have sustainability practices in place when making these goods/services for us.
- enabling green technologies refers to any green, clean or sustainable technologies, products, services or processes that could enable your organization to achieve its environmental sustainability goals Intensity = action Looking at the extremes here – if I were a supplier of green tech this would alarm me. Only 14% overall are very confident they can find what they need. This is a big red flag also for Canadian companies, given that 88% of top global performers actively seek out opportunities to invest in green technology
- In our survey only 6% said they significantly exceed customer expectations wrt sustainability!! 94% are leaving strategic opportunity on the table for their competitors to take. Another 29% say they ‘somewhat’ exceed customer expectations – ho humm.
- In our survey only 6% said they significantly exceed customer expectations wrt sustainability!! 94% are leaving strategic opportunity on the table for their competitors to take. Another 29% say they ‘somewhat’ exceed customer expectations – ho humm.
- ½ respondents said didn’t have the funds (therefore not a strategic imperative); 1/3 said they basically don’t have a strategic framework for evaluating the “value” of it; and almost another 1/3rd said they don’t have a strategy. Even though 78% say their company has a strong commitment to sustainability, and 45% say there is a strong relationship between sustainability management and long term success So basically – we don’t have a strategy for it; because we don’t get the strategic value of it. Implications: need to build sustainability strategy into overall business strategy in order to align with capital and operational budgeting, investment strategies.
- Overall it’s weak – even among the leaders Surprising in light of reputation building value it is said to have Not proactive in communication their initiatives externally: Such as: Embed sustainability in investor presentations; corporate website section; sustainability reports; reaches out to SR investors; sustainability rankings indexes 25% of Canadian companies don’t communicate investment in sustainability AT ALL/ 6% don’t know
- In our survey only 6% said they significantly exceed customer expectations wrt sustainability!! 94% are leaving strategic opportunity on the table for their competitors to take.
- In our survey only 6% said they significantly exceed customer expectations wrt sustainability!! 94% are leaving strategic opportunity on the table for their competitors to take. Another 29% say they ‘somewhat’ exceed customer expectations – ho humm.
- In our survey only 6% said they significantly exceed customer expectations wrt sustainability!! 94% are leaving strategic opportunity on the table for their competitors to take. Another 29% say they ‘somewhat’ exceed customer expectations – ho humm.