Presentation for Siena College School of Business Lecture Series, March 2013

1. The Business Case for
Sustainability
March 11, 2013

2. John Friedman
Corporate Citizenship Communications Director,
Sodexo
I help companies live their values and tell their
authentic stories
20 years+ career including corporate
communications/organizational development,
public/community relations, sustainability and CSR
Sustainable Business blogger for Huffington Post
@JohnFriedman

3. HOW DO WE KNOW WHAT A COMPANY IS ‘WORTH’?
Most simple calculation:
Number of
Cost for a share
shares
of stock
outstanding

4. Tangible Values (Generally Audited Financial Information)
Financial Capital Physical Assets
Intangible Values (Generally Non-audited, Non-financial Information)
Intellectual Brand Image Customer
property loyalty
Employee Reputation Community
engagement support
Labor Unallocated
environment goodwill

5. INTANGIBLE ASSETS
Value is based on your relationships with
■ Customers
■ Employees
■ Owners/Investors
■ Suppliers
■ Competitors
■ Communities
■ Government agencies/regulators

6. THEREFORE…
To improve company valuation,
Improve relationships with stakeholders.
Good stakeholder relationships are necessary
for and lead to a Sustainable Corporation

7. REPUTATIONAL CAPITAL (brand equity = goodwill)
 Needed for quality income
 Necessary to get low cost of capital
 Critical to hire/retain the best employees
 Gets you through rough times
 Avoids commodity pricing/builds value added

8. INTANGIBLE ASSETS – MORE THAN MEETS THE EYE
70% of market value (avg)
80% for S&P 500 Companies
90% for technology companies
Brand Finance
Monks/Lajoux, Corporate Valuation
8

9. 2005: BEFORE THE CRASH
Company Market value Balance sheet Goodwill
assets
Microsoft $279 billion 33.7% 66.3%
Best Buy $26.3 billion 39% 61%
Starbucks $27.8 billion 12% 88%
Goldman Sachs $61.7 billion 1.1% 98.9%
Burlington Northern and $29.2 billion $30.3 billion (103%) None
Santa Fe
Caterpillar $49 billion 95.9% 44.1%
Apple $58 billion 19.8% 80.2%

11. THEORY OF THE MORAL FIRM
(self interest considered upon the whole)
Financial
Reputational Capital
$$$
INPUTS
Capital
Output Sustainable
Physical Conversion
(Goods/ Customers profits;
Capital Process
Social Services) maximum
Capital value
Human
Capital
RETURN ON CAPITAL
(preserve adequacy of capital inputs)

12. MILTON FRIEDMAN
The Social Responsibility of Business is to Increase its
Profits
There is one and only one social responsibility of business–
to use it resources and engage in activities designed to
increase its profits so long as it stays within the rules of the
game, which is to say, engages in open and free competition
without deception or fraud.
Milton Friedman, 1970, New York Times Magazine

13. MILTON FRIEDMAN
The Social Responsibility of Business is to Increase its
Profits
There is one and only one social responsibility of business–
to use it resources and engage in activities designed to
increase its profits so long as it stays within the rules of the
game, which is to say, engages in open and free competition
without deception or fraud.
That responsi-bility is to conduct the business in accordance
with their desires, which generally will be to make as much
money as possible while con-forming to the basic rules of the
society, both those embodied in law and those embodied in
ethical custom.
Milton Friedman, 1970, New York Times Magazine

14. THEORY OF THE MORAL FIRM
(self interest considered upon the whole)
Financial
Reputational Capital
$$$
INPUTS
Capital
Output Sustainable
Physical Conversion
(Goods/ Customers profits;
Capital Process
Social Services) maximum
Capital value
Human
Capital
RETURN ON CAPITAL
(preserve adequacy of capital inputs)

16. 1. Every company lives its
values
2. They may not be the
values in the mission
statement or on the wall
3. Employees, by their
actions, or inactions,
define the real corporate
culture

17. ABOUT SODEXO
January 2013

18. HIGHLIGHTS
€ 18 bn 80
countries
420 000,
revenues employees
34 300 ,
75 million 20 th
sites consumers largest employer
served daily worldwide
18 – Sodexo Group Presentation, January 2013

19. SODEXO
IS THE WORLD’S LEADING
QUALITY OF LIFE SERVICES
COMPANY
On-site
Services
Benefits
and Rewards
Services
Personal
and Home Services
19 – Sodexo Group Presentation, January 2013

20. On-site Services
Across 8 client segments
 Corporate
 Defense
 Justice Services
 Remote Sites
 Sports and Leisure
 Health Care
 Seniors
 Education
20 – Sodexo Group Presentation, January 2013

21. Benefits and Rewards Services
3 families of services
 Employee Benefits
Transport, gift, meals,
personal care, leisure,
education…
 Incentive and
Recognition
Programs
 Public Benefits
21 – Sodexo Group Presentation, January 2013

22. personal and home services
3 categories of services
 Childcare
Childcare centers for
local authorities and
companies
 Concierge services
 In-home
senior care
22 – Sodexo Group Presentation, January 2013

23. THE FUNDAMENTAL PRINCIPLES
OF OUR DEVELOPMENT
 Development of our employees
Human resources development is a factor
in our past development but it is the key for
our future development.
 Our values
Our mission is twofold OUR VALUES
 Improve the Quality of Daily Life  Service Spirit
of our employees and all whom we serve  Team Spirit
 Spirit of Progress
 Contribute to the economic, social
and environmental development OUR ETHICAL PRINCIPLES
of the communities, regions and countries  Loyalty
in which we operate  Respect for people and equal
opportunity
 Transparency
 Business integrity
23 – Sodexo Group Presentation, January 2013

24. OUR SOCIAL & ENVIRONMENTAL COMMITMENT
Develop our Promote nutrition,
employees and to improve health and
promote diversity well-being
BETTER TOMORROW PLAN
our Corporate Social Responsibility road map,
setting our social and environmental commitments Contribute to Protect the
host communities environment
around 4 priorities
24 – Sodexo Group Presentation, January 2013

25. DISCUSSION

26. ? What is the ROLE of
business in a global
society?

27. Business has an obligation Business must be respectful
to promote progress and protective of local cultures

28. Business has an obligation Business must be respectful
to promote progress and protective of local cultures

29. THANK YOU VERY MUCH
1. @JohnFriedman
2. LinkedIn
3. HuffingtonPost.com