SB'12 - Kevin Wilhelm - Sustainable Business Consulting
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A global revolution is in full swing, and the Sustainable Brands Conference is where sustainability, brand and innovation leaders gather to learn, share and strategize to shape the future. SB'12 was the largest gathering to date, a kinetic convergence of innovators from more than 150 companies from around the world finding new ways to create monumental disruption in traditional models of commerce and consumption.
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SB'12 - Kevin Wilhelm - Sustainable Business Consulting
- 1. DECISION MAKING FOR SUSTAINABILITY: MAXIMIZING OPPORTUNITY IN A CHANGING CLIMATE Kevin Wilhelm, Sustainable Business Consulting
- 2. Decision-‐Making for Sustainability: Maximizing Opportunity in a Changing Climate SB12, Sustainable Brands 2012, Sustainable Brands Conference Sustainable Brands – June 4, 2012 Kevin Wilhelm, CEO Sustainable Business Consulting
- 3. Agenda Overview : “changing climate” not climate change Decision Making for Sustainability – Small group exercise: Maximizing Opportunity, Minimizing Risk Decision-‐Making Framework – Small group exercise: Using Return on Sustainability Share Lessons Learned
- 4. So Who is This Guy? About Me • CEO of Sustainable Business Consulting (SBC) • Faculty at the Bainbridge Graduate Institute (BGI) • Author – Return on Sustainability: How Business Can Increase ProLitability and Address Climate Change in an Uncertain Economy Other stuff: • Former Chair – Seattle Chamber’s Sustainability Committee. • Founding Board Member WBA • Advisor to Seattle Climate Partnership Contributing writer to 3 other books: • Green Jobs: a Guide to Eco-‐Friendly Employment • Advancing Sustainability in Higher Education and • Go Green Rating Scale for Early Childhood Settings.
- 5. About my Firm We help companies increase proLitability through better social, environmental and climate practices. Sustainability Communications & Employee Implementation Goals, Assessments Engagement w/ Linancial Strategy & Carbon Reporting & Training analysis & Vision Footprints (CSR, CDP, etc.)
- 6. Our Clients
- 7. CEOs: Sustainability Drivers Top drivers of CEOs’ action on sustainability issues Brand, trust and reputation 12% Potential for revenue/growth cost reduction 24% Personal motivation 29% Consumer/customer demand 31% Employee engagement and recruitment 39% Impact of development gaps on business 42% Governmental/regulatory environment 44% Pressure from investors/shareholders 72% Survey of 766 CEOs, including 50 in-depth interviews ; UN Global Compact and Accenture study, “A New Era of Sustainability,” June 2010 Content used with permission from Bob Willard’s 2011 Presentation, “Communicating the Busine$$ Ca$e for Sustainability”
- 8. Stakeholders Driving Sustainability Stakeholders who CEOs believe will have the greatest impact on the way they manage societal expectations Consumers 58% 50% Employees 45% 39% Governments 39% 32% Communities 28% 29% Regulators 26% 25% Media 25% 24% Investment Community 22% 19% Suppliers 15% 5% NGOs 15% 27% Boards 14% 16% Organized Labor 7% 7% 2010 Other 6% 2007 4% Survey of 766 CEOs, including 50 in-depth interviews ; UN Global Compact and Accenture study, “A New Era of Sustainability,” June 2010 Content used with permission from Bob Willard’s 2011 Presentation, “Communicating the Busine$$ Ca$e for Sustainability”
- 9. Top 10 Business Priorities from 2011 % Category Top Two Priorities by Category Selecting Grow overall company revenue 64% Growth Acquire and retain customers 54% Lower the Lirm’s overall operating costs 44% EfViciency Improve quality of products and/or processes 37% Improve our ability to innovate as an organization 32% Innovation Drive new market offerings or business practices 28% Acquire and retain talent 38% Talent Improve workforce productivity 31% Comply with government regulations and 14% Transparenc requirements y Improve corporate environmental 10% sustainability and social responsibility Forrester's survey of 2,691 executives in Europe, North America, and Asia, “Forrsights Business Decision-Makers Survey, Q4 2010.”
- 10. Sustainability Continuum Most products Employees and services have Green Product Educated & environmental/ or Service CSR Trained social beneLits Report What’s Fully integrated Sustainability? into operations (processes, design, culture and brand) Carbon Footprint Green Team CDP/ Compensation & & Workplace Supplier Evaluation tied to Compliant Disclosure sustainability (great place to work)
- 11. The State of Things Product, Safety, Financial regulations • Lagging US Economy And voluntary reporting standards • Broken US political system • Uncertain Euro (Greece, Spain, Italy) Environmental regulations
- 12. What’s Happening in the Marketplace • Fuel Prices: Gas over $4 – affects everything • Supply Chain: Wal-‐Mart, Target, HP, Microsoft, SAC • Equity Investors: ESG, SRI, SEC Guidelines • Carbon Disclosure Project: $64 Trillion in Assets, • EU Linancial/sustainability reporting in 2014 • Insurance: E&O Insurance – need climate policy • Debt: Equator Principles • FTC: Rulings on “green”
- 13. Reports Galore! Equity Investing • Calvert, DJSI, SAM’s, Domini, Social Funds EMS • ISO 14001 and ISO 26000 • Climate Counts, Corporate Register, CDP, Climate New Scope 3 guidelines, Env. Product Declarations Governance • AccountAbility 1000, Dodd Frank All • GRI 4.0, Climate Registry, CR Reporting Awards Debt/Multinational • IFC Funding, Equator Principles Workers • SA 8000, CA Workers Transparency Law Labeling and 3rd Party • Green Seal, FSC and over 400* others VeriLication Integrated reporting • IIRC, EU reporting requirements in 2014 Source: inhabitat.com/demystifying-eco-labels
- 14. Industry & Trade Organizations Industry Organization Apparel Sustainable Apparel Coalition Outdoor Industry Eco Working Group Electronics CTIA’S Go Wireless, Go Green Retail RILA’s Retail Sustainability Initiative Food Sustainable Food Trade Association Automobile Suppliers Partnership for the Environment Real Estate BOMA’s “Ever-‐Green” Telecommunications TIA’s Sustainable Technology Environments Program
- 15. The Typical Business Decision Considers… Financial Cost ROI Brand Reac:on Brand Value – will a5ract new Suppliers – Demanding it customers, retain exis:ng Investors – Asking for it Compe::ve advantage – differen:ator Legal – Requiring it
- 17. Besides the CSR Director and People in this room -‐ Is Sustainability in anyone’s job description? Energy Leadership/ Prices Business Recogni:on Travel New Carbon Waste Markets Public Supply Policy/ Chain Regula:ons Sustainability Tax Fuel Incen:ves Prices Cost Investor Savings Pressure Paper Insurance
- 18. How decisions are made around Sustainability Legal – Compliance, EU requirements, SEC Investor – Shareholder compliance, CDP Brand – Leadership, First Mover, Staying Ahead of the Compe::on Management– Need to do something for Earth Day? HR – Recruitment tool, new employees are asking ! Suppliers/Customers – Scorecards, RFPs How can you maximize sustainability opportunities in your company’s decision- making process ?
- 19. ROS Planning Process ROS Tool The Return on Sustainability Decision-‐Making Framework
- 20. Lenses
- 21. Energy conservation – Energy optimization & distribution at its facilities – New technologies with lower energy consumption – Improved yields from manufacturing processes Financial Brand Sustainability Saved more than $3 billion Reduced GHG emissions to & expanded their businesses 72% below 1990 levels by 30% Use to be the #1 Polluter, Total savings from the now seen as innovator Removed CO2 emissions landLill gas projects exceed equivalent to almost 78,000 $8 million/year vehicles or more than 900,000 barrels of oil
- 22. Reduced Packaging ReconLigured the plastic bottles for its Suave shampoo Financial Brand Sustainability Saved more than $2 million Met the stricter packaging Saved plastic equivalent to in diesel costs alone requirements of customers some 15 million bottles a such as Wal-‐Mart year Product and Packaging Changed production from curly noodles to straight noodles and then redesigned packaging to shave 20% off the size of its packaging Financial Brand Sustainability Reduced the cost of raw Demonstrated to customers Fuel savings equated to 500 materials packaging by 10% a simple, easy solution to fewer distribution trucks on reduce GHG emissions the road each year without any impact on consumer behavior
- 23. Waste Materials Using excess foam from Therm-‐a-‐Rest ProLite models as raw materials for camp pillows *By Product Synergy group Financial Brand Sustainability Turned costs into a new Met customer demand for Turned hundreds of revenue stream line item complementary product pounds of waste foam on their income statement to Therm-‐a-‐Rest. destined for landLills, Developed additional which wouldn’t purchase point to drive biodegrade for decades, Therm-‐a-‐Rest sales into a practical accessory
- 24. • Revenue • Expenses Objective Financial • Cost savings • Payback What do you want to accomplish? • Process and procedures • Training Operations • Human and physical resources Measure How are you going to evaluate • Customers the objective? • Investors Brand • Reputation • Suppliers and vendors Target • Employees How will you quantify the Social • Community evaluation? Environmental • Resource Use Initiative • Pollution/waste What is your strategy for reaching your objective and target?
- 25. Small Group Exercise Scenarios
- 26. Identifying Risks and Opportunities Risks Opportunities Business as usual Financial crisis Strict environmental and & regulations
- 27. Scenario 1 Business as Usual (BAU) • The country is very politically divided • Environmental issues and new social regulation are on the back burner • The economy grows at a sluggish rate • Market pressures happen organically • Business uncertainty about responding to voluntary programs
- 28. Scenario 2 Financial Crisis • Euro crashes (Greece, Italy, Spain, France election) • $1B in automatic cuts coming Dec 31st, end of Bush tax cuts and congress doesn’t act • Economy tanks, unemployment rises, S&P downgrade (again) • New President, increased political gridlock • Environmental Regulations weakened • ConLlict in Middle East (Iran) pushes oil higher
- 29. Scenario 3 Strict Environmental and Social Regulations • World wakes up about the environment, political leaders get backbone about what needs to be done! • New climate, environmental, and social regulations • Rise in fuel cost (over $5/gallon) • Consumers demand proven, increased social and environmental action • Occupy Wall Street movement becomes permanent
- 31. ROS Strategic Planning Process Objective What do you want to accomplish? Measure How are you going to evaluate the objective? Target How will you quantify the evaluation? Initiative What is your strategy for reaching your objective and target?
- 32. ROS Strategic Planning Process Financial Social Environmental Brand Operations Revenue Process Customers Employees Resource use Expenses Procedures Investors Community Pollution Cost savings Training Reputation and waste Payback Human and Suppliers physical resources Vendors
- 33. • Revenue • Expenses Objective Financial • Cost savings • Payback What do you want to accomplish? • Process and procedures • Training Operations • Human and physical resources Measure How are you going to evaluate • Customers the objective? • Investors Brand • Reputation • Suppliers and vendors Target • Employees How will you quantify the Social • Community evaluation? Environmental • Resource Use Initiative • Pollution/waste What is your strategy for reaching your objective and target?
- 34. What did we Vind out?
- 35. Small Group Activity Return on Sustainability Process
- 36. Financial/Climate Metrics in Normative Terms
- 37. Bloomberg Sustainability Metrics Environmental Governance Social • Direct CO2 Emissions • Size of Board • Number of Employees • Indirect CO2 Emissions • Independent Directors (%) • Employee Turnover (%) • Total CO2 Emissions • Women on Board (%) • Total Fatalities • Total GHG Emissions • Board Meetings/Yr • Lost Time Accidents • GHG Scope 1 • Board Meeting Att. (%) • Women Employees (%) • GHG Scope 2 • Political Donations • GHG Scope 3 • Audit Committee Meetings • Energy Consumption • Water Consumption
- 38. Kevin Wilhelm, CEO Sustainable Business Consulting (206) 935 -‐ 0210 Kevin@sustainablebizconsulting.com www.sustainablebizconsulting.com
- 39. Background Slides • Won’t use, but have on hand just in case
- 40. EU Reporting Requirements Emissions Reporting Metrics • Climate Change Act 2008 • EU Directive 2003/51/EC) British government is required to Directors report must include propose regulation on emissions Linancial and non-‐Linancial reporting to help Britain achieve KPIs, including on its climate objectives or to explain environmental matters where to Parliament why no such appropriate regulation has been made
- 41. CEOs Agree/Strongly Agree that sustainability should be. . . fully embedded into company strategy and 96% operations 72% discussed and acted on by boards 93% 69% fully embedded into subsidiaries’ strategies and 91% operations 65% embedded throughout the global supply chain 88% 59% the basis for industry collaborations and multi 78% stakeholder partnerships 56% incorporated into discussion with Vinancial analysts 72% 2010 51% 2007 Survey of 766 CEOs, including 50 in-depth interviews ; UN Global Compact and Accenture study, “A New Era of Sustainability,” June 2010 Content used with permission from Bob Willard’s 2011 Presentation, “Communicating the Busine$$ Ca$e for Sustainability”
- 42. What’s Happening in the Marketplace Debt Equator Principles Fuel Prices FTC Rulings $100/barrel E&O Insurance Insurance Equity Investors Wal-‐Mart Microsoft SEC Guidelines ESG SRI Supply Chain EU Reporting Requirements HP Carbon Disclosure Project Sustainable Apparel Coalition $64 trillion in assets
- 43. Why Companies Care About Climate Change 2009 2010 73% 73% 73% 60% 59% 59% 47% 47% 47% 41% 41% 41% 38% 24% Employee Brand Product Risk Compliance Cost EfViciency motivation improvement differentiation Management reductions “Reason for Corporate Climate Change Strategy, 2009 v. 2010,” Environmental Leader Content used with permission from Bob Willard’s 2011 Presentation, “Communicating the Busine$$ Ca$e for Sustainability”
- 44. The Rising Costs of the Old Way of Doing Business $120 Avg Cost of Crude Oil $100 $95.57 $87.33 $80 $73.69 $60 $56.15 $40 $20 $- 2008 2009 2010 2011