Sustainability Advantage:

1
Sustainability Advantage The Busine Cae for
Sustainability
PPPC Convention Toronto January 16, 2012
Bob Willard bobwillard_at_sympatico.ca
www.sustainabilityadvantage.com
2
Sustainable Promotional Products

• Cause-related promotional products
• Donation to charity of persons choice
• Carbon offsets
• Matching grants

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Definitions of Sustainability
Sustainable Development (SD) Meeting the needs of
the present generation without compromising the
ability of future generations to meet their own
needs. Brundtland Commission, 1987
Sustainability The possibility that human and
other forms of life on earth will flourish
forever. John Ehrenfeld, Professor Emeritus,
MIT Sustainable Development (SD) Enough - for
all forever. African Delegate to
Johannesburg (Rio10)
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Core Concepts of Sustainability
Futures ThinkingIntergenerational
responsibility (Eco-)Systems
ThinkingCarrying capacity of the planetto
absorb waste and support life Social
JusticeEquity, Dignity, Basic services, Human
rights, Stakeholder voices
Economic, Environmental, Social/Culturalresponsi
bilities
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3-Legged Sustainability Stool
Sustainability
Environmental Leg No Pollution Waste Renewable
Energy Conservation Restoration
Economic Leg Good Jobs Fair wagesSecurity Infrast
ructure Fair Trade
Social Leg Working conditions Health
services Education services Community
Culture Social justice
Quality of Life / Genuine Wealth / Genuine
Progress
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Corporate Sustainability 3-Legged Stool
Triple Bottom Line (TBL) 3Es 3Ps
Sustainability Sustainable Development (SD)
Corporate Responsibility (CR) Environmental,
Social, Governance (ESG)
Corporate Social Responsibility (CSR) Green
Environment - Planet Eco-efficiencies Eco-effectiv
eness
Economy - Profits GrowthJobs, Taxes Products Serv
ices
Equity - People Employees Community / Culture
World
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Smart Business 3-Legged Stool
Asset Management
Natural Capital
Economic / Financial Capital Built /
Manufactured Capital
Human Capital Social Capital
Sustainable Value Creation
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5-Stage Sustainability Journey
5. Purpose/Passion Align with founders /
CEOs values
4. Integrated Strategy Enhance company value /
prosperity
3. Beyond ComplianceSave on eco-efficienciesAvoi
d PR crisis Avoid threat of new regulations
2. Compliance Avoid fines,
prosecution, bad PR 1. Pre-Compliance
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The Sustainability Imperative
Megatrend A fundamental shift in the
competitive landscape that creates inescapable
threats and game-changing opportunities ...
profoundly affects companies competitiveness
and even their survival.
Over the last 10 years, the Sustainability
Imperative has emerged,magnified by escalating
public and governmental concern about climate
change, industrial pollution, food safety, and
natural resource depletion, among other issues.

David A. Lubin and Daniel C. Esty, The
Sustainability Imperative, HBR May 2010
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Significant CEO Mindset Shift
2010 Increase Over 2007
CEOs Agree /Strongly Agree that sustainability
should be .
fully embedded into company strategy and
operations
discussed and acted on by boards
fully embedded into subsidiaries
strategies and operations
embedded throughout the global supply chain
the basis for industry collaborations and
multi-stakeholder partnerships
incorporated into discussions with
financial analysts
Survey of 766 worldwide CEOs, including 50
in-depth interviews UN Global Compact and
Accenture study, A New Era of Sustainability,
June 2010
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Stakeholders Driving Sustainability
Stakeholders who CEOs believe will have the
greatest impact on the way they manage societal
expectations
Consumers
Employees
Governments
Communities
Regulators
Media
Investment Community
Suppliers
NGOs
Boards
Organized Labor
Other
Survey of 766 worldwide CEOs, including 50
in-depth interviews UN Global Compact and
Accenture study, A New Era of Sustainability,
June 2010
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CEOs Sustainability Drivers
Top 3 drivers of CEOs action on sustainability
issues
Brand, trust, and reputation
Potential for revenue / growth / cost reduction
Personal motivation
Consumer / customer demand
Employee engagement and recruitment
Impact of development gapson business
Governmental / regulatory environment
Pressure from investors / shareholders
Survey of 766 worldwide CEOs, including 50
in-depth interviews UN Global Compact and
Accenture study, A New Era of Sustainability,
June 2010
13
The Iceberg of Company Value
1978
2009
1998
1981
25
Tangibles / Financials
29
83
95
Intangibles / Non-Financials / Reputation /
Goodwill
5
71
17
75
Market Value / Capitalization
Sources For 2009, Hollender, Orgain, and Nunez,
The Business Case for Sustainability accessed
July 30, 2011, Kaplan Eduneering/Seventh
Generation Sustainability Institute, February
2010 for 1998 and 1981, Roberts, Keeble, and
Brown, The Business Case for Corporate
Citizenship, Arthur D. Little, 2002, p. 1 for
1978, Stewart, Accounting Gets Radical,
Fortune, April 16, 2001.
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The Perfect Storm Threatens Financial and
Social Capitals
Species Extinction and Overharvesting
Climate Change and Energy Crisis
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Waste, Toxicity, and Health
Tangibles / Financials
Food and Water Crises
Poverty and Social Injustice
(Scientists)
(NGOs)
Intangibles / Non-Financials / Reputation /
Goodwill
Global Markets
Governments
Social license to operate
Media
Banks
The Public
Competitors
Employees
Investors
Communities
Customers
Insurers
Market Value / Capitalization
Boards
Economists
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CEOs Sustainability Drivers
Top 3 drivers of CEOs action on sustainability
issues
Brand, trust, and reputation
Potential for revenue / growth / cost reduction
Personal motivation
Consumer / customer demand
Employee engagement and recruitment
Impact of development gapson business
Governmental / regulatory environment
Pressure from investors / shareholders
Survey of 766 worldwide CEOs, including 50
in-depth interviews UN Global Compact and
Accenture study, A New Era of Sustainability,
June 2010
16
Top 10 Business Priorities for 2011
Forrester's survey of 2,691 executives in Europe,
North America, and Asia, Forrsights Business
Decision-Makers Survey, Q4 2010.
17
One More Goal or an Enabling Strategy?
Talent wars Productivity Innovation Brand
imageQuality Risks Compliance Governance
Supply security
Profit Share price Growth Revenue Market
share New markets Customer care Expenses
Sustainability
Enabling Strategies
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Income / Profit Loss Statement
Revenue / Sales

• Expenses
• Cost of goods sold (COGS)
• Selling, general, and administrative (SGA)
• Interest, taxes, depreciation, and amortization
  (ITDA)

Profit / Net Income
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Wouldnt it be nice if someone

1. determined what real companies have achieved
   from their sustainability-related revenue
   enhancement and expense saving initiatives, by
   researching books, articles, press releases,
   surveys, research papers, case studies, etc.

1. sorted the benefits into generic categories
2. monetized the benefits and normalized themto
   revenue

1. projected profit improvements for typical
   companies, if they were to simply do what leading
   companies have already done, within the next 3 to
   5 years

5. made it easy to tailor the business case for
a particular company with an open source simulator
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7 Business Case Benefits
Opportunities
Risks
Income Statement
Revenue
1. Increased Revenue
9
2. Reduced energy expenses
75
3. Reduced waste expenses
20

1. Reduced risks to revenue and expenses

1. Reduced material and water expenses

10
Expenses

1. Increased employee productivity / innovation

2

1. Reduced employee turnover expenses

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Profit
51 to 81
-16 to -36
Sustainability Capital Reserve
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Two Sample Typical Companies
Company Data Profile Small Professional Services Company of Revenue Large Manufacturing Distribution Corporation of Revenue
Revenue 1,000,000 500,000,000
Energy expense 20,000 2 10,000,000 2
Materials and water expense 50,000 5 150,000,000 30
Total salary / payroll expense 300,000 30 150,000,000 30
Profit 70,000 7 35,000,000 7
Average salary, including benefits 50,000 40,000
Number of employees 6 3,750
Potential Profit Increase
51
81
Potential Profit at Risk
-16
-36
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5 Sources of Funds
Existing budgets maintenance, advertizing,
marketing, communications, education
Government grants and incentives, especially for
early movers
Sustainability Capital Reserve
Other internal capital or external capital markets
Treat as an investment, rather than as a cost
high yield, low risk
Benefits are only counted after their 1 to 5 year
payback period
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The Tipping Point

5. Purpose Passion Align with founders
/ CEOs values
20
4. Integrated Strategy Enhance company value /
prosperity
3.3 Embed sustainable governance
3.2 Create new eco-effective products, services,
leases 3.1 Improve supply chain conditions
and footprints 3.0 Improve company
eco-efficiencies and sustainability brand
3. Beyond Compliance Capture
eco-efficiencies Avoid PR and regulatory risks
2. Compliance
1. Pre-Compliance
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Question

• How long do you think it will be before we
  reach the sustainability tipping point in the
  business community?
• 0-5 years
• 5-10 years
• 10-15 years
• More than 15 years
• Never

25
Time Until Sustainability Tipping Point
3
10
17
44
26
Source Environmental Leader, Time Until
Sustainability Tipping Point is Reached, View of
Global CEOs ( of respondents) in Environmental
and Energy Data Book Q2 2011, July 2011, p. 26.
Based on survey of 1,251 companies, in UN Global
Compact Annual Review 2010.
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Corps Are Investing in Sustainability
The growth of investment in sustainable business
programs will be between 50-100 higher in 2013
than in 2011. Spending on sustainability programs
by Australian, Canadian, U.K. and U.S. companies
with over 1B in sales will hit 60B in 2013.
(Verdantix, based on spending patterns of 2,500
global firms, March 2011)
MIT Sloan and the Boston Consulting Group winter
2011 research report,Sustainability The
Embracers Seize Advantage, Feb. 2011
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Sustainable Promotional Products

• Cause-related promotional products
• Donation to charity of persons choice
• Carbon offsets
• Matching grants

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In Summary
Sustainability is smart business Relevant to
current organizational priorities Important
stakeholders expectations are rising New market
forces risks are in play Large companies have a
ripple effect on suppliers Promotional products
are symbolic gestures Opportunity for leadership
by example Many willing, helpful, unusual
partners
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Sustainability Advantage The Busine Cae for
Sustainability
PPPC Convention Toronto January 16, 2012
Bob Willard bobwillard_at_sympatico.ca
www.sustainabilityadvantage.com