Sustainability Training
The Surprising Solution for Many Large Industrials
on Sustainability, Growth & Innovation
This is about…
linking leadership with
sustainability and
innovation toward the
shifting values of
society…
Which directly ties to
corporate performance
on…
Revenue
Reputation
Reporting
Why focus on Sustainabl e Innovation ? Risk of Business Obsolescence Competitive Differentiation Margin Improvement Global Market AccessAHC Group, Inc. • 156 Stone Church Road • Ballston Spa, NY 12020
3
Are your teams ready for this curve?
Emerging Drivers of Social Response Capitalism
● Emerging Capital Markets (e.g., China, Brazil, Indonesia, Ireland, Scotland, Australia) ● Climate Change & Environmental Protection
● Energy Diversity & Security ● Terrorism
From where comes this new growth? By being like Ben Franklin:
Competitive, frugal, inventive, diplomatic
“So much for industry, my friends, and attention to one’s own business; but to these we must add frugality, if we would make our industry more certainly successful.”
- Benjamin Franklin, The Way to Wealth
• We need to become like Ben Franklin all over again – frugal, inventive and diplomatic, instead of war-like.
• Franklin was one of the first global citizens, who saw multiple universal truths in social capital.
• The true purpose of money is social. Important to realize that doing more with less is the mark of success in this century.
New Thinking on the Purpose and Role of Business
• There is an opportunity to transform thinking and practice about the role of the corporation in society
• Shared value gives rise to far broader opportunities for economic value creation
• Shared value thinking will drive the next wave of innovation, productivity growth, and
economic growth
• Shared value will reignite a whole new generation of management thinking
• Businesses acting as businesses, not as charitable givers, are arguably the most powerful force for addressing many of the pressing issues facing our society
• A transformation of business practice around shared value will give purpose to the corporation and represents our best chance to legitimize business again
The Surprising Solution
Why This Matters to You and Your Firm
The best and growing corporations have linked
corporate strategy to both growth, innovation, and
sustainability. This is not purely financial.
That is the new approach to growth in near future.
1.
The swiftness of the information economy
has allowed more citizens to expect
corporate changes on a global scale—
2.
This is a social shift, driven by attitudes and
world view not just regulations and taxes.
The book The Pope’s Children….
3.
The severity of the global marketplace is
cleansing-out those that resist this new wave
of understanding.
4.
About two thirds of the firms are hurting
from this S Frontier pressure, but not most of
our Corporate Affiliates.
The
Increased Globalization
Increased Transparency of Impacts
The Growth of Voluntary Industry Initiatives
Pressures from Customers and Suppliers
Instantaneous Communication and the Rise of Social Media
Customer Trust and Brand Loyalty
Resource Constraints
Aggressive NGO’s
Governments seeking quick and popular wins
The Growth of Reporting Standards
Sustainability Forcing Factors for the
Modern Company
In a recent PwC survey for the Principles of Responsible
Investment poor performance on ESG factors can reduce a
company’s valuation for M&A by 10%
In a Deloitte 2012 Sustainability study, 61% of CFO’s expect to
increase their involvement in sustainability – demonstrating
that sustainability is at the nexus of financial materiality
In a 2014 report by Pure Strategies, 70% of consumer
product companies engaging in product sustainability have
realized business value by reduced costs, improved
employee engagement, risk mitigation and improved
reputation
Why Sustainability Matters
What Companies are Saying About Where
Sustainability Matters ?
0
20
40
60
80
100
REPUTATION STRATEGY MARKETING DEVELOPMENT REGS STRATEGY OPS MGMT INVSTMNT PLNG SUPPLY CHAIN TALENTPercent Respondents Very / Extremely Important
Source: McKinsey Global Survey: How Companies Manage Sustainability 2010 • Over 50% of company
executives consider
“sustainability” extremely or very important
• 76% see sustainability as creating company value • 60% see sustainability as
important to overall corporate strategy • Only 30% say that their
companies actively seek opportunities to engage in sustainability
Leading Companies are Embracing
CAT as an Exemplar of this New Business Model
*courtesy of CAT
In summary then:
1. This is the new approach to business growth and success 2. Doing more with less is the success
3. Making others in business look better is a key part of this strategy in a hot crowded severe world!
Assessing the bottom line
Reputation is at the forefront in valuation
“Regard your good name as the richest jewel you can
possibly possess” -Socrates
“If you lose money for the firm, I’ll be understanding. If you lose reputation for the firm, I’ll
be ruthless.” -Warren Buffett
“Reputation: You only know what it’s worth, when it lies in
tatters.” -Financial Times
Reputation
Company and
Stock Reputation
affect
●Customers
●Employees
●Investors
●Legislators
●Journalists
●NGOs
Why is sustainability so hard?
Unsure definition – means different things to different people
Unfocused approach – companies often have multiple focus
topics (2/3rds of S&P 500 companies report up to 30 focus
topics)
Lack of defined roles and responsibilities – whose in charge?
Disconnection from the firm’s purpose – seen as “box
ticking” rather than strategic
Focus on process rather than outcomes
Source: McKinsey Global Survey: How Companies Manage Sustainability 2010
The Meaning Of
‘
Sustainability
’
Has Been
Clarified Over The Last Two Decades
Meeting the needs of the present without compromising the ability of future
generations to meet their own needs…
Gro Harlem Brundtland, Norwegian
Prime Minister in 1987 – first usage
Economic
Operating profitably – first among equals
Social
Environmental
Cultural
Protecting and restoring the ecosystem
Acting as if other people matter
Protecting and valuing cultural diversity
….
adapted from Strategy for Sustainability, Adam Werbach, Harvard Business Press,
2009
.
Companies integrate sustainability elements into business practice to
create value, maximize profits and manage risk.
• Reducing energy, waste and water use lowers costs
• Ethical business practices and strong safety, health,
environmental and human rights practices help mitigate
judgments and remediation costs
• Effective capacity building gives entrée to business
opportunities
• Productive engagement with government can help shape
legislation and minimize uncertainties
• In a world where carbon has a cost, low emitters win
n profit
Senior Executives often define sustainability as the
long-term health and success of the enterprise
Moving to a Sustainability-based Business Strategy
Compliance-Based Strategy Main Thrust Objectives Processes Organizational Alignment Stakeholder Engagement EHS = cost • Compliance • Safety Basic management systems EHS managed by functional staff Mainly regulatorsEHS = core company value • EHS excellence
• Business cost savings Sophisticated management systems
EHS integrated into line organization • Regulators • Local communities • Customers EHS = opportunity SR = business investment • Competitive advantage • Differentiation • Reputational management • Total cost and life cycle
management
• Line org. an EHS champion • Supply chain partnerships Engagement with a broad range of stakeholders Sustainability -Based Strategy Excellence-Based Strategy Differentiation – Based Strategy
EHS/SR = a key aspect of company business strategy
• Social responsibility mgt. • Sustainable dev. mgt.
Partnerships with stakeholders
EHS/SR innovation to position company for future growth
Strategy-driven alignment between EHS/SR goals and business decisions
Sustainability Training
Sustainability is at the intersection of
Business Functions
Growth in Sustainability Training
Academic Institutions
Harvard University
Oxford University
Cambridge University
Columbia University
Univ. of Illinois
Univ. of Vermont
University of San Francisco
Southern New Hampshire
University
Commercial and Non-Profit
Organizations
Sustainability Learning
Center
Center for Sustainability
Excellence
GEF Institute
SGS
Green Leaders
KPMG
DuPont
Examples of organizations offering training courses, degrees
and certificates in Sustainability
Corporate
Training – the missing piece
Desired corporate objectives have always had a strong
internal training component
Safety
Information technology
Quality
Diversity
By internalizing training and not relying solely on higher
education and professional certification, companies make the
subject relevant to company goals, business strategy,
operations and employee jobs
Traits needed for Successful
Sustainability Leadership
1. Understanding the broad context.
2. Managing complexity, coping with uncertainty
3. Systems thinking
4. Working beyond boundaries.
5. Leading change.
LEADERSHIP SKILLS
CORPORATE EXECUTIVE START-UP CEO BOARD MEMBER
Strategic Change Agent Team Builder Relationship Builder Analytical Insightful Communicator Face to shareholders Execution
Find + grow talent
Global
Drive
Diversity
VELOCITY OF CHANGE
IS
IMPACTING
ALL
OF THESE ROLES
WHAT SKILLS ARE REQUIRED IN THE NEAR FUTURE TO SUCCEED?
Move with speed
Deal with high ambiguity
Persuader
Fund raiser
Lead rapid change
Curious
Global from day1
Strategic + tactical
Find + reward talent
Execution
Drive
Diversity
Governance and Oversight
Strategic Questioner Continuous learner Team player Independent Global CEO succession Diversity
