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Championing
Sustainability
… even if you’re not the CEO
LSF / IRIS / W3 / EASO
Talk-Back
Speaker Series
November 23, 2010
Bob Willard
[email protected]
www.sustainabilityadvantage.com
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
Significant CEO Mindset Shift
CEOs Agree /Strongly Agree that sustainability should be ….
2010 Increase
Over 2007
… 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
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
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 gaps
on 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
Sustainability 3-Legged Stool
Sustainability
Economic Leg
Good Jobs
Fair wages
Security
Infrastructure
Fair Trade
Environmental Leg
0 Pollution & Waste
Renewable Energy
Conservation
Restoration
Social Leg
Working conditions
Health services
Education services
Community & Culture
Social justice
Quality of Life / Genuine Wealth / Genuine Progress
Corporate Sustainability 3-Legged Stool
Sustainability = Sustainable Development (SD)
= Environmental, Social, Governance (ESG)
= Corporate Social Responsibility (CSR)
= Corporate Responsibility (CR) = Green
= Triple Bottom Line (TBL) = 3Es = 3Ps
Economy - Profits
Growth, Jobs,
Taxes
Products
Services
Environment - Planet
Eco-efficiencies
Eco-effectiveness
Equity - People
Employees
Community / Culture
World
Smart Business 3-Legged Stool
Asset Management
Financial
Capital
Natural
Capital
Human
Capital
Built
Capital
Social
Capital
Sustainable Value Creation
5-Stage Sustainability Journey
5. Purpose/Passion
Values-driven senior leader
4. Integrated Strategy
Enhanced organizational value
3. Beyond Compliance
Eco-efficiencies
PR crisis
Regulatory threat
2. Compliance
Regulatory enforcement
1. Pre-Compliance
Lead It Like Any Culture Change
1. Walk-the-talk as senior leaders
Integrate into vision - mission – strategies
Business strategy vs. philanthropy
Earn credibility – Avoid “green-washing” hype
Visible support – speeches, questions, actions
2. Educate / engage the whole company
Solicit employee ideas - help
3. Align with measurement & reward systems
7-Step Sustainability Change Process
Step 7: Embed and Align
Step 6: Mobilize Commitment
Step 5: Build Case(s) for Change
Step 4: Develop Strategies
Continuously
Learn &
Adapt
Step 3: Assess Current Realities
Step 2: Inspire Shared Vision(s)
Step 1: Wake Up and Decide
7-Step Sustainability Change Process
Step 7: Embed and Align
Step 6: Mobilize Commitment
Step 5: Build the Case(s) for Change
Step 4: Develop Strategies
Step 3: Assess Current Realities
Step 2: Inspire Shared Vision(s)
Step 1: Wake Up and Decide
The 3 R’s of Justifying Sustainability
RISKS
+
RESPONSIBILITIES
+
REWARDS
BUSINESS CASE
Based on Alan AtKisson, The IRIS Agreement, p. 127
Risks to Corporate Capitals / Assets:
Big-5 Sustainability Storm Fronts
Waste, Toxicity,
and Health
Poverty and
Social Injustice
Species Extinction and
Overharvesting
Food and Water
Crises
The 3 R’s of Justifying Sustainability
RISKS
+
RESPONSIBILITIES
+
REWARDS
BUSINESS CASE
Based on Alan AtKisson, The IRIS Agreement, p. 127
Risks to Social Capital:
Stakeholders’ Rising Expectations
Species Extinction and
Overharvesting
Waste, Toxicity,
and Health
Poverty and
Social Injustice
(NGOs)
Food and
Water Crises
Media
Economists
The Public
Investors
Customers
Employees
Competitors
Risks to Reputation re Banks
Corporate Responsibilities
Governments
Insurers
Markets
(Scientists)
The 3 R’s of Justifying Sustainability
RISKS
+
RESPONSIBILITIES
+
REWARDS
BUSINESS CASE
Based on Alan AtKisson, The IRIS Agreement, p. 127
One More Goal … or an Enabling Strategy?
Profit
Share price
Growth
Revenue
Customer care
Expense savings
Competition
Market share
Leadership
Governance
Innovation
Speed to market
New markets
Talent wars
Productivity
Motivation
Brand image
Managing risks
Compliance
Supply security
The 3 R’s of Justifying Sustainability
RISKS
+
RESPONSIBILITIES
+
SME
Companies:
At least 66%
more profit
REWARDS
BUSINESS CASE
Large
Companies:
At least 38%
more profit
Potential Improvements
REPUTATION
1. Reduced recruiting costs
-1%
2. Reduced attrition costs
-2%
3. Increased employee productivity
+6%
4. Eco-efficiencies: savings in energy,
water, materials, waste handling
-10%
5. Increased revenue / market share
+5%
6. Lower insurance & borrowing costs
-5%
… yielding a profit increase of +66%
The 3 R’s of Justifying Sustainability
RISKS
Climate Change &
Energy Crises
+
(NGOs)
Economists
Employees
RESPONSIBILITIES
Investors
Customers
Governments
Markets
Insurers
(Scientists)
+
REWARDS
BUSINESS CASE
At least 38% to 66%
more Profit
7-Step Sustainability Change Process
7. Embed and Align
7
P
R
A
C
T
I
C
E
S
6. Mobilize Commitment
7
5. Build the Case(s) for Change
D
E
R
A
I
L
E
R
S
4. Develop Strategies
3. Assess Current Realities
2. Inspire Shared Vision(s)
1. Wake Up and Decide
7 PARAD O X E S
7 Leadership Practices
Embed
and Align
Get Credible, Stay Credible
Mobilize
Commitment
Dialogue
Collaborate, Educate, Network
Build Case(s)
for Change
Meet Them Where They Are
Develop
Strategies
Influence the Influencers
Piggyback Existing Initiatives
Practice “Planful Opportunism”
Assess Current
Realities
Inspire Shared
Vision(s)
Wake Up
and Decide
True Dialogue
Advocacy
High
Telling
DIALOGUE
Asserting
Explaining
Exploring each
other’s assumptions
to generate meaning
Observing
Asking
Bystanding
Sensing
Clarifying
Interviewing
Low
Low
Inquiry
High
Based on Peter M. Senge et al., The Fifth Discipline Fieldbook, Doubleday, 1994
Collaborate, Educate, Network
Government
Agencies
Suppliers
NGOs
Senior Executive
Network
Your Inner Circle
Customers
Networks in Other
Departments
Meet Them Where They Are
Asset Management
Natural
Capital
Economic / Financial
Capital
Built / Manufactured
Capital
Human Capital
Social Capital
Sustainable Value Creation
Influence the Influencers
Important
Senior Leader
“No”
Important
Senior Leader
“Yes”
Influencer
“Yes”
Influencer
“Yes”
You
You
Ineffective Approach
Effective Approach
7 Leadership Practices
Embed
and Align
Get Credible, Stay Credible
Mobilize
Commitment
Dialogue
Collaborate, Educate, Network
Build Case(s)
for Change
Meet Them Where They Are
Develop
Strategies
Influence the Influencers
Piggyback Existing Initiatives
Practice “Planful Opportunism”
Assess Current
Realities
Inspire Shared
Vision(s)
Wake Up
and Decide
7 Leadership Paradoxes
7
P
R
A
C
T
I
C
E
S
Embed and Align
Mobilize Commitment
Build the Case(s) for Change
Develop Strategies
Assess Current Realities
Inspire Shared Vision(s)
Wake Up and Decide
You Have to Do It Yourself;
You Can’t Do It Alone
Motivators Inhibit
Commitment
Things Need to Get Worse
Before They Can Get Better
To Get “Hard Results,”
Work on the “Soft Stuff”
One Person’s Dream Is
Another Person’s Nightmare
Go Slow
to Go Fast
Go Small
to Go Big
Do it Yourself; You Can’t Do It Alone
“Never doubt that a small group
of thoughtful, committed citizens
can change the world; indeed,
it's the only thing that ever has.”
― Margaret Mead
Whole
Company
Kindred
Spirits
You
Kindred
Spirits
Their
Networks
Their
Networks
All
Industries
All
Whole Industries
Industry
The
World?
Whole
Industry
Whole
Company
“Give me a lever long
enough and a fulcrum
on which to place it, and
I shall move the world.”
― Archimedes
Go Small to Go Big
Small
Moves
Big
Shifts
“You can get away with anything if you call it a pilot”
7 Leadership Paradoxes
7
P
R
A
C
T
I
C
E
S
Embed and Align
Mobilize Commitment
Build the Case(s) for Change
Develop Strategies
Assess Current Realities
Inspire Shared Vision(s)
Wake Up and Decide
You Have to Do It Yourself;
You Can’t Do It Alone
Motivators Inhibit
Commitment
Things Need to Get Worse
Before They Can Get Better
To Get “Hard Results,”
Work on the “Soft Stuff”
One Person’s Dream Is
Another Person’s Nightmare
Go Slow
to Go Fast
Go Small
to Go Big
7 Potential Derailers
Embed and Align
Displaying Hubris
Mobilize Commitment
Mishandling Office Politics
Build the Case(s) for Change
Being a “Problem Child”
7
P
R
A
C
T
I
C
E
S
Develop Strategies
Failing to Produce Results
Assess Current Realities
Succumbing to Stress
Inspire Shared Vision(s)
Wake Up and Decide
Changing Everything at Once
Getting Off to a Bad Start
7 PARAD O X E S
Sustainability Champion’s Guidebook
7
Get Credible,
Stay Credible
Step 7
Embed and Align
Step 6
Mobilize Commitment
Dialogue
P
R
A
C
T
I
C
E
S
Step 5
Build the Case(s) for Change
Collaborate, Educate,
Network
Step 4
Develop Strategies
Meet Them Where
They Are
Step 3
Assess Current Realities
Piggyback Existing
Initiatives
Step 2
Inspire Shared Vision(s)
Influence the
Influencers
Practice “Planful
Opportunism”
Step 1
Wake Up and Decide
You Have to Do It Yourself; You Can’t Do It Alone
Motivators Inhibit Commitment
Go Slow to Go Fast
Go Small to Go Big
Displaying Hubris
7
Mishandling
Office Politics
Being a “Problem
Child”
Failing to Produce
Results
Succumbing
to Stress
Changing Everything
at Once
Getting Off to a
Bad Start
D
E
R
A
I
L
E
R
S
To Get “Hard Results,” Work on the “Soft Stuff”
One Person’s Dream Is Another Person’s Nightmare
Things Need to Get Worse Before They Can Get Better
7 PARAD O X E S
Troubleshooting Complex Change
Vision
Skills
Incentives
Resources
Action Plan
Change
Skills
Incentives
Resources
Action Plan
Confusion
Incentives
Resources
Action Plan
Anxiety
Resources
Gradual
Action Plan Change
Vision
Vision
Skills
Vision
Skills
Incentives
Vision
Skills
Incentives
Action Plan
Resources
Frustration
False Starts
Kevin Brady, Five Winds International, based on
“A Framework for Thinking About Systems Change,” by Knoster, Villa, and Thousand
In Summary …
Lead it like any culture change
Can protect & enhance organizational value
Sustainability is smart business
Relevant to existing business priorities
Important stakeholders’ expectations are rising
Many willing, helpful partners and networks
Opportunity for leadership … by example
The New Economy
•
•
•
•
•
•
•
•
Low-carbon economy vs. fossil fuel-based economy
Local supply chains vs. global supply chains
Services vs. products
“Dematerialization” vs. physical goods, processes, or travel
using “virtual” alternatives like videoconferencing or online
shopping
Responsible consumption / thrift vs. over-consumption
Low / No-growth model vs. “grow or die” model
New ownership models: employees, customers,
co-ops, social venture funds, government funding
New company purposes: “For-Benefit / B-companies,”
“Social enterprises,” “Fourth sector,” “Hybrid organizations”
CEO #1 Challenge: Complexity Gap
CEOs biggest challenge:
Rapid escalation of complexity
79% anticipate more complexity in next 5 years;
50% doubt their ability to manage it
•
•
•
•
•
•
Complexity Drivers / Systems-level challenges:
Interconnected economies, enterprises, societies and
governments; more government regulations
New economic environment: more volatile, uncertain,
complex, and structurally different
Global climate change
Geopolitical issues surrounding energy and water supplies
Vulnerabilities of supply chains for food, medicine, talent
Sobering threats to global security
Based on face-to-face interviews with 1,541 CEOs worldwide, Nov 2009 - Jan 2010
IBM CEO Survey, “Capitalizing on Complexity,” May 2010
Ranking of Most Sustainable Co’s
The Global 100 Most Sustainable Corporations in the World
Most proactive in managing
11 environmental, social and governance (ESG) KPIs
Energy productivity
Water productivity
Carbon productivity
Waste productivity
Leadership diversity
CEO-to-average-worker pay
Top 5 in the World
1.
2.
3.
4.
5.
General Electric
PG & E
TNT N.V.
H&M Hennes & Mauritz
Nokia
Taxes paid
Sustainability Leadership
Sustainability pay link
Innovation capacity (R&D)
Transparency / Disclosure
Best 9 in Canada
16. Enbridge
25. Encana
40. Suncor
59. Nexen
65. Transcanada
50. Sun Life Financial
68. T-D Bank
71. Royal Bank
88. Telus
http://www.global100.org/
Ranking of Sustainable Canadian Cities
Ecological
Integrity
Economic Governance & Infrastructure
Social
Security Empowerment & Built Envir’t Well-Being
Corporate Knights 4th Annual Sustainable Cities Rankings, Issue 30, Winter 2010
College Sustainability Report Card 2011
Ranks 322 colleges and universities in U.S. and Canada with
largest endowments – 95% of all endowments
Ranked in 9 categories
1. Climate and energy use
2. Green building
3. Food and recycling
4. Transportation
5. Administration
6. Student involvement
7. Endowment transparency
8. Shareholder engagement
9. Investment priorities
2011 Results
16% earned “A” level grades
55% earned “B” level grades
23% earned “C” level grades
6% earned “D” level grades
http://www.greenreportcard.org/
Beyond Grey Pinstripes, 2009-2010
Biennial survey and ranking of 149 B-schools
on integration of social and environmental
stewardship into curricula and research
Criteria
Availability of relevant courses (25%)
Student exposure / Course time (25%)
Relevant courses on for-profit impacts (25%)
Faculty research (25%)
Rankings
1. York (Canada)
2. Michigan (USA)
4. Stanford (USA)
5. Notre Dame (USA)
7. RSM Erasmus (NED) 8. NYU (USA)
10. Columbia (USA)
31. McGill (Canada)
3. Yale (USA)
6. UC Berkeley
9. IE Bus School (Spain)
34. Concordia (Canada)
http://www.beyondgreypinstripes.org/
Principles for Responsible Management
Education (PRME)
Promotes corporate responsibility (CR) and sustainability in
business education
Launched by UN in June 2007
Endorsed by more than 336 business schools and universities
from around the world (Nov 2010)
1.
2.
3.
4.
5.
6.
6 Principles of PRME
Teach students to work in a more inclusive, global economy
Incorporate CR into academic activities and curricula
Teach responsible leadership
Research how corporations create sustainable value
Partner with business executives on CR challenges
Dialogue with all groups on critical CR issues
http://www.unprme.org/
Championing
Sustainability
… even if you’re not the CEO
LSF / IRIS / W3 / EASO
Talk-Back
Speaker Series
November 23, 2010
Bob Willard
[email protected]
www.sustainabilityadvantage.com