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Bob Willard bobwillard@sympatico.ca www.sustainabilityadvantage.com

Championing Sustainability … even if you’re not the CEO. LSF / IRIS / W3 / EASO Talk-Back Speaker Series November 23, 2010. Bob Willard bobwillard@sympatico.ca www.sustainabilityadvantage.com. The “Sustainability Imperative”.

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Bob Willard bobwillard@sympatico.ca www.sustainabilityadvantage.com

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  1. Championing Sustainability … even if you’re not the CEO LSF / IRIS / W3 / EASO Talk-Back Speaker Series November 23, 2010 Bob Willard bobwillard@sympatico.ca www.sustainabilityadvantage.com

  2. 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

  3. 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

  4. 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

  5. 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

  6. Sustainability 3-Legged Stool Sustainability Environmental Leg 0 Pollution & Waste Renewable Energy Conservation Restoration Economic Leg Good Jobs FairwagesSecurity Infrastructure Fair Trade Social Leg Working conditions Health services Education services Community & Culture Social justice Quality of Life / Genuine Wealth / Genuine Progress

  7. 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 Environment - Planet Eco-efficiencies Eco-effectiveness Economy - Profits Growth, Jobs, Taxes Products Services Equity - People Employees Community / Culture World

  8. Smart Business 3-Legged Stool Asset Management Natural Capital Financial Capital Built Capital Human Capital Social Capital Sustainable Value Creation

  9. 5-Stage Sustainability Journey 5. Purpose/PassionValues-driven senior leader 4. Integrated StrategyEnhanced organizational value 3. Beyond Compliance Eco-efficiencies PR crisis Regulatory threat 2. ComplianceRegulatory enforcement 1. Pre-Compliance

  10. Lead It Like Any Culture Change • 1. Walk-the-talk as senior leadersIntegrate into vision - mission – strategiesBusiness strategy vs. philanthropyEarn credibility – Avoid “green-washing” hypeVisible support – speeches, questions, actions • 2.Educate / engage the whole companySolicit employee ideas - help • 3.Align with measurement & reward systems

  11. 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 ContinuouslyLearn & Adapt Step 3: Assess Current Realities Step 2: Inspire Shared Vision(s) Step 1: Wake Up and Decide

  12. 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

  13. The 3 R’s of Justifying Sustainability RISKS + RESPONSIBILITIES + REWARDS BUSINESS CASE Based on Alan AtKisson, The IRIS Agreement, p. 127

  14. Risks to Corporate Capitals / Assets:Big-5 Sustainability Storm Fronts Species Extinction and Overharvesting Waste, Toxicity, and Health Climate Change and Energy Crises Food and Water Crises Poverty and Social Injustice

  15. The 3 R’s of Justifying Sustainability RISKS + RESPONSIBILITIES + REWARDS BUSINESS CASE Based on Alan AtKisson, The IRIS Agreement, p. 127

  16. Risks to Social Capital:Stakeholders’ Rising Expectations Species Extinction and Overharvesting Waste, Toxicity, and Health Climate Change and Energy Crises Poverty and Social Injustice Food and Water Crises Media (NGOs) Economists Social license to operate The Public Investors Customers Banks Risks to Reputation re Corporate Responsibilities Markets Employees Governments Insurers (Scientists) Competitors

  17. The 3 R’s of Justifying Sustainability RISKS + RESPONSIBILITIES + REWARDS BUSINESS CASE Based on Alan AtKisson, The IRIS Agreement, p. 127

  18. 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 RELEVANCE

  19. The 3 R’s of Justifying Sustainability RISKS + RESPONSIBILITIES + SME Companies:At least 66%more profit Large Companies:At least 38%more profit REWARDS BUSINESS CASE

  20. Potential Improvements -1% -2% +6% -10% +5% -5% • 1. Reduced recruiting costs • 2. Reduced attrition costs • 3. Increased employee productivity • 4. Eco-efficiencies: savings in energy, water, materials, waste handling • 5. Increased revenue / market share • 6. Lower insurance & borrowing costs • … yielding a profit increase of +66% REPUTATION

  21. The 3 R’s of Justifying Sustainability RISKS Climate Change &Energy Crises + (NGOs) Economists Employees Investors RESPONSIBILITIES Customers Markets Governments (Scientists) Insurers + At least 38% to 66% more Profit REWARDS BUSINESS CASE

  22. 7-Step Sustainability Change Process 7. Embed and Align 7 P R A C T I C E S 7 D E R A I L E R S 6. Mobilize Commitment 5. Build the Case(s) for Change 4. Develop Strategies 3. Assess Current Realities 2. Inspire Shared Vision(s) 1. Wake Up and Decide 7 P A R A D O X E S

  23. 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 Assess Current Realities Piggyback Existing Initiatives Inspire Shared Vision(s) Practice “Planful Opportunism” Wake Up and Decide

  24. True Dialogue High DIALOGUE Exploring eachother’s assumptions to generate meaning Telling Asserting Explaining A d v o c a c y Asking Clarifying Interviewing Observing Bystanding Sensing Low Low High I n q u i r y Based on Peter M. Senge et al., The Fifth Discipline Fieldbook, Doubleday, 1994

  25. Collaborate, Educate, Network Senior Executive Network Government Agencies Your Inner Circle Suppliers Customers Networks in OtherDepartments NGOs

  26. Meet Them Where They Are Asset Management Natural Capital Economic / Financial Capital Built / Manufactured Capital Human Capital Social Capital Sustainable Value Creation

  27. Influence the Influencers ImportantSenior Leader ImportantSenior Leader “No” “Yes” “Yes” Influencer Influencer “Yes” You You Ineffective Approach Effective Approach

  28. 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 Assess Current Realities Piggyback Existing Initiatives Inspire Shared Vision(s) Practice “Planful Opportunism” Wake Up and Decide

  29. 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 To Get “Hard Results,” Work on the “Soft Stuff” Motivators Inhibit Commitment One Person’s Dream Is Another Person’s Nightmare Go Small to Go Big Go Slow to Go Fast Things Need to Get Worse Before They Can Get Better

  30. Do it Yourself; You Can’t Do It Alone TheWorld? All Industries All Industries Whole Industry Whole Industry Whole Company Whole Company TheirNetworks TheirNetworks KindredSpirits KindredSpirits You “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 “Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.” ― Archimedes

  31. Go Small to Go Big Small Moves Big Shifts “You can get away with anything if you call it a pilot”

  32. 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 To Get “Hard Results,” Work on the “Soft Stuff” Motivators Inhibit Commitment One Person’s Dream Is Another Person’s Nightmare Go Small to Go Big Go Slow to Go Fast Things Need to Get Worse Before They Can Get Better

  33. 7 Potential Derailers Displaying Hubris Embed and Align 7 P R A C T I C E S Mobilize Commitment Mishandling Office Politics Build the Case(s) for Change Being a “Problem Child” Develop Strategies Failing to Produce Results Assess Current Realities Succumbing to Stress Inspire Shared Vision(s) Changing Everything at Once Wake Up and Decide Getting Off to a Bad Start 7 P A R A D O X E S

  34. Sustainability Champion’s Guidebook Step 7 Embed and Align Get Credible, Stay Credible Displaying Hubris 7 P R A C T I C E S 7 D E R A I L E R S Step 6 Mobilize Commitment Dialogue Mishandling Office Politics Step 5 Build the Case(s) for Change Collaborate, Educate, Network Being a “Problem Child” Step 4 Develop Strategies Meet Them Where They Are Failing to Produce Results Step 3 Assess Current Realities Piggyback Existing Initiatives Succumbing to Stress Step 2 Inspire Shared Vision(s) Influence the Influencers Changing Everything at Once Step 1 Wake Up and Decide Practice “Planful Opportunism” Getting Off to a Bad Start To Get “Hard Results,” Work on the “Soft Stuff” You Have to Do It Yourself; You Can’t Do It Alone One Person’s Dream Is Another Person’s Nightmare Motivators Inhibit Commitment Things Need to Get Worse Before They Can Get Better Go Slow to Go Fast Go Small to Go Big 7 P A R A D O X E S

  35. Troubleshooting Complex Change Change Vision Skills Incentives Resources Action Plan Confusion Skills Incentives Resources Action Plan Anxiety Vision Incentives Resources Action Plan Gradual Change Vision Skills Resources Action Plan Frustration Vision Skills Incentives Action Plan False Starts Vision Skills Incentives Resources Kevin Brady, Five Winds International, based on “A Framework for Thinking About Systems Change,” by Knoster, Villa, and Thousand

  36. 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

  37. The New Economy • Low-carbon economy vs. fossil fuel-based economy • Local supply chains vs. global supply chains • Servicesvs. 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”

  38. CEO #1 Challenge: Complexity Gap CEOs biggest challenge: Rapid escalation of complexity79% 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

  39. 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 Taxes paid Sustainability Leadership Sustainability pay link Innovation capacity (R&D) Transparency / Disclosure Top 5 in the World General Electric PG & E TNT N.V. H&M Hennes & Mauritz Nokia 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/

  40. Ranking of Sustainable Canadian Cities Ecological Integrity Economic Security Governance & Empowerment Infrastructure & Built Envir’t Social Well-Being Corporate Knights 4th Annual Sustainable Cities Rankings, Issue 30, Winter 2010

  41. 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 • Climate and energy use • Green building • Food and recycling • Transportation • Administration • Student involvement • Endowment transparency • Shareholder engagement • Investment priorities • 2011 Results • 16% earned “A” level grades55% earned “B” level grades • 23% earned “C” level grades • 6% earned “D” level grades http://www.greenreportcard.org/

  42. Beyond Grey Pinstripes, 2009-2010 Biennial survey and ranking of 149 B-schools on integration of social and environmental stewardship into curricula and research CriteriaAvailability 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) 3. Yale (USA) 4. Stanford (USA) 5. Notre Dame (USA) 6. UC Berkeley 7. RSM Erasmus (NED) 8. NYU (USA) 9. IE Bus School (Spain) 10. Columbia (USA) 31. McGill (Canada) 34. Concordia (Canada) http://www.beyondgreypinstripes.org/

  43. Principles for Responsible Management Education (PRME) Promotes corporate responsibility (CR) and sustainability in business education Launched by UN in June 2007Endorsed by more than 336 business schools and universities from around the world (Nov 2010) 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/

  44. Championing Sustainability … even if you’re not the CEO LSF / IRIS / W3 / EASO Talk-Back Speaker Series November 23, 2010 Bob Willard bobwillard@sympatico.ca www.sustainabilityadvantage.com

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