The Business Case for Sustainability
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The Business Case for Sustainability July 2008 . Sustainability on the Rise. The business issue of the 21st century 68% of Fortune 250 companies now publicly report their social and environmental initiatives (KPMG survey, 2005)

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Sustainability on the Rise

  • The business issue of the 21st century

  • 68% of Fortune 250 companies now publicly report their social and environmental initiatives (KPMG survey, 2005)

  • 79% of CEOs agreed that sustainability is vital to the profitability of any company (PricewaterhouseCoopers' Global CEO Survey, 2003)

  • 71% of CEOs said they would sacrifice short-term profitability in exchange for long-term shareholder value when implementing a sustainability program (PricewaterhouseCoopers' Global CEO Survey, 2003)


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Smart Business Decision

“Business can benefit from pursuing sustainable development in two basic ways – by driving cost efficiencies and by generating top-line growth”

- World Business Council on Sustainable Development


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Driving Down Costs

  • Cost savings from improved operational performance and efficiencies

  • Process optimization

    - Potential savings equivalent to 1 - 3% on revenue from reduced utility, materials and waste cost

  • Improved product quality and reduced error rates

  • Expedited permitting and improved relations with regulators


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Driving Down Costs

  • Costs avoided by minimizing business risks and improving safety

  • Corporate Responsibility (CR) provides a means by which companies can better understand and manage risk

    - Establishing a comprehensive CR policy and strategy can offset these risks, spanning legal, financial, environmental and societal risks

  • Avoids litigation, legal claims, and accident expenses


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Driving Down Costs

  • Cost savings from improved recruitment and retention of talented employees

  • Reducing recruitment and training costs

    • Costs a firm 2-3 times the annual salary of a manager to replace (costs of recruitment, hiring, training and work disruption)

    • 71% of employees want to work for companies committed to social and community concerns (Conference Board of Canada, 2000)

    • 70% of employed Canadians would consider changing jobs if their employers did not operate in a responsible manner (Scotiabank, 2007)

  • Attracting the best and brightest, especially amongst graduates

  • Improved access to new, local pools of labor


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Driving Down Costs

  • Cost savings and income produced through improved employee morale and productivity

  • Better trained staff from the application of higher workplace and labor standards

  • Higher long-term productivity levels from a more motivated, engaged and inspired workforce

    - 2% increase in employee productivity from improved company-wide teaming around common sustainability issues that transcend departmental boundaries

  • Boosted employee satisfaction and performance leads to increased customer satisfaction


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Generating Growth

  • Increased revenue through learning and innovation

  • Identifies new markets and price premium opportunities

    - 80% of Canadians agree they would be willing to pay more for a product if produced in a socially and environmentally responsible manner (Globescan’s CSR Monitor survey, 2003)

  • New products through the application of new technologies and improved understanding of consumer needs

  • Stakeholder engagement a catalyst for corporate innovation


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Generating Growth

  • Increased market share from enhanced recognition and reputation

  • Sustainability (Corporate Responsibility) is an intangible asset that can enhance corporate reputation and differentiate a brand

    - Founded on values such as trust, credibility, reliability, quality and consistency

    • 89% of Canadians have more respect for a company when the CEO speaks in favor of CSR (Globescan’s 2002 CSR Monitor)

      - More than two-thirds (68%) of Canadians take a company’s CSR performance into consideration when they make everyday purchases (Scotiabank 2007)


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Generating Growth

  • Increased revenue from improved customer loyalty

  • Aligning corporate values and activities with stakeholder expectations

    • 91% of U.S. consumers who learn about a firm’s negative corporate citizenship practices would consider switching to another company; 85% would pass the information to family and friends; 76% would boycott that company’s products (Cone Communications, 2007)

    • Globally, Canada is the 3rd most demanding market for corporate values to extend beyond financial gain and are the most likely to punish those companies they consider to be socially irresponsible (Globescan’s CSR Monitor, 2003)


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Generating Growth

  • Increased growth from improved access to capital

  • Enhanced credit worthiness and lower cost of capital due to greater investor confidence in the company’s ability to manage change

  • Small but growing trend of using environmental, social factors to evaluate a company’s suitability for investment

    • 90% of Canadian shareholders wanted fund managers to take environmental, social performance into account when valuing companies (Environics, 2003)

    • $503 billion of Canadian financial assets (20% of all assets under management) were invested in SRI financial products as of June 2006 – an increase of almost tenfold in 2 years (SIO, 2008)


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Generating Growth

  • Increased growth from improved supply chain management

  • Improved ability to attract and build effective and efficient supply chain relationships

    - Firm is vulnerable to the weakest link in its supply chain

  • Profitable long-term business relationships formed by improving standards, and thereby reducing risks


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Generating Growth

  • Increased revenue and market share from enhanced ability to strategically plan for the longer-term

  • Better anticipate and understand trends in society to proactively plan for the longer term

    - New regulations, heightened societal expectations and improved scientific knowledge

  • First mover advantage by anticipating the impacts of social pressures


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Questions?

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