sustainability - draft
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SustainabilityA TRIPLE BOTTOM LINE
STRATEGY
Mono-cropping is endangering genetic diversity
20 plants now supply 80% of humanity’s food
Source: IDRC Briefing
Did you know?!
Chronic Water shortages:2010 31 countries > 500 million
2013 36 U.S. States > 100 million2035 50 countries > 3 billion
Only 3% of earths water supply is drinkable and 95% of it is frozen
Source: Economist, Panjiva & Watersense
Did you know?!
Embedded water use 30xCanadian importation
1:6 1.8 million
Ogallala aquifer water source:
33% of Corn crops
30% of irrigated farmland
80% CO, KS, NE, NTX, OK, SD, WY drinking water supply
It is being pumped dry at the rate of 325 billion cubic meters
a yearSource: Kerr Center & U.S. EPA
Did you know?!
U.S. Gov’t study oil and gas supplies will not keep up with demand over next
twenty-five years. Translation alternative energy, energy reduction, energy
efficiency and rising energy prices.
If China begins to use the same amount of oil per capita as the U.S., China alone would consume 100% of the world’s oil production
2010: 12k cars per day2015: 150 million (18 million more than U.S.)
Source: WSJ, People’s Daily & Morning Star
Did you know?!
Major Non-Renewable Resources are depleting world-wide:
AntimonyBariumBismuthCobaltGalliumManganeseNickelPlatinumTitaniumZinc
What does this mean?
Computers, Communication, Healthcare and Solar power
Source: Annual Vital Signs Report World Watch Institute & U.S. Geological Association
Did you know?!
U.S. economy consumes in excess of 100 billion tons of raw materials per year in excess of 90% of this ends up as waste
Did you know?!
Various forms of waste—solid and liquid—including plastics and petro-chemical disbursed through the air and ground waters can travel thousands of miles and end up in:
soilwaterrainfall
impacting local health and eco-system survivability
Source EPA
Global population is ever increasing 9+ billion by 2050 (adding 2 to China’s)
Income is increasing world-wide; new middle class
Population + Income = Consumption
What is basis to "problems”
$430 billion annual advertising budget
4x increase China, India, Venezuela, Brazil, Argentina, South Korea, Taiwan,
Indonesia and Thailand
Top 20% Malaysians and Chileans have higher average incomes than German or Japanese counterparts
Source: AMA & Yankelovich
Did you know?!
Many Businesses & Organizations still operate with a world-view
that has not changed since
Industrial Revolution
The Business Paradigm
Natural resources >
Labor was <
The Paradigm
People limiting factors of production
In spite of our best labor efforts, economy as a whole is enormously inefficient:
Bad News: Increased waste
tonnage from 250 million in 1990 to over 500 million today
Good News: Capacity
Unknown News: ?
WASTE
U.S. Economy
4.5 lbs. per person per day = .821 tons per person per year
Source: US EPA
Current or Old Paradigm was"end-of-the-pipe"
remediation efforts
How do we manage waste ?!
Stewardship: Current growth model (indiscriminate consumption via obsolescence ) is not sustainable
What has this Paradigm resulted in?
Regardless of one’s “political” persuasion
How we operate is unsustainable (NJR)
Some Simple Facts
The Changing Paradigm
Natural resources <
Labor is >
Paradigm is Shifting
Natural resources limiting factors of production
Next “Industrial Revolution”, like the first, will be in
response to:
changing patterns of scarcity and influenced behavior
Natural Capital—Sustainability
The New Paradigm
Corporate Social ResponsibilityEquity(able)
EnvironmentalismGreenLean
Sustainable Development
Sustainability Another Word for:
Core to contemporary Sustainability are the
Four (E’s)
What is Sustainability?
1st E Ecology & Environment2ndE Economy & Employment
3rd E Equity & Equality (social)
4th E Education
4 E’s or Core to Sustainability
Fad
Movement
Revolution
Sustainability: How Real?
A definition:
Economic Development + Social Wellbeing + Environmental Protection = Sustainability
“Meet present needs without compromising the ability of future generations to meet their needs"(WECD, 1987).
Sustainability
Borneo (diesel to hydro) Tigray Region (women agriculture) Curitiba, Brazil (bus system 8-1.9) Bavaria, Germany (solar 9k) Adele, Australia (solar city) India (biogas and time) NYC (1 Yr &1k Bldg Supers) U.S. Gov’t (green leasing) USGBC (green property mgt cert) Madison, WI (local dollars) MIT, Oberlin, UNC, Furman, Stanford, Liberty,
Bates, etc. Alexandria VA School system (healthy schools) State NC (project green 156) Faith Based Organizations (social entrepreneur)
What’s Going On Out There
U.S. States RPS Targets
A definition:
An alignment of an organizations’ products, services & processes with
expanded stakeholder expectations resulting in a re-definition of profit.
Profit= economic +environmental + social value
realized through optimal utilization of natural & social capital
Corporate Sustainability
Mattel Corporation (logistics programs) Safeway Stores (Renewable energy) Wal-Mart (Green Products, renewable energy) Nike (new product design) Fruit of Loom (waste water) Lowes (LfP GBM) Marriott (CY Design) KKR & EDF (Portfolio Best Practices) UMMC Hospital System (weekend audits) UPMC (healthy children) Grove Park Inn (waste) Carnhagan Car Wash (water reuse) Shorebank (Community model) Bank of America SC/NC (100+ cool roof) South G’ville Fire Dept (water re-harvesting) Jarden Process Solutions (packaging) Cox Wood (renewable energy) Hartness Intl (LCM)
What’s Going On Out There
The concept of sustainability is gaining traction
Customers Supply-chain (up/down) Employees Regulators Other Stake-holders
Any miscalculation or misjudgment can have serious
repercussions
Sustainability
New Paradigm emerging realization that:
• waste reduction• energy efficiency
• pollution prevention • product innovation (naturally)
• social responsibility-equity
make economic and social sense!
What is driving Sustainability?
Some argue it’s just a re-badging or extension of Lean manufacturing
Continuous improvement: increasing efficiency, reducing waste, easing environmental impact, and boosting workplace safety
Is Sustainability Something New?
Others argue lean is precursor to sustainability Much larger context and external issues:
resources & constraints government regulation societal intervention & responsibility marketing strategies expanded profit definition shareholder value/linkage
Is Sustainability Something New?
Ignore---no top manager in CJO role
Adhere---doing minimally required
Lip Service---remedially oriented
Strategic---strategic positioning
How are Businesses dealing with Sustainability ?
Modest Efforts in terms of compliance, employee volunteerism and corporate philanthropy
Motivating force for change in processes & positioning Core drivers/practices to insure value
Moving from a passive cost-based mind set to building
StrategicAdvantage
Strategic Positioning via Sustainability
Two Legs and One of Three Outcomes
Do it Better or Do it Different
Increase Revenues, Decrease Costs or Build Good Will
Strategic Advantage
It can be price, quality, service, innovation, technology, process, affinity, etc.
Outcomes
One strategy that can leverage all (3) outcomes:
Increase revenues
Decrease costs
Build value
Ideal Strategic Advantage
By addressing both sides of the Sustainability Equation
ProductionAnd
Consumption
Sustainability Strategy: How is Strategic Advantage being built?
Minimally define and alter Eco-footprint
as well as Innovative business processes, products/services and life cycles
Production Side
Strategy 1x lower operating cost/cost-structures
to 3X build value
Re-thinking sustainable consumption in terms of “experience”:
(3) three broad categories1st Innovation
2nd Choice Influencing3rd Choice Editing
Consumption Side
Moving from Strategy 1x lower costs to
2X generate new revenues
Consumers Choices Defined by Innovation, Editing and Influence
Extended Producer Responsibility or Product Stewardship
More than 21 States have joined together to enact 50 product stewardship laws
addressing 7 products in the United States
→ No one size or approach fits all business cases
→ Strategy is half the game execution is the other half
→ Societal case doesn’t always equal business case
→ Opportunity still trumps responsibility
→ Finding or driving systemic value requires more than low-level fruit
→ Measuring and reporting can create culture
→ Management as process versus a program insures change
How is Sustainability defined & implemented: The Furman Strategic Framework Approach
1st What shade of green is best ?Internal/External considerations, goals & alignment
2nd When & How best to move into this area ?Shift bench-marks & stakeholder engagement
3rd What to target? How to measure and report?Issues mapping and SMS Reporting
4th What processes or tools to use? How best to think and act to insure on-going success?Footprints, audits, value-streams, systems thinking and process management
How is Sustainability defined & implemented: The Furman Strategic Framework
Foot printing, Auditing & Value-Stream assessment
Life-cycle Management Sustainable Product-Service-Process Design Process & Label Certification Green Product Marketing Environmental Managerial Accounting
Sustainability Business Tools/Processes
Activity or Area: Energy
Current State (Bench-mark)
Sustainable State
Foot Printing, Mapping, Auditing & Value-Streams
Identify Measure
Item Source Rate Usage Consumption Qty Cost
Future (Minimization/Reduction)Conservation
Efficiency Management
Item Solution Savings Solution Savings Solution Savings
Renewable Energy
Item Solution Cost Savings
Life Cycle Analysis: Product Decisions, Design & Management
McDonough & Braungart Biomimicry Institute
Process and Label Certification
400+ Labels world-wide and growing
Green Product & Service Marketing
Managerial Accounting ProcessesActivity Based Cost AccountingConsultancyCertificationReporting Practices
Green Accounting & Reporting
☼ Lower risk (lower costs)Operationally Financially
☼ Increase opportunities (drive revenues)New products/servicesNew target marketsHigher margin products/services
☼ Build a stronger balance sheet (increase leverage) Good will
TransparencyBrand/ReputationCorporate valuation
☼ Laws and Regulation (increasing)Proactive versus Reactive
What is the business case for a Sustainability strategy?
Sustainability Business Case
Impact Areas Revenue and Cost Impact Business Value
Productivity: Reduce waste Increasing resource efficiencies Enhance safety Employee morale Reducing risks
Re-structure cost structures:Reduce consumption resources Utilizing more natural materials Better working environment Decreasing liabilities Investing in future
Drive
Operating costs Decrease structuresResource usage Minimize or Eliminate Down-time Increasing productivityMotivation Increasing productivityRisk factors Decrease costsValue Investing & managing natural capital
Innovation: Product, service or process Do it better Do it different
Efficient & Competitive Effective & Strategic Advantage
Drive
Sales Existing/New customersMargins Decrease operating costsProduct Basis to new product, service & processes
Reputation:
Build Brand Brand Strengthened
Drive Sales Increase Yield/dividendsCash flow Decrease interest costsProfit Enhance business valuation Societal Will Enhance market/business
“Green Organization” concept is evolving Program: Strategy:Feeling Good Measuring Good Recycling Life-cycle Decision makingNice to do Need to doImage Building Brand IntegrationTelling the Customer Teaching the CustomerIgnore natural cycles Mimic natural cyclesHuman Resources Human CapitalOrganization as machine Organization as brainShareholder StakeholderCSR Adherence Embedding CSR
Sustainability Tactic or Strategy
Sustainability: CPA Roles and Competencies
•Strategy and Performance Measurement
•Emissions Allowance Accounting
•Systems and Controls
Sustainability Accounting
•Climate Change and Carbon Reporting
•Sustainability Reporting
•Integrated Reporting
Sustainability Reporting
•Assurance on GHG Statements
•Assurance on Sustainability Reports
•Tax and Advisory Services
Assurance, Tax & Other
Services
PublicPractic
e
BIG
Revenues Operating Costs
Good Will/Valuation
SustainabilityTriple Bottom Line Strategy
THREAT OR OPPORTUNITYTACTIC OR STRATEGY
Ignoring sustainability trends can impede ability to achieve let alone compete.
Do you have a plan?!
Sustainability