Corporate Responsibility and Sustainability An Obligation or an Opportunity? Maria Sillanpaa Founding Director, Sustainability Advisory Group?

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1 Corporate Responsibility and Sustainability An Obligation or an Opportunity? Maria Sillanpaa Founding Director, Sustainability Advisory Group?

2 > Make it visible What does it mean to you, in your sector, given your strategic objectives and plans > Make a commitment What issues really matter for your business, how should you articulate your commitment and what is your roadmap for action > Make it happen How to translate your vision into practical actions and initiatives How to integrate your vision with how you manage your business > Make it possible How best to ensure you have the right people and skills in place to realise your aspirations

3 Overview What is it? Why is it important? How do we convince the board? How do we get the best value out of it?

4 > making it visible what does it mean?

5 > making it visible language games Corporate Social Responsibility Corporate Citizenship Business Ethics Community Involvement Triple Bottom Line Confused!!! Sustainable Development Responsible Competitiveness Corporate Sustainability Philanthropy Environmental management

6 > making it visible first challenge CR and sustainability are evolving terms that do not have universally accepted definitions or fully recognised set of criteria

7 > making it visible the provocation CR is a strategic imperative to all organisations large & small, public & private it is not optional Maria Sillanpaa, Founder Sustainability Advisory Group

8 > enter the board room Yes, but we need to focus on the bottom line you claim it s of strategic importance prove it!

9 > enter the board room sustainability as an enabler of success?...we need to manage costs & increase margins...we need to attract customers...we need to attract and retain the best employees...we need to manage risk exposure and govern...we need to capture emerging markets...we need to attract investors...we need to foster innovation

10 > making it visible building the business case State of the world Rules have + + changed It s good for our business

11 > state of the world the mega forces

12 > by 2050 we will need 2 planets Since 1980 human demand of planetary resources has exceeded supply. We now use 20% more of the Earth s biocapacity that it can regenerate.

13 > population growth

14 > economic growth Global economic activity has increased by a factor of 40 since the start of the Industrial Revolution. Intergovernmental Panel on Climate Change, Special Report on Emissions Scenarios, 2001

15 and will have to continue because it s not reaching everyone Half of the world s population live on less than $2 per day.

16 "It is predicted that by 2030 the world will need around 50% more food and energy and 30% more fresh water whilst mitigating and adapting to climate change. This threatens to create a 'perfect storm' of global events." Sir John Beddington, Chief Scientific Officer, UK

17 A new study has highlighted the prospect that global industrial civilisation could collapse in coming decades due to unsustainable resource exploitation and increasingly unequal wealth distribution." Study partly-sponsored by NASA

18 > state of the world the board reaction? Well that was DEPRESSING!!! It s not really our job to fix that! What an earth are WE supposed to do about that??!!

19 > BUSINESS CASE 1 - because there is no choice! Business as usual not an option. We need big changes in industrial systems, business models, economic assumptions, market rules and governance frameworks to tackle the huge challenges facing us all at once. Business needs to be part of the solution Jorma Ollila, WBCSD Chairman

20 > BUSINESS CASE 1 - because there is no choice! only those companies that develop products and services that address global challenges such as energy supply and access, climate change, pressure on ecosystems, or water, will be around for the long haul. Jorma Ollila, WBCSD Chairman

21 > building the business case - state of the world THE BIG Qs how do we stay relevant when the state of the world is what it is? what does growth mean going forward? how to judge innovation?

22 > building the business case - state of the world THE DOWNSIDE? No matter how committed we are to making a positive contribution this doesn t tell us how!

23 > making it visible building the business case State of the world + Rules have + changed It s good for our business

24 > building the business case rules have changed Governments are demanding action Civil society and media expects accountability Consumers and B2B clients are demanding it Investor due diligence is changing fast Employees are expecting it > New standards have and are being introduced across all sectors and regions

25 > the standards game introducing the alphabet soup

26 > regulation, regulation, regulation > legislation > de facto mandatory standards > voluntary standards > international, regional, national, sectoral > indexes, ratings, awards

27 standard futures? > they are here to stay! > they will get tougher & de facto compliance norms > further convergence at principles and management level > but landscape will remain dynamic since new issues will emerge

28 > the journey often starts with standards.. Complying. Ensuring licence to operate Protecting reputation Compliance and risk driven Reacting to new rules, regulations, stakeholder pressures

29 > BUSINESS CASE 2 - non compliance can be VERY costly BP Deepwater oil spill if it had happened in Tampere

30 > BUSINESS CASE 2 - non compliance can be VERY costly DEEP WATE R

31 building the business case > rules have changed Ok, we hear you, but which standards are relevant to us and why? do we chose one or many? what new skills will we need to get there?

32 > convincing the board we need to focus on the bottom line...we need to cut costs & increase margins...we need to attract customers...we need to attract and retain the best employees...we need to manage risk exposure and govern...we need to capture emerging markets...we need to attract investment...we need to foster innovation

33 > making it visible building the business case State of the world Rules have + + changed It s good for our business

34 > it s about efficiency and savings Clearly good for our business. We are taking costs out and finding we are doing things we just do not need to do, whether it be packaging, or energy usage, or the kind of equipment we buy... There are a great number of decisions that we can make that are great for sustainability and great for the bottomline profit Lee Scott CEO Wal-Mart

35 > it s about efficiency and savings

36 > it s about responding to changing customer expectations 49 million of US adult consumers are LOHAS - consumers interested in Lifestyle of Health and Sustainability $300+ billion marketplace and growing fast just in US

37 > it s about responding to changing customer expectations Customer expectations are changing fast

38 > it s about responding to changing B2B expectations B2B expectations are changing fast My large multinational customers, the Wall- Marts and the like, now ask us about our sustainability performance. They want our buildings to be LEED, our offices to be green and our transport options to be lean. Raji Hattar Head of Sustainability Aramex

39 > it s about responding to changing B2B expectations What is ecomagination? a business initiative to help meet customers demand for cleaner and more energyefficient products

40 > it s about competitiveness We are investing in environmentally cleaner technology because it will increase our revenue, our value and our profit... not because it is trendy or moral, but because it will accelerate our growth and make us competitive Jeff Immelt Chair and CEO General Electric

41 > the journey often leads to shifts in strategy. Adding value. Market differentiation & new opportunities Revenue growth Cost reduction Efficiency gains Complying. Ensuring licence to operate Protecting reputation Compliance and risk driven Reacting to new rules, regulations, stakeholder pressures

42 building the business case > it s about the bottom line Ok now you re talking, so how can we achieve efficiency gains in our business? how do we innovate given our market and customers?

43 > convincing the board we need to focus on the bottom line...we need to cut costs & increase margins...we need to attract customers...we need to attract and retain the best employees...we need to manage risk exposure and govern...we need to capture emerging markets...we need to attract investment...we need to foster innovation

44 > it s about transformational innovation One billion people have access to a mobile but no bank account. It is estimated that the mobile banking business will be worth US$ 5 billion by 2020

45 > from compliance to transformational change Transforming. Elevating standards New business models and partnerships Strategic evolution Adding value. Market differentiation & new opportunities Revenue growth Cost reduction Efficiency gains Complying. Ensuring licence to operate Protecting reputation Compliance and risk driven Reacting to new rules, regulations, stakeholder pressures

46 > BUSINESS CASE 3 - It s about transformation!

47 > licence to transform requires trust

48 > transforming THE BUSINESS MODEL

49 Maybe > add the billionaires the billionaire club club GE, Nike, Chipotle, Whole Foods, Tesla, IKEA, Unilever, Natura Brasil, Toyota > disruptive innovation > iconoclastic leadership > higher purpose > integrated sustainability > responsible behavior > mainstream appeal

50 > convincing the board sustainability as an enabler of success...we need to cut costs & increase margins...we need to attract customers...we need to attract and retain the best employees...we need to manage risk exposure and govern...we need to capture emerging markets...we need to attract investment...we need to foster innovation

51 Obligation or opportunity?

52 Good luck with your journeys! THANK YOU! uk.linkedin.com/in/mariasillanpaa twitter.com/#!/thinkwider