Beth Beloff, Chairman
Systems Constraints What is Business Doing What s important in making decisions Call to Action
This is Sustainability ALL inextricably linked Economic Activity Society Environment
This is Sustainability ALL inextricably linked Economic Activity Society Environment
Sustainability, Corporate Citizenship, Sustainable Development... About Systems Growth that is ethical and compassionate Strives to improve our quality of life while protecting ecosystems on which all life depends Protective of people and other living things everywhere, now and for future generations Triple-bottom-line Beloff
Sustainable Development, Sustainability... We do not inherit the Earth from our ancestors; we are only borrowing it from our children Native American Beloff
Dimensions of Sustainability Context Resources Values Place Time Environmental Economic Social Governance Structure, and Culture Supply Operation Distribution Use Fate Value Chain Source: Beloff and Beaver, 2000
The Constraints Energy resources Water availability Supply and Quality of Natural Resources Biodiversity Loss Stable Climate Pollutant Effects Social equity (Poverty & instability) Consumption Political pressure (codes/regulations) Human population Economic development Demand for Resources The Natural Step
The World s Ecological Footprint, Footprint 1961 2002 1961 to 2002 1.4-1.2-1.0 - Ecological Footprint Earth's Ecological Capacity 0.8-0.6-0.4-0.2 - Source: WWF, UNEP, GFN 0.0-1961 1971 1981 1991 2001 61 1971 1981 1991 2001 Calculates total amount of land the world s countries need to produce the resources they use and to absorb corresponding waste they generate using prevailing technology. Empty world to Full world Source: 2006-2007 Worldwatch Vital Signs, data sources, WWF, UNEP, Global Footprint Network
The World s Ecological Footprint 1961 to 2002 Our footprint on the world has more than tripled since 1961 We have gone from an empty to a full world! We are using up resources faster than the planet can regenerate them and absorb waste. If everyone consumed resources like the United States, the planet could only support 1.2 billion people. With the current population we would require 5.5 planets to sustain this consumption level! Statistics from Worldwatch Vital Signs 2006 2007
5.5 Earths? China is catching up! Earth cannot support our choices any longer
Stakeholder Demands Transparency Greener products Community contributions Ethical business practice Regulatory Environment SOx, AAI, Emerging GHG regs REACH, extended producer responsibility Financial Markets ESG Risk Mgmt SRI Investments Visible Impacts Resource constraints Climate impacts Social disparity Supply-Chain Pressure Green / Sustainability requirements Market for green products, services
Time Application RISKS OPPORTUNITY -1 0 +1 high low low high Tomorrow Lead the Pack System Innovate Expand the boundaries Today Internal Do No Harm Meet minimum standards Value Chain External Function Value Chain Adapted from Transforming Sustainability Strategy into Action, Beloff et al, 2005
Doing well by doing good Top Line Sustainability Customer/Employee Loyalty Enhance Reputation Build New Markets and New Alliances Stimulate Innovation Gain Access to Capital Increase Productivity Reduce Risk Reduce Waste / Costs Bottom Line
Source: Economist Intelligence Unit 2008
Source: Economist Intelligence Unit 2008
Examples Sustainable Growth as corporate strategy to create new opportunities and markets ; increasing shareholder value per pound of product Ecomagination as a business strategy; story of products with environmental AND economic benefits, certified products, quantifying benefits of environmental innovations to bottom line; portfolio grew by 21% 08 to $17B Prius hybrid as a system-level innovation, not just tweaking the parts
Examples Socio-Eco-Efficiency Analysis to assess innovations, market new products, and communicate with stakeholders Response to Katrina, Energy efficiency; Pushing sustainability into the supply chain: packaging, energy, GHGs, hazardous materials Strengthening brand relative to sustainability; pushing it manufacturing operations and product development; empowering women in sales force to move ideas into the community; re-invigorating their brand
Recognizing impacts and influence Source: Steelcase & Coalesse supply chain conference presentation by Kevin Owens
Partners & Suppliers Employees Corporate Governance Competitors NGOs Financial Social Environment Customers Investment community Regulators Operating Companies (geography/products) Shareholders Communities Consumers Media
Environmental Stewardship Social Progress Reducing Bad Reduce energy, water, materials GHG and climate change Emissions and discharges H&S incidents and employee exposures Product safety risks Nuisances & community complaints Ethics violations Creating Good Create solutions to global problems Require suppliers to be green Protect and restore eco-systems Carbon neutral Change employee behavior Enhance Employee health and wellbeing Improve customer productivity Build Community partnerships Exceed social expectations Provide educational opportunities Economic Growth Operational and financial risks Energy costs EHS costs Externalities - costs Provide benefits to local community Microcredit Provide social investment Contribute to Millenium Dev. Goals Externalities - benefits
Today or Tomorrow Company or Supply / Value Chain US or Globe Reducing BAD or increasing GOOD Energy or Water How to define social
What transformations to Measure Corporate Culture Human resources Goodwill Raw materials Water Energy Land Capital investment Knowledge Operation / Facility Business unit Corporation Value Chain Attitude & Influence Human capacity Community benefits Profits / Salaries Tax contributions Products/Services Waste Emissions Land transformation Human health & ecological effects Inputs Business Processes Outputs/Results
Roadmap to identify critical few metrics Six steps to develop the right mix of metrics Process to develop and implement metrics that: Inform business strategy Enhance decision-making Measure what is right Communicate effectively
www.gemi.org/metricsnavigator Critical few issues Issues most material to the business and its stakeholders Critical few objectives The greatest value expected of a potential objective Critical few strategic metrics Meaningful and Effective in driving performance, integration, and making the business case
Significance of Concern Level of Stakeholder Concern Ability to Control or Influence Relevance to Business Importance to Business Success Organization s Impact
AIChE Sustainability Index 2007 Strategic Commitment 7 6 Environmental Performance 5 4 Safety Performance 3 2 1 0 Product Stewardship Social Responsibility Sustainability Innovation Value Chain Management Average Range of scores
Strategic Commitment to Sustainability Stated commitment Commitment to voluntary codes Presence and extent of sustainability goals and programs 3 rd party ratings Safety Performance Process safety Employee safety Environmental Performance Resource use Waste and emissions (including greenhouse gases) Compliance and liability history Social Responsibility Community investment Stakeholder partnership and engagement Product Stewardship Product safety and environmental assurance process System in place for compliance to emerging regulations (e.g. REACH) Sustainability Innovation* R&D in place to address societal needs (e.g. Millennium Development Goals) Integration of sustainability concepts and tools in R&D New products related to sustainability (patents) Value Chain Management* Environmental management systems Supplier standards and management process
200 Key Sustainability Questions Where to ask them during process and product development Who should be included in the answers?
Corporate Functions Value Chain Stages Corporate functions to involve or consult at each value chain stage. (RACI Chart) Sustainability considerations Tools & Resources
Corporate Functions Value Chain Stages Corporate Functions Axis (each box represents a different corporate function that is critical to driving sustainability in the organization) Executive Management Corporate functions to involve or consult Financial Business at each Management value chain stage R&D EHS Engineering Manufacturing / Operations Logistics / Supply Chain Sales Sustainability considerations Customer Technical Service/Support Marketing Communications Public Relations Tools & Resources Human Resources Legal Information Technology & Management
Corporate Functions Value Chain Stages Value Chain Axis Business Strategy Development Upstream Input Corporate functions R&Dto involve or consult at each value Idea chain Generation stage Concept Scoping Definition Development Scale up Commercialization Sustainability Production considerations Distribution Industrial Consumer Use Customer Use Tools & Resources End of life Facility Molecule
Business Perspective Econ. Social Environmental Resource Use Environmental Impact Health & Safety Societal Impact Economic Impact Management Business Strategy Energy use, material intensity, water use, land use GHG emissions, air emissions, solid waste, (pollutant effects) Toxic reduction, hazards, process safety Workers well-being, local community impacts/qol, global societal impacts/contributions Financials along value-chain (corporate, customers, ) Internal process, value-chain partnership, stakeholder engagement Alignment with business strategy, core values & competencies, market & regulatory drivers
SD Guide Upstream Input
Product Performance (in use) lower environmental impacts and/or helps users improve their environmental performance Product Composition best-in-class environmental attributes based on materials, composition and end-oflife practices Product Life-Cycle Management life-cycle assessment performed and products are produced and sourced in environmentally responsible manner Supplier Practices meets best-in-class standards for corporate environmental / socially responsible practices
Assessment Framework Sustainability.
From Dow Chemical Company Website
NYT 5-31-09
Why Should We Care? Beloff
Why Should We Care? Beloff
What is at Stake? Beloff
Adopt a new way of thinking Extend your awareness of the factors in making decisions Don t sub-optimize Walk the talk - university office home
Sustainability is mindset them vs us we are all in this together interdisciplinary extend the boundaries pay now or pay later 7 th generation Beloff
Mars
For More Information Beth Beloff beth@bethbeloff.com 713 666-6870 Office Beloff