1. Communicating the Bu$ine$$ Case for $ustainability Strategies
Business in the Community
Plymouth, England
April 12, 2007
Bob Willard 1

2. The Sustainability “3-Legged Stool”
Sustainable Development (SD) =
Sustainability
Corporate Social Responsibility (CSR) =
Triple Bottom Line (TBL)
Corporate Responsibility (CR) = = =
Environmental, Social, Governance (ESG)
Economy / Profits
Sustainable business
Profits
Taxes, R&D
Jobs
Expenditures
Training
Fair trade
Core values
Environment / Planet
Eco-Efficiency
Manufacturing efficiencies
Operations efficiencies
Product efficiencies
Smart design
Cradle-to-cradle, take-back
Beyond compliance
Restorative to nature
Equity / People
Ethical business
Internal Employees
Human Rights
Health & Safety
Respect, Caring
Local Community &
Culture
Rest of the World 1

3. The Smart Business “3-Legged Stool”
Asset Management
Financial
Capital
Manufactured
Natural
Capital
Human
Capital
Social 1

4. 5 Stages and Emerging Drivers
5. Purpose / Passion
4. Integrated Strategy
3. Beyond Compliance
2. Compliance
1. Pre-Compliance
Passionate Founder / CEO
P r o a c t I v e
Business Opportunities – “Carrots”
Risk Management – “Sticks”
Eco-efficiencies
Regulatory Threat
PR Crisis
R e a c t I v e
Regulatory Pressure / Enforcement 1

5. Ends vs. Means Stage 5: Purpose / Values
Stage 5: Purpose / Values
We want to be a successful business
… so that …
we can contribute to environmental and social well-being
Means
End
Stage 4: Integrated Strategy
We want to contribute to environmental and social well-being
… so that …
we can be a successful business
Means
End 1

6. 5 Stages and Emerging Drivers
5. Purpose / Passion
4. Integrated Strategy
3. Beyond Compliance
2. Compliance
1. Pre-Compliance
Passionate Founder / CEO
P r o a c t I v e
Business Opportunities – “Carrots”
Risk Management – “Sticks”
Eco-efficiencies
Regulatory Threat
PR Crisis
R e a c t I v e
Regulatory Pressure / Enforcement 1

7. Tangibles Company Value
The Company Value Iceberg
Tangibles
/ Financials
/ Balance Sheet
Intangibles / Brand Image
/ Nonfinancials / Reputation /
/ Stakeholder Relationships
Company Value 1

8. Tangibles / Financials Intangibles / Nonfinancials
The Company Value Iceberg: 1981
Tangibles / Financials
83%
Intangibles / Nonfinancials
17%
Company Value
Arthur D. Little, The Business Case for Corporate Citizenship , 2002) 1

9. Tangibles / Financials Intangibles / Nonfinancials
The Company Value Iceberg: 1998
Tangibles / Financials
29%
Intangibles / Nonfinancials
71%
Company Value
Arthur D. Little, The Business Case for Corporate Citizenship , 2002) 1

10. Non-financials / Reputation
The Sea of Demanding Stakeholders
Financials
NGOs / Civil Society
Shareholders & Investors
Employees
Mainstream Media
Global Markets / EU
Non-financials / Reputation
Awakened Public
Banks & Insurers
Customers
Company Value
Economists
Competitors
Governments at all levels
Scientists 1

11. Non-financials / Reputation
Two-part Business Case
OPPORTUNITIES
Financials
NGOs / Civil Society
Shareholders & Investors
RISKS
Employees
Mainstream Media
Global Markets / EU
Non-financials / Reputation
Awakened Public
Banks & Insurers
Customers
Company Value
Economists
Competitors
Governments at all levels
Scientists 1

12. The Perfect Storm Oct. 27 – Nov. 1, 1991
Worst storm in history …100’ waves
Cold front from Great Lakes
The Perfect Storm
(Former) Hurricane Grace
Warm front near Sable Island
All were dying out
Energy from the 3 systems combined
Sudden, unexpected, devastating 1

13. Mega-Issues + Stakeholders = New Market Forces
Climate Crisis
Climate Crisis
Pollution & Health
Climate Crisis
Other …
Energy Crisis
Water Crisis
Erosion of Trust
Pandemics
Financials
NGOs / Civil Society
Shareholders & Investors
Employees
Mainstream Media
Global Markets / EU
Non-financials
Awakened Public
Banks & Insurers
Customers
Company Value
Economists
Competitors
Governments at all levels
Scientists 1

14. Mainstream Media / Awakened Public
The “Goracle” Factor + Hurricane Katrina + High gas prices + Weird weather + IPCC report + Stern Review + …
67% of Canadians say would switch to “green” companies (Environics, Feb 07)
79% of Americans say they are Conscious Consumers; 20% are Advocates vs. 7% in 2004 (Egg, Mar 07)
18% of global consumers are Mainstream Activists (Globescan CSR Monitor, 2005) 1

15. Economists’ Warnings about Risks
Economists’ Statement on Climate Change (Feb 1997) Signed by 2,000 economists, including 6 Nobel Laureates
Humans causing CC; it presents significant environmental, economic, social, and geopolitical risks; preventive steps justified
Benefits to economy outweigh the costs
Market-based mechanisms are most efficient way to slow CC: international cap-and-trade system and carbon taxes (“Great Green Tax Shift”)
Stern Review on Climate Change (Oct 06) By former World Bank chief economist Nicholas Stern
Humans causing CC; cost of mitigation is 1% of annual global GDP by 2050 if act now; 5-20% of annual GDP if act later
Benefits of $2.5T if act now; global depression if do not
Stabilize GHGs; deployment low-carbon technologies; remove barriers to energy efficiency; implement regulations, carbon taxes, and / or a cap-and-trade system 1

16. Investors Worried about Risks
Carbon Disclosure Project
2003
2006
Institutional Investors 35
225
Value of Assets Held
$4.5T
$31T
Companies Surveyed
FT500
1,800
Manufacturer impact: -40%; Bank impact: -29%
Climate Crisis
Physical Risks
Litigation Risks
Competitive Risks
Reputation Risks
Investor Network on Climate Risk (INCR): 65 institutional investors, $4T in assets;
Ask SEC to require listed companies to disclose CC risks to their financial performance (June 06);
Climate Watch List of worst 10 companies get shareholder resolutions on CC (Feb 07);
Request Congress cut GHGs 60-90% below 1990 levels by 2050 (Mar 07)
Investors 1

17. Banks and Investors Taking Action
Citigroup: largest U.S. bank; (Jan 06) will reduce GHGs from its 13,000 properties by 10% by 2011
Bank of America: second largest U.S. bank; (Apr 05) $3K rebates on employee hybrids; (Mar 07) $20B over 10 years to support growth in environmentally friendly activities and reduce global warming; reduced mortgage rates on energy efficient homes
Goldman Sachs: (Nov 06) first major investment bank to adopt a comprehensive environmental policy; investing $1B in clean energy projects
JP Morgan Chase: (Apr 05) adopted Equator Principles
348 shareholder resolutions on ESG issues 2005 (up 16% from 2003); 177 social resolutions reached a vote (up 22% from 2003) 1

18. EU Market Forces Pollution & Health Climate Crisis Regulations
Restriction on Hazardous Substances (RoHS)
Waste from Electrical and Electronic Equipment (WEEE)
End of Life Vehicles Directive (ELVD)
Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH)
Energy-using Products (EuP)
Climate Change Plan: (Mar 07) By 2020, cut CO2 by 20% below 1990 level; 20% of electricity from renewable sources vs. 6% now; 10% of vehicles on biofuels
Big Retailers: Tesco, Marks & Spencer, Asda
Climate Crisis
Regulations
Market Access
EU Market 1

19. US Position on Climate Change?
20 States: Renewable energy targets
9 States: Suing Feds for lax fuel efficiency standards
5 West-coast States: Western Regional Climate Action Initiative
7 East-coast States: Regional Greenhouse Gas Initiative (RGGI)
33 States: Climate Registry of baselines
425 US Cities: Climate Protection Agreement: Kyoto at city level; -7%
Big Corporations: Wal-Mart, GE, DuPont
Combat Climate Change (3C) Initiative: 18 US energy corps; want carbon trading
US Climate Action Partnership (USCAP): 10 major corps + 4 NGOs; want cap-and-trade and 15% GHG reduction in 15 years
Climate Crisis
Energy Crisis
Regulations
Carbon caps
US States
US Cities
Corporations 1

20. Unusual Co-drivers of Sustainability
National Security
Alternative energy: Investment in the US
projected to be $6B by 2008; $167B by 2015
Sustainability reputation: 70% of NA grads
would not apply to company with a poor CSR
reputation
War for Talent
Carbon trading: $29.8 B global market in 2006 and set to double in 2007; Opportunity for additional revenue?
Revenue Pressure
Environmental reporting: Sarbanes Oxley
requires material risks be identified; CICA
guidance on MD&A discussion of risks; GRI
guidelines; 64% of Global 250 do SD reports
Transparency 1

21. Non-financials / Reputation
Two-part Business Case
OPPORTUNITIES
Financials
NGOs / Civil Society
Shareholders & Investors
RISKS
Employees
Mainstream Media
Global Markets / EU
Non-financials / Reputation
Social Licence
to Operate
Awakened Public
Banks & Insurers
Customers
Company Value
Economists
Competitors
Governments at all levels
Scientists 1

22. Business Priorities Revenue Governance Brand Image Productivity
New Markets
Complying with
New Regulations
Profit
Attracting &
Retaining
Top Talent
Share Price
Growth
Attracting &
Retaining
Customers
Leadership
Motivation
Innovation
Managing Risks
Competitive
Advantage
Market Share
Speed to Market
Responding to Emerging
Market Forces
Expense Savings 1

23. Benefits to “SME Ltd.” Potential profit increase: 66%
Revenue: $4,000,000
Profit: $200,000 (5% of Revenue)
Workforce: ( Managers)
Avg. Employee Salary: $25,000
Avg. Manager Salary: $55,000
Potential profit increase: 66%
+ Energized employees
+ Improved corporate image
+ Competitive advantage
+ Positioned for the future 1

24. The Catch 1. Show senior leadership 2. Educate the whole company
Include SD in vision / mission / strategies
Reinforce it is a business strategy vs. a compliance or philanthropy issue
Avoid “green-washing” hype
Visible support: speeches, questions, actions
2. Educate the whole company
Solicit employee ideas
3. Align with measurement systems
Align with measurement / management systems
Integrate into recognition / reward systems 1

25. 6 Benefit Areas Usual focus Reduced electricity, fuel, and waste costs
Reduced recruiting costs
Reduced attrition costs
Increased employee productivity
Increased revenue / market share
Reduced risk, easier financing 1

26. 6 Benefit Areas … % Improvement
Reduced electricity, fuel, and waste costs -10%
Reduced recruiting costs %
Reduced attrition costs %
Increased employee productivity %
Increased revenue / market share %
Reduced risk, easier financing %
… yielding a profit increase of +66% 1

27. What if … Reduced electricity, fuel, and waste costs -10%
Reduced recruiting costs %
Reduced attrition costs %
Increased employee productivity %
Increased revenue / market share %
Reduced risk, easier financing %
+3%
… yielding a profit increase of +66%
+48% 1

28. What if … Reduced electricity, fuel, and waste costs -10% -5%
Reduced recruiting costs %
Reduced attrition costs %
Increased employee productivity %
Increased revenue / market share %
Reduced risk, easier financing %
-5%
… yielding a profit increase of +66%
+56% 1

29. What if … Reduced electricity, fuel, and waste costs -10%
Reduced recruiting costs %
Reduced attrition costs %
Increased employee productivity %
Increased revenue / market share %
Reduced risk, easier financing %
+2.5%
… yielding a profit increase of +66%
+64% 1

30. What if … Reduced electricity, fuel, and waste costs -10% -5%
Reduced recruiting costs %
Reduced attrition costs %
Increased employee productivity %
Increased revenue / market share %
Reduced risk, easier financing %
-5%
+3%
+2.5%
… yielding a profit increase of +66%
+35% 1

31. Tipping Point? 5. Purpose / Passion -------------------------------
4. Integrated Strategy
3. Beyond Compliance
2. Compliance
1. Pre-Compliance
20% at Stage 4 or 5
Passionate Founder / CEO
P r o a c t I v e
Business Opportunities – “Carrots”
Risk Management – “Sticks”
Eco-efficiencies
Regulatory Threat
PR Crisis
R e a c t I v e
Regulatory Pressure / Enforcement 1

32. Sustainability is smart business New market forces / risks are in play
Closing Thoughts
Sustainability is smart business
New market forces / risks are in play
Public expectations are rising
Talk their language
Show relevance to existing priorities
You are not alone; find partners
Opportunity for leadership 1

33. Communicating the Bu$ine$$ Case for $ustainability Strategies
Business in the Community
Plymouth, England
April 12, 2007
Bob Willard 1