Leading publication JAMES SPENCER Director PricewaterhouseCoopers

S60 Sustainability: Workplace

PwC Business as usual or unusual? Three “rules” to consider 1.Employee engagement drives business performance 2.Sustainability drives employee engagement 3.There is no silver bullet for embedding sustainability Two objectives for today 1.The case for change ◦Why does sustainability matter from an employee’s perspective? 2.A framework for embedding change ◦How can we embed sustainability into business as usual? 3

PwC Some numbers…. 4 1 Engaging employees through corporate responsibility, Ipsos MORI Employee Relationship Management, Nov PwC Managing Tomorrows People December 2008: pwc.com/managingpeople Driving Performance and Retention Through Employee Engagement, (2004), Corporate Leadership Council 4 PwC 12th Annual CEO survey 2009: pwc.com/ceosurvey of employees would recommend their company if they feel it is environmentally responsible v fewer than 50% if it is not 1 of ‘millennials’ would consider leaving an employer whose corporate responsibility behaviour no longer meets their expectations 2 of employees who consider their employers to be paying enough attention to environmental protection and sustainable development exhibit high levels of commitment 1 Employees most committed to their employer perform 20% better and are 87% less likely to leave the organisation 3 of CEOs recognise their organisations’ responsibility to create management structures that reward long-term thinking as a critical or important element of a solution to climate change 4 75% 86% 75% 87% 74%

PwC So, does it matter if employees are engaged with your sustainability strategy? 5 What is on the mind of CEO’s? Why 62% of CEOs agreed that climate change initiatives, would above all other benefits, provide a reputational advantage with key stakeholders including employees 1 75% of highly engaged employees believe they can impact cost, quality and customer service, verses 25% of disengaged employees. 3 More engaged colleagues More engaged customers 74% of the public agree that they would believe the word of an employee over that of a company advert regarding a company's contribution to society and the environment. 2 Essentially, engaged employees provide better customer service which translates to increased financial performance because they understand how their work can help the company achieve its’ strategy and objectives and their loyalty to the company motivates them to release discretionary effort.

PwC And as the “War for Talent” starts again…. 6

PwC Three key messages… 1.Sustainability is no different from any other business change initiative 2.Embedding sustainability into the business is no different from embedding any other change into a business 3.Sustainability is a journey, not a destination 7

PwC HR plays an important role in embedding sustainability Not the sole accountability of an CSR Manager HR “owns” employee engagement. Sustainability, CSR, whatever you call it is a key driver of engagement. CSR – HR = PR -If employees are not engaged, CSR / Sustainability becomes an exercise in public relations. -The credibility of an organisation will become damaged when it becomes evident that a company is not ‘walking the talk’.” 8

PwC A framework for embedding sustainability 9 Leadership l Who are the sustainability champions? l How do leaders role model behaviour? Culture How are your business values / culture linked to sustainability? Change Strategy l How is sustainability linked to the Business or People strategies? People Performance How is sustainability measured? Change Vision l What is your vision for sustainability? Organisation Design: l How is sustainability embedded into jobs? Benefits l How are your sustainability actions linked Commitment l How do you communicate your sustainability initiatives? Deliver Business Benefits Develop culture Define change strategy Build commitment Create change vision Design organisation Manage people performance Develop Leadership

PwC Adapting it to embed sustainability 10 Deliver Business Benefits Develop culture Define change strategy Build commitment Create change vision Design organisation Manage people performance Develop Leadership Share the broader context – from both a business and personal perspective (answer the question, “what’s in it for me?”) Begin with some company mandates (set all printers to double-sided printing, adjust thermostats) Provide examples of how one employee can make a real difference (removing a single light bulb from every vending machine at all Walmart locations saved $1 million) Leverage the diversity of your company – allow for different ways to engage in sustainability initiatives (recycling, volunteering, leading a team) Communicate early and often and in different formats (signs, newsletters, conference calls, meetings, pod- casts, tweets) Make sustainability part of every employee’s job description Develop metrics by company, by department, and by individual and report out progress (track effect of recycling program – reduction in waste, reduction in trash removal) Provide opportunity for employees to generate ideas (green teams) Provide a format for sharing ideas across departments and locations (intranet, electronic newsletters) Start with initiatives that everyone can participate in (establish recycling programs, remove all styrofoam products from cafeteria) Develop ongoing training programs (videos, podcasts, lunch & learns) Tie variable compensation to progress on sustainability initiatives (in manufacturing plant, part of manager’s bonus is tied to drop in energy usage) Sponsor competitions (most ideas, most cost savings, greatest effect on community) Link Executive / Management remuneration to sustainability targets Create a vision of sustainability for your company (what does sustainability look like?) Demonstrate c-suite support (what steps will management take?) Explain why sustainability is important to your business in particular (what benefits will be gained? Cost-savings, improved image in the community, etc) Identify and allocate resources (budget time and money) Put infrastructure in place to generate ideas Identify what you are currently doing well and why

PwC Example: Embedding sustainability into the workplace - PwC UK 11 Issue: Staff were making changes at home to reduce their environmental impact but were not carrying these behaviours into the workplace Challenge: How could we link the employee engagement agenda to the firm’s targets around reducing carbon and working in our communities Solution: Introduced sustainability + schools programme. -Focus on adopting sustainable behaviours (reducing energy and resource use, reusing materials, recycling waste). -Measure savings and contribute to trust fund for local schools (used to teach children how to lead more sustainable lives and their impact on the planet) Result: Significant financial savings and increase in employment engagement survey scores

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PwC Some questions to consider… 13 Consider this... How do you know if your employees believe they work for an organisation that acts responsibly towards society and the environment? How are your leaders visibly and proactively demonstrating their commitment to sustainability? How are you encouraging behaviour change around sustainability? How do your reward programmes support your sustainability objectives? How do you measure the impact of your sustainability programme on your people’s motivation and commitment levels? Or on the success of your recruitment and retention activities? Employee Engagement Sustainability ComplianceStrategic High Low

PwC Drives employee emotional commitment via organisational levers Increases employee discretionary effort, ie going the extra mile for the company Increases customer satisfaction and customer loyalty Improves revenue growth and profitability Sustainability Programme Linking it all together… …the Sustainability value chain 14