1. Sustainability, It’s Value and How Leading Companies and Universities
Are Approaching It
By William R. Blackburn
10th Annual Business Strategy and the
Non-Market Environment Conference
Kellogg School of Management
Northwestern University
May 7, 2010

2. Why Are Companies Going Green??

3. Top Reasons for Increased Focus on Sustainability*
Reputation, brand
Stakeholder pressure (esp. customers)
Reduce waste (and costs), increase productivity
Employee morale, motivation and recruitment
Peer pressure (competitors, high-visibility companies)
WHY?
*Source: 2007 Conference Board study of 16 major corporations

4. Top Obstacles to Corporate Progress on Sustainability*
Complexity and breadth of issues; uncertain solutions
Pace of business; growing number of priorities (short-term pressures)
Fear of adverse consequences from transparency; modesty about self-promotion
Lack of knowledgeable, skilled leaders to drive the initiative
No clear, significant impacts on the company from the marketplace
Financial challenges; lack of resources
*Source: 2007 Conference Board study of 16 major corporations

5. Sustainability Issues in Tough Economic Times
Financial viability of the organization, its suppliers and key customers
Waste/energy reduction (cost)
Cost-efficient products
Employee relations
Safety
Ethics
Support for the less fortunate

6. Two Benefits for Organizations that Proactively Seek Sustainability
Long-term financial viability
Loyalty of key stakeholders

7. Organizations Need the Loyalty of Key Stakeholders to Be Successful
Employees
Funders
Our
Organization
Government
Communities
Customers
Rating
Groups
Activists
General
Public

8. Building Stakeholder Loyalty
Transparency
Credibility
Stakeholder
Loyalty
Stakeholder
Engagement
Econ, Env, Soc
Performance

9. Large corporations are beginning to see the strategic importance of sustainability.
e.g., Wal-Mart vice president of strategy & sustainability, 2005; senior vp, 2007

10. Wal-Mart Packaging Initiatives
Environmental Sustainability Packaging Summit
45 major packaging suppliers
2,000 attendees
Sustainable Packaging Value Network
200 global packaging leaders from government, academia, NGOs, and industry
5% Packaging Reduction Goal
60,000 suppliers
$11 billion savings ($3.5 billion to Wal-Mart)

11. Another Truth…..
Organizations are still struggling with the operational definition of sustainability!!!

12. General Definition of Sustainable Development/ Sustainability
Brundtland Commission, 1987
Elkington’s Triple Bottom Line, 1997

13. General Definition of Sustainability “The 2 Rs” (Blackburn 2007)
Respect: for people and other living things
Resources: the wise use of economic and natural resources
—for the purpose of sustaining and promoting the long-term well-being of the organization and society.

14. Sustainability vs Other Terms??
Sustainable Development
Sustainable Growth
Social Responsibility/ CSR
Corporate (Global) Citizenship
Corporate Responsibility
Green

15. Defining Sustainability Obligations
and Issues for Action
Going beyond Brundtland Comm, TBL and 2Rs
Implied expectations of global stakeholders from Global Reporting Initiative (GRI) and sustainability reports
Express expectations of global stakeholders
2008 Conference Board study
Other standards (Ethos Indicators, STARS, Star Community Index, UNGC, ISO 26000, industry standards, etc.)
Identified expectations of stakeholders from direct engagements

16. Sustainability Standards —Principles, Management Tools
UN Global Compact principles: over 5000 businesses
ISO Social Responsibility Guidelines (2010); ISO Environmental Management System Standard: 200,000 facilities
Sustainability Tracking, Assessment and Rating System (STARS) (2010): 500 universities
Star Community Index (2010?): 1000 cities
Global Reporting Initiative (GRI) Sustainability Reporting Guidelines : reporting organizations
The U.S. Green Building Council is facilitating the work of cities through the creation of the STAR Community Index, a partnership with ICLEI-Local Governments for Sustainability and the Center for American Progress.

17. Defining Sustainability Obligations
and Issues for Action—Common Topics
Governance (oversight structures for legal and ethical compliance and risk control)
Human Rights (civil rights, nondiscrimination, etc.)
Labor Practices (wages, working conditions, etc.)
Environmental Issues (pollution, energy and resource conservation, biodiversity, etc.)
Fair Operating Practices (anti-corruption, fair competition, etc.)
Consumer Issues (fair marketing, consumer safety, etc.)
Community Involvement & Development
Economic Viability of the Organization

18. Sustainable Products & Services
Improve the efficient use of natural and economic resources along the product life cycle
Provide greater respect and accommodation for the needs of people and other living things along the product life cycle

19. A Corporate Commitment to Sustainability (A Sample Sustainability Policy)
It is within the best interests of our company and society as a whole that our company move along the path to sustainability. To that end, we will strive to achieve the following vision of performance:
1. Economic success: the wise use of financial resources
a. Company Economic Prosperity
Our business is positioned to survive and prosper economically.
b. Community Economic Prosperity
We are helping our community survive and prosper economically.

20. 2. Social responsibility: respect for people
a. Respect for Employees
We treat our employees in a respectful, fair, non-exploitative way, especially with regard to compensation and benefits; promotion; training; open, constructive dialogue with management; involvement in decision-making; working conditions that are safe, healthy and non-coercive; rights of association, collective bargaining and privacy; employment-termination practices; and work-life balance.
b. Diversity, Fair Hiring Practices
We promote diversity and use hiring practices that are fair, responsible, non-discriminatory, and non-exploitative for our employees, board members, and suppliers.
c. Responsible Governance
We manage our risks properly, use our economic power responsibly and operate our business in a way that is ethical and legal.
d. Respect for Stakeholders
We are transparent, respectful and fair to local populations, investors, suppliers and other stakeholders outside our organization who may be affected by our operations. We work collaboratively with our communities, governments and supply chain to enhance the well-being of others.
e. Fair Dealing With Customers
We are honest and fair with our customers, competing fairly for their business, anticipating their needs, respecting their privacy, and providing them safe and effective products and services under the conditions we promise.

21. 3. Environmental responsibility: respect for life; the wise management and use of natural resources
a. Resource Conservation
We conserve our use of natural resources to the extent practicable.
b. Waste Prevention and Management
We reduce to the extent practicable the volume and degree of hazard of the wastes we generate from our operations, and handle them in a safe, legal and responsible way to minimize their environmental effects.
c. Environmental Risk Control and Restoration
We minimize the risk of spills and other potentially harmful environmental incidents, restore the environment where damaged by us, and enhance it to better support biodiversity.
d. Supply Chain Impacts
We work with others in our supply chain to help assure environmental impacts and risks associated with our products and services are reduced and properly controlled.
e. Collaboration With Communities
We collaborate with our communities to protect and improve the environment.

22. Examples of Economic Topics
Sales
Profits
Dividends
Cash flow
R&D investment
Capital expenditures
Debt and interest
Wages
Market share
Retained earnings Liabilities
Return on investment
Community donations
Taxes
Tax subsidies
Local purchasing
Credit rating
Brand strength

23. Examples of Social Topics
Ethics Workplace safety Employee shared values
Product usefulness Corporate governance Employee work-life balance
Product quality Employee relations Human rights (security policies, etc.)
Product safety Product labeling Fair advertising and labeling
Union relations Board diversity Impacts on local cultures
Producer responsibility Supplier diversity Employee diversity
Consumer privacy Employee privacy Employee training and development
Emergency preparedness Non-discrimination policies Employee wellness programs
Child labor Community outreach Employee assistance programs
Forced labor Employment Employee turnover
Disciplinary practices Transparent public reporting Employee layoff policies
Flexible work options Dependent care benefits Anti-sexual harassment policies
Charitable donations Bribery and corruption Political contributions
Antitrust practices Securities regulation Helping the disadvantaged
Occupational health Industrial hygiene Food product nutrition
Bioterrorism Worker violence Support for community services
Indoor air pollution Indigenous rights Access to healthcare by the poor
Legal compliance concerning the above topics

24. Examples of Environmental Topics
Waste disposal Air pollution Water pollution
Chemical spills Greenhouse gases Ozone-depleting substances
Water conservation Energy conservation Natural resource usage
Pollution prevention Recycling Biodiversity
Packaging reduction Soil contamination Product take-back
Natural habitat restoration Wetlands protection Wildlife conservation
Animal rights Product energy use Customer disposal of products
Precautionary Principle Spill prevention Renewable energy and materials
Endangered species Soil erosion/depletion Environmentally sensitive design
Compliance with environmental laws and permits

25. Some Observations About Sustainability
Sustainability is not about one thing.
The business case for sustainability is really the business case for a process that looks at sustainability trends and issues and prioritizes among the opportunities and threats to an organization to select those for action that contribute the most value.

26. Common Organizational Threats and Opportunities
-Legal
-Financial
-Reputational
-Competitive
-Operational
-Productivity, cost
-Employee relations
-Reputation, brand
-License to operate, community appeal
-Sales, new markets, customer appeal
-Innovation, new products and services

27. Sustainability Trends: Conditions Responses
Opposition to Globalization
Extended Producer Responsibility
Green Products
Green Marketing/Labeling
Green Product Certification
Rise in Socially Responsible Investing
Investor Concerns about Corporate Governance
Increased Demands for Transparency/ Public Reporting
Growing Power of NGOs/CSOs
Increasing Global Terrorism
Over-consumption of Resources
Obesity; Poor Food Nutrition
Fossil Fuel Depletion
Climate Change
Deforestation
Threats to Biodiversity
Fresh Water Depletion/Water Contamination
Wetlands Destruction
Fish Depletion
Coral Reef Destruction
Spread of Hazardous Pollutants
Declining Soil Quality
Ozone Depletion
Declining Corporate Credibility
Growth in Global Business Competition
Speed of Communications/ Digital Divide
Widening Prosperity Gap (Health, Income, Services)
Population Growth
Serious Disease
Mental Health Problems
Increased Immigration; Lower Fertility in Industrialized Nations
Hunger and Malnutrition
Child and Forced Labor
Education Needs for the Disenfranchised
Urbanization

28. Issues Addressed by the 2015 UN Millennium Development Goals
Extreme poverty and hunger
Universal primary education
Gender equality
Child mortality
Maternal mortality and health
HIV/AIDS, malaria and other diseases
Environmental sustainability
Global partnerships to help developing nations

29. How are organizations responding to these trends??

30. Sustainability Trends Drive Response of Organizations
Climate Change
Fossil Fuel Depletion
Energy Conservation
Carbon Footprinting
Recycling
Recycled Content
Dematerialization
Over Consumption
of Resources
Changing Population
Profile
Diversity Programs

31. The Efficient Enablers The Pathway The Evaluators
The Drivers
The Efficient Enablers
The Pathway
The Evaluators
A champion/leader with mgmt support
Approach for selling the organization on sustainability
Accountability mechanisms
Organizational structure
Deployment and integration
Vision and policy
Operating system standards
Strategic planning for aligned priorities
Indicators and goals
Measuring and reporting progress
Stakeholder engagement and feedback
©2007 William Blackburn Consulting, Ltd.

32. No. of Companies with Goals on Subject Per Conf Bd. Study7 5 4 1 3 2 11
Greenhouse Gas Red.
Safety
Energy Reduction
Water Use
Supplier Rev.
Waste Red.
Pkg. Reduction
Product Design/ Rev.
Philanthropy
Mgmt. Systems
Fleet Safety
Diversity
Renewable/ Clean Energy
Air Pollution Red.
Waste Recycling
Process/Fac. Design Rev.
Wastewater Red.
Goal Subject
Number of Companies
No. with Metric Goals
No. with Non-metric Objectives
No. of Companies
with Goals on
Subject Per
Conf Bd. Study
(total=11)
Source: W. Blackburn, Frameworks for
Integrating Citizenship and Sustainability…,
Report 1446, (2009), available at

33. Approach to Sustainability at Universities
Administration (planning and leadership)
Campus operations
Curriculum
Research; policy development
Student activities
Community outreach

34. Sustainability at Universities —Typical Social and Economic Issues
Diversity, nondiscrimination
Student substance abuse, mental & physical health
Volunteerism
Cafeteria nutrition
Crime rate, safety
Service learning, sustainability in curriculum
Quality of education (ratings, etc.); graduation rates
Economic
Financial health of institution
Costs of attendance; hrs at min wage for students to pay costs
Salaries vs. minimum wage and vs median household income for community
Procurements from local suppliers
Charitable donations

35. Sustainability and Environmental Rating Schemes for Universities
Sustainability (econ, env, soc.)
STARS (Sustainability Tracking, Assessment and Rating System) by Association for the Advancement of Sustainability in Higher Education (AASHE),
Beyond Grey Pinstripes ratings of business schools by World Resources Institute (WRI),
Business as Unusual student rankings of graduate business schools by Net Impact,
Environmental
The College Sustainability Report Card,
The Princeton Review’s Green Rating,

36. 7 Recommendations for Universities
Top Support: Obtain support from top university officials.
Team: Create multifunctional sustainability team with student, faculty, administrative and operations staff and alumni input.
Policy & Goals: Build from existing commitments/statements to develop and implement a true sustainability policy (economic, social, environmental); identify priorities and supporting goals and initiatives.
Evaluation: Do STARS analysis; use U of NC (Chapel Hill), UBC and other highly-ranked schools as benchmarks for progress.
Report: Publish meaningful, transparent, annual sustainability report;
Engage Stakeholders: Use report to engage internal and external stakeholders on the university’s sustainability issues and initiatives. Educate the public and community on the sustainability concept.
Publicize Efforts: Publicize efforts with media and rating organizations.

37. The Sustainability Handbook— The Complete Management Guide to Achieving Social, Economic and Environmental Responsibility
(See )

38. World’s Population (in Billions)1 2 3 4 5 6 7 8 9 10
1930
1999
2050

39. US Consumption and Waste!!
5% of the population
25-30% of the resources and wastes
Need 5-6 worlds at current production if everyone consumed at US rates!
Source: Worldwatch Institute, 2003, 2004; US Geological Survey, 1998

40. Corporate Partnerships with NGOs and Government*
Healthcare
Water, climate change
Employee volunteerism)
Education on relevant skills
EPA voluntary programs
Customer-oriented partnerships
Supplier-oriented partnerships
Healthcare: AIDs programs
Volunteerism: P sponsors employees to assist NGOs in 30 countries
FP: works with colleges to prepare disadvantages people for jobs with utilities
EPA: Energy Star, Green Supplier Network, Climate Leaders, SmartWay Transport Partnership
Customer partnerships: JP After School Roundup, to fund after school programs for needy children
Supplier: Aveda gets natural ingredients from indigenous tribes; teams w/ NGOs and others to help make their communities sustainable
*Source: 2007 Conference Board study of 11 major corporations

41. Corporate Supply Chain Programs*
Risk-based programs
Approach
Requirements or guidelines document (supplier codes)
Evaluation process
Questionnaires; self assessments
Expert site evaluations
Communications and networking forums and CSR awards
Downstream collaboration (e.g., Aveda, Coca-Cola)
Downstream: Aveda spas during Earth Month;
CC, bottlers council, standards, metrics, community programs , report
*Source: 2007 Conference Board study of 11 major corporations