1. Is Sustainability Relevant to Business?
-- To Employees? To Consumers? To Executives?
By William R. Blackburn
Sustainability Leadership Forum- Chicago
Oce’ Headquarters
Chicago, IL
August 1, 2012
©2012 William Blackburn Consulting, Ltd.

2. What do we mean by “Relevant to”?
Of interest to?
Actual or potential impact on? (whether or not known)
Actual or perceived value to? (e.g., customer willingness to pay more for)
©2012 William Blackburn Consulting, Ltd.

3. Why are companies going Green, adopting sustainability practices?
©2012 William Blackburn Consulting, Ltd.

4. The Conference Board Study Participants
Alcan, acquired by Rio Tinto
Aveda part of Estee Lauder
BMS didn’t participate in drivers portion of study
©2012 William Blackburn Consulting, Ltd.

5. Top Reasons For Increased Focus on Sustainability by Companies (Source: 2007 Conference Board study of 17 major corporations. )
WHY?
Reputation, brand
Stakeholder pressure (esp. customers)
Reduce waste (and costs), increase productivity
Employee morale, motivation and recruitment
Peer pressure (competitors, high-visibility companies)
7% growth in natural food sales in Dec 09
No of sustainable product launches is 4 times faster in 2009 as last year---- (500) in Q1 is about same as for all of 2008.
©2012 William Blackburn Consulting, Ltd.

6. Two Benefits for Organizations in Proactively Seeking Sustainability
Long-term financial viability
Loyalty of key stakeholders
DuPont, Dow and 3M saved $1 billion from P2
GE $50 million from safety, Intel $30 mil from contractor safety programs.
Baxter $800 million cumulative over 12 years
Raytheon saved $10 mil in electricity costs in 2007 from energy reduction efforts
©2012 William Blackburn Consulting, Ltd.

7. Business Needs the Loyalty of Key Stakeholders to Be Successful
Other
Companies
Investors
Our
Company
Government
Communities
Customers
Rating
Groups
Carbon Disclosure Project
Activists
General
Public
©2012 William Blackburn Consulting, Ltd.

8. Building Stakeholder Loyalty
Transparency
Credibility
Stakeholder
Loyalty
Stakeholder
Engagement
Econ, Env, Soc
Performance
Strategic communications (reporting; engagement); no “greenwash”
Working in the “discomfort zone” on the toughest issues
“See ourselves as others see us”
©2012 William Blackburn Consulting, Ltd.

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
Some years ago a McKinsey study funded by Wal-Mart showed it had lost 8% of shoppers due to its bad social and environmental reputation
Company also began to see they could drive down costs while boosting green reputation.
2007 made position senior vp.
©2012 William Blackburn Consulting, Ltd.

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)
©2012 William Blackburn Consulting, Ltd.

11. What general topics would you expect to be covered under an organization’s commitment to sustainability/ social responsibility?
©2012 William Blackburn Consulting, Ltd.

12. Defining Sustainability Obligations
and Issues for Action—Common Topics*
Governance (oversight structures and systems for legal and ethical compliance and risk control on below topics for organization and its supply chain)
Human Rights (civil rights, nondiscrimination, etc.)
Labor Practices (wages, working conditions, etc.)
Fair Operating Practices (anti-corruption, fair competition, etc.)
Consumer/customer Issues (fair marketing, consumer safety, product compliance, etc.)
Community Involvement & Development
Economic Viability of the Organization
Environmental Issues (pollution, energy and resource conservation, biodiversity, etc.)
*Based on the GRI reporting guidelines and ISO SR standard
©2012 William Blackburn Consulting, Ltd.

13. Home Depot Supplier Social & Environmental Responsibility Program
Access to audit
Age requirements
Forced labor
Wages and working conditions
Discrimination
Emergency planning
Environment, health and safety
Freedom of expression and association
Fraud prevention

14. Walmart Supplier Sustainability Assessment Questionnaire
Energy & climate
Waste & water
Safety, labor and human rights compliance
Community development investment in source locations
Sub-supplier oversight:
Locations, traceability
Guidelines on environmental compliance, labor practices, product safety
Pre-evaluation of production quality & capacity

15. So in practice, what does sustainability mean?
©2012 William Blackburn Consulting, Ltd.

16. Emerging Meaning of Sustainability from an Organizational View “The 2 Rs”
Values-driven management based on---
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 (including the environment).
©2012 William Blackburn Consulting, Ltd.

17. 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
©2012 William Blackburn Consulting, Ltd.

18. A Corporate Commitment to Sustainability (Consensus Sustainability Policy Per Conf Bd. Study)
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.

19. 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.

20. 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 ensure 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.

21. 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

22. 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

23. 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

24. 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.
©2012 William Blackburn Consulting, Ltd.

25. Common Organizational Threats and Opportunities
(=Relevance)
Threats
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

26. 40% of the World Will Live in Water-Scarce Regions by 2025
Next 40 years ave supply of fresh water will be cut by 1/3
Threatens survival and food supply, hydro power
Source: WRI, UNEP, WBCSD, Tomorrow’s Markets—
Global Trends and Their Implications for Business, 2002;
Jeff Seabright, Coca Cola Presentation, TCB, May 31, 2007.
<0.5
4.0-10
>10
Extreme
Scarcity
Scarcity
Stress
Adequate
Abundant
Surplus
Ocean/
Inland Water
No Data
1000 m³/person/year

27. Sample SWOT Analysis for Sustainability Issue: Water
Threat
Opportunity
Strength
Weakness
Possible Objectives
Depletion of Fresh Water Resources
1. Water
shortage
could
jeopardize
operations
2. Some
competitors
have long-term
water rights
conservation
projects can
save money,
help secure
supply
2. More on-site
water treatment
and reuse
are possible
3. May be able
to secure long-
term water rights
in some
locations
1.Some water
projects
underway
2. Internal
engineering
expertise
1. No long-term water rights secured in some growth regions
2.Some communities serving our factories have poor water supply infrastructure
1. Investigate water risks on site-by-site basis and develop actions to address them
2. Consider more aggressive water treatment, reuse and conservation programs using internal engineers
3. Explore securing long-term water supplies in high risk areas while respecting community needs

28. 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
No of TNCs jumped 10x in 30 years
51 of world’s largest companies aren’t countries but companies
10% have access to internet; 50% haven’t used a phone
Extended Producer Resp: proactively control risk; hazards info, responsible for harm; take back
Light brings heat brings change; surge in reporting; stockholder resolutions
150% increase in International NGOs in 20 years

30. The Sustainability Handbook—
The Complete Management Guide
to Achieving Social, Economic and
Environmental Responsibility
(See )
©2012 William Blackburn Consulting, Ltd.

31. Relevance to Which Customer?
Dedicated Greens/ “Lifestyles of Health & Sustainability” (LOHAS) %
Sympathetic, Pragmatic, Health & Wellness Greens %
Overwhelmed/ Procrastinators %
Unconcerned/ Other Priorities %
Survey Sources: -Roper National Marketing Institute Hartman Group Landor Associates

32. And Not Every Green Product is Successful……
Thomas Edison electric car
Whirlpool Super Efficient Refrigerator Project (SERP); won $35 mil prize for eliminating Freon and improving energy efficiency, but size and pricing were wrong.

33. 7 Lessons on Sustainable Products & Services
Customers will pay more for (a) added safety of food and hygiene- and health-related products, (b) a more natural living environment, and (c) lower life-cycle costs.
Products and services for the poor must break barriers on cost/pricing either through low volume per unit or low-cost operations.
Government mandate can create markets for green products and services.
3. Energy star computers; green energy
Another good example is the U.S. Environmental Protection Agency’s Comprehensive Procurement Guidelines (CPG) mandating that federal agencies and federally supported state agencies purchase office products with the highest recovered material content practicable.

34. 7 Lessons on Sustainable Products & Services
Some commercial customers may also pay more for green products if they can gain a clear reputational advantage with their own customers or other important stakeholders.
A small percentage of customers will pay more for a green product or service than a comparable non- green product purely for ethical reasons.
3. Energy star computers; green energy
Another good example is the U.S. Environmental Protection Agency’s Comprehensive Procurement Guidelines (CPG) mandating that federal agencies and federally supported state agencies purchase office products with the highest recovered material content practicable.

35. 7 Lessons on Sustainable Products & Services-cont’d.
Many customers will avoid products with a highly publicized social or environmental stigma.
With those exceptions, a product’s social and environmental advantages and cause-based marketing are differentiating factors, not primary factors, to most consumers.

36. The 4 Challenges of Sustainability?
To develop and produce products/services that address relevant economic, social and environmental concerns
To make those products/services competitive, marketable
To conduct operations in ways that are open and honest, and socially and environmentally responsible
To operate PROFITABLY!
©2012 William Blackburn Consulting, Ltd.