1. Business Value and Sustainability
David Wheeler
Erivan K Haub Program in Business and Sustainability

2. The SVA - sustainability paradox
The test of a first class mind is the ability to hold two opposing ideas in the head at the same time and still retain the ability to function
F Scott Fitzgerald

3. Shareholder Value Model
Tomorrow
Innovation
Repositioning
Growth Path
Trajectory
SVA
Internal
External
Profit
Risk Reduction
Reputation
Right to Operate
Today

4. ‘Sustainable’ Value Model
Drivers
Tomorrow
Drivers
Sustainability
Lens
Sustainability
Lens
Innovation
Repositioning
Growth Path
Trajectory
SVA
Internal
External
Profit
Risk Reduction
Legitimacy
Right to Operate
Sustainability
Lens
Sustainability
Lens
Drivers
Drivers
Today

5. Sustainable Value Model
Tomorrow
Drivers
Drivers
Clean
technologies
Disruptive
Raise the
bottom
Meet unmet
needs
Ballard
Honeywell
Grameen HP
Innovation
Repositioning
Growth Path
Trajectory
Internal
External
Profit
Risk Reduction
Reputation
Right to Operate
Transparency accountability
Stakeholder
dialogue
Footprint
reduction
Resource
productivity 3M
DuPont
Suncor
Placer Dome
Drivers
Drivers
Today

6. Drivers of change in stakeholder relations
The shifting sands of taxation and fiscal policy
internalisation of environmental and social costs
ecotaxation and fiscal reform
stakeholders’ need for assurance
attitude of investors
the governance issue
changing societal and workplace values
the rise of the ‘gold collar’ worker
the rise of the intelligent consumer
technology, e-commerce and e-communication
competition and competitiveness

7. Sources of wealth creation and competitive advantage
20th Century
production inputs
access to capital
market domination
proprietary information
21st Century
knowledge
innovation
competencies
intellectual property and social capital
brands
reputation
relationships

8. Descriptive typology of approaches to stakeholder management
defensive (relationships avoided)
top down (risk and liability reduction)
interactive and innovative (trust-based, opportunity driving)

9. Reconciling sustainability and corporate social responsibility
Tier 3
Engaged
TBL +
Tier 2
Responsive
Meeting reasonable
expectations
Tier 1
Compliant
Avoiding harm

10. Historical examples of stakeholder inclusion in US corporate strategy
General Electric s
Shareholders
Employees
Customers
General Public
Sears s
Community
Stockholders

11. William Ford on stakeholders
We want to find ingenious new ways to delight consumers, provide superior returns to shareholders and make the world a better place for us all. We can do well for employees, customers and shareholders, and we can do good for society.
William C Ford Jr, Chairman, Ford Motor Company
13 May 1999

12. The business case for investing in stakeholder relationships
Eighteen mostly US companies with year track records all demonstrated a strong commitment to people development and knowledge sharing. These companies ‘built to last’ outperformed comparator companies’ stock price 15 fold and average share prices 70 fold.
James Collins & Jerry Porras, Built to Last

13. The business case for balancing stakeholder relations
Over an eleven year period, established US companies which balanced the interests of customers and workers with those of owners demonstrated sales growth four times and employment growth eight times that of companies which followed a ‘shareholder first’ strategy.
James Kotter & John Heskett, 1991

14. The business case for social capital
US companies lose on average 50 per cent of their customers every five years, 50 per cent of their employees every four years and 50 per cent of their investors every year. But the most successful US companies have lower turnover rates.
Frederick Reichheld, The Loyalty Effect

15. The business case for reputation and protection of brand value
Coca Cola
Microsoft
IBM
General Electric
Ford
Disney
Intel
McDonalds
Marlboro
Nescafe
$83.8 billion
$56.6 billion
$43.8 billion
$33.5 billion
$33.2 billion
$32.3 billion
$30.0 billion
$26.2 billion
$21.0 billion
$17.6 billion
Interbrand, 1999

16. The Potential Eco-efficiency 10 AAA vs. 10 CCC companies in:
EcoValue ‘21
Top and Bottom Rated Companies1998 Total Return
aerospace defense
specialty chemical
chemicals
communication equipment
electric companies
electronics (semiconductors)
health care
iron and steel
paper, forest products, etc.
petroleum

17. Social capital and the new economy
Volatility and virtuality erode relationships - it’s that simple - which is why managers must learn to invest in social capital.
Laurence Pruzak & Don Cohen, HBR June 2001