Let’s Talk Sustainability: The Big Issues, The Best Ideas A joint ERM and Dix & Eaton workshop February 11, 2014
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Nov 15, 2014
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Let’s Talk Sustainability: The Big Issues, The Best Ideas
A joint ERM and Dix & Eaton workshop
February 11, 2014
Today’s Agenda
Introductions
Format
Topics
Opportunities and risks, making the business case
Getting started/getting better
Determining content
Communications opportunities
The mechanics of reporting
Discussion
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3
ERM Snapshot
• ERM is a leading global provider of environmental, health, safety, risk, social
consulting services and sustainability related services.
• We have over 140 offices in 39 countries and territories employing more than 5,000
people.
• Our six core services are designed to meet the broad range of our clients’ changing
needs: • Air Quality and Climate Change
• Impact Assessment and Planning
• Performance and Assurance
• Transaction Services
• Contaminated Site Management
• Risk Management
• Over the past five years we have worked for more than 50 per cent of the Global Fortune 500.
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Dix & Eaton Snapshot
Cleveland-based strategic business communications firm
Practice areas: Investor relations,
media relations, marketing
communications, crisis communications,
employee communications
Relevant specialties
Energy and Natural Resources
Sustainability Communications
Integrating sustainability into business operations is increasingly taking on more strategic importance.
Drivers
Investors
More and more of a company’s market value is based on intangibles (reputation/goodwill /brand image) - legitimizing sustainability factors as valuation drivers.
40% of all shareholder proposals included social and environmental issues
- Ernst & Young, 2012
Institutional investors are screening investments using sustainability or corporate responsibility criteria and are requiring more disclosure and reporting on material environmental and social issues.
“Nearly 75% of surveyed investment professionals see ESG issues as material to stock prices”2013
-Thomson Reuters Extel/UKSIF Survey
Corporate attention to sustainability serves as a proxy for good governance.
Supply Chain
A company’s supply chain is key not just to its business performance, but also its environmental and social performance, reputation, and risk profile.
As companies are being pressed on their environmental and social footprints, they are turning to: suppliers, and suppliers’ suppliers, to disclose, reduce, and monitor a vast array of information: where materials come from, under what conditions they are mined or manufactured, where and how things are made, how things are packaged and transported, and more.
On average, American firms saw about 40 percent of environmental costs occur through direct impacts, with the supply chain accounting for 60 percent. The 40/60 ratio holds true for both our U.S. and global samples. – State of Green Business 2013
On average, American firms saw about 40 percent of environmental costs occur through direct impacts, with the supply chain accounting for 60 percent. The 40/60 ratio holds true for both our U.S. and global samples. – State of Green Business 2013
Natural Resource ShortagesCompanies are already considering resource availability when sourcing materials or locating facilities. As Coca-Cola’s President of Great Britain Sanjay Guha noted in 2009 “Water sustainability is also now central to our investment decisions. Potential markets and ease of distribution were once the key factors in deciding where to build plants. Now it is the long-term supply of water.”
- E&Y Six Growing Trends In Corporate Sustainability 2013
“Losing and replacing a good employee costs companies between 70%–200% of an employee’s annual salary” - National Environmental
Education Fund
Studies show that when a company has CSR initiatives, employees are more proud of and committed to the organization. This is because our personal identities are partly tied up in the companies that we work for. As the labor market becomes more competitive, companies will have to maintain a competitive edge in order to continue to attract top talent.
“Talent Report: What Workers Want in 2012” - Net ImpactSome of today's youngest workers dream of making a big impact on the people and environments around them -- and some are willing to take a pay cut to land a job that will let them do that.
Employee Attraction and Retention
Value Proposition
Current financial metrics miss much of the value that
sustainability generates for companies and communities
Reduced costs through resource efficiency
Driver of innovation
Reduced risks
Easier access to capital
Improved ability to attract and retain the best talent
Enhanced labor productivity and morale
Enhanced brand equity
Better managed supply and value chains
Making the Business Case
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The value driver model - a tool for Communicating the business value of Sustainability - A PRI-UN global compact LEAD Collaboration on creating long-term value
Benefits of Sustainability Programs Siemens has committed to revenue growth from sustainability. The
company’s fiscal year 2012 revenue saw 42 per cent, or over EUR 33 billion, come from its environmental portfolio.
Unilever’s Sustainable Living Plan aims to double growth while halving the company’s greenhouse gas, water and waste footprint across the entire lifecycle of its products. Over the past four years, the company’s productivity savings have reached almost USD 400 million as it prepares for this plan.
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The value driver model - a tool for Communicating the business value of Sustainability - A PRI-UN global compact LEAD Collaboration on creating long-term value
Benefits of Sustainability Programs DuPont’s business focuses on responding to three global
challenges: 1) ensuring food security for a growing population, 2) discovering new solutions to meet energy needs and 3) working to insure the protection of life through cleaner and safer chemistry and materials. Revenue from DuPont’s products designated as sustainability advantaged, now at over 30 per cent of total revenue (more than USD 10 billion), is growing at a rate 5.5x faster than the company overall.
Pirelli launched its Green Performance Strategy in 2009 and has since seen rapid growth in its sustainability-enhanced tires. This class of newly designed products, meeting European Union standards, now accounts for 45 per cent of revenue and is growing at 2.2x the rate of Pirelli’s overall sales.
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The value driver model - a tool for Communicating the business value of Sustainability - A PRI-UN global compact LEAD Collaboration on creating long-term value
Discussion
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• What are you seeing as the main drivers – today and tomorrow?
• How successful have you been in making the “business case” for
sustainability?
• How best to counter those that believe that this is just a “green
initiative”?
What to Call ‘It’?
Many terms – sustainability; corporate citizenship; corporate
social responsibility (CSR); environmental, social and
governance (ESG); etc.
Importance of consistency within the organization for “ease
of use”
Define it for your organization to help people understand
what’s included and what it is – and also what it isn’t
Consider making it a combination of current situation and
aspirations
Not just “green,” but you could start there
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What to Call ‘It’?
Sustainability: Development that meets the needs of the
present without compromising the ability of future
generations to meet their own needs.
“3 P’s” of People, Planet, Profit
Source: The Brundtland Commission, a.k.a. World Commission on Environment and Development
(WCED)
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Economic
Social Environmental
Overview
Take a first pass at determining key stakeholder/audience groups
and their interests
Take inventory of current CSR/sustainability-related activities and
communications
Benchmark peer sustainability performance and communications
Determine current strengths, weaknesses, opportunities and threats
Figure out “what motivates us” and “where do we want to be”
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Benchmarking
Identify your key peers and competitors
Determine their sustainability communications activities, i.e. reporting,
media relations, etc.
Collect data on scope, content and format of their communications
Compile in one place, and analyze for trends and best practices
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What Motivates Us…
Growing risks and rewards for companies with:
High brand exposure (household names)
Big environmental impact
Natural resource dependence
Current or potential high exposure to regulations
Competitive markets for talent
Low market power (but aiming to be major players)
Established social and environmental reputations (good or bad)
Dix & Eaton add: Core values-driven
Source: Green to Gold by Daniel C. Esty and Andrew S. Winston, 2006
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…and Where Do We Want to Be?
Thought Leadership
Create new, innovative tools
Reach all audiences (and media)
Dare to stand out
Proactive
Research (“listening” as a form of
communication)
Utilizes existing tools (direct communications, website)
Focus on primary, “safe” audiences
Reactive
Wait until you “need” it
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Discussion Questions
How did you start?
How could you start?
How are you currently connecting with your stakeholders?
Materiality Assessment
Identify and prioritize issues
Inform or validate sustainability strategy, programs and initiatives
Provide foundation for sustainability report
Engage with stakeholders
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What is a Material Issue?
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GRI – “… topics and indicators that reflect the organization’s significant economic, environmental and social impacts, or that would substantively influence the assessments and decisions of stakeholders.”
SASB – “…in the event such fact is omitted from a particular disclosure, there is a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of the information made available.”
Response
Defensive Transformative
Transformative• Game-changing issue for
the business model• Requires relevance,
timing, champions• Focus on values, culture,
world view
Offensive• Energizing the company• Create value for customers,
shareholders, employees• Can focus on efficiency or
on growth/innovation• Inject new content into
existing business processes
Defensive• Protecting the company• License to Operate• Extended supply chains• Integrated with other
efforts• Risks and expectations
Denial/ Discovery• Definitional confusion• Report > actions• Focus on Green Agenda (or
just climate change)• Difficult to move beyond
learning
Denial/ Discovery Offensive
Demonstrating Performance
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Effective Goals should:
•Be SMART
•Align with Organization’s Strategic Direction
•Align with Sustainability Strategy/Materiality
Assessment
•Drive desirable behavior
•Be easy to communicate and visualize
•Cascade – applied at organizational,
department and individual level
•Data collection
Discussion
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• How material is material?
• What are the Risks and Rewards of taking an Offensive position?
• What makes a good goal?
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Overview
Internal communications and
training
Media relations (trade, local,
national), including:
Rollout of new products, services,
programs and processes
CSR awards and other recognition
Digital communications: web
content and social media
Sustainability reporting
Investor outreach
Grassroots community outreach,
such as hosting community
meetings, providing facility tours,
being a guest speaker, serving
on local nonprofit boards, etc.
Environmental crisis
preparedness and response
Supply chain communications
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Be Strategic, Engaging and Accountable
Start to “walk the walk” before you talk
Develop key messaging around initiatives that ties to
overall corporate strategy and/or goals
Determine goals, phases, positioning, timing, budget, etc.
Capitalize on short-term, low-risk opportunities
Use case studies – be a good story teller
Set goals and track metrics
42
Data and Stories
Stories-driven: “Stories that are so powerful that no one asks for the statistics”
(or the numbers don’t matter)
Data-driven: “Intel saw most of its metrics worsen in 2010 compared to 2009,
with chemical waste output up 27 percent. It blames the rise on increasing
complexity in its manufacturing processes.” (and higher production volumes)
Data-driven
Stories-driven
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Words of Warning
For your organization, which is the bigger risk?
Greenwashing: Perception of consumers that they are being misled by
a company regarding its environmental practices or the environmental
benefits of a product or service.
It’s promotional “spin”
“Greenblushing”: Limited or no information disseminated by an
organization so as to understate or ignore its commitment to and
actions on environmental responsibility.
Walking the walk but being too unsure and shy to talk the talk
It’s quiet, unclear, unfocused, not packaged, not accessible
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Words of Warning
Seven sins of greenwashing The hidden trade-off. Suggesting a product is “green” based on an unreasonably narrow
set of attributes without attention to other important issues.
No proof. Committed by an environmental claim that cannot be substantiated by supporting
information or reliable third-party certification.
Vagueness. Committed by every claim that is so poorly defined or broad that its real
meaning is likely to be misunderstood by the consumer, e.g. “all-natural.”
Irrelevance. Committed by making an environmental claim that may be truthful but is
unimportant or unhelpful, e.g. “CFC-free” because CFCs are already banned by law.
Lesser of two evils. Committed by claims that may be true within the product category, but
that risk distracting the consumer from the greater environmental impacts of the category as
a whole, e.g. organic cigarettes.
Fibbing. Making environmental claims that are simply false, e.g. lying about Energy Star
certification.
False labels. Committed when either words or images give the impression of third-party
endorsement where no such endorsement actually exists.
Source: TerraChoice and PRSA Professional Standards Advisory PS-12,
October 2009
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Words of Warning
Symptoms of greenblushing Believing you need “all the answers” before you can communicate – not willing to share
information about “the journey.”
Being reluctant to talk about your sustainability activities, even when asked to or recognized
by outside parties.
Downplaying your achievements internally, which can be very de-motivating.
Afraid to bring it up with customers in case they’re ahead of you or not particularly interested.
Always assuming there’s more risk than reward in communicating.
Feeling that what you’re doing is “not that special,” when, in fact, others could learn a lot from
your ideas.
Source: Dix & Eaton, March 2010
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Communications Opportunities – Discussion Questions
Which communications tools are you most likely to implement for
sustainability?
Which communications tools have you found most useful or had the
most success with when it comes to sustainability?
What hasn’t worked for you?
What’s the greater risk in your organization – greenwashing or
greenblushing?
The Mechanics of Reporting
Sustainability reporting is the practice of measuring, disclosing, and being
accountable to internal and external stakeholders for organizational
performance towards the goal of sustainable development.
“Sustainability reporting” is a broad term considered synonymous with
others used to describe reporting on economic, environmental, and social
impacts (e.g., triple bottom line, corporate responsibility reporting, etc.).
A sustainability report should provide a balanced and reasonable
representation of the sustainability performance of a reporting organization
– including both positive and negative contributions.
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What You Need
Cross-functional team that includes EHS, sustainability, HR, IT,
legal, operations, government affairs, operations, foundation, local
contacts
Assignment of project manager/point person
Early engagement with information “gatekeepers”
Clarity about ultimate decision-maker and decisions that need to be
made at that level
Process-oriented/project management
Awareness of trends and frameworks (but few mandates)
Set a (realistic) deadline
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Sustainability Reporting Options (cont.)
Frameworks:
Global Reporting Initiative
Carbon Disclosure Project
ISO 26000
United Nations Global Compact
International Integrated Reporting Council
Sustainability Accounting Standards Board (2013-2015)
• Health care• Financials• Technology &
Communications • Non-Renewable
Resources• Transportation
• Resource Transformation
• Consumption I• Consumption II• Renewable Resources &
Alt Energy• Infrastructure
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Global Reporting Initiative (GRI)
Originated in U.S., grew in Europe, now the world’s most widely accepted,
integrated reporting framework
More than 3,800 companies currently using GRI; about 50% are from Europe
Data-driven disclosures in three key areas:
Strategy and Profile: Disclosures that set the overall context for understanding
organizational performance such as its strategy, profile, and governance.
Management Approach: Disclosures that cover how an organization addresses a
given set of topics in order to provide context for understanding performance in a
specific area.
Performance Indicators: Indicators that elicit comparable information on the
economic, environmental, and social performance of the organization.
Preparers apply to be “in accordance” with GRI guidelines
“Core” or “Comprehensive”
Reporting Format
To GRI or not to GRI, that is a key question
Report to GRI standards
Use GRI as only a guide
GRI reports include:
Company Profile
Governance, Commitments, and Engagement
Management Approach and Performance Indicators
Economic
Environmental
Social
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Must-Do’s Before Undertaking a GRI Report
Sign up for GRI training
Establish and refine your data-
collecting mechanisms
Pull together a cross-functional team
Secure senior management support
and engagement at the beginning
Think through what you are going to
report because you can’t include
everything – materiality!
Set a realistic deadline and process
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The Mechanics of Reporting – Discussion Questions
What kind of report would you be most likely to do next?
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Recommended Resources
Web sites/blogs Environmental Leader CSRwire SmartBrief on Sustainability Corporate Responsibility Magazin
e Green Biz GreenInc. (New York Times) Treehugger.com Sustainable Industries Sustainablog Governance & Accountability
Institute www.twitter.com/ThreePs
Organizations Institute for Sustainability
Business Practice, Baldwin Wallace
Corporate Sustainability Network Sustainable Cleveland 2019 GreenCityBlueLake Institute Global Reporting Initiative Sustainability Accounting
Standards Board Sustainable Brands
ERM Contact Information
Guy Roberts (Chicago)
847-258-8934
Terry Mors (Michigan)
734-276-1306
Scott Smith (Cleveland)
216-593-5200
Dan Bremer (Cleveland)
614-530-9863
ERM
3333 Richmond Road
Suite 160
Beachwood, OH 44122
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Dix & Eaton Contact Information
Gregg LaBar
216-241-4614
Stephanie Harig
216-241-3069
Dix & Eaton
200 Public Square, Suite 1400
Cleveland, OH 44114
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