Sustainability and Corporate Social Responsibility: Driving Business Value
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The webinar provides perspective on the business case and business value of mainstreaming sustainability and social responsibility in corporate strategy and operations through case studies and best practices from across the globe. Main points covered: • Why invest in Sustainability and CSR? • Why Business are adapting Sustainability Paradigm • Global Study Cases on CSR Presenter: Radhika Lalit is presently an Associate with Rocky Mountain Institute with extensive experience in sustainability and CSR consulting. In the past, Radhika worked as a sustainability and corporate social responsibility strategy consultant to over thirty Fortune 500 corporations in India and has been able to successfully engage businesses to catapult solutions for sustainable development. Link of the recorded session published on YouTube: https://youtu.be/ZKUglISIgwI
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Sustainability and Corporate Social Responsibility: Driving Business Value
- 2. Radhika Lalit Associate, Rocky Mountain Institute Radhika Lalit has extensive experience in sustainability and CSR consulting. In the past, Radhika worked as a sustainability and corporate social responsibility strategy consultant to over thirty Fortune 500 corporations in India and has been able to successfully engage businesses to catapult solutions for sustainable development. Radhika has a Master’s in International Policy Studies from Stanford University and also has MBA and Engineering Bachelors from reputed educational institutions. Contact Information 650-713-7643 radhika.k.lalit@gmail.com linkedin.com/in/radhikalalit @radhikalalit
- 3. Sustainability is an organization’s commitment to be responsible and accountable to the planet and society at large for its impact.
- 4. Creating Shared Value Profitability and Growth Responsibility to Stakeholders Strong Corporate Governance Commitment to Society and Planet Characteristics of a responsible and sustainable firm
- 5. “97% CEOs believe that sustainability is important to the future success of their business.” - UNGC and Accenture Study 2016
- 6. Why Businesses are Adopting the Sustainability & CSR Paradigm
- 7. Growth, Returns and Brand Equity In a review of 52 studies spanning three decades, Ortlitzky, Schmidt and Rynes found that a 13% change in corporate financial performance (CFP) can be attributed to sustainability. Sustainable organizations have the highest ROA and Net Income over time.
- 8. Case Study: Hindustan Unilever Limited (HUL) Enhancing Revenues and Brand Value Project Sunshine • Providing Clean Drinking Water (PureIt) • Promoting Hygiene (Lifebuoy) • Building Toilets (Domex) HUL Product Source: https://brightfuture.hul.co.in/
- 9. Promotes Business Model Innovation Shared Service Economy Product As a Service eg: Zipcar, Enterprise Shared Resources eg: Uber, Airbnb Peer-to-Peer eg: LendingClub Process/Product Remodeling Recycled Product eg: Novelis Waste to Wealth eg: Haathi Chaap Reuse, Recycle and Repair: Patagonia Repair Shop Pay for Success ESCO Models Social Bonds Environmental Bonds Environmental and Social Value Creation Sustainable Energy/Responsible Organization Buy One, Give One eg: TOMS Energy Efficiency Models eg: Opower Leveraging New Sources of Investment Crowdfunding eg: Fundly, Mosaic Microfinance eg: Water Credit Green Banks Going Virtual On-demand Production eg: Threadless B2B business models eg: ITC e- choupal B2C business model eg: Tesla Source: Adapted from the report: “Model Behavior 20 Business Model Innovations for Sustainability” by SustainAbility
- 10. Case Study: Simpa Networks Innovating Business Models Pay-As-You-Go Model for Energy Services in Rural Neighborhoods Source: http://www.goldmansachs.com/citizenship/environmental-stewardship-and-sustainability/environmental-markets/cem-partners/gs-report.pdf
- 11. Promotes Market Disruption (Case in Point: Grocery Industry)
- 12. Case Study: Google Transforming the Market • Google is world’s largest corporate buyer of renewable power, with 19 PPA agreements reaching 2.6 gigawatts of wind and solar energy. • Next year, Google will reach 100% renewable energy Other Initiatives • Used machine learning to reduce 40% energy consumption in data centers • Installed Streetview cars with air pollution sensors Source: https://www.google.com/green/ “We’re a data-driven company. The science of climate change tells us that building a carbon-free electrical grid is an urgent global priority” - Gary Demasi, Google
- 13. Attracting and Retaining Best Talent • 2016 Deloitte Survey: Millennials want to contribute to the positive impact they believe business has on society, but in so doing, they wish to stay true to their personal values. • 2014 Net Impact study showed that business school graduates would take a 15% pay cut to: • Work for an organization whose values are like my own (88%) • Have a job that seeks to make a social or environmental difference in the world (83%) • Have a job in a company committed to corporate and environmental responsibility (71%) Source: https://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/gx-millenial-survey-2016-exec-summary.pdf https://www.grantthornton.com/issues/library/articles/manufacturing/2015/04-sustainability-attracts-talent.aspx#sthash.uTpi8r4K.dpuf
- 14. Regulatory Changes and Stakeholder Pressures (Case in Point: India) Section 135, New Companies Act, 2013 • As many as 8000 listed companies registered with the Registrar of Companies are under the ambit of the Companies Act 2013. • The new law mandates companies with the following criterion to spend at least 2% of their average net profits made in the preceding 3 years for the purpose of social welfare and development : • net worth of Rs. 500 Crore or more or • turnover of Rs. 1,000 Crore or • net profit of Rs. 5 Crore or more • According to reports, the private sector’s combined charitable spend jumped from an estimated 33.67bn rupees ($0.5bn) in 2013 to around 250bn rupees ($3.8bn) after the law’s enactment. • Ironically, a survey by KPMG found that 52 of the country’s largest 100 companies failed to spend the required 2% last year.
- 15. Roadmap for Institutionalizing CSR and Sustainability Processes in your Organization • Step 1: Build a Team: Build a cross-functional team; Engage top management • Step 2: Identify Materiality: Earmark issues important to you and your stakeholders • Step 3: Strategize Goals and Values: Outline goals with clear timelines, set deliverables, and assigned responsibilities • Step 4: Stakeholder Engagement and Communication: Engage and incentivize internal and external stakeholders to brainstorm solutions • Step 5: Prioritize and Implement: Pursue low-hanging fruits and identify implementation partners for strategic, long-term opportunities • Step 6: Measure, report and communicate outcomes: Review and communicate results transparently on key metrics to measure progress
- 16. Pre-requisites for Successful Sustainability and CSR Interventions • Vision, Mission and Value Alignment • Organizational Priority • Passionate Team • Sustainability KPIs and Incentives • SMART Goals and Impact • Comprehensive communication plan
- 17. Conclusion • Sustainability and CSR offer a strategic systems approach for solving business problems and driving business value • Better Sustainability Practices attract: • Higher Shareholder Value • Greater margins, revenues and growth in the long term • Higher Brand Valuations • Customer Adulation • Talent • It is NOT Philanthropy! • It is NOT an option anymore. It is a pre-requisite to ‘Business Continuity’.
- 18. ISO 26000 Training Courses ISO 26000 Introduction 1 Day Course ISO 26000 Foundation 2 Days Course ISO 26000 Lead Implementer 5 Days Course ISO 26000 Auditor 5 Days Course Exam and certification fees are included in the training price. https://pecb.com/iso-26000-training-courses | www.pecb.com/events
Notes de l'éditeur
- Hi Everyone, Thank you so much for attending this webinar on sustainability and csr. Before I start, I would like to introduce myself. I am presently an associate with the buildings practice at the Rocky Mountain Institute. I have significant experience in consulting, research, international development, and policy analysis. I recently graduated with my Master’s degree in International Policy Studies from Stanford University, prior to which I was a sustainability and CSR consultant to several Fortune 500 corporations in India. I am grateful to PECB for this opportunity to discuss how sustainability and CSR can transform business trajectories and drive substantial business value. My presentation is primarily divided into three parts – the first part is about understanding sustainability and CSR and their relevance at a systemic level in businesses. The second part is about understanding why organizations must invest in sustainability and CSR Now? And the third part provides an insight into roadmaps, resources and best practices to institutionalize sustainability and csr in the business DNA.
- Let us start by understanding what we mean by Sustainability and CSR and how should we think of it. There are several definitions given by experts throughout the world. However, for the purpose of this webinar, I would like you to think about Sustainability as an organization’s commitment to be responsible and accountable to the society and the planet for the impact of its product and services. Corporate Social Responsibility or Corporate Citizenship or CSR on the other hand, is ‘a commitment by organizations to have a positive impact on the societies in which they operate’. I believe CSR to be an integral part of an organization’s sustainability strategy. And How I would like you visualize this is by understanding the ecosystem. Businesses must understand that they operate within the society and the society or the entire human race operates within the planetary ecosystems. Therefore, without investing in society or the planet it is impossible for any organization to be sustainable or even in existence.
- What does a responsible nad sustainable firm look like. At the very outset, the purpose of any organization must be to create shared value, be profitable and grow. At the same time be Transparent, Accountable and Ethical. Whereas at the core, any responsible organization must have its staunch commitment to the society and planet.
- The CEOs of today’s global and multinational corporations understand this strategic paradigm and can foresee an unprecedented wave of conscious consumerism emerging. This year UNGC and Accenture interviewed over a 1000 CEOs on their business outlook. The study determined that 97% of the CEOs in over 100 countries emphasized that the paradigm of sustainability was essential to the future success of their businesses. This is a huge societal shift in perspectives and paradigms towards sustainability and corporate social responsibility in business. Let us understand the strategic reasons why businesses are adopting the sustainability and csr paradigm.
- There are two reasons why sustainability is more important than ever in today’s world: 1. Sust and csr are robust Risk Management tools 2. They create immense shared value. Lets talk about Risk Management. As a part of risk management, it is important to understand that the society gives the businesses a long term license to operate only when the business operates in a responsible manner. Therefore, social and environmental stewardship is essential to Business Continuity. Reputation Management is another important reason, most companies pursue these activities. However, due to myopic view of its relevance, some businesses mistake philanthropic activities to be sustainability or csr. However, it is important to take note that sustainability is not philanthropy it is a part of the business strategy itself. Managing mounting Stakeholder Pressure is another key risk management tool for the enterprise. Stakeholders could include shareholder, government, regulators, consumers, CSOs, as well as employees. Fear of Regulation and compliance is also a potential driver for several organizations to put their act together International Organizations Creating Shared Value is now a business imperative. The society want only want those businesses to survive and thrive who are responsible, Driving Efficiencies, Growth and Innovation. From the business’s perspective they can use this approach to Enhancing their Branding, Retaining Best Talent, Gaining competitive Advantage and even gaining Access to Responsible Investment
- Research going on for over three decades indicates that if the Corporate Financial Performance goes up, 13% can be attributed to increasing sustainability. Further, it has also been proved that sustainable organizations have the highest ROA and Net Income over time. The graph on the right of your screens conveys this insight with the help of a graph. Thus, it is important to understand that sustainability has strategic benefits to organizations once institutionalized.
- Let us talk about an example here: HUL capitalizes on CSR activities to help with its branding campaign in rural communities. Thereby also leveraging the image of a responsible enterprise for urban counterparts.
- So how are businesses benefiting from Sustainability as an innovative approach to problem solving? Innovative Sustainability and CSR approaches have helped business rethink their organization’s business model. They have also created newer sources of revenue leading to profitability of an enterprise. I have made an attempt to classify these innovative business models and approaches towards institutionalizing social and environmental value in business strategy in 6 different categories. The first category of business models are those based on shared service economy, the second based on product or process remodelling, the third based on pay got Success, the fourth on Environmental and Social Value Creation, the fifth on tapping new sources of investment and the last around an internet or virtual economy. The first is something most of you would be familiar with. With services like Uber, Lyft, Airbnb, LendingClub this category does not need much explanation but what it does tell us is that the world is moving towards a newer equilibrium where services and not physical possessions of the goods would matter most. The second category of product and process modeling is also something that is common wisdom with resource efficiency being the common thread. As an example, Novelis recycles over 40 billion used cans globally every year. It is a 11 billion dollar enterprise. The third category is pay for success models where the customer//investor only pays if the promised targets are achieved. The fourth category is where organizations are committed to providing solutions for environmental and social value creation. Examples of such organizations are Tesla, TOMS, Opower, among others. Whereas the fourth category is around leveraging new sources of investment. This category taps into the new sources of finance. The fifth category on the other hand deals with removing physical interfaces and going virtual or cutting middlemen. WaterCredit uses microfinance loans to provide clean water and toilets to individuals and communities. Mosaic, a solar company that uses an easy-to-use crowdfunding investment model enabling small individual investors to fund large commercial solar projects. This and similar models are opening a door to more democratized systems and shifting away from traditional command-and-control business models where centralized operators decide what investments to make—in coal versus solar, for instance. Fundly offers individuals the chance to raise money for medical procedures, schooling or charity Opower: This software company partners with utility providers around the world to promote energy efficiency among energy users. Threadless is a t-shirt company that invites artists to create designs, which users vote on; the most popular ones go into production, and designers receive monetary compensation by the company
- Simpa sells solar home systems in the Indian state of Uttar Pradesh. Rather than finance consumer purchases through traditional credit, Simpa uses a pay-as-you-go top-up model. Similar to pre-paid mobile top-ups in India, this financing model allows consumers to buy recharge credits for when they want to use the SHS. After the consumer has made 28 months of payments, they will own the system. Simpa has a strong focus on customer service and makes sure customers do not default on payments. As a result they have seen low default rates. They have been able to provide 900,000 households access to electricity for at least 7 hours per day, which translates to over $21 million in additional incomes for local economies.
- It is good for your business: Disruption in Markets In an otherwise stagnant grocery industry, "responsible consumption" (RC) products—goods labeled organic, natural, ecological, or fair trade—are a bright spot. This market segment that has already reached $400 billion will likely grow by an additional $180 billion. RC offerings are no longer niche products, but are capturing a disproportionate share of growth. In the US alone, sales of RC products grew at about 9% annually in recent years—accounting for about 70% of total US grocery-sales growth. Responsible consumption products captured nearly 70% of total US grocery market growth between 2010 and 2013.
- Market transformations can be led by businesses wanting to do well and wanting to do good. This follows the Win-Win Strategy. Google transformed the corporate RE space in a very clever way. Google is a technology company and like most other technology companies, energy use in data centers and their buildings is a major expense. With the goal of powering itself by 100% RE, it has de-risked its business from future energy prices fluctuations. This is a huge win for Google because when it brought its entire portfolio to be powered with RE, it was also able to bring down the prices of Corporate Solar Power Purchase Agreements substantially, transforming the energy market as a whole.
- To maximise engagement with Millennials and keep them as employees or customers, companies should look at ways to close the gap. This can be achieved through increasing the focus on people (employees, customers and society), on products and purpose – and less on profits. Millennials see profits as important, but they seek a more balanced perspective and want to be part of creating a more balanced scorecard and a more sustainable future.
- India is the first country in the world to enshrine corporate giving into law. Ref: https://www.theguardian.com/sustainable-business/2016/apr/05/india-csr-law-requires-companies-profits-to-charity-is-it-working
- It is a new approach for solving strategic business problems and driving business value.