This document provides an overview of a workshop on sustainability hosted by ERM and Dix & Eaton. The agenda covers opportunities and risks of sustainability, getting started with sustainability programs, determining sustainability content, communication opportunities, and the mechanics of sustainability reporting. Key topics discussed include making the business case for sustainability, stakeholder engagement, materiality assessments, and setting goals. Audience members share experiences with sustainability programs and ask questions.
2. 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
2
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:
•
•
Impact Assessment and Planning
•
Performance and Assurance
•
Transaction Services
•
Contaminated Site Management
•
•
Air Quality and Climate Change
Risk Management
Over the past five years we have worked for more than 50
per cent of the Global Fortune 500.
3
4. 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
4
11. 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.
12. 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
On average, American
firms saw about 40
firms saw about 40
percent of
percent of
environmental costs
environmental costs
occur through direct
occur through direct
impacts, with the
impacts, with the
supply chain
supply chain
accounting for 60
accounting for 60
percent. The 40/60 ratio
percent. The 40/60 ratio
holds true for both our
holds true for both our
U.S. and global
U.S. and global
samples.
samples.
– State of Green Business
– State of Green Business
2013
2013
13. Natural Resource Shortages
Companies 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
14. Employee Attraction and Retention
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.
“Losing and replacing a good
employee costs companies
between 70%–200% of an
employee’s annual salary”
- National Environmental
Education Fund
“Talent Report: What Workers Want in 2012” - Net
Impact
Some 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.
15. 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
16. Making the Business Case
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
16
17. 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.
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
17
18. 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.
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
18
19. Discussion
•
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”?
19
21. 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
21
22. 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
Economic
Social
Environmental
Source: The Brundtland Commission, a.k.a. World Commission on Environment and Development
(WCED)
22
23. 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”
23
26. 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
26
28. 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
28
30. …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
30
31. Discussion Questions
How did you start?
How could you start?
How are you currently connecting with your stakeholders?
31
33. Materiality Assessment
Identify and prioritize
issues
Inform or validate
sustainability strategy,
programs and initiatives
Provide foundation for
sustainability report
Engage with
stakeholders
33
34. What is a Material Issue?
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.”
34
35. Response
Defensive
• Protecting the company
• License to Operate
• Extended supply chains
• Integrated with other
efforts
• Risks and expectations
Denial/ Discovery
Denial/ Discovery
• Definitional confusion
• Report > actions
• Focus on Green Agenda (or
just climate change)
• Difficult to move beyond
learning
Defensive
Transformative
• Game-changing issue for
the business model
• Requires relevance,
timing, champions
• Focus on values, culture,
world view
Offensive
Transformative
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
37. Demonstrating Performance
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
37
38. Discussion
•
How material is material?
•
What are the Risks and Rewards of taking an Offensive position?
•
What makes a good goal?
38
40. Overview
Internal communications and
training
Media relations (trade, local,
national), including:
Rollout of new products,
services, programs and
processes
CSR awards and other
recognition
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
Digital communications: web
content and social media
Sustainability reporting
40
41. 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
41
42. Data and Stories
Storiesdriven
Datadriven
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)
42
43. 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
43
44. 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
44
45. 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
45
46. 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?
46
48. 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.
48
49. 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
49
52. 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
52
53. 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”
53
54. 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
54
55. Must-Do’s Before Undertaking a GRI Report
Sign up for GRI training
Establish and refine your datacollecting 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
55