Presentation I've prepared for a number of upcoming conferences. It is based on more than 80 interviews with managers, heads of sustainability and CEOs.

1. Global Drivers / Trends in Sustainable
Business
September 2012
Toby Webb, Founder, Ethical Corporation
and Stakeholder Intelligence
Toby.webb@stakeholderintel.com / tobywebb.blogspot.com

2. Research Background
 Based on interviews with more than 80 senior managers,
NGO representatives and academics around the world
 Research conducted May-August 2012
 Telephone, email and face-to-face interviews with heads of
sustainability, CSR, corporate responsibility and external
affairs
 Also based on CEO interviews, including: Unilever, Coca-
Cola Enterprises, Kingsfisher, Desso, O2 and others

3. A word on terminology…and attitudes
 CSR is Corporate Social Responsibility
 CR is Corporate Responsibility: Designed to incorporate
environmental concerns
 Sustainable development is a global trend and concern
 Sustainable business is both a business contribution to
sustainable development AND a holistic management approach
 Sustainability often seen only as Green in the USA: Less social
 Ethics often something companies speak about in terms of
compliance, but its links to CR/Sustainability are strong (anti-
corruption and bribery)

4. Macro political & economic trends
 Economic stagnation in the West: Weak political
leadership
 Volatile times in BRIC nations: Growth slows & Biz
expands (retail in India)
 New opportunities in the CIVETS? (Colombia, Indonesia,
Vietnam, Egypt, Turkey, South Africa)
 Rising social unrest around the world: Middle East, India,
China, but also EU, Asia too
 Africa rising: Over 500 African companies have $100
million + annual turnover. About 150 have $1 billion+

5. What this means for business with global exposure:
 Populist governments in tough times demand action
from business
 Consumers and suppliers become frightened and risk
averse: seek reassurance from trusted Brands and
Partners
 Populations and supply chains unstable: Middle
East, Pakistan, Bangladesh (But even UK:
Supermarkets carry 72 hours of food supply)
 Wages rise in China: Attention on Bangadesh &
Burma (infrastructure, institutional challenges)

6. Macro economic and environmental trends
 Resource constraints more obvious (Soil
erosion, rare earth elements, water shortages,
agricultural commodity availability)
 Political populism breeds supply chain volatility
(Argentina: Gas. Russia: Wheat. USA: Corn.
Germany: Energy)
 Economic troubles mean supply uncertainty
(South Africa: Mining)

7. Macro economic and environmental trends
 Environmental and Energy challenges affect
sourcing trends (China) and future planning
(Climate Change impacts)
 Demographic changes: Aging societies and
product and service demand
 Urbanisation drives regulatory and
infrastructure change - and opportunity

8. Business trends: Why Corporate Power is a Concern
 1,000 companies responsible for half of the total market
value of the world's more than 60,000 publicly traded
companies. "They virtually control the global economy" -
Professor Robert Eccles, Harvard Business School
 1980: World’s largest 1,000 companies made $2.64 trillion
in revenue, or $6.99 trillion in 2010 dollars, adjusted using
the consumer price index
 They employed nearly 21 million people directly
 A total market capitalization of close to $900 billion ($2.38
trillion in 2010 dollars), or 33 percent of the world total

9. Business trends: Why Corporate Power is a Concern
 By 2010 the world’s largest 1000 companies made $32
trillion in revenue
 They employed 67 million people directly
 Total market cap: $28 trillion
 Equal to 49 percent of total world market cap
(down from 64 percent in 2000, at the peak of the Internet
bubble and before the financial crisis of 2008)

10. Business trends: Why Corporate Power is a Concern
 Substantial concentration within the top 1000
 Eighty-three companies account for one-third of
the group's $32 trillion in revenue
 Top 172 companies account for half of annual
global corporate revenue
 172nd largest corporation, Rosneft Oil, has
revenue equivalent to GDP of 74th largest
country, Uruguay

12. Why Corporate Sustainability will become essential
“If companies are to continue such rapid growth in
developing markets they might need to bring in
more than goods and services, such as civil-society
upgrades where they're most needed: housing,
health and education”
“Market opportunity, peer pressure, investor
pressure, and brand reputation are doing for these
companies what otherwise might be accomplished
only through regulation”
Professor Robert Eccles, Harvard Business School

13. Why Corporate Sustainability will become essential
 Many of the largest businesses now take
Corporate Sustainability very seriously
 Many claim to have "embedded" it: they are
wrong. They are at the start of their journey
 But they will do so voluntarily or be forced to do
so by pressure or regulation
 9 billion people will mean scarcer resources.
Companies will need to fight for their piece of the
pie

14. The Role of Investors
 The top 500 fund managers have over $42
trillion in assets under management
 The top 10 fund managers account for one-third
of this amount; the top 50 for two-thirds
 This means that a small number of
institutional investors might wring great
change from businesses. They’re making
progress:

15. The Role of Investors
 8 from 10 of world's largest pension funds have signed UN's
Principles for Responsible Investment. (Assets: $30 trn)
 Many such investors support Integrated Reporting.
 Increasingly so do Governments in Europe and Emerging
Markets.
 Integrated reporting (practice of issuing financial and
ESG data in one document) helps companies understand
where new initiatives might come from, and helps investors
understand whether a company sees how the world is
changing
Source: Robert Eccles, Harvard Business School

16. Corporate Responsibility trends:
 Corporate reputation vulnerability: Big brands are easy
targets
 Social Media and the rise of the empowered citizen
campaigner
 Regulatory trends: Disclosure of biz impacts and
performance (carbon, water, bribery, health & safety, risk
exposure)
 Investor demands: Seeking surety around risk and
management quality
 Talent retention & motivation v. related to sustainability

17. Corporate Responsibility trends:
 Global consumer knowledge: Consistency in behaviour,
pricing and quality matters across markets
 Supplier power shift: Will rising demand and wages shift
the balance?
 Sustainability and new opportunity: Build trust, drive
resilience, save money, serve new markets, create new
services, innovate new products, partner with others,
create sustainable demand
 47% of companies surveyed say increased revenues and/or
their position in the current market through CR measures
(KPMG 2011)

18. Seven long-term challenges and opportunities:
 1. B2B collaboration on sustainability, with
competitors, partners and suppliers
 2. The business case, particularly around internal and
external behavioural change
 3. Engaging with campaign groups
 4. Corporate reputation and new/evolving media
 5. Company strategy and process, product, design
and manufacturing innovation
 6. Business contributions to tackling bribery and
corruption
 7. Corporate contributions to development, policy and
institutional frameworks

19. A VERY fast moving agenda…A week’s worth of headlines
 Cameroon: Report raises concerns that Herakles Capital's palm oil
plantation will displace local farmers, destroy livelihoods
 Nintendo says its partners agree not to use conflict minerals in
production of consoles
 Google blocks YouTube anti-Muslim movie trailer in Egypt, Libya, India,
Indonesia & Afghanistan amid criticism of censorship. Google refuses to
restrict worldwide access to anti-Islam film, saying this would violate
company's global free speech policy
 World Food Programme & MasterCard create new “digital food” delivery
systems, by providing people with electronic voucher transfers to buy food
from local shops & markets
 US Congress considering "Internet freedom" legislation to keep US
companies from selling technology to repressive govts
All headlines from Business-Humanrights.org newsletter 19/09/2012

20. A VERY fast moving agenda…A week’s worth of headlines
 Cameroon: Report raises concerns that Herakles Capital's palm oil
plantation will displace local farmers, destroy livelihoods
 Nintendo says its partners agree not to use conflict minerals in
production of consoles
 Google blocks YouTube anti-Muslim movie trailer in Egypt, Libya, India,
Indonesia & Afghanistan amid criticism of censorship. Google refuses to
restrict worldwide access to anti-Islam film, saying this would violate
company's global free speech policy
 World Food Programme & MasterCard create new “digital food” delivery
systems, by providing people with electronic voucher transfers to buy food
from local shops & markets
 US Congress considering "Internet freedom" legislation to keep US
companies from selling technology to repressive govts
All headlines from Business-Humanrights.org newsletter 19/09/2012

25. Why Mission, Vision and Values Matter
 Corporate purpose and values key to attracting & retaining talent
 CEOs are now statesmen and political operators: Their values are
the company's values.
 Tone from the top is vitally important: A purely commercial
corporate vision will not embed sustainability.
 You can't have your cake and also eat it: Two sets of values will
not work. Think about who this is for. Your people need one
simple, recurring message to drive motivation and change
 Lots of companies have not integrated sustainability into purpose.
This is a key strategic error. You will fail if you do not correct this
eventually… The opportunity is there to be taken!

26. Companies to watch: Ethical Corp advisory board picks
Ford, McKesson, Ingersoll-Rand, Siemens,
Aviva, Puma, Wheb Partners, Triodos,
Honeywell, Avalon Rare Metals, Toyota, Pax
Scientific, BASF, M&S, Unilever, Carillion,
Reckitt Benckiser, BMW, Aerofarms, Esquel,
Natura, Patagonia, Unilever, Kingfisher, O2,
Bupa,Google, Mars, Wal-Mart, Interface,
Coca-Cola Enterprises, Apple, Phillips, GE,
Sainsbury's, SAB Miller, Vodafone

27. Further resources:
 www.ethicalcorp.com
 Tobywebb.blogspot.co.uk
 Business-humanrights.org
 Harvard Business School Research /
blogs
 Doughty Centre for Corporate
Responsibility
 Academy of Business in Society
Research