FMA International: R Boller
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How to Make Sustainability Management Integral to Your Organization
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FMA International: R Boller
- 1. How to Make Sustainability Management Integral to Your Organization Jackson Family Wines Presented February 3, 2010 by Robert Boller
- 2. Planning and activity that takes into account the long-term maintenance and well-being of environmental, social and economic demands.
- 5. Land Use
- 7. Welfare
- 10. Cost Savings
- 13. 3. Build momentum and maintain relevance: Resource maximization 2. Provide value to multiple stake holders: Extend reach - embedded throughout organization 1. Establish the sustainability mission: Leadership to gain the competitive edge 4. Persistent Communication: Be the information resource to each unique audience
- 14. Demonstrate leadership to gain marketable benefit now Help transform how the organization thinks about itself and it’s objectives Build the case through focusing on data and case studies Don’t reinvent the wheel, use information from leading companies and markets (domestic and international) Access to 23,000 CSR reports: http://www.corporateregister.com Dive deep for trends, competitive claims, independent research and third-party certifications
- 15. Reporting Types: H&S -> Environ -> Sustainability Source: Corporate Register, Corporate Climate Communications Report 2008
- 16. Study of 2,200 Leading Global Companies including Fortune G250 and N100 across 22 countries The question has shifted from “Who’s Reporting” to “Who’s Not Reporting?” 80% 74% 77% 51% Companies have CSR reporting (52% in 2005) U.S. Companies have CSR reporting (37% in 2005) Management systems based on third-party standards & metrics Implemented ISO 14001 Source: KPMG International Survey of Corporate Responsibility Reporting 2008
- 18. Program Framework Specific Initiatives
- 19. 2. Provide value to multiple stake holders Extend reach - embedded throughout organization
- 20. Source: KPMG International Survey of Corporate Responsibility Reporting 2008
- 21. The most effective projects provide value to multiple stake holders Communicate the personal benefit to each audience Embedded throughout organization Corp. Gov. Corp. Governance Finance Operations Operations Marketing / PR Sales Finance Sr. Exec. Team Sr. Exec. Team Marketing / PR Sales
- 23. Have punished companies with non-sustainable practices through non-purchaseSource: Natural Marketing Institute 2007
- 24. Top Three Drivers Source: JWT & Penn, Schoen, Berland & Associates 2009: Top 3 Drivers
- 26. Of all workers would prefer to work for a sustainable company
- 27. Of recent graduates would prefer to have a job with a direct positive impact
- 28. Average salary MBA graduates would sacrifice to work at socially responsible firm
- 29. Of companies have implemented CSR programs to increase ability to attract talentSource: Cone Communications, Natural Marketing Institute, WSJ 2007(MonsterTrak ), Stanford Univ. 2003, Deloitte 2008
- 31. Increase in employee productivity due to implementing a CSR program
- 32. Of companies found increased moraledue to implementing a CSR program
- 33. Of companies improved employee health due to implementing a CSR program
- 34. Of all employees have higher willingness to stay at a company with strong CSR culture
- 35. Of companies have implemented CSR programs for greater employee retentionSource: Deloitte 2008 , Society for Human Resource Management 2009, Kenexa Research Institute 2007
- 36. Energy Use (reduction) Water Use (reduction) Solid Waste (reduction) Worker Productivity (increase) Employee Turnover (reduction) Compliance Violations (reduction) Standard Results Forecast Total 30% $4M 40% $1.5M 60% $500K 2% $3M 25% $1.5M 70% $500K $11M
- 37. Employee Costs Facility/BUs Local Projects Support CRS Mgmt Systems / Consulting Certifications (LEED/ISO 14001) Renewable Energy Certificates Total Standard Results Forecast $500K $250K $500K $100K $150K $1.5M
- 38. Direct Benefits Direct Costs Total Direct Benefits Direct Costs Total $5.5M $11M $12M 100% -33% $1.5M $1.25M $1M 100% +33% $4M $9.75M $11M $3.63M $7.26M $7.92M $2M $1.66M $1.33M $1.63M $5.6M $6.6M
- 39. Direct Benefits Direct Costs Total Indirect Benefits? PR Value (existing program) Brand Equity/Loyalty/Trial $5.5M $11M $12M $1.5M $1.25M $1M $4M $9.75M $11M $1.5M 50% $10M Gross Revenue 2%
- 40. 3. Build momentum and maintain relevance: Resource maximization
- 41. Managing Through Job Cuts and Budget Tightening Source: GlobeScan October 2009, organizations with existing CSR programs
- 44. Utilize consultants to reduce headcount
- 45. Programs with trading partners who have funding
- 47. Develop the structure for 3rd-party certification (ISO 14001/LEED)
- 48. Develop CSR Report outline and other communications pieces
- 51. “Greening the planet and our bottom line”Corp. Governance Operations Finance Sr. Exec. Team Marketing / PR Sales
Notes de l'éditeur
- It’s probably useful for this discussion to briefly define what sustainability is since there is so much confusion about the termIt’s know by a number of names, but it boils down the…Planning and activity that takes into account the long-term maintenance and wellbeing of environmental, social and economic demands.Straight forward triple bottom line…
- It’s often broken down into these four quadrantsSocial aspects are often divided into the workplace and the communityAnd for this discussion we’ll just refer to it as Corporate Social Responsibility or CSREach organization may have a different focus in their CSR program, but each aspect should all be viewed as a part of the whole
- These are the broad CSR strategies and objectives that we’re going to discuss today…HOW TO:Bring invaluable improvements / insight to your operationWork in tune with corporate goalsJustify the CSR programAnd how to maintain momentum with job cuts and budget tightening
- …and we’re going to weave those objectives into these 4 main tactics…HOW TO1. Establish the sustainability mission2. We’ll focus largely on Providing value to multiple stake holders3. Build momentum and maintain relevance4. How to provide persistent CommunicationLet’s at the start with…
- …Establishing the sustainability mission: leadership to gain the competitive advantageWe have a choice: do we want to demonstrate leadership and gain the marketable benefit now, or wait to follow the competition and government regulation and have no marketable benefitWe can help transform how the organization thinks about itself and it’s objectivesWe can help Align the corporate goals to match the leadership position by asking the question: Do youwant the program to be a “me too” approach or really show leadership by demonstrating “best of class” performance as you would in any other business activity?Even though you may already have initiatives underway, it’s useful to have the over arching mission clearly definedI’ve found it very powerful to build the case through focusing on data and case studies: we need to demonstrate why taking this position of leadership is of value to the organizationYou don’t reinvent the wheel, use information from leading companies and markets (domestic and international)Dive deep for trends, competitive claims, independent research and third-party certificationsCan find useful information from sources like National Venture Capitol Association, Dow Jones Sustainability Indexesetc.Use information from leading companies and international markets to show your team and shareholders how to ad value through sustainabilityAt the corporateregister.com you can find over 23,000 CSR reports that will have relevant information to any programUnderstanding the reporting trends can help you decide the framework for your CSR program…
- This chart shows the type of reports that have been published over the last 17 yearsTo read it you only need to understand three things: red represents pure H&S reports, green represents pure environmental reports and yellow are full sustainability, or CSR reports, as we previously definedH&S reporting peaked almost two decades ago, followed by the rise of environmental reports peaking at the turn of the century and finally we can see that over the last decade the majority of reports are for full-on CSR programsNow we understand the type of reporting taking place, but we still need to demonstrate how many companies have programs and are reporting…
- This study looked leading 2,200 companies in the world including the Fortune Global 250 and the N100, or top 100 companies, across the leading 22 countriesThe study has taken place every three years for the last 18 years80% of global leaders have CSR reports up from 52% three years earlier74% of US leaders have CSR reporting, double the number three years earlier77% of global leaders have management system based on third-party standards and certificationsAnd 51% have implemented ISO 14001, which is the international standard for environmental performanceOK, now we see that to be a leading company, we need a CSR programAnd, if we’re going to stand out we may want to see what defines top-performance to help us model our frameworkWe can start by doing some simple research…
- For example, If you go to the Dow Jones Sustainability Indexes you can take a look at their Sustainability LeadersHere is BMW, a company that we all know, and you can get a feel for their performance – any one here from BMW today?Now that we’ve identified BMW as a good performer we can dig deeper…First we look at the average performance for BMW’s “sector”Then BMW’s performanceAnd finally, the best performance of a company in that “sector”We see that BWW total score is best of, or tied for best of, the sectorIt’s broken down further into the triple bottom line scores and we’re interested in taking a closer look at their environmental performanceIt looks like they’ve got a strong Operational Eco-Efficiency programOur organization is interested in that and it might be useful to see what they’re doing that has earned them top marks…
- On the BMW web site you can down load the 116 page CSR report and find useful information for:CSR program frameworkSpecific initiatives that may be relevant to your businessHere we see how in the paint shop they’ve developed a way to reduce water (and associated energy) use by 70%This may be directly applicable to other manufacturing paint shops or just help generate ideas on how we can save waterWe don’t have to stop here: we can get on the phone and call themMany of the people responsible for these initiatives, like ourselves, are open to sharing details on their approach and issues and opportunities from their projectsAt JFW we work in an open-source format to help multiply the positive effect of our projectsThe real objective here is to develop a program that isn’t a “me too” program, you want to develop a program that demonstrates leadership and brings value to the company from the public attentionIt doesn’t matter if each individual idea is original, it the overall program that works towards “best of class” that matters
- Now we’ll talk about providing value to multiple stake holders and extending the CSR reachThis will embed CSR throughout the organization and keep it from being put in a box
- Here is a survey that represents the reasons that organizations have CSR programs and it helps to identify who the stakeholders are and how much value CSR represents to them.Ethical: Companies are saying that it’s the right thing to do to operate responsiblyEconomic: Many economic factors including decreased cost of regulatory issues resulting in fines, settlements or operational restrictionsBrand:Building trust and brand loyalty with consumersInnovation:Many companies found that to their surprise- CSR efforts taught them lessons they could apply to their advantage in other areasEmp. Prod:Giving employees a reason to believe in the company and a way to contribute to society increases moral resulting in higher productivityRisk:Compliance oriented management systems greatly assist a good risk management program and result are also reflected in Economic Cons.In fact- the insight here was that companies who had existing programs continuedto drop the importance of risk management because they no longer saw it as much of a threat due to their performanceSuppliers: Like minded suppliers are more willing to meet customer’s special needs and partner on joint programs and PRShareholders: Kind of a summation of all the benefits, but not a driving force in and of itselfMarket Share: Largely pertaining to companies entering emerging marketsGovtRelat: Demonstrating commitment to the environment and social issues gains governmental benefits in unrelated areas to the companies’ advantageCost: Just the pure cost savings largely represented in economic considerationsNow we know what benefit CSR can be to each stakeholder
- By selecting projects that address the needs of multiple stakeholders, we can provide the greatest value to the organization and help ensure approval and successful implementation of those projectsA project that has great benefit to operations, but limited appeal to other stakeholders may be a worthwhile project, but other projects will need to address the needs of other groups to truly embed CSR throughout the organizationSome projects may be developed without input from some groups that will benefit, so it’s important to communicate to them those benefits to garner further supportIt’s also important to share the information that substantiates those benefits…
- Consumer Purchasing Drivers are reflecting not only the “product” that they’re buying, but also the company that they’re buying it from46% of consumers have rewarded companies with sustainable practices through purchaseConversely, 55% of consumers have punished companies with non-sustainable practices through non-purchaseThat’s fairly powerful, it’s not about the product they’re buying, they’re saying “I know how you do business, I don’t like it and I’m not going to buy your products anymore because of it”It’s important to note that these consumer drivers hit CPG (consumer packaged goods) and B2C services first, but it’s obviously trickling down to B2B suppliers and services who need to act sustainably to meet similar demands through govt. regulation and other voluntary standards.Keeping that information timely can help us keep the program on track…
- Here we’re looking at the top three consumer purchasing drivers, Price, Quality and “Greenness”, and their relative importanceBefore the recession, quality was the key driverNow, as one might expect, price is the key driver gaining mostly at the expense of qualityand we can see that consumers are saying that after the recession, the “greenness” of a product will be just about as important as price or quality in decision makingIt’s may be useful to keep in mind: employees are also consumers, consumers of our organization’s culture…
- Employee Recruitment:77% Of all workers would prefer to workfor a sustainable company92%Of recent graduates would prefer to work for sustainable company80% of recent graduates would prefer to have a job with a direct positive impact, that’s not working for a sustainable company, that’s actually having a job that does something positiveIn one study they found that MBA graduates would sacrifice almost $14,000 to work for a socially responsible firmAs a result of these benefits, 93% of companies have implemented CSR programs in part to increase their ability to attract talent
- There are also benefits to employee productivity and retention through implementing a CSR program46%Of companies found increased moral due to implementing a CSR program87% Of companies found improvement in workforce productivity due to CSRAnd those companies found an increase in productivity of 2%. If you think about it: assuming a 40 hour work week for employees, if they ad just 10 min. per day of productive time that’s an additional 2% productivity75% of companies saw improved employee health. How much of that was related to increased moral and employees not taking a mental health day60% saw a a higher willingness to stay with their companyAs a result of these benefits, 81% of companies have implemented CSR programs in part to increase productivity and retentionThis information is all fine and good, but the rubber really meats the road when you put it into financial terms…
- First we look at some standard benefits and savings that can be found through competitive CSR reports or research papersOf course the list would vary depending on the projectsNow I’ve put together dollars against the % savings based on what you might see with a widget company grossing 500M with 2,000 employeesThe savings would be relevant to the type of company or productEnergy: $4MWater: we’ve spend a lot of time looking at the true cost of water from acquisition, pre-treatment, use, wastewater processing and dispersal. The true cost of water is higher than most people think $1.5MWaste Reduction: reducing the amount of waste and finding value in the waste you do generate: $500KProductivity: AvgEmp: $57K (Bureau of Labor Statistics) benefit % comp.30.2 percent (Employee Benefit Research Institute)= $73,765/yr x 2,000 emp=147,524,000 X.02%=$1.5MTurnover: The cost to replace/train an employee is 50% of their pay: $57K*.5=$28.5K at 10% avg turnover=$5.7M reduced by 25%=~$1.5MCompliance: Risk assessment can show that the management systems for third-party certification program will greatly reduce potential losses. That’s not to say that you’ve got losses at $500K each year now, but they will help eliminate the infrequent large issues that could ariseTotal $11MOK, that’s half the picture…
- Employee: We might have 50 employees working 1hr/wk plus 2 RFTCRS Management Systems and ConsultingSupport for individual facility/BU initiatives: funding to support local initiativesThird-party certifications to validate you achievementsRECs: Renewable energy program or some program that doesn't actually have a ROITotal $1.5M
- Lastly we want to bring the cost/benefits together in phased mannerSavings go up over time, and costs go down once efficiencies are achievedWe see that in year one we’ll save $4M, then almost $10M and $11MNow, it’s likely that they’ll be skeptics at your organization and that’s OKGo ahead, grant them that you’re an underperforming company and can only achieve 2/3rds of other companies performance and that your costs will be 1/3 greater than you predict.Even so, it looks like a pretty good financial pictureOK, I’m going to say we perform at least at an average level and go back to the 100% calculationsBut, what’s missing from the picture? Indirect Benefits
- We had a PR program that they calculated was worth $3M worth of advertisingThanks very much for the idea, now let’s apply that to CSR and tell me it’s not worth at least 50% of thatWhat is the value for Brand Equity, loyalty and trial?If you got $500M of gross revenue and assume a measly 2% increase would be worth $10M is GRWe can see that the program is a great value to the organization just on the direct cost/benefit analysis not to mention when the indirect benefits are forecastThe whole point of this exercise is to show that taking the time to do the research and calculations will help to establish the business case for implementing and maintaining a strong CSR program
- Build momentum and maintain relevance:Or: How do we stay in the CRS business through resource maximization
- In October 50% organizations with existing CSR programs said that they were increasing their budgetsThey’ve seen the benefits that can be gotten through CSR and want to increase those benefits66% of organizations were increasing their communications about their program garner good-will with customers, employees and government73% of organizations were increasingly demonstrating a ROI for their programsThose trends may be great, but what if you can’t make the case to even stay at static spending levels?...
- Focus on projects with strong ROIProjects that deliver the best ROI are usually the first in line when budgets come backPrioritize projects by; 1) ROI and 2) cost Utilize resources outside the budgetInternal resources;Enthusiastic department managers can take on tasks that take time, not moneyUse the opportunity to strengthen the sustainability teamExternal resources;Research the government agencies have been tasked with disseminating public funding for sustainability projects and then call them directly. We’ve had great success finding assistance.If there is headcount pressure then try and use consultants to keep heads off the books. I had to do that this year.Develop joint programs with trading partners who have fundingBuild alliances with the competition to put pressure on suppliers
- Work on projects that take time, but not moneyEnhance skill base and value with training and obtaining personal certifications (ISO/LEED). For ~$1,500 I became certified as an ISO Lead auditorDevelop the structure and policy and procedures for third-party certification (ISO 14001, LEED etc). That’s what were doing now.Develop a Corporate Social Responsibility outline and other communications pieces. Demand response program for energy curtailment with no cost and good payments. In California we’re got a program that pays for cutting back during peak periods to eliminate rolling blackouts. We earned $120K this year for a few hours work and no cost
- Persistent CommunicationDon’t loose control of your programBe the resource for informationOnce the program catches on- if your not talking about it, others will do it for youBroadcast the successes, project status updates and sustainability mission over and over to all employeesFocus on opportunities with stake holdersMake sure your not the “Green Guy/Gal”Focus on added value to the management teamSign your success story emails: “Greening the planet and our bottom line”