sustainabilityadvantage

1. THE BUSINESS CA$E for the Sustainability Imperative CANSEE York University November 2, 2013 www.sustainabilityadvantage.com bobwillard@sympatico.ca

2. “Capitalism is under siege … The purpose of a business must be redefined around creating shared value (CSV)… How to reinvent capitalism—and unleash a wave of innovation and growth” Michael Porter and Daniel Kramer, HBR, Jan-Feb 2011

3. CAPITALISM 2.0

4. ENABLERS vs. ONE MORE GOAL Profit Share price Brand value Revenue growth Market share Expenses Access to capital Talent wars Productivity Innovation Quality Risk management Supply security “SUSTAINABILITY” (SUSTAINABILITY) STRATEGIES

5. MORE RIGOROUS BUSINESS CASE Benefits # Strategies 1. Increased revenue 3 2. Reduced energy 10 3. Reduced waste 4 • Reduced materials 4 • Increased productivity 6 • Reduced turnover 1 95% rewrite;recalibrated 7+7 • Risks to revenue and expenses

6. SUSTAINABILITY BUSINESS CASE Opportunities Income Statement Risks Revenue 1. Increased revenue 9% 2. Reduced energy 75% 3. Reduced waste 20% • Reduced revenue and increased expenses Expenses • Reduced materials 10% • Increased productivity 2% • Reduced turnover 25% SUSTAINABILITY CAPITAL RESERVE +51 to +81% PROFIT -16 to -36%

7. SOURCES OF FUNDS • Existing budgets • Government grants and incentives • Sustainability Capital Reserve • Other internal or external capital markets • Treat as a high-yield, low-risk investment + ONLY COUNT BENEFITS AFTER PAYBACK PERIODS

8. WHICH “BUSINESS CASE”? Sustainability Business Case #1: More ProfitSustainability Business Case #2: Better ROISustainability Business Case # 3: Higher Share Price http://sustainabilityadvantage.com/2012/10/10/sustainability-business-case-1-more-profit/ http://sustainabilityadvantage.com/2012/10/23/sustainability-business-case-2/ http://sustainabilityadvantage.com/2012/10/30/sustainability-business-case-3-share-price/

9. HOW WOULD WE RECOGNIZE A TRULY SUSTAINABLE BUSINESS IF WE SAW ONE?

10. CAPITALISM 2.0

11. THE FOURTH BENCHMARK Other companies 3 GOAL LINE(S) Gold-standard benchmark 4 1 2 X Baseline year PerformanceToday CompanyGoal Material, science-based KPIs and Goals for a Truly Sustainable Business Company X

12. FIVE BENEFITS • It addresses the confusion factor • It creates a sense of urgency • It raises the bar and sparks innovation • It identifies true leaders and best practices • It helps identify material ESG issues

13. SEVEN REASONS THAT IT’S TIME • Leading companies are ready • Important stakeholders are ready • Capitalism is ready • Business case is stronger than ever • Opportunity to harmonize with ESG standards • We’re running out of runway • It is doable

14. TRULY SUSTAINABLE BUSINESS WHAT A truly sustainable business creates positive environmental, social, and economic value Environment Society … throughout its value chain/network WHERE Economy … contributing to the possibility that human and other life will flourish on our planet, forever X WHY If it were to operate forever, it would not only do no harm; it would do well by doing some net good.

15. METHODOLOGY / FLOW OF LOGIC 8 science-based System Conditions for a sustainable environment (3) and a sustainable social system (5) 8 Design Constraints for a truly sustainable business model 18 KPIs with measureable goals that confirm the company is performing within the Design Constraints

16. SYSTEM CONDITIONS In a sustainable society, nature is not subject to systematically increasing … 1. concentrations of substances extracted from the Earth’s crust, 2. concentrations of substances produced by society, 3. degradation of nature by physical means, …and 4. people are not subject to systemic barriers to their … 4a. Wellness: physical, psychological, emotional and spiritual wellness; safety 4b. Influence: participation in decision making; voice 4c. Learning: increasing competence; growth 4d. Equity: impartiality; respect; diversity; fairness; justice 4e. Meaning: purpose; making a difference http://www.naturalstep.org/the-system-conditions

17. ORGANIZING FRAMEWORK ESG Governance Social Environmental

18. KPIs & GOALS • Environment / Planet (6) • GHGs: zero or better • Energy: 100% renewable • Water used: sustainable share or net zero • Materials: 100% recycled/renewable • Waste / Pollution: zero or better • Ecosystems services: restorative? • Society / People (6) • Employee remuneration: fair living wage? • Human capital: enhanced annually? • Local economy: strengthened annually? • Community well-being: enhanced annually? • Social license to operate: enhanced annually? • Customer well-being: enhanced annually? • Governance / Profit (6) • Board oversight: ESG committee • Policies and systems: embed ESG principles • Ethics: zero ethical violations • Disclosure: full disclosure on ESG aspects • Transparency: transparent about lobbying • Financial performance: going concern Towards a Gold-standard Benchmark for a Truly Sustainable Business http://www.naturalstep.ca/sites/default/files/gold-standard-benchmark-latest-version.pdf

19. CAPITALISM 2.0

20. THE BUSINESS CA$E for the Sustainability Imperative CANSEE York University November 2, 2013 www.sustainabilityadvantage.com bobwillard@sympatico.ca