Booz & Company

1. Booz & Company Profitability and Social Responsibility “Quo Vadis” Bangkok, 21 August 2009

2. Booz & Company is a leading global management consulting firm • Booz & Company is a leading global management consulting firm — for nearly a century, we have helped our clients realize the essential advantage needed to survive, thrive, and win • Founded in 1914, our Firm is the oldest management consulting firm and the only consultancy that is a top-tier provider of consulting services to the private, public, and non-governmental sectors around the world • We bring foresight and knowledge, deep functional expertise, and a practice approach to build capabilities and deliver real impact • In 2008, we separated our operations from our U.S., government consulting business, which retains the name Booz Allen Hamilton • We continue our work with businesses, governments, and organisations around the world, now under the name Booz & Company • With annual sales of $1.3 billion, we have over 3,300 staff members in 57 offices than span more than 30 countries and 6 continents worldwide

3. We create ‘Essential Advantage’ through our four key capabilities “Creating Essential Advantage” Strategy “Establish the case for Change” Implementation “Make the Change” • A unique perspective on the dynamics of businesses and the competitive environment • Client-specific solutions to complex issues • Ability to execute or directly supervise the success-critical elements of the solution • Ability to structure and mange change programs on a global level Results that Endure Functional and Cross-Functional Skills “Define what to Change” Change Management “Make the Change stick” • Deep functional expertise • Combined with specific industry knowledge • Ensuring results by changing behavioral and organizational characteristics of an organization

4. A Point of Departure … “A corporation's purpose is to maximize returns to its shareholders.”

5. A Point of Departure … “A corporation's purpose is to maximize returns to its shareholders. Therefore, corporations are only responsible to their shareholders and not to society as a whole. Only people can have social responsibilities.” “Those who would not force Greenpeace and the Salvation Army to generate a profit should not force businesses to take responsibilities outside their area of expertise.”

6. Some definitions -- but not ‘labels’ (others include ‘Business Ethics’ and ‘Corporate Social Responsibility(1)’) “Stakeholder Theory” “Sustainability” “Triple Bottom Line” • Developed by R. Edward Freeman in 1984 -- “Strategic Management -- a Stakeholder Approach” • “Stakeholder theory argues that a corporation is also responsible for other parties involved, including governmental bodies, political groups, trade associations, trade unions, communities, associated corporations, prospective employees, prospective customers, and the public at large” • “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It contains within it two key concepts: • The concept of 'needs', in particular the essential needs of the world's poor, to which overriding priority should be given; and • The idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs." • Coined by John Elkington in 1994, on his article “Towards the Sustainable Corporation: Win Win Win Business Strategies for Sustainable Development” (California Management Review) • The triple bottom line is made up of "social, economic and environmental" aspects -- "people, planet, profit" • It suggests that Corporations should be evaluated not only by their Financial Performance, but also by their ‘Environment’ and ‘Social’ performances Source: “Our Common Future”, Brundtland Commission Report, United Nations (1987) -- World Commission on Environment and Development (WCED) Source: http://cmr.berkeley.edu/search/articleDetail.aspx?article=4900#9601 Source: www.corporate-ethics.org//pdf/Strategic_Management_A_Stakeholder_Approach.pdf (1) A built-in, self-regulating corporate mechanism whereby business would monitor and ensure their adherence to law, ethical standards, and international norms (Wikipedia)

7. Some different views “Stakeholder Theory” “Sustainability” “Triple Bottom Line” • Developed by R. Edward Freeman in 1984 -- “Strategic Management -- a Stakeholder Approach” • “Stakeholder theory argues that a corporation is also responsible for other parties involved, including governmental bodies, political groups, trade associations, trade unions, communities, associated corporations, prospective employees, prospective customers, and the public at large” • “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It contains within it two key concepts: • The concept of 'needs', in particular the essential needs of the world's poor, to which overriding priority should be given; and • The idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs." • Coined by John Elkington in 1994, on his article “Towards the Sustainable Corporation: Win Win Win Business Strategies for Sustainable Development” (California Management Review) • The triple bottom line is made up of "social, economic and environmental" aspects -- "people, planet, profit" • It suggests that Corporations should be evaluated not only by their Financial Performance, but also by their ‘Environment’ and ‘Social’ performances “The idea of sustainable development is an oxymoron because development inevitably depletes and degrades the environment” Redclift, M. (2005). "Sustainable Development (1987–2005): an Oxymoron Comes of Age.” Source: “Our Common Future”, Brundtland Commission Report, United Nations (1987) -- World Commission on Environment and Development (WCED) Source: http://cmr.berkeley.edu/search/articleDetail.aspx?article=4900#9601 Source: www.corporate-ethics.org//pdf/Strategic_Management_A_Stakeholder_Approach.pdf (1) A built-in, self-regulating corporate mechanism whereby business would monitor and ensure their adherence to law, ethical standards, and international norms (Wikipedia)

8. A better starting point?

9. Some objectives • Aims of today’s discussion: • Improve our understanding of what sustainability means for us • Raise questions that will ultimately drive what we might need to do differently • It is NOT: • A list of actions • Workplans • Potential Questions that companies need to answer: • How do we define sustainability to fit our market, people and beliefs? • How important is sustainability? • Should we take a leader or follower position in sustainability? • Where to from here? 1 2 3 4

10. 1 How do we define sustainability to fit our market, people and beliefs? “meeting the needs of the present without compromising the ability of future generations to meet their needs” “being able to adapt to future challenges to continue to do what we do” United Nations “integrating economic progress, social development, and environmental concerns with the objective of ensuring a quality of life for future generations that is at least as good as today's.” “using, developing and protecting resources in a manner that enables people to meet their current needs and also provides that future generations can meet their own needs” Oregon State University Or should we say: What do we think? What is our definition?

11. 2 How important it is depends on our current challenges Current Operating Landscape • Health concerns (e.g. childhood obesity) • Responsible marketing • Resource efficiency • Community investment/engagement • OH&S • Waste disposal & recycling • Waste minimisation Regulation Community expectations Customer advocacy • Organic • Consumer-conscious labelling • Green initiatives CLIENT EXAMPLE: Candy Manufacturer • Corporate mission & values • Socially responsible employer • Employee learning & development Employees Shareholder requirements • Investment returns • Corporate social responsibility • Good governance Consumers preferences • Low cost • High quality • Labelling • Reduced packaging • Food miles / carbon footprint • Responsible sourcing Any others?

12. 3 Should we lead or follow? Sustainability approaches: Description: Possible contexts: What it impacts:

13. 3 SustainableEnterprise Corporate Community Investment Community Affairs Philanthropy Meeting Government Regulation Alternative frameworks exist… CSR Tree Increasingly Strategic Engaging Stakeholders Source: Richard Bernhard, “Transitioning to Strategic CSR”, Thai-American Business (Journal of the American Chamber of Commerce in Thailand, 2009)

14. 8 An example

15. Example: Global beverage company • Sustainable companies find areas of mutual interest and ways to make “doing good” and “doing well” synonymous, thus avoiding the implied conflict between society and shareholders • XXCo. is working toward several sweet spots • It has business goals of cost reduction which overlap with a series of environmental improvements to reduce energy, waste, and packaging Source: The Sustainability Sweet Spot; Andrew W. Savitz, with Karl Weber; Environmental Quality Management

16. Another example • The Bedol Water Clock is the most accurate, environmentally practical, hassle-free chronometer of its kind. Want a high quality, beautifully designed clock that literally runs itself?  Look no further.   Because the handsome Bedol Water Clock works 100% on natural power. It’s true. No batteries, no chemicals, no electricity – no pollution. You don’t even need to wind it up! Just fill the tank with natural tap water ... add a splash of natural lemon juice ... and you’re set for 6 to 8 weeks of accurate timekeeping before refreshing. (You won’t even lose time while changing water, thanks to the built-in memory chip!)

17. Lights Equipment Economy Business First Example: We have examined the major emissions from our travel and office consumables Carbon Emissions Sizing Examined in this analysis • Out of scope: • Personal decisions unrelated to the business: Eg Travel to and from office, Use by staff of client facilities and consumables • Indirect emissions which result from the choices made by others and therefore beyond our control eg, Created by restaurants which we use Travel Office Consumables Office Facilities Services Off Site Costs Client facil. & consumables Bldg embodied energy Cleaning Air Electricity Hotels Furniture embod. energy Couriers Meals & entertainment Air-conditioning IT and Comms Copying paper Building maintenance Auto Banking & Insurance Taxis Limos Food & Beverage Public transport Hired cars Waste Water

18. 5,950,000 Air travel dominates our emissions followed by electricity and vehicle travel Emissions FY09 91% of emissions kg of CO2e Total = 6,500,000 kgs of CO2e Air travel Electricity Taxis & Limos Paper Note: FY is April to March

19. 4 Compliance Playing Catch-up with Competitors Fighting Fires Doing what we have to Lagging the pack and ultimately exerting more effort Adopting a reactive approach to dealing with matters of sustainability Conforming to minimum societal expectations and keeping within regulations

20. 4 Short Term Business Advantage In the Pack Managing Risks Saving Money Being in the slip stream requires less effort Adopting sustainable practice to mitigate risk exposure Implementing sustainable practice has a short term financial upside

21. 4 Investing for the Future Leading the Way Embracing Change Innovating New Products Being the leader of the pack and setting the standard for sustainable practice Understanding that the definition of Sustainability is not static and that the only way to fully adapt is to embrace change Allowing sustainable initiatives to shape ideas and drive innovation

22. 4 Altruism Values and Beliefs A Better World Connection Being guided by values and beliefs and holding a set of objectives beyond profit Contributing to a greater purpose that serves humanity Creating linkages between people

23. A Hypothesis … “XXX can significantly improve long-term corporate profitability because it reduces risks and inefficiencies while offering a host of potential benefits such as enhanced brand reputation and employee engagement”

24. “The future can no longer be takenfor granted – it needs to be rescued.” “… after Agriculture, Industry, and Knowledge, the next revolution is Sustainability.” Richard Neville (Footprints of the Future)