2014 Kaleidoscope Conference Algonquin College May 13, 2014

1. THE GOOD NEWS ABOUT THE NEW SU$TAINABILITY IMPERATIVE 2014 Kaleidoscope Conference Algonquin College May 13, 2014 bobwillard@sympatico.ca sustainabilityadvantage.com

2. CORPORATE SUSTAINABILITY TRIPLE BOTTOM LINE Equity Profits / Economy People / Planet / Environment

3. CORPORATE SUSTAINABILITY GREEN +CSR Economic Social Environmental

4. CORPORATE SUSTAINABILITY ESG Governance Social Environmental

5. CORPORATE SUSTAINABILITY ASSET MANAGEMENT Financial / Manufactured Capital Human / Social Capital Natural Capital

6. AC S-E-E FRAMEWORK http://www3.algonquincollege.com/sustainability/overview-2/our-framework/

7. THE REAL “REAL WORLD”

8. NESTED INTERDEPENDENCIES Environment Society Business

9. FIVE-STAGE SUSTAINABILITY JOURNEY 5. PURPOSE & PASSION 4. INTEGRATED STRATEGY 3. Beyond Compliance 2. Compliance 1. Pre-Compliance

10. “Over the last 10 years, the ‘Sustainability Imperative’ has emerged,magnified by escalating public and governmental concern about climate change, industrial pollution, food safety, andnatural resource depletion, among other issues.” David Lubin and Daniel Esty, HBR, May-June 2010

11. “Expect the Unexpected: Building business value in a changing world,” KPMG, 2012

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

13. 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%

14. Potential profit increase 51% 81% Potential profit at risk -16% -36%

15. 60-employee manufacturing company 42 projects between 2006-2008 58% reduction in electricity usage 90% reduction in natural gas usage Reduced annual CO2 emissions by 115 tonnes Increased profits by 76%. Invested $46,186 to yield energy savings of $89,152 Average pay-back period of 6.3 months “Manufacturer finds lighting energy efficiency convenient,” Green Manufacturer, March 1, 2010

16. GREEN BUILDING BENEFITS: TO WHOM? • Slower depreciation • Higher occupancy rate • Easier financing • Rapid ROI • Higher market value • Reduced downtime • Lower operating costs • Lower maintenance costs • Lower refurbishment costs • Corporate image / prestige • Compliance with regulations • Lower design and construction costs • Faster sales • Increased productivity Adapted from Cleland Robertson, Lead Manager, Sustainable Construction & Infrastructure Group, Sustainable Business Solutions, PwC Chile. Based on World Green Building Council.

17. GREEN BUILDINGS: PRODUCTIVITY World Green Building Council, “The Business Case for Green Buildings,” March 2013

18. Bottom Line Business Case Profit could increase by 51-81% Profit could drop by 16-36% “Expect the Unexpected: Building business value in a changing world,” KPMG, 2012

19. RISKS TO REVENUE % Rev. at Risk % Probability within 5 yrs Potential Revenue Erosion Risk from poor reputation on energy and carbon management 5% 25% 5% 25% Risk from poor reputation on water management Risk from poor reputation on materials and waste management 5% 20% Risk from poor reputations of suppliers or customers 5% 10% Risk from poor reputation on eco-system damages 5% 1% Risk from less competitive prices 10% 10% Risk from sudden disruptions in the value chain 2% 5% 5% Revenue at risk

20. RISK OF ESCALATING EXPENSES % Potential Impact % Probability within 5 yrs Potential Escalating Expenses Risk of higher cost of energy 10% 75% Risk of a price on carbon ($20/T x 300T/$1M Rev.) 100% 25% Risk of higher cost of waste 5% 70% Risk of higher cost of water and materials 5% 75% Risk of higher cost of capital (Debt = 30% of Rev.) 0.60% 75% Risk of higher employee voluntary turnover 5% 25% Risk of lower employee productivity 1% 10% 11% to 31% Potential increase in expenses -16% to -36% Impact on profit from revenue and expense risks

21. GLOBAL RISKS 2014 • 10-year outlook • 31 global risks with the potential to cause significant negative impact across entire countries and industries • Five classifications: • Economic, • Environmental • Societal • Geopolitical • Technological • All are interconnected. World Economic Forum (WEF), “Global Risks 2014,” January 2014.

22. RISK LIKELIHOODS AND IMPACTS World Economic Forum (WEF), “Global Risks 2014,” January 2014.

23. RISK INTERCONNECTIONS World Economic Forum (WEF), “Global Risks 2014,” January 2014.

24. OECD RISKS BY 2050 • 80% increase in world energy demand, with 85% from fossil fuels; 50% increase in GHGs (685 ppm) • Urban air pollution / ground-level ozone is top cause of mortality, ahead of dirty water and lack of sanitation.   • Global biodiversity declines by a further 10%, mature forests shrink by 13%. • Global water demand increases by some 55%; competing demands put water use by farmers at risk; 40% of the global population live in river basins under severe water stress OECD, “Environmental Outlook to 2050.”

25. “A weakening of the pillars of our planetary infrastructure—a stable climate, clean air and water, healthy biodiversity, and abundant resources— is costing business real money”If this hotter, scarcer, more transparent, and unpredictable world is the new normal, then how must companies act to ensure a prosperous future for all, including themselves? … That’s the Big Pivot … and it’s nonnegotiable.” New companies will be more resilient, robust, and able to thrive in fast-changing times” Andrew Winston, The Big Pivot, HBR Press, 2014

26. 7-STEP CHANGE PROCESS Embed and align changes Mobilize commitment Build case(s) for change Develop strategies ContinuouslyLearn and Adapt Assess current realities Inspire shared vision(s) Wake up and decide

27. THE GOOD NEWS ABOUT THE NEW SU$TAINABILITY IMPERATIVE 2014 Kaleidoscope Conference Algonquin College May 13, 2014 bobwillard@sympatico.ca sustainabilityadvantage.com