Erm dix&eaton sustainability 021114

1. Let’s Talk Sustainability: The Big Issues, The Best Ideas A joint ERM and Dix & Eaton workshop February 11, 2014 2. Today’s Agenda  Introductions  Format…
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  • 1. Let’s Talk Sustainability: The Big Issues, The Best Ideas A joint ERM and Dix & Eaton workshop February 11, 2014
  • 2. Today’s Agenda  Introductions  Format  Topics  Opportunities and risks, making the business case  Getting started/getting better  Determining content  Communications opportunities  The mechanics of reporting  Discussion 2
  • 3. ERM Snapshot • ERM is a leading global provider of environmental, health, safety, risk, social consulting services and sustainability related services. • We have over 140 offices in 39 countries and territories employing more than 5,000 people. • Our six core services are designed to meet the broad range of our clients’ changing needs: • • Impact Assessment and Planning • Performance and Assurance • Transaction Services • Contaminated Site Management • • Air Quality and Climate Change Risk Management Over the past five years we have worked for more than 50 per cent of the Global Fortune 500. 3
  • 4. Dix & Eaton Snapshot  Cleveland-based strategic business communications firm  Practice areas: Investor relations, media relations, marketing communications, crisis communications, employee communications  Relevant specialties  Energy and Natural Resources  Sustainability Communications 4
  • 5. Audience Snapshot  Name  Organization  Role  Why are you here? 5
  • 7. Global Trends
  • 8. Sustainability Drivers
  • 9. WEF Global Risks 9
  • 10. Drivers Integrating sustainability into business operations is increasingly taking on more strategic importance.
  • 11. Investors More and more of a company’s market value is based on intangibles (reputation/goodwill /brand image) legitimizing sustainability factors as valuation drivers. 40% of all shareholder proposals included social and environmental issues - Ernst & Young, 2012 Institutional investors are screening investments using sustainability or corporate responsibility criteria and are requiring more disclosure and reporting on material environmental and social issues. “Nearly 75% of surveyed investment professionals see ESG issues as material to stock prices” 2013 -Thomson Reuters Extel/UKSIF Survey Corporate attention to sustainability serves as a proxy for good governance.
  • 12. Supply Chain A company’s supply chain is key not just to its business performance, but also its environmental and social performance, reputation, and risk profile. As companies are being pressed on their environmental and social footprints, they are turning to: suppliers, and suppliers’ suppliers, to disclose, reduce, and monitor a vast array of information: where materials come from, under what conditions they are mined or manufactured, where and how things are made, how things are packaged and transported, and more. On average, American On average, American firms saw about 40 firms saw about 40 percent of percent of environmental costs environmental costs occur through direct occur through direct impacts, with the impacts, with the supply chain supply chain accounting for 60 accounting for 60 percent. The 40/60 ratio percent. The 40/60 ratio holds true for both our holds true for both our U.S. and global U.S. and global samples. samples. – State of Green Business – State of Green Business 2013 2013
  • 13. Natural Resource Shortages Companies are already considering resource availability when sourcing materials or locating facilities. As Coca-Cola’s President of Great Britain Sanjay Guha noted in 2009 “Water sustainability is also now central to our investment decisions. Potential markets and ease of distribution were once the key factors in deciding where to build plants. Now it is the long-term supply of water.” - E&Y Six Growing Trends In Corporate Sustainability 2013
  • 14. Employee Attraction and Retention Studies show that when a company has CSR initiatives, employees are more proud of and committed to the organization. This is because our personal identities are partly tied up in the companies that we work for. As the labor market becomes more competitive, companies will have to maintain a competitive edge in order to continue to attract top talent. “Losing and replacing a good employee costs companies between 70%–200% of an employee’s annual salary” - National Environmental Education Fund “Talent Report: What Workers Want in 2012” - Net Impact Some of today's youngest workers dream of making a big impact on the people and environments around them -and some are willing to take a pay cut to land a job that will let them do that.
  • 15. Value Proposition  Current financial metrics miss much of the value that sustainability generates for companies and communities  Reduced costs through resource efficiency  Driver of innovation  Reduced risks  Easier access to capital  Improved ability to attract and retain the best talent  Enhanced labor productivity and morale  Enhanced brand equity  Better managed supply and value chains
  • 16. Making the Business Case The value driver model - a tool for Communicating the business value of Sustainability - A PRI-UN global compact LEAD Collaboration on creating long-term value 16
  • 17. Benefits of Sustainability Programs  Siemens has committed to revenue growth from sustainability. The company’s fiscal year 2012 revenue saw 42 per cent, or over EUR 33 billion, come from its environmental portfolio.  Unilever’s Sustainable Living Plan aims to double growth while halving the company’s greenhouse gas, water and waste footprint across the entire lifecycle of its products. Over the past four years, the company’s productivity savings have reached almost USD 400 million as it prepares for this plan. The value driver model - a tool for Communicating the business value of Sustainability - A PRI-UN global compact LEAD Collaboration on creating long-term value 17
  • 18. Benefits of Sustainability Programs  DuPont’s business focuses on responding to three global challenges: 1) ensuring food security for a growing population, 2) discovering new solutions to meet energy needs and 3) working to insure the protection of life through cleaner and safer chemistry and materials. Revenue from DuPont’s products designated as sustainability advantaged, now at over 30 per cent of total revenue (more than USD 10 billion), is growing at a rate 5.5x faster than the company overall.  Pirelli launched its Green Performance Strategy in 2009 and has since seen rapid growth in its sustainability-enhanced tires. This class of newly designed products, meeting European Union standards, now accounts for 45 per cent of revenue and is growing at 2.2x the rate of Pirelli’s overall sales. The value driver model - a tool for Communicating the business value of Sustainability - A PRI-UN global compact LEAD Collaboration on creating long-term value 18
  • 19. Discussion • What are you seeing as the main drivers – today and tomorrow? • How successful have you been in making the “business case” for sustainability? • How best to counter those that believe that this is just a “green initiative”? 19
  • 21. What to Call ‘It’?  Many terms – sustainability; corporate citizenship; corporate social responsibility (CSR); environmental, social and governance (ESG); etc.  Importance of consistency within the organization for “ease of use”  Define it for your organization to help people understand what’s included and what it is – and also what it isn’t  Consider making it a combination of current situation and aspirations  Not just “green,” but you could start there 21
  • 22. What to Call ‘It’?  Sustainability: Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.  “3 P’s” of People, Planet, Profit Economic Social Environmental Source: The Brundtland Commission, a.k.a. World Commission on Environment and Development (WCED) 22
  • 23. Overview  Take a first pass at determining key stakeholder/audience groups and their interests  Take inventory of current CSR/sustainability-related activities and communications  Benchmark peer sustainability performance and communications  Determine current strengths, weaknesses, opportunities and threats  Figure out “what motivates us” and “where do we want to be” 23
  • 24. How to Inventory Current Activities 24
  • 25. Identifying Stakeholders Source: Target’s 2012 CSR report 25
  • 26. Benchmarking  Identify your key peers and competitors  Determine their sustainability communications activities, i.e. reporting, media relations, etc.  Collect data on scope, content and format of their communications  Compile in one place, and analyze for trends and best practices 26
  • 27. SWOT Analysis 27
  • 28. What Motivates Us…  Growing risks and rewards for companies with:  High brand exposure (household names)  Big environmental impact  Natural resource dependence  Current or potential high exposure to regulations  Competitive markets for talent  Low market power (but aiming to be major players)  Established social and environmental reputations (good or bad)  Dix & Eaton add: Core values-driven Source: Green to Gold by Daniel C. Esty and Andrew S. Winston, 2006 28
  • 29. What Motivates Us… 29
  • 30. …and Where Do We Want to Be?  Thought Leadership  Create new, innovative tools  Reach all audiences (and media)  Dare to stand out  Proactive  Research (“listening” as a form of communication)  Utilizes existing tools (direct communications, website)  Focus on primary, “safe” audiences  Reactive  Wait until you “need” it 30
  • 31. Discussion Questions  How did you start?  How could you start?  How are you currently connecting with your stakeholders? 31
  • 33. Materiality Assessment  Identify and prioritize issues  Inform or validate sustainability strategy, programs and initiatives  Provide foundation for sustainability report  Engage with stakeholders 33
  • 34. What is a Material Issue?  GRI – “… topics and indicators that reflect the organization’s significant economic, environmental and social impacts, or that would substantively influence the assessments and decisions of stakeholders.”  SASB – “…in the event such fact is omitted from a particular disclosure, there is a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of the information made available.” 34
  • 35. Response Defensive • Protecting the company • License to Operate • Extended supply chains • Integrated with other efforts • Risks and expectations Denial/ Discovery Denial/ Discovery • Definitional confusion • Report > actions • Focus on Green Agenda (or just climate change) • Difficult to move beyond learning Defensive Transformative • Game-changing issue for the business model • Requires relevance, timing, champions • Focus on values, culture, world view Offensive Transformative Offensive • Energizing the company • Create value for customers, shareholders, employees • Can focus on efficiency or on growth/innovation • Inject new content into existing business processes
  • 36. Response – the GRI Framework
  • 37. Demonstrating Performance Effective Goals should: •Be SMART •Align with Organization’s Strategic Direction •Align with Sustainability Strategy/Materiality Assessment •Drive desirable behavior •Be easy to communicate and visualize •Cascade – applied at organizational, department and individual level •Data collection 37
  • 38. Discussion • How material is material? • What are the Risks and Rewards of taking an Offensive position? • What makes a good goal? 38
  • 40. Overview  Internal communications and training  Media relations (trade, local, national), including:  Rollout of new products, services, programs and processes  CSR awards and other recognition  Investor outreach  Grassroots community outreach, such as hosting community meetings, providing facility tours, being a guest speaker, serving on local nonprofit boards, etc.  Environmental crisis preparedness and response  Supply chain communications  Digital communications: web content and social media  Sustainability reporting 40
  • 41. Be Strategic, Engaging and Accountable  Start to “walk the walk” before you talk  Develop key messaging around initiatives that ties to overall corporate strategy and/or goals  Determine goals, phases, positioning, timing, budget, etc.  Capitalize on short-term, low-risk opportunities  Use case studies – be a good story teller  Set goals and track metrics 41
  • 42. Data and Stories Storiesdriven  Datadriven Stories-driven: “Stories that are so powerful that no one asks for the statistics” (or the numbers don’t matter)  Data-driven: “Intel saw most of its metrics worsen in 2010 compared to 2009, with chemical waste output up 27 percent. It blames the rise on increasing complexity in its manufacturing processes.” (and higher production volumes) 42
  • 43. Words of Warning For your organization, which is the bigger risk? Greenwashing: Perception of consumers that they are being misled by a company regarding its environmental practices or the environmental benefits of a product or service.  It’s promotional “spin” “Greenblushing”: Limited or no information disseminated by an organization so as to understate or ignore its commitment to and actions on environmental responsibility.  Walking the walk but being too unsure and shy to talk the talk  It’s quiet, unclear, unfocused, not packaged, not accessible 43
  • 44. Words of Warning  Seven sins of greenwashing  The hidden trade-off. Suggesting a product is “green” based on an unreasonably narrow set of attributes without attention to other important issues.  No proof. Committed by an environmental claim that cannot be substantiated by supporting information or reliable third-party certification.  Vagueness. Committed by every claim that is so poorly defined or broad that its real meaning is likely to be misunderstood by the consumer, e.g. “all-natural.”  Irrelevance. Committed by making an environmental claim that may be truthful but is unimportant or unhelpful, e.g. “CFC-free” because CFCs are already banned by law.  Lesser of two evils. Committed by claims that may be true within the product category, but that risk distracting the consumer from the greater environmental impacts of the category as a whole, e.g. organic cigarettes.  Fibbing. Making environmental claims that are simply false, e.g. lying about Energy Star certification.  False labels. Committed when either words or images give the impression of third-party endorsement where no such endorsement actually exists. Source: TerraChoice and PRSA Professional Standards Advisory PS-12, October 2009 44
  • 45. Words of Warning  Symptoms of greenblushing  Believing you need “all the answers” before you can communicate – not willing to share information about “the journey.”  Being reluctant to talk about your sustainability activities, even when asked to or recognized by outside parties.  Downplaying your achievements internally, which can be very de-motivating.  Afraid to bring it up with customers in case they’re ahead of you or not particularly interested.  Always assuming there’s more risk than reward in communicating.  Feeling that what you’re doing is “not that special,” when, in fact, others could learn a lot from your ideas. Source: Dix & Eaton, March 2010 45
  • 46. Communications Opportunities – Discussion Questions  Which communications tools are you most likely to implement for sustainability?  Which communications tools have you found most useful or had the most success with when it comes to sustainability?  What hasn’t worked for you?  What’s the greater risk in your organization – greenwashing or greenblushing? 46
  • 48. The Mechanics of Reporting  Sustainability reporting is the practice of measuring, disclosing, and being accountable to internal and external stakeholders for organizational performance towards the goal of sustainable development.  “Sustainability reporting” is a broad term considered synonymous with others used to describe reporting on economic, environmental, and social impacts (e.g., triple bottom line, corporate responsibility reporting, etc.).  A sustainability report should provide a balanced and reasonable representation of the sustainability performance of a reporting organization – including both positive and negative contributions. 48
  • 49. What You Need  Cross-functional team that includes EHS, sustainability, HR, IT, legal, operations, government affairs, operations, foundation, local contacts  Assignment of project manager/point person  Early engagement with information “gatekeepers”  Clarity about ultimate decision-maker and decisions that need to be made at that level  Process-oriented/project management  Awareness of trends and frameworks (but few mandates)  Set a (realistic) deadline 49
  • 50. Sequence of Activities 50
  • 51. Sustainability Reporting Options 51
  • 52. Sustainability Reporting Options (cont.)  Frameworks:  Global Reporting Initiative  Carbon Disclosure Project  ISO 26000  United Nations Global Compact  International Integrated Reporting Council  Sustainability Accounting Standards Board (2013-2015) • • • • • Health care Financials Technology & Communications Non-Renewable Resources Transportation • • • • • Resource Transformation Consumption I Consumption II Renewable Resources & Alt Energy Infrastructure 52
  • 53. Global Reporting Initiative (GRI)  Originated in U.S., grew in Europe, now the world’s most widely accepted, integrated reporting framework  More than 3,800 companies currently using GRI; about 50% are from Europe  Data-driven disclosures in three key areas:  Strategy and Profile: Disclosures that set the overall context for understanding organizational performance such as its strategy, profile, and governance.  Management Approach: Disclosures that cover how an organization addresses a given set of topics in order to provide context for understanding performance in a specific area.  Performance Indicators: Indicators that elicit comparable information on the economic, environmental, and social performance of the organization.  Preparers apply to be “in accordance” with GRI guidelines  “Core” or “Comprehensive” 53
  • 54. Reporting Format  To GRI or not to GRI, that is a key question  Report to GRI standards  Use GRI as only a guide  GRI reports include:  Company Profile  Governance, Commitments, and Engagement  Management Approach and Performance Indicators  Economic  Environmental  Social 54
  • 55. Must-Do’s Before Undertaking a GRI Report  Sign up for GRI training  Establish and refine your datacollecting mechanisms  Pull together a cross-functional team  Secure senior management support and engagement at the beginning  Think through what you are going to report because you can’t include everything – materiality!  Set a realistic deadline and process 55
  • 56. GRI Report 56
  • 57. Non-GRI Report (Online-Only) 57
  • 58. Non-GRI Report/Brochure © Dix & Eaton Incorporated 2011 58
  • 59. Scorecard 59
  • 60. Other Report (Annual Report) 60
  • 61. Integrated Reporting 61
  • 62. Relative Comparison of Cost and Effort for Report New effort New cost 62
  • 63. The Mechanics of Reporting – Dis
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