Our first blog, How Sustainability Can Save Business, reframes the common purpose of traditional Corporate Social Responsibility (CSR) practitioners — that of “saving the environment.” Our premise: Given the social and economic frameworks and institutions of our society, more can be accomplished (and faster) by viewing sustainability as an economic opportunity relevant to business, compared to viewing it as an environmental initiative in isolation of business. Therefore the goal of “saving the environment” may be more appropriately framed as “saving business.”
Chief Financial Officers (CFOs) and Chief Operating Officers (COOs) are increasingly accountable for sustainability. A study by Deloitte — Sustainability: CFOs are coming to the table — found their accountability for sustainability had jumped sharply during the last year. In 2012, 26 per cent of CFOs were responsible to the board for their firm’s sustainability strategy, up from 17 per cent in 2011. Similarly, for COOs it was 10 per cent in 2012, up from 3 per cent in 2011. Further, 53 per cent of CFOs said their involvement had increased in the last year, with 61 per cent noting they expected it to increase over the next two years.
Canada needs a “national approach to climate policy and carbon pricing.” Think that this is the advice of some environmental group? Then think again; this is the urging of the Canadian Council of Chief Executives (CCCE) in a policy paper: Clean Growth 2.0: How Canada can be a Leader in Energy and Environmental Innovation.
Implementing a sustainability strategy into the business of a large U.S. retailer proved challenging because the “corporate culture possessed strong anti-bodies,” noted Tyler to colleague — who had only ever worked for the one company, for decades.
“What corporate culture?” replied his colleague looking slightly confused. “We don’t have a culture.”
Tyler’s instant reply was: “Yeah right, and a fish doesn’t know it’s living in water.”
“Culture eats strategy for breakfast, every day.” This was Tyler’s response to a question during a panel session at a recent conference. The panel was discussing the challenges faced by professional managers in their efforts to implement sustainability into business.
The other challenge under discussion was about finding the appropriate balance between sharing insights and strategy with others, versus holding some things back for the competitive reasons.
Placing a shadow price on carbon can help a company cut costs, while dramatically reducing its risk and exposure to rising energy prices and a price being put on carbon.
One of the roles of corporate strategy function is to assist the CEO and board in managing strategic uncertainty and risk. Knowing that it’s impossible to accurately forecast future events, one of the jobs of corporate strategy is to develop scenarios of potential future realities, strategies for these scenarios, and a portfolio of options that may be exercised in the event that a scenario comes into being.
Using sustainability as strategy can drive change within a company’s supply chain by engaging suppliers and service providers with the resulting savings running into the millions of dollars a year.
A case in point: one of Canadian Tire’s most popular products is a six-foot folding utility table, selling many tens-of-thousands a year. The company collaborated with its supplier on product redesign and packaging to use less raw materials to make and package the product. Now, the tables use 11 per cent less plastic in their construction and occupy 15 per cent less volume for shipping. The annual savings for Canadian Tire: more than $375,000 a year as a result of reduced material, packaging and shipping costs.
Many Canadians are trying to do more with less during this economy of thrift. But we all face essential expenses — those costs associated with “keeping the lights on” — often, literally.
Whether you’re managing a household or a large corporation, energy — that stuff that enables your car to move from one place to another, keeps your beer cold and your shower hot — is generally regarded as an essential expense. Sure, you could drink warm beer and take cold showers; but really? There’s got to be a better way.
It is surprising just how big is the “sustainability” opportunity is.
In just the energy efficiency (EE) field McKinsey & Company estimates that $2 trillion can be invested in EE by 2020 with an internal rate of return (IRR) of 17 per cent. To put that into perspective: that rate of return is better than investing in the stock market or in real estate over the long-term — the two investments we’re always told give the best long-term returns.
The net effect would be equivalent to cutting the need for 64 million barrels of oil a day — about one and a half times today’s entire U.S. consumption.