In October, sustainability consultant and former federal Green Party leader Jim Harris presented the business case for sustainability to delegates of the CIMA Canada Conference 2012. Mr. Harris put forward the argument that sustainable business practices weren’t just a matter of ethics, but also tools for cost reduction and profitability, citing several studies and examples that proved his thesis. However, he also noted that few organizations have adopted sustainability practices because the issue simply isn’t on their radar. He recently spoke with the Financial Post’s Dan Ovsey about why he believes this to be true and what he sees as the biggest barriers to sustainability. Following is an edited transcript of their conversation. [...] … [Read more...] about Identifying barriers to adoption of sustainable business practices
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." Our perspective is pragmatic; that the worthy purpose of "saving the environment" is destined to be ineffectual, and at best immaterial, if environmental initiatives are pursued in isolation of the economic engines and structures of our society -- that is, capitalism, business, government and the active participation of other organizations and individuals within this framework. It is within this framework that companies are applying a central guiding principle to their business sustainability strategies -- "derive economic benefits from improved environmental and social outcomes." Why? Because it delivers results. We do not argue the desired outcome of healthy people and a healthy planet, and an economic framework that includes a broader social purpose. Indeed, we align on these values. After all, Jim was leader of the Green Party of Canada and Tyler used to earn his living as a conservation … [Read more...] about How Much Can Business Influence the Environment?
"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. Tyler's comment was relevant to both. His point: having a strategy is one thing, but being able to implement it is entirely another. After all, the value of a strategy is not what is written on the whiteboard or the back of napkin, it is the value unleashed by engaging the minds and hearts of motivated employees and suppliers. The key to unlocking this value is to understand and harness the corporate culture, work within its bounds and value system, while making room for new ideas. Enterprise Risk Management colleagues refer to the ability to implement a strategy (or not) as "execution risk." Tyler has been fortunate to have had the experience of developing and implementing business sustainability strategies over the past decade in three different, very large corporations: a $14 billion company, a $400 billion company and Canadian Tire, a $12 billion company. In every instance he had to tailor his approach to the culture's unique value system and the process by which ideas are accepted into the … [Read more...] about Why Culture Eats Strategy for Breakfast
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. Royal Dutch Shell is perhaps the best known example of a company using scenario planning to prepare for future events, beginning in the 1970s. Shell's scenario planning prepared it for the first oil crisis in 1973 -- when the price of oil quadrupled in just 18 months. Most recently Shell has been using scenario planning for developing strategies mitigating the effects of climate change. The greater the value of resources and time invested in a strategic commitment -- such as developing a new oil field or pipeline -- the greater the value of scenario planning is to an organization. But a firm doesn't have to be a multinational oil company to get value from managing the risk that is implicit in any business strategy. Planning for a Carbon-constrained Economy Placing a price on carbon of anywhere from $10 to $80 a tonne can have a profound effect on business planning. It immediately … [Read more...] about The Benefits of Carbon Shadow Pricing
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. Employee Engagement Sustainability as strategy can also engage employees. In 2010, Canadian Tire's Senior Vice President of Merchandizing invited all the company's buyers to the conference centre for an afternoon departmental meeting. Employees thought it was to discuss organizational restructuring. Before the start of the meeting, the conference centre was very quiet. The goal, it turned out, was to engage buyers in a creative way -- to shake things up -- to facilitate some disruptive innovation on something that should have been a core element of their business activities, but at the time wasn't. Corporate thinking is often to execute on a perfect plan -- in this case, we wanted to take buyers out of their usual, comfortable environment and see … [Read more...] about A Little Less Cardboard Can Save You Millions
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. During a poor economy, it can be a challenge for a business to increase profitability as competition for the "cautious consumer" intensifies and there is increasing pressure on margins. But a recession offers the perfect opportunity to question the way things have always been done -- and drive out waste and inefficiency. One of Jim's favourite slogans is: "a crisis is a terrible thing to waste." While most are cautiously optimistic about the North American economy today, it was a different story in the latter half of 2008 when Canadian Tire launched its Business Sustainability Strategy with an aspiration to profitably grow the business without increasing energy use or contributing to an increase in the carbon footprint of the economy. And the company has been somewhat successful: energy and fuel used to move product from vendors to stores is nine per cent lower, despite a 22 per cent increase in tonne-km of product shipped. And energy use for buildings and … [Read more...] about In Business, Don’t Waste a Crisis
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. [...] … [Read more...] about You Are Better Off Investing in Sustainability Than Stocks
Decades of experience have shown that environmental initiatives pursued in isolation of the economic benefit are largely immaterial. But when environmental objectives are framed as business strategy and tied to business operations and measured in terms of cutting cost and increasing profitability -- significant environmental benefits are generated. And so we believe that environmentalism can save business, as the more powerful engagement tool that business has at its disposal to drive innovation. This is the first of a series of weekly columns to be published on Tuesday by Tyler Elm and Jim Harris on how sustainability as strategy cuts cost, raises revenue and mitigates risk for business. Ever since Rachel Carson's groundbreaking Silent Spring was published in 1962, environmentalists have been trying to save the planet. While there has been progress, overall the efforts have clearly failed, because the planet is in worse shape today than 50 years ago. We need not document the litany of damage here. Decades of experience have shown that environmental initiatives pursued in isolation of the economic benefit are largely immaterial. But when environmental objectives are framed as business strategy and tied to business operations and measured in terms of cutting cost and increasing profitability -- significant environmental benefits are generated. Sustainability then garners executive focus and corporate resources. Companies like General Electric, Interface … [Read more...] about How Sustainability Can Save Business