The Business Case for Sustainability
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Sustainability – as a conceptual framework for the organization of priorities and allocation of resources – provides a unique platform for reducing costs, identifying and managing risk, enhancing brand, and driving innovation. No other business priority offers as rich a set of benefits over time - benefits that create, enhance and preserve lasting value for all stakeholders.
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The Business Case for Sustainability
- 1. The Business Case for Sustainability Education Sustainable Workforce Training GBCI and AIA Credential Maintenance Professional Development Portland | Cleveland | Los Angeles | New York | San Francisco | Seattle This presentation is protected by US and International copyright laws. Reproduction, distribution, display and use of the presentation without written permission of the speaker is prohibited ©Brightworks 2012 Green Building and LEED® Sustainability Planning
- 2. The Business Case for Sustainability The Business Case and Beyond How Deep Integration of Sustainability Thinking Creates Lasting Value Brightworks Sustainability Advisors 19 April 2012
- 3. The Business Case for Sustainability Agenda Business As Usual Sustainability Business Strategy and the Business Case 7 - Cost savings - Asset value improvement - Risk mitigation - Brand enhancement - Innovation driver - Employee attraction and retention - Market opportunity Tools Beyond the Business Case
- 4. The Business Case for Sustainability Objectives At the end of this course, you will be able to: 1. Provide context for the two key drivers for Sustainability, the “Ethical Case” and the “Business Case”. 2. Provide an understanding of Sustainability and Business Strategy. 3. Provide an understanding of the business benefits of green building and LEED from a tactical and prescriptive approach. 4. Provide an overview of the tools and techniques necessary to develop a successful business case for sustainability.
- 5. The Business Case for Sustainability LEED NC Workshop Brightworks 2008 Business as Usual
- 6. The Business Case for Sustainability
- 7. The Business Case for Sustainability from www.droughtmonitor.unl.edu
- 8. The Business Case for Sustainability
- 9. The Business Case for Sustainability LEED NC Workshop Brightworks 2008 Sustainability
- 10. The Business Case for Sustainability Sustainable Development is development which meets the needs of the present without compromising the ability of future generations to meet their own needs. World Commission on Environment and Development (The Bruntland Report 1987) Definitions UNITED NATIONS DEFINITION
- 11. The Business Case for Sustainability Sustainability 101 “People, Planet, Profit” or “Economy, Environment, Equity” TRIPLE BOTTOM LINE (TBL)
- 12. The Business Case for Sustainability CRADLE TO CRADLE (C2C): Biological and Technical Nutrient Cycles Definitions www.mbdc.com
- 13. The Business Case for Sustainability Definitions www.naturalstep.org ...concentrations of substances extracted from the Earth’s crust, ...concentrations of substances produced by society, ...degradation by physical means, ...people are not subject to conditions that systematically undermine their capacity to meet their needs. In a sustainable society, nature is not subject to systematically increasing... and, in that society... THE NATURAL STEP: Four “System Conditions” of Sustainability
- 14. The Business Case for Sustainability 60 miles per gallon “40% better than code” Recycling Less toxics Zero emissions 100% renewable power Zero waste Zero pollution Sustainable vs. Green green green sustainable VS. What’s the Difference?
- 15. The Business Case for Sustainability Portland’s South Waterfront Redevelopment 2002 to today Regenerative Design
- 16. The Business Case for Sustainability LEED NC Workshop Brightworks 2008 Sustainability & Business Strategy
- 17. The Business Case for Sustainability “more than 70 percent of survey respondents said that their company has not developed a clear business case for sustainability.” Whereas 50 percent of the experts we surveyed said that their company had a compelling business case for sustainability, only 10 percent of the novices we surveyed did. Further, when asked about the logic underlying their organization’s investments (or lack thereof) in sustainability initiatives, 68 percent of experts cited improved financial returns compared with only 32 percent of novices.
- 18. The Business Case for Sustainability The Business Case 7 5 6 Market Opportunity 4 Risk Mitigation Cost Savings Asset Value Improvement Innovation Driver Brand Enhancement 1 2 3 Employee Attraction and Retention
- 19. The Business Case for Sustainability • RETAIL PRODUCT VENDOR • COMPANY IN HIGHLY COMPETITIVE TALENT MARKET • SPEC BUILDING Risk Mitigation Asset Value Improvement Employee Attraction and Retention Market Opportunity Innovation Driver Cost Savings Brand Enhancement Risk Mitigation Asset Value Improvement Brand Enhancement Innovation Driver Market Opportunity Employee Attraction and Retention Cost Savings THE SEVEN DON’T CHANGE, BUT THEIR RELATIVE IMPORTANCE VARIES The Business Case • MANUFACTURING COMPANY WITH LARGE OR COSTLY WASTE STREAM • OWNER-OCCUPIED BUILDING, OR
- 20. The Business Case for Sustainability The Business Case Cost Savings 1 5 6 Market Opportunity 4 Risk Mitigation Cost Savings Asset Value Improvement Innovation Driver Brand Enhancement 1 2 3 7 Employee Attraction and Retention
- 21. The Business Case for Sustainability The Business Case OHSU CENTER FOR HEALTH AND HEALING Portland, Oregon $140 million construction cost $2 premium for sustainable features • 5 gas-fired microturbines • massive PV array on S. façade • membrane bio-reactor, on-site waste treatement • eco-roof $500,000 SDC charge offset $1.3m tax credits (state + federal) $600,000 projected annual operating cost savings Cost Savings 1
- 22. The Business Case for Sustainability The Business Case “Interface began its journey to sustainability by focusing on the elimination of waste. At Interface, we define waste as anything that does not provide value to the customer. This includes traditional forms of waste such as off-quality and scrap, as well as nontraditional forms of waste such as overuse of materials, inventory losses, etc. The cumulative avoided costs from waste elimination activities since 1995 are calculated to be over $433 million…” source: www.interfaceglobal.com Cost Savings 1
- 23. The Business Case for Sustainability The Business Case Risk Mitigation 2 7 5 6 Market Opportunity 4 Risk Mitigation Cost Savings Asset Value Improvement Innovation Driver Brand Enhancement 1 2 3 Employee Attraction and Retention
- 24. The Business Case for Sustainability The Business Case Risk Mitigation 2
- 25. The Business Case for Sustainability The Business Case Risk Mitigation 2
- 26. The Business Case for Sustainability The Business Case Risk Mitigation 2
- 27. The Business Case for Sustainability The Business Case Innovation Driver 3 7 5 6 Market Opportunity 4 Risk Mitigation Cost Savings Asset Value Improvement Innovation Driver Brand Enhancement 1 2 3 Employee Attraction and Retention
- 28. The Business Case for Sustainability The Business Case Innovation Driver 3 “In 2005 Cisco designated the recycling group as a business unit, set clear objectives for it, and drew up a national P&L account. As a result, the reuse of equipment rose from 5% in 2004 to 45% in 2008, and Cisco’s recycling costs fell by 40%. “The unit has become a profit center that contributed $100 million to Cisco’s bottom line in 2008.”
- 29. The Business Case for Sustainability The Business Case Innovation Driver 3
- 30. The Business Case for Sustainability The Business Case Market Opportunity 4 7 5 6 Market Opportunity 4 Risk Mitigation Cost Savings Asset Value Improvement Innovation Driver Brand Enhancement 1 2 3 Employee Attraction and Retention
- 31. The Business Case for Sustainability The Business Case Market Opportunity 4
- 32. The Business Case for Sustainability The Business Case Market Opportunity 4 REQUIRED BY REGULATION
- 33. The Business Case for Sustainability The Business Case Market Opportunity 4 AIM Environmental Technology Program CalPERS $600 million Environmental Technology Program Board targets investments in environmental technology solutions that are more efficient and less polluting than existing technologies…
- 34. The Business Case for Sustainability The Business Case Asset Value Improvement 5 7 5 6 Market Opportunity 4 Risk Mitigation Cost Savings Asset Value Improvement Innovation Driver Brand Enhancement 1 2 3 Employee Attraction and Retention
- 35. The Business Case for Sustainability The Business Case Asset Value Improvement 5
- 36. The Business Case for Sustainability The Business Case Asset Value Improvement 5
- 37. The Business Case for Sustainability The Business Case Asset Value Improvement 5
- 38. The Business Case for Sustainability The Business Case Brand Enhancement 6 7 5 6 Market Opportunity 4 Risk Mitigation Cost Savings Asset Value Improvement Innovation Driver Brand Enhancement 1 2 3 Employee Attraction and Retention
- 39. The Business Case for Sustainability The Business Case Brand Enhancement 6
- 40. The Business Case for Sustainability The Business Case Brand Enhancement 6
- 41. The Business Case for Sustainability The Business Case Brand Enhancement 6 Respondents Cited–by a Large Margin–an Improved Image as the Principal Benefit of Addressing Sustainability
- 42. The Business Case for Sustainability The Business Case Employee Attraction and Retention 7 5 6 Market Opportunity 4 Risk Mitigation Cost Savings Asset Value Improvement Innovation Driver Brand Enhancement 1 2 3 7 Employee Attraction and Retention
- 43. The Business Case for Sustainability The Business Case Source: SHRM – Advancing Sustainability: HR’s Role Employee Attraction and Retention 7
- 44. The Business Case for Sustainability The Business Case Employee Attraction and Retention 7
- 45. The Business Case for Sustainability The Business Case To sustain high levels of performance Requires high levels of well-being - Peter Senge
- 46. The Business Case for Sustainability LEED NC Workshop Brightworks 2008 Tactical & Prescriptive Tools
- 47. The Business Case for Sustainability Sustainability Tools: Rating Systems
- 48. The Business Case for Sustainability Sustainability Tools Change Management “Change requires you change something.” - Bill Reed
- 49. The Business Case for Sustainability LEED NC Workshop Brightworks 2008 Beyond the Business Case
- 50. The Business Case for Sustainability Global Ecological Crises Beyond the Business Case “…2009 was tied for the second warmest year in the modern record, a new NASA analysis of global surface temperature shows. …in the Southern Hemisphere, 2009 was the warmest year since modern records began in 1880. …when we average temperature over five or ten years to minimize that variability, we find that global warming is continuing unabated,“said James Hansen, the director of GISS The Ethical Case: We can see the limits of a healthy planet and must change course if we wish to prosper.
- 51. The Business Case for Sustainability Value Creation for Total Shareholder Return Beyond the Business Case The Business Case: Sustainability can affect all the levers companies use to create value.
- 52. The Business Case for Sustainability The Ethical Case + The Business Case The Value Proposition The Value Proposition for Sustainability
- 53. The Business Case for Sustainability Resources RESEARCH ARTICLES MIT Slone Report : The Business of Sustainability (three reports) http://sloanreview.mit.edu...I, http://sloanreview.mit.edu...II, http://sloanreview.mit.edu/...III CoStar Report: Value of Green Building www.costar.com/josre/doesGreenPayOff.htm Cost of Green Revisited http://www.davislangdon.com/USA/Research/ResearchFinder/?c=362,334 HBR: Sustainability As a Key Driver of Innovation hbr.org/2009/09/why-sustainability-is-now-the-key-driver-of-innovation/ar/1 SHRM: Advancing Sustainability – HR’s Role http://www.shrm.org/... Harvard: The Impact of a Corporate Culture of Sustainability on Corporate Behaviour and Performance http://www.hbs.edu/research/pdf/12-035.pdf
- 54. The Business Case for Sustainability Green Building & LEED® Sustainability Planning Workshops Portland | Cleveland | Los Angeles | New York | San Francisco | Seattle This presentation is protected by US and International copyright laws. Reproduction, distribution, display and use of the presentation without written permission of the speaker is prohibited ©Brightworks 2011 Thank you! Questions?
Hinweis der Redaktion
- Top Speaking Points: 1. Brightworks as Sustainability Advisors 2. Brightworks ‘elevator pitch’ • Brightworks helps organizations integrate sustainability into their strategic and operational planning processes. • They are a business-centric consulting firm – they understand how businesses think, make priorities, and make decisions. • Their approach is to help firms use sustainability strategically - to save money, reduce risk, improve positioning and enhance brand.
- BP has agreed to pay a $15 million penalty to resolve Clean Air Act violations at its scandal-plagued refinery in Texas City, Tex., federal regulators announced Thursday. The settlement — the largest ever recovered for Clean Air Act violations at a single facility — addresses violations stemming from fires and a toxic leak in 2004 and 2005. It brings to $137 million the amount recovered by the federal government from BP in criminal, civil and administrative fines for safety and environmental violations at the Texas City refinery. That final report said the release of chemicals had gone on for 959 hours, until May 16. Among other pollutants, the plant had released 17,000 pounds of benzene; 37,000 pounds of nitrogen oxides, which can cause respiratory problems; and 186,000 pounds of carbon monoxide. Another 262,000 pounds of various volatile organic compounds also escaped. http://green.blogs.nytimes.com/2010/09/30/bp-to-pay-record-fine-for-refinery-violations/ Waste: With the three landfill sites in the city full to the brim and every resident continuing to account for at least half-a-kilogram of municipal waste everyday, Delhi is staring at a sanitation crisis. It mentioned that the MCD had demanded more land to process 400 metric tonnes of solid waste which is generated daily. http://www.indianexpress.com/news/landfill-sites-full-need-dda-nod-for-new-sites-govt/848988/
- Texas: Cotton crops affected, beef and wheat prices expected to skyrocket, and there is no end in sight. China: Divert at least six trillion gallons of water each year hundreds of miles from the other great Chinese river, the Yangtze, to slake the thirst of the north China plain and its 440 million people. The engineering feat, called the South-North Water Diversion Project, is China’s most ambitious attempt to subjugate nature. It would be like channeling water from the Mississippi River to meet the drinking needs of Boston, New York and Washington. Its $62 billion price tag is twice that of the Three Gorges Dam, which is the world’s largest hydroelectric project. http://www.nytimes.com/2011/06/02/world/asia/02water.html?pagewanted=all
- Ethanol: The Agriculture Department this week estimated that farmers will harvest 12.5 billion bushels of corn this year, the third-largest crop on record, but that was 3 percent less than the USDA had forecast a month earlier. With corn supplies tightening, the USDA also estimated usage for feed would be reduced. About 4.7 billion bushels of this year's crop is expected to be used for livestock feed, down from 5 billion bushels for the 2010 harvest. http://www.usatoday.com/money/industries/food/story/2011-09-18/corn-prices-ethanol-mandate/50417146/1 Fuel Delivery to Nome: Renda, Russian tanker follows Coast Guard Icebreaker Healy through thousands of miles of sea ice for an emergency delivery of gasoline and diesel fuel to Nome. No local resources for energy, logistical issues caused shortage. http://www.nytimes.com/2012/01/10/us/icebreaker-slowly-carves-path-for-tanker-to-bring-emergency-fuel-to-alaska.html?
- Urgency of sustainability- Current issues and opportunities for us
- One framework for looking at the Business case
- Another framework…
- Another framework…more for assessing the relative sustainability of a project/initiative
- What is the goal of sustainability? One important way to describe the differences is that ‘green’ involves incremental changes to the old ways of doing things. True ‘sustainable development’ is transformative and brings our economy into a paradigm whereby future generations can expect the planet to be the same or healthier than we find it.
- This is one example from our work which actually qualifies as regenerative design. In Portland’s South Waterfront Redevelopment - a 40 acre urban infill redevelopment of an industrial area - it was all graded down to just gravel, rock and dirt when we first got there, it looked like this picture on the slide. We helped get the development plan changed to include what's called a “bioswale” - a dedicated area of engineered drainage and vegetation - to treat all of the public storm water coming off the site, and then a man made waterfall takes that water into the Willamette River, which runs through downtown Portland. A permit from the Army Corps of Engineers was required to do that instead of taking all the storm water through pipes to outfalls or a waste treatment plant. It turned out that the cost of the bioswale was equivalent to the cost of the technical system that was originally in the plan. But what was done there was a re-creation of the pre-development ecological function. So we took an area that was a former shipyard, and then a former industrial site, and along the waterfront edge, replicated the storm water treatment function that was there pre-development, and it's now a dense high-rise developed area with 15-17 storey buildings with a water treatment system that looks like a garden. That's the one example I can point to of regenerative design that we've had.
- Experts in the field of sustainability recognize the value (tied to economic payback) in sustainability initiatives.
- There are generally 6 drivers of Sustainability:
- Case study 1:
- If said resource gets regulated as hazardous waste or if you're producing a waste stream that today you can dispose in a landfill, and next month or next year is going to have to go to hazardous waste landfill - cost implications equals risk and if your competitors have shifted to a different non-toxic input or waste product that's not going to get regulated, that’s going to give them competitive advantage. You would rather have the competitive advantage: figure out what your risks are in your resource flows, or resource flow assessment.
- One risk is in resource price volatility. If your products and processes rely on resources that are either becoming more costly because they are becoming more scarce, or because of regulation, then you are exposing yourself to an input-cost risk.
- Last risk area is negative brand risk. I'll talk more about positive brand opportunity later but in the risk category, a certain number of consumers will avoid products they perceive as having negative ecological value. One survey says up to 60 percent of consumers are willing to boycott manufacturers whose products contribute to pollution - whether they actually go and do that or not who knows - but even if it’s five percent, you don't want to lose that customer base.
- An Oregon-based company called Columbia Forest Products figured out that in the LEED market, you get a point for using composite wood products that don't have formaldehyde in them. So they went out to figure out how they could adhere their composite wood products without formaldehyde-based glue, and they used a methodology called Biomimicry. They worked with – or utilized the work of - some scientists at Oregon State University who had figured out how to mussels adhere to rocks in the ocean at 55 degrees in saltwater using no toxic inputs.
- The federal government has mandated green practices = opportunity to providers of sustainable solutions
- First, green building is rapidly becoming code in a number of municipalities and states (see CALGreen)
- CEOs were asked to evaluate several programs based on their contribution to shareholder value:
- Innovest studied the returns of » There is increasing evidence showing that superior performance in managing climate risk is a useful proxy for superior, more strategic corporate management, and therefore for superior financial performance and shareholder value-creation » The considerable variations in “carbon performance” among same-sector industry competitors are currently not transparent to, nor well understood by, mainstream Wall Street and City analysts. As a result, carbon-driven risks and value potential remain, for the present at least, almost entirely hidden from view » In the longer term, the out-performance potential will become even greater as the capital markets become more fully sensitised to the financial and competitive consequences of environmental and climate change considerations » There is strong evidence of dramatic increases in the level of institutional investor concern – and intervention – with climate change issues and their investee companies. if invested $1M for the three years of the study, you would be $91,800 better off investing in carbon leaders $818,500 - $726,700 Harvard Study: Investing $1 in the beginning of 1993 in a value-weighted (equal-weighted) portfolio of sustainable firms would have grown to $22.6 ($14.3) by the end of 2010, based on market prices.[i] In contrast, investing $1 in the beginning of 1993 in a value-weighted (equal-weighted) portfolio of traditional firms would have only grown to $15.4 ($11.7) by the end of 2010.
- Findings included significant benefits for commercial buildings with green initiatives and certifications
- Major players have recognized the brand value that triple bottom line initiatives can bring to their companies.
- External Brand: consumers recognize, and importantly are willing to pay for perceived ‘green’ products.
- An important class of “assets” are the employees of any firm. The firm that has the ability to attract and retain better employees have a distinct advantage over their competition. According to the 2011 Report by SHRM, 80-90% of employers recognize that sust. is important
- Internal Brand: employees benefit in health and well-being from green building initiatives. Studies have found as much as 2% efficiency gained by green building initiatives.
- Internal Brand
- Variety of tools – but just because you have a hammer doesn’t mean every problem is a nail…
- We will cover the technical overview of LEED EB prereqs and credits Reference standards Percentages and requirements End of each section we’ll have some sample test questions
- Urgency of sustainability- Current issues and opportunities for us
- Top Speaking Points: 1. Brightworks as Sustainability Advisors 2. Brightworks ‘elevator pitch’ • Brightworks helps organizations integrate sustainability into their strategic and operational planning processes. • They are a business-centric consulting firm – they understand how businesses think, make priorities, and make decisions. • Their approach is to help firms use sustainability strategically - to save money, reduce risk, improve positioning and enhance brand.