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Sustainability<br />A TRIPLE BOTTOM LINE STRATEGY<br />

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Mono-cropping is endangering genetic diversity <br />20 plants now supply 80% of humanity’s food<br />Source: IDRC Briefing<br />Did you know?!<br />

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Did you know?!<br />Chronic Water shortages:<br /> 201031 countries > 500 million<br />2013 36 U.S. States > 100 million<br />203550 countries > 3 billion <br />Only 3% of earths water supply is drinkable and 95% of it is frozen<br />Source: Economist, Panjiva & Watersense<br />Embedded water use 30x<br />Canadian importation<br />1:6 1.8 million<br />

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Ogallala aquifer water source:<br />33% of Corn crops<br />30% of irrigated farmland <br />80% CO, KS, NE, NTX, OK, SD, WY drinking water supply<br />It is being pumped dry at the rate of 325 billion cubic meters a year<br />Source: Kerr Center & U.S. EPA<br />Did you know?!<br />

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U.S. Gov’t study oil and gas supplies will not keep up with demand over next twenty-five years. Translation alternative energy, energy reduction, energy efficiency and rising energy prices.<br />If China begins to use the same amount of oil per capita as the U.S., China alone would consume 100% of the world’s oil production<br />2010: 12k cars per day<br />2015: 150 million <br />(18 million more than U.S.)<br />Source: WSJ, People’s Daily & Morning Star<br />Did you know?!<br />

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Did you know?!<br />Major Non-Renewable Resources are depleting world-wide:<br />Antimony<br />Barium<br />Bismuth<br />Cobalt<br />Gallium<br />Manganese<br />Nickel<br />Platinum<br />Titanium<br />Zinc<br />What does this mean? <br /> Computers, Communication, Healthcare and Solar power<br /> Source: Annual Vital Signs Report World Watch Institute & U.S. Geological Association<br />

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U.S. economy consumes in excess of 100 billion tons of raw materials per year in excess of 90% of this ends up as waste<br />Did you know?!<br />Various forms of waste—solid and liquid—including plastics and petro-chemical disbursed through the air and ground waters can travel thousands of miles and end up in:<br />soil<br />water<br />rainfall <br />impacting local health and eco-system survivability<br />Source EPA<br />

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What is basis to "problems”<br />Global population is ever increasing <br />9+ billion by 2050 (adding 2 to China’s)<br />Income is increasing world-wide; new middle class<br />Population + Income = Consumption<br />

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$430 billion annual advertising budget<br />4x increase China, India, Venezuela, Brazil, Argentina, South Korea, Taiwan, <br /> Indonesia and Thailand <br />Top 20% Malaysians and Chileans have higher average incomes than German or Japanese counterparts<br />Source: AMA & Yankelovich<br />Did you know?!<br />

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The Business Paradigm <br />Many Businesses & Organizations still operate with a world-view that has not changed since<br />Industrial Revolution<br />

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Natural resources ><br />Labor was < <br />The Paradigm<br />People limiting factors of production<br />

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In spite of our best labor efforts, economy as a whole is enormously inefficient:<br />Bad News: Increased waste tonnage from 250 million in 1990 to over 500 million today <br /> Good News: Capacity <br /> Unknown News: ? <br />WASTE<br />U.S. Economy<br />4.5 lbs. per person per day = .821 tons per person per year<br />Source: US EPA<br />

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How do we manage waste ?!<br />Current or Old Paradigm was<br />"end-of-the-pipe" <br />remediation efforts<br />

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What has this Paradigm resulted in? <br />Regardless of one’s <br />“political” persuasion<br />How weoperate is <br />unsustainable (NJR)<br />Stewardship: Current growth model (indiscriminate consumption via obsolescence ) is not sustainable <br />

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Some Simple Facts<br />The Changing Paradigm <br />

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Paradigm is Shifting<br />Natural resources < <br />Labor is > <br />Natural resources limiting factors of production <br />

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Next “Industrial Revolution”, like the first, will be in response to:<br />changing patterns of scarcity <br />and influenced behavior <br />Natural Capital—Sustainability<br />The New Paradigm <br />

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Sustainability Another Word for:<br />Corporate Social Responsibility<br />Equity(able) <br />Environmentalism<br />Green<br />Lean<br />Sustainable Development<br />

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Core to contemporary Sustainability are the <br />Four (E’s)<br />What is Sustainability?<br />

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1st E Ecology & Environment<br />2ndE Economy & Employment<br />3rd E Equity & Equality (social)<br />4th E Education<br />4 E’s or Core to Sustainability<br />

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Fad<br />Movement<br />Revolution<br />Sustainability: How Real?<br />

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A definition:<br />Economic Development + Social Wellbeing + Environmental Protection = Sustainability<br />“Meet present needs without compromising the ability of future generations to meet their needs"(WECD, 1987).<br />Sustainability <br />

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<ul><li>Borneo (diesel to hydro)

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Tigray Region (women agriculture)

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Curitiba, Brazil (bus system 8-1.9)

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Bavaria, Germany (solar 9k)

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Adele, Australia (solar city)

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India (biogas and time)

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NYC (1 Yr &1k Bldg Supers)

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U.S. Gov’t (green leasing)

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USGBC (green property mgt cert)

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Madison, WI (local dollars)

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MIT, Oberlin, UNC, Furman, Stanford, Liberty, Bates, etc.

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Alexandria VA School system (healthy schools)

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State NC (project green 156)

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Faith Based Organizations (social entrepreneur)</li></ul>What’s Going On Out There<br />

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U.S. States RPS Targets<br />

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A definition: <br /> An alignment of an organizations’ <br />products, services & processes with <br />expanded stakeholder expectations<br />resulting in a re-definition of profit. <br />Profit=economic +environmental + social value <br />realizedthrough optimal utilization of <br />natural & social capital<br />Corporate Sustainability<br />

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What’s Going On Out There<br /><ul><li>Mattel Corporation (logistics programs)

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Safeway Stores (Renewable energy)

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Wal-Mart (Green Products, renewable energy)

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Nike (new product design)

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Fruit of Loom (waste water)

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Lowes (LfP GBM)

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Marriott (CY Design)

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KKR & EDF (Portfolio Best Practices)

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UMMC Hospital System (weekend audits)

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UPMC (healthy children)

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Grove Park Inn (waste)

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Carnhagan Car Wash (water reuse)

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Shorebank (Community model)

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Bank of America SC/NC (100+ cool roof)

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South G’ville Fire Dept (water re-harvesting)

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Jarden Process Solutions (packaging)

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Cox Wood (renewable energy)

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Hartness Intl (LCM)</li></li></ul><li>The concept of sustainability is gaining traction<br /><ul><li>Customers

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Supply-chain (up/down)

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Employees

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Regulators

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Other Stake-holders</li></ul>Any miscalculation or misjudgment can have serious<br />repercussions <br />Sustainability <br />

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What is driving Sustainability?<br />New Paradigm emerging realization that:<br /><ul><li>waste reduction

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energy efficiency

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pollution prevention

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product innovation (naturally)

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social responsibility-equity</li></ul>make economic and social sense! <br />

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Some argue it’s just a re-badging or extension of Lean manufacturing<br />Continuous improvement: increasing efficiency, reducing waste, easing environmental impact, and boosting workplace safety <br />Is Sustainability Something New?<br />

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Others argue lean is precursor to sustainability <br /> Much larger context and external issues:<br /><ul><li>resources & constraints

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government regulation

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societal intervention & responsibility

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marketing strategies

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expanded profit definition

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shareholder value/linkage</li></ul>Is Sustainability Something New?<br />

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<ul><li>Ignore---no top manager in CJO role

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Adhere---doing minimally required

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Lip Service---remedially oriented

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Strategic---strategic positioning</li></ul>How are Businesses dealing with Sustainability ? <br />Modest Efforts in terms of compliance, employee volunteerism and corporate philanthropy<br /> Motivating force for change in processes & positioning Core drivers/practices to insure value<br />

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Strategic Positioning via Sustainability <br />Moving from a passive cost-based <br /> mind set to building<br />Strategic<br />Advantage <br />

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Two Legs and One of Three Outcomes<br />Do it Better or Do it Different<br />Increase Revenues, Decrease Costs or Build Good Will<br />Strategic Advantage<br /> Outcomes<br />It can be price, quality, service, innovation, technology, process, affinity, etc. <br />

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One strategy that can leverage all (3) outcomes:<br />Increase revenues<br />Decrease costs<br />Build value<br />Ideal Strategic Advantage<br />

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By addressing both sides of the <br />Sustainability Equation<br />Production<br />And <br />Consumption<br />Sustainability Strategy: How is Strategic Advantage being built?<br />

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Minimally define and alter <br />Eco-footprint <br />as well as <br />Innovative business processes, products/services and life cycles<br />Production Side<br />Strategy 1x lower operating cost/cost-structures <br />to <br />3X build value<br />

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Re-thinking sustainable consumption in terms of “experience”:<br />(3) three broad categories<br />1st Innovation<br />2nd Choice Influencing<br />3rd Choice Editing <br />Consumption Side<br />Moving from Strategy 1x lower costs to <br />2X generate new revenues<br />

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Consumers Choices Defined by Innovation, Editing and Influence<br />

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Extended Producer Responsibility or Product Stewardship<br />More than 21 States have joined together to enact 50 product stewardship laws addressing 7 products in the United States<br />

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<ul><li>No one size or approach fits all business cases

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Strategy is half the game execution is the other half

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Societal case doesn’t always equal business case

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Opportunity still trumps responsibility

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Finding or driving systemic value requires more than low-level fruit

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Measuring and reporting can create culture

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Management as process versus a program insures change</li></ul>How is Sustainability defined & implemented: The Furman Strategic Framework Approach<br />

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1st What shade of green is best ?<br />Internal/External considerations, goals & alignment<br /> <br /> 2nd When & How best to move into this area ? Shift bench-marks & stakeholder engagement<br /> 3rd What to target? How to measure and report?<br />Issues mapping and SMS Reporting<br /> 4th What processes or tools to use? How best to think and act to insure on-going success?<br />Footprints, audits, value-streams, systems thinking and process management<br />How is Sustainability defined & implemented: The Furman Strategic Framework <br />

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Sustainability Business Tools/Processes<br /><ul><li>Foot printing, Auditing & Value-Stream assessment

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Life-cycle Management

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Sustainable Product-Service-Process Design

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Process & Label Certification

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Green Product Marketing

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Environmental Managerial Accounting</li></li></ul><li>Foot Printing, Mapping, Auditing & Value-Streams<br />Activity or Area: Energy<br />Current State (Bench-mark)<br /> Sustainable State<br />Future (Minimization/Reduction)<br />

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Life Cycle Analysis: Product Decisions, Design & Management <br />McDonough & Braungart<br />Biomimicry Institute <br />

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Process and Label Certification<br />400+ Labels world-wide and growing<br />

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Green Product & Service Marketing<br />

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Green Accounting & Reporting<br /><ul><li>Managerial Accounting Processes

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Activity Based Cost Accounting

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Consultancy

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Certification

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Reporting Practices</li></li></ul><li>What is the business case for aSustainability strategy?<br /><ul><li>Lower risk (lower costs)</li></ul>Operationally <br />Financially<br /><ul><li>Increase opportunities (drive revenues)</li></ul>New products/services<br />New target markets<br />Higher margin products/services<br /><ul><li>Build a stronger balance sheet (increase leverage)</li></ul>Good will<br />Transparency<br />Brand/Reputation<br />Corporate valuation<br /><ul><li>Laws and Regulation (increasing)</li></ul>Proactive versus Reactive<br />

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Sustainability Tactic or Strategy<br />“Green Organization” concept is evolving <br />Program: Strategy:<br />Feeling Good Measuring Good <br />Recycling Life-cycle Decision making<br />Nice to do Need to do<br />Image Building Brand Integration<br />Telling the Customer Teaching the Customer<br />Ignore natural cycles Mimic natural cycles<br />Human Resources Human Capital<br />Organization as machine Organization as brain<br />Shareholder Stakeholder<br />CSR Adherence Embedding CSR<br />

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Sustainability: CPA Roles and Competencies<br />BIG<br />Public<br />Practice<br />

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Revenues<br />Operating Costs<br />Good Will/Valuation<br />SustainabilityTriple Bottom Line Strategy<br />

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Threat or Opportunity<br />Tactic or Strategy<br />Ignoring sustainability trends <br />can impede ability to achieve let alone compete.<br />Do you have a plan?!<br />Sustainability<br />