A framework for thinking about "multiple bottom line" business management.

1. An Integrated Framework for Wealth Creation in Businesses John Cleveland Innovation Network for communities

4. Integrated Wealth Creation Financial Natural Social Core Process: Customer value creation. Embodied in: Money, physical assets, “good will.” Core Process: Building trust and reciprocity. Embodied in: Social relationships and social institutions. Core Process: Learning and personal development. Embodied in: Physical, mental, emotional, spiritual capabilities; and intellectual property. Core Process: Water, mineral, energy and biotic cycles. Embodied in: Natural system resilience and productivity; raw material inputs. Human Human capital is at the middle of the triangle, because it is the basis for a company’s ability to contribute to capital formation in the three other domains. OUR FOCUS IS HERE

9. At the Intersection of Two Practice Fields “ For-Profit” “ For-Benefit” Social Venturing: “ Both/And” not “Either/Or”

12. Connecting Four Capitals to Core Business Processes Enterprise Dimensions How It Can Influence the Four Capitals Mission What its purpose is; what its long term vision is; how it communicates to stakeholders Leadership What it values; who it recruits; how it develops leadership Marketing and Product Development Who it sells to; what it sells; how it designs products and services; where it sells Production How it produces; how much waste it creates; technology it uses Human Resources Who it hires; how many; how diverse; how it develops them; where they are located Supply Chain Management What it buys; where it buys it; who it buys from; how it develops its supply base Facilities Where it locates; how it constructs its facilities Finance Where it borrows money; where it invests funds; how it distributes profits/surplus Community Relations Who it gives money to; how it contributes to the community; who they lobby/influence and on what issues

13. A Spectrum of Practice “ For-Profit” Culture “ For-Benefit” Culture Traditional Non-Profits: Purpose: Improve the welfare of a target population. Products: Services designed to achieve a specific social outcome. Processes: Oriented towards involvement and intention. Profits: Funded through grants, transfer payments; third parties pay costs. Target is break even Performance: Impact on quality of life. “ Dual Purpose” Enterprises: Purpose: Create social and financial capital. Products: Designed to generate margins and create social benefit. Processes: Designed for both efficiency and social impact. Profits: Revenues from multiple sources. Margins and social contributions. Performance: Social impact and wealth creation. Traditional For-Profits: Purpose: Create wealth for owners. Products: Products and services that provide value to customers. Processes: Oriented towards cost and quality efficiency. Profits: Customer pay for products and services. Target is maximum profit. Performance: Profit margin; return on investment; growth. Non-profits become more “business-like” (Mission unchanged) For-profits pay attention to social outcomes (Mission unchanged)

14. Developing An Integrated Strategy Enterprise Dimensions Capital Formation Strategies Financial Capital Natural Capital Social Capital Human Capital Mission Leadership Marketing and Product Development Human Resources Supply Chain Management Facilities Finance Community Relations

16. A Focus on Natural Capital and Environmental Performance

21. Firm Environmental Performance The environmental performance of firms can be looked at from at least three different useful dimensions: Environmental impacts The facet of the natural ecology that is being affected (what ISO 14000 refers to as “environmental impacts”) Environmental aspects The dimension of the company’s operations that can have an impact on the environment (what ISO 14000 refers to as “environmental aspects”) Improvement goals The generic strategies that can be deployed to reduce environmental aspects and impacts.

22. Environmental Impacts This dimension of environmental performance refers to the aspect of natural capital that company activities are most likely to affect. The four main categories are linked to the four primary natural cycles that sustain us. Cycle Description Energy Energy cycles represent the pathways through which energy is captured, stored, and used. There are three different energy “pathways” – energy “income” which is reflected in direct solar absorption, biomass storage, wind, and hydro power; energy “savings” which is our store of fossil fuels; and energy “inheritance” which is our store of nuclear and geothermal energy. Mineral These are the cycles of minerals from underground to above ground and back to the earth. In natural systems, this occurs through plants and the soil, which makes minerals available for use by living species. Mining and other human cycles accelerate and disrupt these cycles. Water Waste moves through a continuous cycle of evaporation, precipitation, percolation and infiltration. Disruptions to the natural water cycles affect its quality, quantity and timing. Animal and plant populations Plant and animal ecologies depend on energy, mineral and water cycles. When we disturb these cycles, we affect both individual species and entire eco-systems.

29. Summary Dimensions of Firm Behavior Product Design Operations Facilities Transportation Etc. ENV. IMPACT GOALS Environmental Aspect (Co. Systems) Environmental Impact Improvement Goals Energy Impact Mineral Cycle Impact Water Cycle Impact Plant & Animal Population Impact Reduce Use Intensity Increase Renewable Resources Reduce Health and Pollution Risk Increase Degree of Reuse Extend Service & Function

31. Strategies to Support Sustainable Commerce Strategy Description Invest Invest, either directly or indirectly (i.e. through equity or debt funds) in the growth of existing companies or the creation of new ones that demonstrate superior environmental performance (e.g. “green gazelles”). Subsidize Underwrite some cost of doing business (e.g. tax abatements; tax credits; equipment purchase; land and utilities; etc.) that help companies improve environmental performance. Regulate Change regulatory incentives and penalties to encourage environmental performance. Create New Inputs Through R&D and other investments, create new products, materials, or intellectual property that can improve firm environmental performance (e.g. university research institutes for alternative materials).

32. Strategies to Support Sustainable Commerce (cont’d) Strategy Description Create Demand Be a customer for products or services that exhibit improved environmental performance (e.g. buy green buildings; purchase green power); aggregate demand among many customers to make the sale more feasible. Advise and Consult Provide consulting services to companies (such as MMTC’s “lean and green” services; or the Green Supplier Network assessments) Inform Provide market research; tool kits; and other information materials. Create indicators of environmental performance for firms and sectors. Educate Develop curricula (credentialed and non-credentialed) and educational programs to provide the knowledge and skills that companies need to improve environmental performance. Network Create relationships between players that would not happen in the normal course of their business.

33. References USEFUL REFERENCES Author Title Paul Ekins The Gaia Atlas of Green Economics Ray Anderson Mid-Course Correction Janine M. Benyus Biomimicry: Innovation Inspired by Nature John Elkington Cannibals With Forks, The Triple Bottom Line of the 21 st Century Business Paul Hawken Ecology of Commerce: A Declaration of Sustainability Paul Hawken, Amory & Hunter Lovins Natural Capitalism: Creating the Next Industrial Revolution Brian Nattrass & Mary Altomare The Natural Step for Business Livio DeSimone & Frank Poposff Eco-Efficiency – The Business Link to Sustainable Development Claude Fussler Driving Eco-Innovation Lester Brown Eco-Economy – Building An Economy for the Earth Robert Costanze et al An Introduction to Ecological Economics National Academy of Engineering The Greening of Industrial Eco-systems Allan Savory Holistic Resource Management

34. The INC Mission is to develop and spread scalable innovations that transform the performance of community systems. www.in4c.net Pete Plastrik 231-448-3169 [email_address] John Cleveland 616-240-9751 [email_address]