Defining the Compe..ve and Financial Advantages of Corporate Responsibility and Sustainability
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Defining the Compe..ve and Financial Advantages of Corporate Responsibility and Sustainability
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Defining the Compe..ve and Financial Advantages of Corporate Responsibility and Sustainability
- 1. Defining the Compe..ve and Financial Advantages of Corporate Responsibility and Sustainability October 7, 2015 Boston, MA Sustainable Brands New Metrics Steve Rochlin, IO Sustainability @SteveRochlin, www.ProjectROI.com 1 Copyright IO Sustainability, 2015; SRochlin@iosustainability.com
- 2. Why Project ROI? 2 Measure Integrate Improve Build the Discipline Copyright IO Sustainability, 2015; SRochlin@iosustainability.com
- 3. What is Corporate Responsibility (CR)? Planning cycle • 12 months Major func.ons • Technical assessment, audiHng, reporHng, and improvement of regulatory and voluntary systems Examples • Emissions • Legal & ethical conduct • Safety Planning cycle • 12 months Major func.ons • Code & standard adopHon; comms; stakeholder management; partnering; program design; & reporHng Examples • Giving & volunteer • Engagement • ReporHng • SRI, RaHngs, Standards Planning cycle • 30 months Major func.ons • Shared value programming; pilot products; social innovaHon; supplier development; green producHon Examples • Cost Savings • Pilot products • Pilot R&D • Cause campaign Planning cycle • 60 months + Major func.ons • Strategic planning • R&D & product development • Business process redesign Examples • Products foster sustainability • “Net posiHve” footprint Compe..ve Posi.oning Innova.on & Transforma.on Engagement Compliance Reduce Footprint Increase Handprint Report Accountability to stakeholders 3 Copyright IO Sustainability, 2015, SRochlin@iosustainability.com
- 4. Methodology • Address quesHons relevant to Senior ExecuHves • Emphasis on rigorous, recent, peer reviewed research • Reviewed and assessed over 200 studies • Focus on the poten&al ROI CR can deliver • IdenHfy lessons learned on managing to deliver ROI 4 Copyright IO Sustainability, 2015; SRochlin@iosustainability.com
- 5. Headlines: From Over 200 Studies Reviewed CR delivers financial value if done well CR is an intangible asset Lead or lag but don’t dabble For specific issues be like Goldilocks – do what’s just right Fit, Commit, Manage, and Connect 5 Copyright IO Sustainability, 2015; SRochlin@iosustainability.com
- 6. Findings -‐-‐ Summary Overview 6 Copyright IO Sustainability, 2015; SRochlin@iosustainability.com
- 7. CR’s poten&al to drive market value and share price 7 4% -‐ 6% Increase Market Value by up to: Over a 15 year period, increase shareholder value by: $1.28bn Increased valua.on for companies with strong stakeholder rela.onships: 40-‐80% Copyright IO Sustainability, 2015; SRochlin@iosustainability.com
- 8. CR’s poten&al value for financial risk reduc.on 8 4% Reduce systema.c risk by: 40% 1% Reduce the cost of equity by: Reduce share price vola.lity: 2-‐10% Avoided market losses from crises: $378M Reduce credit spread by: Doubles the probability of investment grade ra.ng $38.4M Copyright IO Sustainability, 2015; SRochlin@iosustainability.com
- 9. CR’s poten&al value for marke.ng & sales 9 Up to 20% 15% -‐ 20% 1-‐20% ! 60% Increase Revenue from Sales by: Add a Price Premium of as much as: Consumer Commitment CR Consumer Segments Strongly moHvated by CR __% Moderately moHvated by CR __% Neutral __% Moderately dissuaded by CR __% Strongly dissuaded by CR __% Copyright IO Sustainability, 2015; SRochlin@iosustainability.com
- 10. CR’s poten&al value for reputa.on 10 7% -‐ 11% CR’s Brand and/or Reputa.on Value as a % of total firm value 4% -‐ 7% Sales & reputa.on risk protec.on Copyright IO Sustainability, 2015; SRochlin@iosustainability.com
- 11. CR’s poten&al value for human resources (HR) 11 25% -‐ 50% 13% $3700 7.5% Reduc.on in staff turnover rate Willingness to accept decline in compensa.on 5% Poten.al savings in wages to encourage hourly workers to stay 90% -‐ 200% Savings in terms of annual salary for every employee who stays that might have lef ProducHvity increase Increase in employee engagement Copyright IO Sustainability, 2015; SRochlin@iosustainability.com
- 12. Findings -‐-‐ Managing CR to Deliver Value 12 Copyright IO Sustainability, 2015; SRochlin@iosustainability.com
- 13. Choose priority value crea.ng goal(s) 13 a) Reduce risks & protect license to operate worth 10% of the company’s value (and beyond) b) Nurture, grow, & protect a CR-‐related brand/reputaHon asset worth up to 11% of the firm’s value c) Boost how shareholders view performance to enhance share price and market value by as much as 6% d) Enhance compeHHve posiHoning with, and deepen the engagement of, your customers leading to revenue growth e) Enhance your compeHHve posiHoning with, and deepen the engagement of, your employees leading to reduced turnover and higher producHvity f) Some combinaHon of the above Copyright IO Sustainability, 2015; SRochlin@iosustainability.com
- 14. Manage your CR Asset Copyright IO Sustainability, 2015; SRochlin@iosustainability.com 14 U Intensity of approach Intensity of approach For the total CR approach For specific CR ini.a.ves CR leaders do best Find the sweet spot Go big or go home Find what’s “just right”
- 15. Follow Good Prac.ces to Drive Financial and Wider Business Value from CR MANAGEMENT FRAMEWORK 1. FIT 2. COMMIT 3. MANAGE 4. CONNECT 15 Copyright IO Sustainability, 2015; SRochlin@iosustainability.com
- 16. How IO and the Project ROI team are working with companies 16 Frame Diagnose Develop Integrate Implement Measure Train Copyright IO Sustainability, 2015, SRochlin@iosustainability.com
- 17. Next steps • Design your CR and sustainability programs to achieve value • Demonstrate the value to your execuHves • Measure and improve • Get involved with the Project ROI Research and Management InsHtute Contact: Steve Rochlin IO Sustainability SRochlin@iosustainability.com +1 703 969 9197 17 Copyright IO Sustainability, 2015, SRochlin@iosustainability.com