creating successful sustainability collaborations...sep 24, 2014 · • inherently a change...
TRANSCRIPT
Creating Successful Sustainability Collaborations
David Guernsey to SEDC
David Guernsey to SEDC 09-24-2014
former: Senior Sustainability Manager UPSnow: Independent Sustainability [email protected]
• Sustainability Today• Collaboration Imperative• Insights
Creating Successful Sustainability Collaborations
SUSTAINABILITY – WHAT IT IS & IS NOT
• New perspective on business model
• Open dialogue with stakeholders
• Inherently a change management process
• Sustainability done well builds capacity forlong-term value
• Balancing act of new concerns & issues
• Increasingly … recognized and valued by investors
Sustainability – Business DefinitionFor the business enterprise, sustainable development means adopting business strategies and activities that meet the needs of the enterprise and its stakeholders today while protecting, sustaining and enhancing the human and natural resources that will be needed in the future
What It Is Not
• Solely a PR exercise
• A few green initiatives
• A green wash
• A finite project
• A secret
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Sustainability & Financial Performance
Value of an organization
Ocean Tomo – Intellectual Capital Equity
Mounting evidence of outperformance
S&P 500 vs. S&P GRI reporters – 2001 to 2011 [Bloomberg]
Moving beyond shareholder value to stakeholder value through ES&G Performance
Mechanisms of Value Creation
“What you can’tmeasure, you cannotmanage. What youcan’t manage, youcannot change.”
A mix of tangible, intangible and hard to measure!
Looking from the outside in = new perspective
Sustainability by Sector – Material Value & Risk
Supply Chain Value / Risk
New Market Value / Risk
Reputation Value
Operations Value / Risk
Innovation Value / Risk
Retail
Transport
Consumer Brands
MFG
Technology
Utilities
Universities
Sustainability Activities – Leading & Lagging
Sustainability is quickly becoming an expectation …
Major Activities of Leading Companies• Deep Supply Chain engagement • Wide Stakeholder engagement• Focused Employee engagement• Disclosure reporting for Carbon & Water• Full Lifecycle Assessment
• Global Enterprise Risk• Investor insight into financial
“grade” sustainability data• 3rd Party Assurance• Emergence of Integrated Reporting• Valuing Natural Capital
Challenges of Lagging Companies• Lack of Senior Mgmt support• Sustainability is marginalized …• Inability to create value from …
• Challenged by lack of data / mgmt of • Sustainability Context• See it as a Public Relations exercise?$
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Sustainability Collaboration Imperative
Are we changing as fast as the world around us?
Leadership Risk mitigation Transparency is the new normal
Enlightened self-interest
Evolutionary advantage Road to resilient profit
Reputation New market opportunities Disruptive innovation on the doorstep
Challenge to status quo
Leveraging collective expertise Customers, employees and investors expect accountability
Our highly complex and intertwined global concerns require multi-disciplinary and multi-stakeholder relationships
Stakeholders: Companies, NGOs, Gov’t, Civil Society, Academia 9
SC Sustainability Collaboration Maturity ModelDimensions LEVEL 1 (BASIC/STARTING) LEVEL 2 (INITIAL/STANDARD) LEVEL 3 (INTERMEDIATE /
EXCELING)LEVEL 4 (ADVANCED) LEVEL 5 (MARKET LEADERSHIP)
Learning Receptive Shared Effort Shared Value Better Business
Sustainability ApproachWhat kind of approach best describes your firm's approach to sustainability in the supply chain internally, and in regard to its work?
Strategy & GovernanceWhat is the level of organizational commitment to utilizing sustainability as a business opportunity?
Sustainability ContextWhat is the nature of the sustainability issue(s) as related to the business initiative and what is the capacity of the organizations to manage it?
Organizational SupportHow is your business organized to capitalize on a sustainability engagement with customers?
Contract ManagementWith regard to sustainability practices, how sophisticated are the applied SC contract models for Value and Alignment between the 3PL and your select client firm?
Information Technology & ToolsHow well are the organizations utilizing technology and tools to manage metrics and gain insights into sustainability performance?
Network ManagementTo what degree do the organizations utilize network visibility and efficiency improvements to quantify and create sustainability related value?
Performance ManagementTo what degree are business & sustainability related metrics applied and utilized to enhance performance?
Resources & Waste ManagementWhat is the level of sophistication applied to the partnership with respect to the reduction of waste and utilization of resources in the supply chain?
Fuel & Emissions ManagementWhat is the level of sophistication applied to the partnership with respect to the reduction of GHG and local pollutant emissions in the supply chain? [Note: local pollution emissions of concern are NOx, SOx, HCs and PM]
Megatrends & MaterialityTo what degree have the organizations assessed and are they collectively acting to manage sector megatrend concerns and significant material aspects?
Risk ManagementTo what degree and perspective are organizational ES&G risks evaluated and acted upon within and between the organizations?
CommunicationWhat is the sophistication level of sustainabilty related communications within and external to the organizations?
Early conformist approach: these organizations are loosely reactive
to clients sustainabil ity motivations and lack
appreciation of a triple bottom line perspective.
Mature conformist approach: these organizations are receptive
to clients sustainabil ity motivations and have joint
projects/initiatives underway, with l imited staff buy-in and
quantification of sustainabil ity related issues.
Engaged approach: these organizations have clearly documented supply chain
sustainabil ity initiatives, metrics and goals that they share with
each other, customers and other stakeholders.
Value chain approach: these organizations have shared
sustainabil ity initiatives, metrics and goals yielding performance
gains and mutual ROI from sustainabil ity initiatives.
Visionary approach: these organizations have recognized
leadership sustainabil ity strategies and supply chain
management practices with clear alignment across firms and
yielding new business opportunities.
Organizations incorporating basic sustainabil ity perspective in
communications with stakeholders.
Organizations are acting by way of recognition and stakeholder
concerns to develop a sustainabil ity report and other stakeholder communications.
Organizations produce sustainabil ity reports and
communicate regarding their shared efforts to stakeholders.
Organizations produce "mature" sustainabil ity reports and
communicate regarding economic and sustainabil ity related benefits of shared efforts to stakeholders.
Organizations communicate with stakeholders from an integrated
business perspective .6
Organizations are advanced sustainability reporters .7
Organizations apply NO introspective process to assess megatrend concerns or material
aspects of their business horizon.
Organizations have begun to identify business related ES&G3
externalities and are considering strategic actions.
Organizations have shared their learnings regarding megatrend
concerns and significant material aspects4 as they relate to their
shared business activities.
Acting collectively and strategically to respond to
megatrend concerns and issues of significant material impact to the
organizations.
Significant understanding of sector megatrend concerns and
significant material issues is contributing to development of
new or enhanced business models.
Organizations util ize a traditional risk management approach with
NO sustainabil ity related perspective.
Organizations util ize a traditional risk management approach and are cognizant of sustainabil ity
related issues with nascent risk management driven efforts to
mitigate them.
Organizations util ize traditional risk management and are delving
into the ES&G enterprise risk5
perspective. They are considering management approaches to
control their value chain risks.
Employing an Enterprise Risk management perspective to value
chain externalities. This approach yields a shared value / shared
risk perspective to the partnership.
Enterprise risk management strategy yields business horizon
insights that help steer the organizations to new business
opportunities and business model considerations.
Waste is wasted. No efforts to manage the reduction of wastes or
the util ization of resources from supply chain activities.
Basic returns mgmt system in place with NO recognition of
sustainabil ity related benefits. Waste and resource use are
reduced through solitary efforts.
Sophisticated returns mgmt system in place with recognition of
sustainabil ity related benefits. Waste and resource use are
quantified and reduced through collaborative efforts.
Sophisticated returns mgmt system with recognition & quantification
of business and sustainabil ity related benefits. A l ife cycle
approach is applied to minimize the creation of wastes and
util ization of resources.
Partnership perceives waste as financial loss and acts to enable
the return or use of SC waste as an economic resource through
broader collaborative engagements.
Organizations using minimal, if any, best practices to reduce fuel
use and emissions with l ittle acknowledgement of sustainabil ity
related benefits.
Organizations util izing industry best practices to reduce fuel use and emissions for cost reduction
with some acknowledgement of the associated sustainabil ity related
benefits.
Organizations are collaborating to implement tools and technologies
that reduce fuel use and emissions for cost reduction with
acknowledgement of the associated sustainabil ity related
benefits.
Application of technologies and processes to reduce fuel use and
emissions are quantified and contributing to cost reduction and
reduced SC risks for the partnership.
Application of new technologies, innovations and processes to
reduce fuel use and emissions are quantified and contributing to cost
reduction, reduced SC risks, and business growth from
sustainabil ity l ike-minded companies.
There is a lack of clarity regarding the need for technology and tools to capture sustainabil ity related
data.
Using some technology and tools to collect sustainabil ity data.
Leveraging technology and tools to collect sustainabil ity related
insights.
Technology and tools produce sustainabil ity related insights that are acted upon and create shared
value in the relationship.
Technology and tools used for the frequent monitoring, independent
verification, transparency and accuracy of resource usage and its
impact in the supply chain.
Network improvements driven solely from within organizations
for cost reduction only and no perspective on sustainabil ity
related benefits.
Network improvements driven as collaborative effort between
organizations for cost reduction with acknowledgement of
sustainabil ity related benefits.
Network improvements driven as collaborative effort between
organizations for cost reduction and efficiencies with
quantification of sustainabil ity related benefits supported by
metrics.
Collaborative effort to redesign networks for multiple business
benefits that create shared value. Sustainabil ity related benefits
quantified, supported by metrics and shared goals.
Collaborative efforts to redesign networks for multiple business
benefits creates shared value and insights that drive recognized
leadership, brand value and new business opportunities.
Organizations2 util ize own business metrics with NO
sustainabil ity perspective.
Organization(s) util ize own business metrics with
sustainabil ity perspective.
Organization(s) util ize shared business metrics with
sustainabil ity perspective.
Organization(s) util ize shared business metrics with
sustainabil ity perspective and shared value approach.
The application of business and sustainabil ity metrics yield
business insights that lead to new opportunities for business models
and innovation opportunities.
Organizational sustainabil ity perspective is nascent. Issues and opportunities are not being acted
upon.
Organizational sustainabil ity perspective is seen as an ad-hoc
opportunity with l imited staff support. Limited sustainabil ity engagements with SC partners.
Middle management support for sustainabil ity efforts.
Collaborative engagement with some strategic SC partners. Coordinated planning and
execution.
Senior management supporting sustainabil ity as a practice that
enables improved customer relationships and value added
benefits
Senior management supporting sustainabil ity as a recognized
business driver, opportunity and risk management practice that
enables business growth
Sustainabil ity issues of the organizations are benefiting from
the collaborative engagement.
Sustainabil ity issues benefiting significantly. Organizations are transparent about shared value.
Contracts include sustainabil ity related joint metrics of success.
Periodic performance reviews include senior management. The application of key sustainabil ity practices to create value in the relationship has generated new
business opportunities from leadership efforts.
Lone stranger approach Ad-hoc resource(s) Dedicated lead resource Dedicated group
Organizational sustainabil ity mandate with dedicated team and full integration into all aspects of
business
Sustainabil ity issues of the organizations not defined,
understood or owned.
Sustainabil ity issues of the organizations are documented,
understood and owned.
Sustainabil ity issues are managed and understood as drivers of
economic value and market growth opportunity. Organizations are
transparent about cost and environmental benefit.
LSP1 receiving sustainabil ity related requests for information from clients. Answering poorly if
answering at all .
LSP receiving requests for information and sustainabil ity
related contractual requirements from clients. Meeting some
sustainabil ity related customer requirements.
LSP recognizes opportunity in responding well to information
requests and meeting many contractual requirements.
LSP has systems in place to meet and respond to customers
requirements. Contracts include shared value (recognition /
incentives) for sustainabil ity related performance.
A model developed for Logistics Quarterly2014 - 3PL Sustainability Study & Awards Program
Organization(s) utilize shared business metrics with sustainability perspective and shared value approach.
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Learning ReceptiveShared Effort
Shared Value
Better Business
Sustainability Approach Re act ive to V i s ionar y
Strategy & Governance Nasce nt to Inte gr ate d
Sustainability Context The bus ine ss conne ct ion to g loba l i s sue s
Organizational Support Ad hoc to fu l l Inte gr at ion
Contract Management Abse nt to shar e d va lue & r i sk
Information Tech & Tools Tr anspar e nt and ins ight fu l f low of in for mat ion
Network Mgmt S tage s o f S C networ k e nhance me nt
Performance Mgmt Evo lut ion o f metr i cs & ins ights
Resources/Waste Mgmt Pr ogr e ss ion to a c i r cu lar e conomy appr oach
Fuel/Emissions Mgmt C ost sav ings to compet i t i ve advantage
Megatrends/Materiality Running b l ind to long- te r m bus ine ss
Risk Mgmt S hor t - s ighte d to e nte r pr i se pe r spe ct ive
Communication Impr ov i se d to advance d susta inab i l i ty r e por te r s
SC Sustainability Collaboration Maturity Model
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Collaboration Insights from the INSIDE
Sustainability dept. has a modest & directed budget
Find a center of gravity Look for CFO insights
Sustainability context (multi-dimensional)
Getting past the gatekeeper Scale for “what if”
Verification & transparency are fundamental
Know the hurdlesUse external sector pressures (with finesse)
Sustainability Dept Across Functions Senior Mgmt
Step by Step
Learn
• Sustainability transforming business• Recognize it as a journey• Get to know sustainability minded companies
Engage & Support
• Utilize exploratory dialogue• Build capabilities to support data needs
Leverage
• Engage in sustainability initiatives with shared objectives• Align objectives and goals to create shared value• Build a Better Business
Canadian Tar Sands Activism
NGO Activist Contact• Get a letter• Do your homework• Consider a path and confirm
ISSUE• Like finding green electrons?• Brand / customer campaign• Highly complex environmental /
social / financial / security / human implications
How did UPS respond• Acknowledge issue• Open a dialogue• Engage U.S industry experts
& stakeholders
BSRFuture of Fuels
Workgroup
Example: Effective Industry Collaboration
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On the Scent
Sustainability collaboration does not have to be the exclusive domain of large leadership companies