liz muller & partners
  • Home
  • Services
  • ABOUT US
  • Clients
  • Blogs
  • Work Products
  • CONTACTS

Ernst & Young and GreenBiz’s Six Sustainability Trends

7/28/2013

0 Comments

 
I appreciated Ernst & Young and GreenBiz’s recent report, Six growing trends in corporate sustainability. The authors summarize findings from a survey of thought leaders on the six growing trends in corporate sustainability in the autumn of 2012. The report provides insightful information from the 282 survey respondents across 17 industries. More importantly, the authors discuss the findings in the context of the following six trends drawn from the survey results.
  1. The “tone from the top” is a key driver for corporate sustainability efforts
  2. Governments and multilateral institutions are not engaged in corporate sustainability
  3. Sustainability now includes the risks of both a shortage of and limited access to natural resources
  4. Corporations are not adequately prepared for the scale of future sustainability challenges
  5. Uptake of integrated reporting is slow
  6. Investor and shareholder inquiries on sustainability matters are increasing
Although this is not very encouraging news, I would like to share some points I found most interesting and add my own perspective on these six trends.

Tone from the top

Survey results indicate that direction and support of a corporation from the top are the main drivers for companies to integrate and invest in sustainability efforts. Sustainability has become mainstream. Nearly 70 percent of respondents cite sustainability in mission statements and say that sustainability is discussed regularly. Despite these strides, approximately half of the companies surveyed have not integrated sustainability into their business strategies.

I find it interesting to note that the board of directors plays an important role in ensuring that sustainability is on the overall business agenda. The survey found that 64 percent of respondents believe reporting to the board is a driver, while only 27 percent feel that the CEO is the most important driver. This can be quite positive and powerfulgives me hope. Board members may sit on multiple boards or lead another company. These members can share learnings from other organizations’ experiences and bring back ideas to their companies, resulting in increased alignment and increasingly more support from the top.

Customers are also increasingly motivating companies to take action by urging greater efficiencies (e.g. energy, packaging) and increased disclosure of working conditions or environmental impacts.

The role of governments and multilateral institutions

The report states that the lack of strong leadership from governments and multilateral institutions has created a “muddled policy environment.” Instead, respondents see large corporations as leaders in advancing sustainability at a global scale. Many also see consumers, non-governmental organizations, industry groups and governments as contributors.

This finding troubles me. Many companies have pursued the efficiency opportunities that they can tackle independently. We are now faced with the more complex issues that require long-term commitment and investment, including research and development. Companies need pragmatic, long-term policies if they are to invest in such long-term strategies, innovative research, or capital expenditures. We need governments to step up and set us all in the right direction through effective policies and incentives. President Obama’s recently announced plan to address climate change is a positive step, but additional policies and incentives will be required if we are to realize real progress.

Raw material shortages

The report cites that 51 percent of responding companies expect their business to be affected by shortages of or limited access to raw materials and natural resources in the future. Water is the natural resource most recognized as being at risk, with 76 percent of respondents mentioning water first.

We need to grow the awareness level to the point where 100 percent of all companies recognize the risks we face and actively address these risks.

Lack of preparation for the scale of future challenges

Continuing along these lines, the report indicates that corporate risk assessment and response planning are inadequate to address the scope and scale of some of the challenges we face. Most companies have not yet adequately assessed their risk to key inputs such as water or other raw materials. Even fewer companies have taken serious steps to address such risks.

I believe this lack of readiness needs to be given much more attention. It is not only the scale of the challenges but the complexity of the solutions that concern me. These risks will be exacerbated over time as populations grow and pressures on natural resources increase. We need all industries, governments and other actors to address the risks through harmonized and synergistic approaches.

The uptake of integrated reporting is slow

More than 5,000 sustainability and corporate responsibility reports are now produced worldwide, but the importance of integrating sustainability reporting into financial reporting has not taken hold as of yet.

The inclusion of sustainability in standard financial reports would raise awareness of sustainability issues, challenges and risks among shareholders as well as the board and senior management (including chief executive and chief financial officers – two critical supporters as the survey indicates). Many respondents also feel that integrated reporting would help deconstruct reduce the separation between sustainability and other business functions.

The report cites some cChallenges to integrated reporting includinge the potential for legal risks associated with increased transparency, the difficulty of aligning sustainability processes with financial processes, and the potential lack of executive and board support.

While too many companies are putting off the integration of sustainability and financial reporting, we need to start. Risk-averse companies should, at a minimum, socialize the inclusion of sustainability into financial reports – possibly keeping to more general statements and shying away from detailed metrics and commitments. Others should include the appropriate level of detail, including key performance indicators and goals.

Investor and shareholder inquiries are increasing

The report indicates a rise in stakeholder and investor questionnaires as well as shareholder proposals on social and environmental issues. However, I can’t help but recall the last sustainability conference I attended or the numerous mentions that no investors are asking anything about environmental or social risks and progress during quarterly investment calls. we need to see continued pressure from investors and consumers on corporations in the areas of the unspoken risks of resource scarcity and environmental degredation.

The Ernst & Young and GreenBiz report on these six trends shows some positive advances. But what I see more clearly is that Still, more progress must be made. Motivating more impactful investments based on science that can be more widely adopted by mainstream business would be the top priority in my book. This shift requires governments to set the course for where we must go and implement policies and incentives to encourage businesses to invest in research, technology or upgrading equipment and facilities and take action to reach the common goals.
0 Comments

The LAUNCH Approach: Fostering "A Collective Genius for a Better World"

7/11/2013

0 Comments

 
I was recently invited to participate in a special LAUNCH event, which was held at Nike's headquarters this week. I was so impressed with the event that I wanted to share some highlights with you.  

Founded by NASA, Nike, the U.S. Agency for International Aid (USAID), and the U.S. Department of State, LAUNCH is a global initiative that aims "to identify and support the innovative work poised to contribute to a sustainable future and accelerate solutions to meet urgent challenges facing our society." LAUNCH does this by showcasing and supporting innovative approaches to global challenges through a series of forums.  

Hannah Jones of Nike kicked off the event by setting the stage not just for the event at hand, but also for how we can all remain a part of LAUNCH in the future, contributing to what LAUNCH calls "collective genius for a better world." LAUNCH is about big, bold, disruptive change that will lead to system innovation - quickly and collaboratively.  

This week's event brought together approximately 150 "change agents" - experts, innovators, and manufacturers from various fields that ranged from sustainability to human rights, policy, diplomacy, international aid, academia, and more. We didn't know what exactly the event would involve, or even who would attend. What we did know was that we were honored to be included and we didn't want to miss an opportunity to be involved in something big - after all, the organizations behind LAUNCH don't shy away from big challenges.  

None of us was disappointed. Just having the opportunity to meet with and learn from the many passionate, knowledgeable pioneers was worth the trip.  

The real treat was on day one when we played an interactive game modeled after Monopoly. This wasn’t your grandparent's monopoly. It was a digital simulation played by 150 people competing in real time on multi-touch interactive tablets that allowed us to measure our progress at the end of each round of play. We began by selecting from various investment opportunities, which we would follow over a span of seven years. The winning team would be the one that achieved the best financial, environmental, and social results. Each team represented an apparel supply chain with subgroups of brands, manufacturers, chemical companies, and farmers. Investment options included some that involved investments by all supply chain actors (e.g. open source data systems), and some that were made individually (e.g. brand marketing), while others were significant enough to pursue cross-industry cost sharing (e.g. scaling up water saving technology). The investment options were only presented during each subsequent round of play that represented a year in time. Some investments with the largest benefits, such as bringing pilot initiatives to scale, were introduced in later years but required prior investments such as completed pilot projects. Along the game's timeline external forces (e.g. rising sea level due to climate change, increases in fuel prices, civil unrest due to food shortages) were introduced, which resulted in bonus points for teams who had positioned themselves well for such events.  

Through our experiences playing the game, we learned the value of collaboration - across a supply chain and across industries - and the importance of balancing efforts across sustainability criteria (e.g. toxicity, water, energy and climate, social, and waste) and against costs and cost savings. We determined that investments in foundational systems (e.g. open source data), pilot programs that would later be scaled up, and marketing to raise awareness among consumers were important factors.  

What I found most interesting were the social and tactical factors that came into play, and how representative of real life our interactions were. Our team stumbled when each supply chain actor made individual investments rather than pursuing options that resulted in shared costs and shared value for each member of the supply chain. As a result, my subgroup (brands), ended up collaborating with other teams' brands subgroups more than with our own team members. The teams that invested in foundational systems seemed to fare best. In addition, we soon learned the value of playing off of our innate competitive natures. The determination and energy we put into each decision and the desire we felt to differentiate ourselves from other teams - while at the same time needing their collaboration on investments that individual teams could not afford - required a balancing act that was just as important as weighing costs and impacts. Each of these observations is true to life. We need to foster collaboration in pre-competitive spaces and play into competition to help us get further faster.  

Day two of the event began with the announcement of the LAUNCH System Challenge 2013. The challenge seeks innovations that can be scaled up quickly and accelerate research, education and capacity building. We then heard from members of a partnership that uses market opportunities to lower environmental and climate impacts while improving the health and well-being of 4.5 million people - and counting. The partnership is between a Swiss company, Vestergaard Frandsen, and the Kenyan Ministry of Public Health and Sanitation that resulted in the making of LifeStraw, a low cost, passive water filter, as well as Carbon for Water, a financing program. LifeStraw filters have enabled people to treat drinking water properly while simultaneously eliminating their reliance on wood fires to boil the water. The Carbon for Water Program is funded by carbon financing, a model that allows for a company to earn carbon credits when they lower or eliminate emissions, which can then be sold. In this case the funding comes from selling the carbon credits that are earned when LifeStraw filters are used instead of wood fires, thereby eliminating the GHG emissions that would have resulted from those fires.  

The last work session of the event allowed each of us to get into small groups to discuss various elements and aspects of the systems that we aim to change for the better. These sessions included looking at topics at each stage of the supply chain (e.g. processing, manufacturing, and branding) and again through the lens of issues that spanned the supply chain or industry as a whole (e.g. systems thinking, transparency, traceability, capacity building). The results of each of these discussions will be sent to all participants. I will be sure to share highlights with you when I receive them.  

I am truly honored to have been a part of this week's LAUNCH event and in the company of so many passionate, intelligent and dedicated people. The experience has re-energized me to think about and act towards bigger and bolder change. We don't have any other options. Please join us on our journey to a better and brighter future.

0 Comments

    Archives

    August 2019
    January 2019
    October 2018
    July 2018
    May 2018
    March 2018
    December 2017
    November 2017
    August 2017
    May 2017
    November 2016
    October 2016
    February 2016
    October 2015
    July 2015
    April 2015
    February 2015
    October 2014
    September 2014
    June 2014
    May 2014
    April 2014
    March 2014
    January 2014
    November 2013
    October 2013
    September 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    January 2013
    October 2012
    August 2012

    RSS Feed

Proudly powered by Weebly