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The Sustainability Advantage: Can Canadian Companies be sustainability leaders?
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The Sustainability Advantage
Canadian companies can become leaders
:: September 21, 2010 ::Carbon Economy Summit
Susan Sheehan motum b2b
• Sustainability-driven companies do so for competitive advantage
• Canadian companies not doing so, yet
• What to do (mimic the leaders)
The message 3
• 76% of executives said sustainability contributes to shareholder value in the long run; 50% said delivers short-term value too
• More than 70% rank sustainability as very or extremely important to corporate reputation and brand
• 60% said sustainability important to corporate strategy
Source: McKinsey & Company, “How companies manage sustainability”, Feb. 2010 global survey of 1,946 non-energy execs
Apparently: investing in sustainability management DOES deliver value
4
• 25% of executives say sustainability is a top-three priority in their CEO’s agenda
• use sustainability as competitive driver: formally embedded in business practices; extremely effective at managing it
• actively seek opportunities to invest in sustainability
• Track sustainability indicators of their customers and suppliers
• Aggressively communicate their sustainability investments
Source: McKinsey & Company, “How companies manage sustainability”, Feb. 2010 global survey of 1,946 non-energy execs
Also: leading companies tend to exhibit leadership
5
What are Canadian companies saying…..
6
• What are Canadian companies BUYING to improve their sustainability performance
• How intense is this activity (current and future)?
• Intensity = Action
• motum b2b, Innovative Research Group, Roger’s Publishing collaboration
Our study: assess the intensity of sustainability investment in Canada?
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ManufacturingTransportation & Warehousing
Wholesale & Retail Trade
Other
Agriculture, Forestry and Fishing
UtilitiesConstruction
Who did we interview? 268 senior decision makers
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17%
34%
49%
< $10M <$100M + $100M
Who did we interview?role and size
9
27%36%37%
C-Suite OperationsManager
Non C-SuiteManager
Respondent’s Role Company Size
Some findings to ponder
51%
46%
41%
34%
28%
18%
18%
13%
6%
10%
3%
Waste management
“Green” IT
Energy efficiency in operations
Water management
Air emissions management
Clean or alternative energy
Sustainable supply chain
‘Green’ buildings
Other
None
Don’t know
11
What have you done for green lately?
87% have implemented some form of a sustainability initiative over the past two years
87% have implemented some form of a sustainability initiative over the past two years
Q
32%
29%
28%
25%
22%
21%
21%
18%
6%
12%
7%
Energy efficiency in operations
‘Green’ buildings
Clean or alternative energy
Sustainable supply chain
Water management
Waste management
“Green” IT
Air emissions management
Other
None
Don’t know
12
What do you plan to do soon-ish?
81% will implement some form of sustainability initiative in 2010 and/or 2011
81% will implement some form of sustainability initiative in 2010 and/or 2011
Q
Carbon management initiatives…
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What’s going to happen now (in 2010)?
Supply Chain Position
Company Size
Overall B2B B2B+B2C B2C Small Medium Large
Increase 38% 31% 42% 57% 29% 43% 43%
Stay about the same 50% 55% 54% 30% 60% 47% 41%
Decrease 5% 6% 1% 3% 7% 1% 11%
Note: ‘Don’t know’ not shown
Q
Supply Chain Position
Company Size
Overall B2B B2B+B2C B2C Small Medium Large
Cost savings or efficiencies 77% 81% 78% 73% 71% 83% 81%Competitive positioning 39% 37% 39% 53% 37% 47% 24%
Regulatory compliance 34% 31% 35% 50% 25% 43% 38%
Employee morale/retention 32% 31% 35% 30% 29% 36% 27%
Government and utility financial incentive programs 28% 33% 26% 33% 26% 34% 30%
Individual leadership/legacy of key executive(s) 27% 33% 25% 17% 25% 29% 38%
Corporate Social Responsibility (CSR) programs 26% 31% 26% 17% 15% 38% 38%
Brand enhancement 25% 24% 29% 17% 17% 32% 30%
Product differentiation 22% 23% 21% 17% 25% 21% 16%
Risk mitigation 16% 16% 19% 17% 10% 20% 30%
Community pressure/Community relations 12% 13% 15% 10% 9% 16% 22%
Potential new revenue stream (e.g. carbon credits) 10% 9% 11% 13% 10% 13% 5%
Other reporting requirements 2% 3% 0% 3% 2% 0% 8%
Other 2% 2% 1% 3% 3% 1% 3%
There are no motivations to be sustainable at my company 4% 4% 5% 0% 5% 4% 3%
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What’s driving your investments?Q
“My company’s commitment to environmental sustainability is strong.”
15What’s your firm’s commitment to sustainability at this time?
Supply Chain Position Company Size
Overall B2B B2B+B2C B2C Small Medium Large
Strongly agree 28% 24% 39% 27% 25% 28% 42%Somewhat agree 50% 54% 42% 57% 55% 49% 39%
Somewhat disagree 13% 13% 13% 13% 15% 17% 6%Strongly disagree 6% 7% 6% 0% 5% 4% 8%
Total Agree 78% 78% 81% 83% 80% 76% 81%
Q
“How important is the adoption of corporate sustainability practices and policies to your company’s long-term success?”
16
Sustainability and long-term success
Supply Chain Position Company Size
Overall B2B B2B+B2C B2C Small Medium Large
Extremely important 10% 7% 15% 7% 8% 9% 8%Very important 35% 30% 37% 50% 28% 39% 38%
Somewhat important 31% 35% 27% 30% 35% 32% 30%Not very important 14% 16% 13% 13% 18% 14% 11%
Not important at all 6% 7% 6% 0% 6% 4% 8%Don’t know 4% 4% 2% 0% 4% 1% 5%
Extremely + Very Important 45% 38% 52% 57% 37% 49% 46%
Q
17Is environmental performance of products/services/processes a significant factor in what your company buys?
13%
40%30%
13%
Very significant Somewhatsignificant
Not very significant Not significant atall
53% say significant 42% say ‘not so’ significant
Q
Q
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Sustainable supply-chain Do we demand ‘it’ from suppliers?Do our customers demand ‘it’ from us?
Supply Chain Position Company SizeOur suppliers should have sustainability practices B2B B2B+B2C B2C Small Medium Large
Extremely important 3% 2% 3% 7% 3% 4% 3%Very important 16% 15% 17% 20% 12% 16% 22%
Somewhat important 39% 35% 43% 47% 41% 39% 32%Not very important 27% 29% 26% 17% 31% 25% 14%
Not important at all 12% 17% 9% 3% 11% 11% 22%Don’t know 4% 2% 2% 7% 2% 5% 8%
Extremely + Very Important 19% 17% 20% 27% 15% 20% 24%
Supply Chain Position Company SizeOur customers expect us to have sustainability practices B2B B2B+B2C B2C Small Medium Large
Extremely important 5% 2% 7% 7% 5% 4% 8%Very important 21% 17% 26% 30% 14% 26% 22%
Somewhat important 35% 41% 28% 37% 34% 36% 41%Not very important 25% 23% 27% 20% 34% 25% 5%
Not important at all 8% 12% 6% 0% 9% 4% 16%Don’t know 7% 4% 6% 7% 5% 5% 8%
Extremely + Very Important 26% 20% 33% 37% 18% 30% 30%
How confident are you that your organization knows where to find ‘enabling green technologies’?Q
19Low confidence finding green solutions = in theory we get it; but it’s not embedded in strategy yet
Supply Chain Position Company Size
Overall B2B B2B+B2C B2C Small Medium Large
Very confident 14% 15% 19% 3% 14% 11% 16%Somewhat confident 48% 50% 45% 57% 48% 46% 62%
Not very confident 22% 21% 22% 33% 24% 33% 11%Not confident at all 6% 6% 6% 3% 7% 4% 5%
Don’t know 9% 8% 7% 3% 7% 7% 5%
Confident 63% 65% 64% 60% 61% 57% 78%Not Confident 28% 27% 29% 37% 31% 37% 16%
Net Confidence 35% 38% 35% 23% 30% 20% 62%
Gap analysis….. 20
Global
• 88% of sustainability leadings execs seeking opportunities to invest
Local (Canada)
• 45% extremely-very important to long-term success
• 38% planning to increase investment
• 28% strongly committed to sustainability
• 14% Canadian companies very confident finding enabling technologies…..
What to do, what to do….. 21
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Step 1: Treat sustainability as a strategic opportunity Barriers to investing in green?
49%
33%
27%
22%
13%
10%
8%
11%
Lack of capital budget or financing
Unacceptable payback periods
Don’t have a green technology investment strategy
Don’t know what technology to look for
Technology risk/unproven
Don’t know where to source these technologies
Don’t Know
Don’t have purchasing policies that allows for evaluating the unique benefits of green technologies
Q
• 62% don’t report sustainability metrics to investors or are unaware of their reporting practices; even though 50% of them keep track of value creation from these investments
• Only 18% of Canadian companies feel they do sustainability communications “extremely or very well”
Step 2: Tell people about it How good are you at sustainability communications?
23
Q
• Formally embedding sustainability in business practices (supply chain, capital allocation, HR, product development, differentiation)
• Actively investing in enabling technology
• Measuring results and benefits
• Actively seeking external assessment
• Proactively communicating what you are doing
Sustainability Advantage means
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Sustainability leadership takes leadership
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PS: Only 6% of our Canadian respondents feel they significantly exceed customer expectations…..
