March 22, 2007
Sustainable Growth Toolkit
Related Studies & Resources
Opportunities and Risks from Environmental and Social Trends
March 22, 2007
1. Finding the Right Place to Start
Goal: Establish the right starting place that will assure that sustainability efforts are rooted in the core business and will generate shareholder value.
A. Decide scope of effort
B. Start with the core values of the company
C. Articulate the company’s business goals and strategies
D. Define the operating environment in which the company does business
E. Lay the internal groundwork for the initiative within the company
F. Find the right words to describe your effort
A. Decide Scope of Effort
Determine what type of sustainability strategy best suits the needs of your company:
- Company Wide
- Single Business Unit
- Combination of Company-Wide/Single Business Unit
- In establishing your starting place, be sure that there is support and a willingness from within your company.
B. Start with the Core Values of the Company
- Identify the social and environmental principles that the company has historically adopted (explicit or unstated).
- Catalogue past efforts to advance social and environmental goals.
- Define the relationship between core company values and success in the marketplace.
- Understand the current culture of the organization and the viewsof staff on sustainability and organizational culture and change.
C. Connect to Business Goals & Strategies
- To be sure that sustainability is anchored in the business and not an appendage, it is essential to integrate sustainability with the company’s broader business goals and strategies.
- To do this effectively, articulate these goals & strategies in the beginning of developing your sustainability approach.
D. Define Company’s Operating Environment
Map the company’s operating environment:
- Identify competitive threats and pressures.
- Describe the expectations for social and environmental value of direct and end-use customers.
- Understand the social and environmental commitments and principles in use in your industry at both the company and industry levels.
E. Lay the Internal Groundwork
- Form an interdisciplinary team that includes leaders of key businesses, finance people and those with responsibility for external affairs.
- Seek a mandate from the senior leadership team to make them vested in success.
- Establish the right corporate governance and organizational structure.
F. Find the Right Words to Describe Effort
- A company should use the words and terminology that fits their needs, but define these terms up front to establish clarity.
- The term “sustainability”is widely used and too broadly defined. Derivatives of the term include “Sustainable Growth”(used in this toolkit), “Corporate Social Responsibility”(CSR) and “Triple Bottom Line”(TBL).
- Be cautious in using the term “initiative”to define your sustainability approach as that lends itself to be a short-term and limited effort.
2. Opportunities and Risks from Environmental and Social Trends
Goal: A rigorous analysis of the market opportunities and risks the business faces as a result of environmental and social trends.
A. How to think about sustainability: social and environmental trends as market forces that put business value at stake
B. How sustainability strategies create value
C. Identifying the issues on which the business has “value-at-stake”
D. Describe the key trends in social and environmental issues
E. Engaging stakeholders on value-at-stakeExamples: JPMorgan Chase, Entergy, SC Johnson
B. How Sustainability Strategies Create Value
- Review different approaches to how corporate sustainability strategies create financial value
- The following two illustrations take slightly different approaches
- These approaches can be used separately or in combination
Strategies for Creating Environmental Social Benefits with Business Value
How Sustainability Strategies Create Value Emphasizing Intangible Assets
C. Identifying the Issues on which the Business has “Value-at-Stake”
Take a broad view of value
- near-term tangibles
- intangibles such as reputation and trust (by customers and society)
- employee recruitment and retention, and
- being the “partner of choice”by those in and beyond your value chain
- What are the key social and environmental trends with the potential to act as market drivers in your business?
- Use tools that help you systematically look at a full range of issues
- Characterize most important risks and opportunities related to social and environmental trends
D. Describe the Key Trends in the Social &Environmental Trends Affecting Business
Different approaches to trend analysis:
- Scenario analysis
- Decide how to approach this analysis in your company
- Internal strategy or forecasting group
- End-use Customers
- Experts on the key trends
E. Engaging Stakeholders on Opportunities and Risks
- External points of view important to understanding trends
- Identifying the right stakeholders
- Preparing for face-to-face engagements
Value at Stake: JPMorgan Chase
- JPMorgan Chase recognizes that balancing non-financial factors such as environmental and social issues with financial priorities is an essential part of good corporate citizenship, in addition to being fundamental to risk management and the protection of investors.
- “As part of its energy practice, our private equity group has invested in renewable energy generation projects and will continue to consider other investments in profitable renewable energy generation and technology.”
Source: JPMorgan Chase –Pubic Environmental Policy Statement Value at Stake: JPMorgan Chase