The New Sustainability Advantage: Seven Business Case Benefits of a Triple Bottom Line - Tenth Anniversary Edition

Praise for

The New Sustainability Advantage

This book is an invaluable read for sustainability insiders as well as first timers. The structure of The New Sustainability Advantage is so well thought through that it allows the reader to get the information they need quickly and efficiently. Beyond the impressive data and logic of the business case for sustainability, the real lessons lie in the humility, creativity, persistence and passion for which Willard has become internationally renowned.

—Dr. James Gray-Donald, Associate Vice-President, Sustainability Leader, Sears Canada Inc.

In his book, The New Sustainability Advantage, Bob Willard articulates the business case for sustainability and the alignment of the for-profit mandate with the pursuit of environmental and social benefits. Using examples, he demonstrates that sustainability is a material source of business value when employed as a strategic framework for innovation, value creation, and organizational enhancement. Milton Friedman’s edict — that the business of business is business, and the creation of shareholder profit is its fundamental mandate — is just as true now as it ever was. Yet — as the reader discovers — what has changed is the context within which business operates, and thus how one bounds this edict in the pursuit of sustainable capitalism. The sources of value available to business and the competitive forces acting upon it are dynamic. We should not be surprised by shifts in business criteria, sources of value, or changes in the business activities required delivering a winning value proposition.

—Tyler J. Elm, Vice President, Business Sustainability, Canadian Tire Corporation

Through his new book, Bob gives us a more compelling business case for sustainable practices that help the bottom line by capitalizing on employees’ emotional engagement and culture change. His business case for investing in sustainability strategies is realistic, achievable, and profitable.

—Claude Ouimet, Senior V.P. General Manager for Canada and Latin America at InterfaceFLOR

10 years after publishing his ground-breaking book, Bob Willard continues his thought-leadership with The New Sustainability Advantage, an even more compelling updated case for businesses of all size to reap the benefits of advancing sustainability. His thorough research and impeccable credentials have the power to both convince sceptics and arm champions. Bob’s well laid out balance of risk and opportunity inspires those businesses already addressing sustainability issues to push further and deeper for even greater triple-bottom-line impacts. By providing resources, worksheets and on-line material to empower businesses to do it themselves, Bob is proactively building the sustainable world he wants to live in.

—Barbara Turley McIntyre, Director Sustainability and Corporate Citizenship, The Co-Operators Group Limited

Willard’s latest update adds some important ideas to the field of sustainability. He has assembled some of the best data and case studies available on why and how sustainability creates enduring value for companies. Before organizations can really commit and learn to compete on sustainability, they need to really understand all aspects of the business case for driving green deep into strategy. Willard’s book is an indispensable resource and an easy read, which doesn’t go together often.

— Andrew Winston, environmental strategist and co-author of the international bestseller Green to Gold

Going green is highly profitable. Bob Willard documents this fact in case study after case study: His analysis is spot on. Cutting carbon is really a proxy for cutting energy and electricity — hence cutting cost. With a good green story companies are raising revenue because consumers want to buy from a company that isn’t destroying the future of their children and grandchildren. Going green also mitigates risk against rising energy prices. So sustainability cut cost, raises revenue and mitigates risk. This book is a must read for every executive who is concerned about the bottom line — and their corporate license to operate.

— Jim Harris, International bestselling author, Former Leader, Green Party of Canada

Praise for

The Sustainability Advantage (First Edition)

Bob Willard has performed a service of inestimable value: quantifying the business case for sustainability. He shows how to capture the potential effects of millions of firms, large and small, waking up to the untapped profit potential that’s all around them. Read this book to learn how.

—Ray Anderson, CEO, Interface, Inc.

Bob Willard has laid out a powerful but practical guide to the ways in which companies can use the sustainability concept to improve productivity and decrease expenses, while increasing revenue and shareholder value.… His book is a delightful combination of creativity and vigor.

—Stephan Schmidheiny, Honorary Chairman, World Business Council for Sustainable Development

The Sustainability Advantage makies the most compelling argument yet for how business can profit from a strategy that focuses on the health of people and the planet. By putting these lessons into practice, you’ll save your company, you’ll preserve the environment, and you’ll earn new respect for yourself.

—Jim Kouzes, co-author, The Leadership Challenge and Encouraging the Heart

The New

Sustainability

Advantage

COMPLETELY REVISED 10TH ANNIVERSARY EDITION

The New

Sustainability

Advantage

SEVEN BUSINESS CASE BENEFITS

OF A TRIPLE BOTTOM LINE

BOB WILLARD

Copyright © 2012 by Bob Willard.

All rights reserved.

Cover design by Diane McIntosh.

Main image: © iStock (Jim Schemel) rooster: © iStock (pastoor)

New Society Publishers acknowledges the support of the Government of Canada through the Book Publishing Industry Development Program (BPIDP) for our publishing activities.

eISBN: 978-1-55092-507-4

Inquiries regarding requests to reprint all or part of The New Sustainability Advantage should be addressed to New Society Publishers at the address below.

To order directly from the publishers, please call toll-free (North America)

1-800-567-6772, or order online at www.newsociety.com

Any other inquiries can be directed by mail to:

New Society Publishers

P.O. Box 189, Gabriola Island, BC V0R 1X0, Canada (250) 247-9737

Library and Archives Canada Cataloguing in Publication

Willard, Bob

The new sustainability advantage : seven business case benefits of a triple bottom line / Bob Willard. -- Completely rev. 10th anniversary ed.

Previous ed. published under the title: The sustainability advantage.

Includes bibliographical references and index.

1. Management--Environmental aspects. 2. Sustainable development reporting. 3. Business enterprises--Environmental aspects. 4. Environmental protection--Economic aspects. 5. Sustainable development. I. Title.

HD30.255.W54 2012 658.4’083 C2011-908458-9

New Society Publishers’ mission is to publish books that contribute in fundamental ways to building an ecologically sustainable and just society, and to do so with the least possible impact on the environment, in a manner that models this vision. We are committed to doing this not just through education, but through action. The interior pages of our bound books are printed on Forest Stewardship Council®-registered acid-free paper that is 100% post-consumer recycled (100% old growth forest-free), processed chlorine free, and printed with vegetable-based, low-VOC inks, with covers produced using FSC®-registered stock. New Society also works to reduce its carbon footprint, and purchases carbon offsets based on an annual audit to ensure a carbon neutral footprint. For further information, or to browse our full list of books and purchase securely, visit our website at: www.newsociety.com

To my wife, Sherrill,

who ensures that our personal sustainability flourishes.

Contents

Acknowledgments

Preface to the Second Edition

Preface

Introduction

Sustainability Strategies Are Smart Business Strategies

The Premise

Definitions, Terminology, and Frameworks

Definitions of a Sustainable Society

Snorkeling in the Terminology Swamp

Our Unsustainable Take-Make-Waste Business Model

Elephant #1 in the Board Room: Growth

Elephant #2 in the Board Room: Overconsumption

A Sustainable Borrow-Use-Return Business Model

The Five-Stage Sustainability Journey to a Sustainable Enterprise

Stages 4 and 5: Similar Behaviors, Different Motivations

The Four-Step Transformation from Stage 3 to Stage 4

The Need for a Relevant, Aligned Business Case

Aligned with Existing Business Priorities

Aligned with the Standard Value Chain Framework

Aligned with the Income Statement Framework

Possibilities for Two Typical Companies

BENEFIT 1

Increased Revenue and Market Share

Revving-Up Revenue

More B2C and B2B Revenue from a More Sustainable Brand

New Revenue from New Green Products

New Revenue from Services and Leasing

Potential Top-Line Totals

BENEFIT 2

Reduced Energy Expenses

The Lowest-Hanging Fruit

Saving Energy in Buildings: An Inside Job

Computing Energy Savings in IT

Driving Energy Savings in Transportation

Renewing Energy Savings with Substitutions

The Secret Sauce of Eco-Efficiency Savings: Engaged Employees

Potential Energy Expense Savings

BENEFIT 3

Reduced Waste Expenses

In Bed with Embedded Waste

The Four-Factor Formula for the Full Cost of Waste

Company Efforts to Avoid Waste

Bonus: Revenue from Selling Waste

Potential Waste Savings Help Build a Sustainability Capital Reserve

BENEFIT 4

Reduced Materials and Water Expenses

Saving Natural Capital Saves Financial Capital

Savings from Dematerialization

Savings from Substitutions

Savings from Recycling and Reusing Onsite Waste

Savings from Product Take-Back/Closed-Loop Systems

Savings on Water

Savings on Consumables and Paper

Potential Materials Savings Help Build a Sustainability Capital Reserve

BENEFIT 5

Increased Employee Productivity

Purpose Powers Performance

Engagement Drives Business Results

Engagement Enables Productivity and Innovation

CSR Programs Promote Productivity and Engagement

Volunteerism Vaults Employee Engagement and Productivity

Increased Productivity from Reduced Absenteeism

Increased Productivity from More Telecommuting and Less Travel

Increased Productivity from Green Buildings

Increased Productivity and Innovation from Improved Collaboration

Increased Productivity and Innovation from Higher Engagement

Potential Increased Employee Productivity and Innovation

BENEFIT 6

Reduced Hiring and Attrition Expenses

The War for Talent Still Rages

A Sustainable Enterprise Is a Talent Magnet

Paying the Price for Voluntary Turnover

BENEFIT 7

Reduced Risks

Standard Two-Part Business Case

Four Categories of Risk

Mitigating Strategic Risks That Could Erode Revenue

Risk to Revenue from Poor Reputation on Energy and Carbon Management

Risk to Revenue from Poor Reputation on Water Management

Risk to Revenue from Poor Reputation on Materials and Waste Management

Risk to Revenue from Poor Reputations of Suppliers or Customers

Risk to Revenue from Poor Reputation on Ecosystem Damages

Risk to Revenue from Less Competitive Prices

Risk to Revenue from Sudden Disruptions in the Value Chain

Mitigating Operational Risk That Could Increase Expenses

Risk of Higher Cost of Energy

Risk of a Price on Carbon

Risk of Increased Cost of Waste

Risk of Higher Cost of Water and Materials

Risk of Higher Cost of Capital

Risk of Higher Voluntary Turnover and Lower Employee Productivity

Mitigating Compliance Risk

Mitigating Financial/Stock Price Risk

Potential Burning Platform of Risks

Conclusion

Potential Bottom-Line Benefits for M&D Corp

Potential Bottom-Line Benefits for Sam’s Solutions

What’s In It for Me (WII-FM)?

What about the Costs?

Why the Business Case Is Hopeless

Why the Business Case Is the Perfect Path to the Tipping Point

Notes

Index

About the Author

Acknowledgments

Hundreds of conversations, articles, journals, books, and conferences contributed to this book — some directly, but most indirectly.

In the last ten years I have given over 700 interactive talks on the business case for sustainability strategies to corporate, non-governmental, academic, and public sector audiences. The question-and-answer sessions and informal conversations at these events were wonderful learning labs. I learned about the need to articulate my points more succinctly; to provide snappy evidence to back up my claims; to reframe my arguments so that they are more relevant to those in the discussion; and to listen and learn from their experiences.

Other speakers at these events also enriched my thinking. So did the authors of the thousands of articles I have perused, brought to my attention by the dozen or so press clipping services to which I subscribe. The explosion of material on corporate social responsibility (CSR); sustainable development; sustainability; and environmental, social, and governance (ESG) strategies provides excellent grist for my authorial mill.

I also acknowledge valuable help from Caroline Nolan, principal at ThinkSustain® Consulting, and Timothy Nash, president of Strategic Sustainable Investments. Not only did they provide me with data, material, and examples, but they were also invaluable sounding boards as I grappled with decisions about the flow, organization, emphasis, and quantification of the sustainability benefits. Tom Ewart, Tima Bansal, and Bushra Tobah at the Network for Business Sustainability helped clarify my understanding of academic research on the business value of sustainability programs and helped me separate relevant findings from the interesting but not-so-useful majority.

As usual, working with Heather Nicholas and her colleagues at New Society Publishers was a treat. It is fun to collaborate with kindred spirits. Diane McIntosh’s artistic touches on the cover, and Audrey McClellan’s eagle eye on the text provided professional polish to the finished product. They helped with all four of my books and are my trusted safety net.

Thank you all.

Preface to the Second Edition

When I did research for the first edition of The Sustainability Advantage, I relied on studies, cases, reports, and literature written in the late 1990s and early 2000s. Since then, sustainability strategies have become even more relevant to corporate success. New, compelling evidence of the potential business benefits convinced me to recalibrate the business case to reflect current findings.

My original plan was to update some of the examples in the original book and some of the parameters in the original spreadsheets. The evolution of the scope of the updates reminds me of what happened when my wife and I decided to make a few improvements to our home. We started by agreeing we should update the kitchen cupboards, but the more modern cupboards highlighted the age of the countertops, so we decided to replace them as well. Soon the kitchen flooring, appliances, and plumbing and lighting fixtures were on the list. Then it occurred to us that if we were going to redo the kitchen, we might as well remove the wall to the dining room and refinish the adjoining living room and its access to the back deck. An open, modernized downstairs layout would show up the dated hall entrance and staircase, and then we were talking about remodeling the upstairs. Whoa. That is when we realized that what we really wanted was a new house. So we moved.

Similarly, I quickly saw that it was easier to write a new manuscript than to update the previous one. This book is my new home for the business case for sustainability described in the first edition. The first edition was about why companies should embrace sustainability strategies. This edition focuses on why they are doing so and what additional benefits they might reap by going even further on their sustainability journeys. Figure 0.1 itemizes six ways that the new edition differs from the first.

One of my objectives in writing a 10th anniversary edition is to avoid the need for a 20th anniversary edition. The last point on the what’s new list in Figure 0.1 references an online Sustainability Advantage Simulator dashboard and worksheets. They summarize the business case calculations described in The New Sustainability Advantage — think of the book as a detailed explanation of the simulator — and are freely available on my website at sustainabilityadvantage.com. If the logic and assumptions in the simulator need to be tuned to reflect new evidence, I can make adjustments immediately online. It is like a real-time précis of the book and an ongoing 10th anniversary edition.