You are on page 1of 53

CIRCULA

ECONOM
BENEFIT
CORPORATION
UNI TED NATIONS SUSTAINABLE
DEVELOPMENT GOALS
SHARED
VALUE
of new sustainability leadership thinking
14
CIRCULAR
ECONOMY
BENEFIT
CORPORATION
UNI TED NATIONS SUSTAINABLE
DEVELOPMENT GOALS
ENVIRONMENTAL
PROFIT & LOSS
SHARED
VALUE
NET POSITI VE
DIRECTIONS 14:
GETTI NG
UNDER THE
It has long been clear that if we are to tackle the major challenges facing
humanity whether it be access to healthcare, environmental degradation,
poverty, food shortages, education or human rights abuses - business has a
vital role to play. However, many companies are still struggling to reconcile
the challenge of unceasing demands for growth and economic returns with
the less tangible, but nevertheless real, opportunities presented by playing a
positive role in society
Yet a growing number of businesses are moving beyond the tactical responses
to these issues energy efciency, carbon reduction, codes of conduct to form
a more strategic view of how their businesses need to adapt. These are businesses
that will not just be viable, but will thrive in the starkly different future that lies
ahead of us.
This is no easy task. But the rise of a number of potentially transformative
approaches to business sustainability Shared Value, Environmental Prot &
Loss, Circular Economy, Net Positive, Benet Corporations offers solutions for
moving away from business as usual on a much broader scale than has been
previously seen.
So what is it about these particular approaches that has seen them become the
new power behind some of the worlds most sustainable companies?
Are these concepts genuinely transformative? Or are they just the latest big ideas
that will be shelved in times of trouble or replaced by shiny, new alternatives in
the near future?
Directions 2014 dives under the surface of these approaches and concepts for
sustainable business to analyse what lies at their core, their strengths and
weaknesses and their potential impacts.
By bringing together insight from the academics behind the concepts, experiences
from the companies pioneering them and the ambitions of the organisations
trying to bring them into the mainstream, we hope to shed some light on the inner
workings of these models and to help you explore which or which combination
might be the right t for your business.
Directions 2014 Team
NIGEL SALTER
Founder & CEO
JIM PEACOCK
Director, Consultancy and
Communications
ANNIE LANCASTER
Senior Consultant
TOM LOVE
Senior Designer
ARIAN OLDROYD
Digital Design Director
ELLEN ALM
Account Manager
LOUISE MOYNA
Production Team Manager
GARY McCALL
Manager of Print
Production and Resources
JEFF SUTTON
Business Development
Director
KIM FORSBERG
Marketing Executive
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
CIRCULAR ECONOMY
EP&L
SHARED VALUE
New Opportunities Seen
in the Round.............................10
Vision 2030...............................12
China Looks to take a
Leading Role.............................16
Every company should have
a North Star............................18
NET POSITIVE
The Next Frontier of
Sustainability Leadership ....22
One Year In;
Many Years to Go ....................26
A Quantum Leap Forward......30
EP&L and the Triple
Bottom Line...............................32
Forging the link between
economic and social value.....36
CSR into CSV..............................40
Our contributors............................................46
About us..........................................................48
B CORP
Prot with Purpose................44
CONTENTS
Evolutionary Timeline..........................................................................................................................................................................................................2
Edging towards a Tipping Point.........................................................................................................................................................................................4
RIP: The End of Business As Usual...................................................................................................................................................................................6
SUSTAINABILITY THINKING:
THE CONCEPTS UNDER REVIEW
1
DIRECTIONS 2013 SALTERBAXTER
2
DIRECTIONS 2013 SALTERBAXTER
2
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
2
1976
In their research report to
the European Commission,
The Potential for
Substituting Manpower for
Energy, Walter Stahel and
Genevieve Reday sketched
the vision of an economy in
loops (or circular economy).
2005 1966 1982 2006 2007 2008
2006
Promoting a circular
economy was identied as
national policy in Chinas
11th ve-year plan.
2005
General Electric launches
Ecomagination
2006
The concept of Creating
Shared Value (CSV) is rst
introduced in The Harvard
Business Review
2006
Nestl signs up to CSV
2006
Certied B Corp
Founded
2007
First B Corp
certied
2008
Policy efforts to support
B Corps rst launched
EVOLUTI ONARY
1982
The report was published
in the book Jobs for
Tomorrow: The Potential
for Substituting Manpower
for Energy.
1966
The idea of circular material
ows as a model for the
economy was presented by
Kenneth E Boulding in his
paper The Economics of the
Coming Spaceship Earth.
The question of how business can be more sustainable is not
new; indeed, the thinking were reviewing in Directions 2014
originated as early as the 1960s, with principles that hark
back to the dawn of capitalism.
Here, we explore how the concepts and models under review
have evolved in parallel, some key moments in their
development, and their adoption by agship brands.
CIRCULAR
ECONOMY
SHARED
VALUE
333
2009 2010 2011 2012 2013 2014
2010
The Ellen MacArthur
Foundation is established.
2012
The Ellen MacArthur
Foundation and McKinsey
release a report entitled
Towards the Circular
Economy: Economic and
business rationale for an
accelerated transition
the rst of its kind to
consider the economic and
business opportunity for
the transition to a
restorative, circular model.
2012
the European Commission
published a document
entitled Manifesto for
a Resource Efcient
Europe. This manifesto
clearly stated that In a
world with growing
pressures on resources
and the environment, the
EU has no choice but to go
for the transition to a
resource-efcient and
ultimately regenerative
circular economy.
2013
Some big-name brands
sign up to the circular
economy: IKEA, Cisco,
Coca-Cola, Renault
2014
Unilever joins the movement
2009
Conceived by PUMA
chairman Jochen Zeitz
2011
EP&L theory announced
by PUMA
2011
UK Government uses
the PUMA EP&L as a
case study for
sustainable business
in a DEFRA white paper
2011
Ofcial Launch by PUMA
2014
Novo Nordisk becomes the
rst big pharma company to
publish an EP&L report.
2011
Shared Value concept
further explained
in The Harvard Business
Review
2012
Kramer & Porter & FSG
found the Shared Value
Initiative to enhance
knowledge-sharing and
best practice for CSV,
globally.
2012
IKEA announce net
positive intentions
(not ofcially afliated
with the movement)
2012
Kingsher announce net
positive intentions (not
ofcially afliated with
the movement)
2013
BT announce net positive
intentions (not ofcially
afliated with the
movement)
2013
Forum for the Future
partners with WWF
and The Climate Group to
form Net Positive Group,
which aids companies
in accelerating their
progress towards
becoming Net Positive
2014
Forum for the Future, WWF,
and The Climate Group
publish a report (sponsored
by BT) that captures the
principles of what it means
to take a Net Positive
approach
2010
Maryland becomes rst
U.S State to pass Benet
Corporation legislation
2011
500 Companies have
signed on as B Corps
2012
Patagonia becomes a
certied B Corp
2013
19 US states have passed
Benet Corporation
legislation
B CORP
EP&L
NET
POSITIVE
4
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
Nigel Salter asks:do these new schools
of thought on sustainability provide
business with the tools of transformation
or are they just more smoke and mirrors?
Theres something different about this
latest edition of our Directions report.
All of this years inputs and contributions
seem to conrm that business and
brands are now focused very much on
the question of how to drive sustainable
commercial success, rather than on
whether or not this is an agenda that
actually matters to them.
It seems to me that, in their different
ways, all of the ideas and methodologies
circular economy, Shared Value, EP&L,
Net Positive and Benet Corporations
discussed here (there are others of course
too, but we have highlighted the ones that
we see as the most signicant) are proof
that business is trying to integrate
sustainability thinking more fully and
make it more operational clearly a good
thing, regardless of the alignment or
choice of one method over another.
But what are the key factors at work here?
THE NEED FOR PRACTICALITY
There is simply no doubt in my mind
sustainability thinking has spent too long
with its head in the clouds and not enough
time homing in on the commercial
realities. This is now changing.
Business knows that there is a huge
opportunity in the sustainability challenge.
It is now trying to work out how to
maximise this opportunity to achieve
competitive advantage and ensure future
viability and protability. These different
methodologies and ideas give business
leaders and managers some of the tools
and processes needed to plot a path to the
desired results. They may not be perfect
yet, but they are at least valid attempts to
move from management theory to real,
NIGEL SALTER
Founder & CEO
Salterbaxter MSLGROUP
N
F
Sa
5
on-the-ground transformation that
delivers useful outcomes social,
environmental and commercial.
LEGITIMISING THE
TRANSFORMATION
And it is perhaps also down to the fact
that these models are not perfect yet that
they are acting slightly as totem poles
around which theres growing
collaboration, innovation and momentum.
The fact is that managers within business
often need the legitimising effect of a
credible school of thought in order to get
adequate buy-in within their companies
to spur on real change.
We should not underestimate the important
legitimising effect within business thats
come from the names of the Ellen
MacArthur Foundation and McKinsey
sitting comfortably alongside the circular
economy movement and the Michael
Porter/Harvard name being put squarely
behind the concept of Shared Value.
As well as the legitimising effect, the fact
that these concepts are seen to be
increasingly credible also provides another
kind of much needed security. It offers
cover for some of the failure that is going to
be an inevitable and, indeed, essential part
of the journey to nd workable solutions.
As Kingsher conrms, not all the
innovation and new thinking will work and
so it is essential to experiment within a
framework that creates enough room for
failure, as well as success, to be acceptable.
Innovative thinking needs an umbrella!
COMMUNICATING TO BUILD
CRITICAL MASS
We should also not underestimate the
massive role that communications and
effective engagement have to play in
driving change.
As everyone knows, good stories really do
help to get people on board and, to a
degree, all of the models and ideas covered
here have a storytelling role to play as well
as doing the actual job of turning science
into substance. The circular economy
somehow wouldnt be as memorable or as
attractive if it was called The Regenerative
Economy. Net Positive is a simple story to
capture. The EP&L is a neat blend of
sustainability and nance written in a
language business can understand. All of
these methodologies enable business to
explain itself better.
And one step beyond just storytelling is
actual engagement where people are
compelled to act and get more involved.
As Robert Metzke from Philips explains,
all businesses need an ambition a
North Star to strive for. Over and above
just storytelling, these models provide the
desired destination and a sense of
purpose that gets organisations, teams,
people and processes all properly and
effectively lined up.
These organisations themselves would
undoubtedly prefer to emphasise the
substance and science part of the
argument. But in the practical, messy
reality of business, there is no doubt these
models also help with the important task
of communicating new ways of thinking
and getting people to engage with them.
BUSINESS FILLING THE
GOVERNMENT VOID
It was probably shortly after COP15 that
business woke up to the reality that
governments were not going to be the
force for change needed to address the
worlds sustainability challenge.
Since then, business has taken on the
responsibility much more by itself or in
sector or even multi-sector collaborations
to build the momentum needed. All of
these models and processes could be said,
at least partially or indirectly, to have been
borne out of that lack of leadership from
government or at least from the sense
that if business is to gain commercially
from the agenda then it needs to apply its
own rules and operate on its own terms.
Thats not to say that government and
other policymakers have failed to
respond totally.
The big focus on public-private
partnerships weve seen in the last few
years, particularly in developing markets,
is evidence of a changing mindset Guido
Schmidt-Traub makes this point well in his
article and underlines that, actually, the
scale of the challenges we face means that
public-private collaboration is essential.
And the fact that the United Nations
Sustainable Development goals (UN SDGs)
appear to be a more relevant framework
for business to engage with, and have been
relatively well received by business, points
to some positive potential.
THE NEED FOR SCALE
But we also have to be honest with
ourselves. Despite all the talk of the last
decade and the great theories, has that
much really changed?
Michael Porter made this point well in last
years TED talk called Why business can
be good at solving social problems.
As he points out, business really has to
roll its sleeves up now and apply the prot
motive to the societal challenge of
sustainability.
This is partly because business is good at
solving problems. But its also down to the
simple fact that it controls the vast
majority of the worlds resources, and
most of the efforts and initiatives to date
have operated at too small a level.
The only way to truly address the issues
is to operate at scale across the system.
And only business has the model (prot
based) and the resources to deliver this
effectively. Porters statistics underline
the dilemma pretty dramatically total
global revenues by stakeholders split
like this: Non-prot organisations
$1.2 trillion; Governments $3.1 trillion;
Business $20.1 trillion.
These new models and schools of thought
are all signicant attempts to square this
circle and to apply commercial thinking to
societys key sustainability challenges in
a way that can be quickly scaled up.
They may not provide the nal answers.
But, taken together, they are starting to
look like a tipping point.
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
Weve come to the end of business as
usual. Guido Schmidt-Traub argues
that if we are to meet the scale of the
environmental challenges that face us,
and to have a chance of achieving the
UNs Sustainable Development Goals,
the models under review here are only
the start: the private sector must play
a central role in making a reality of
sustainable development. Here he
outlines the need to fundamentally
change how business works, and the
major transformations that need to
take place.
According to NASA gures, the frequency
of extreme temperature events events
that should occur only once every 700
years has already risen 100-fold, even
though the earth has warmed by only
0.9C. Warming by another 0.40.6C is
built into the system at todays
concentration of greenhouse gases,
meaning that even if we were able to stop
emitting greenhouse gases today, things
would still get signicantly worse.
But if we carry on along the road we are
currently on, the earth will be 45C
warmer by the end of this century.
This will put the climate system outside
the stable range of the Holocene epoch
that has enabled human civilization to
ourish over the past 10,000 years.
Its clear that business as usual simply
does not offer a viable long-term
perspective for economic growth. And yet
rapid growth is still possible, but only if it
becomes sustainable by respecting
environmental boundaries at local,
regional, and planetary levels.
FOUR MAJOR TRANSFORMATIONS TO
SUSTAINABLE DEVELOPMENT STAND
OUT FOR BUSINESS.
01. EMISSIONS
A drastic reduction of greenhouse gas
emissions from 5.2 tons of carbon
dioxide per capita to 1.6 tons by 2050.
This will require massive increases in
energy efciency; low-carbon electricity
generation; the electrication of
transport, heating and cooling in
buildings; and the decarbonisation of
industrial processes, such as cement,
steel and chemical production.
02. AGRICULTURE
An increase in agricultural production by
at least 50 per cent to serve the needs of
a growing and increasingly prosperous
global population.
This need must be met using far fewer
resources. Before 2030, the world needs
to stop land degradation and net
conversion of land to agricultural use,
bring water use in line with sustainable
supply, reduce excessive nutrient ows,
and lower chemical pollution.
03. SUSTAINABLE CITIES
Cities will require higher-density
housing and land-use planning;
resource-efcient infrastructure and
services; and drastically reduced
pollution of air, water, and land.
This urban transformation must occur
soon. If not, countries will get locked into
unsustainable infrastructure and land-
use patterns that might have a lifetime of
70100 years.
04. PRODUCTION
Industry must transform itself to
respond to rapidly changing tastes and
lower resource intensity and
environmental pollution.
This will require higher resource efciency
in energy, water, and other material
inputs; drastically lower levels of
emissions and pollution; and innovative
life-cycle management of all industrial
products particularly long-lived
pollutants, such as plastics. With some
four to ve billion people aspiring to
middle-class lifestyles, this process of
industrial transformation needs to
happen at an unprecedented pace.
GUIDO SCHMIDT-TRAUB
ExecutiveDirector
UN SustainableDevelopment Solutions Network
RI P:
ITS CLEAR THAT BUSINESS
AS USUAL SIMPLY DOES
NOT OFFER A VIABLE
LONG-TERM PERSPECTIVE
FOR ECONOMIC GROWTH.
6
7
SOME PROGRESS
BUT A LACK OF SERIOUS ACTION
Each of these four transformations marks
a major departure from business as
usual. The circular economy, Net
Positive, Shared Value, and other
emerging business strategies for
sustainability are an important step
towards launching the four
transformations.
Some businesses are already nding new
opportunities in these transformations,
but overall, governments and business
have not begun to tackle these
transformations seriously.
So the question is: how can governments
and business harness such innovation to
drive transformations in energy,
agriculture, cities and industry?
DIRECTED CHANGE
The Sustainable Development Solutions
Network (SDSN) commissioned by UN
Secretary-General Ban Ki-moon to
accelerate practical problem-solving for
sustainable development shows that
each transformation requires long-term
change in technologies, in business
models, in regulation, and in consumer
behaviour.
Achieving the transformations will require
directed technological change, a
process involving six steps:
01. GOAL SETTING
Just as business requires clear goals to
succeed, the world needs to adopt long-
term goals for sustainable development.
Building on the success of the Millennium
Development Goals (which set
quantitative targets for reducing extreme
poverty), governments are now debating a
new set of Sustainable Development
Goals for the period 20152030.
02. BACK-CASTING AND NATIONAL PATHWAYS
Countries and businesses need to back-
cast feasible trajectories to work out what
needs to be done today to achieve long-
term goals. These should be transparent
and public to promote open debates with
the active participation of business.
03. TECHNOLOGY BENCHMARKS AND
R&D ROADMAPS
Countries and businesses can set
technology benchmarks, providing the
long-term incentives that businesses
need to innovate and to mobilise the
ingenuity of their engineers.
Benchmarks also provide a framework
within which businesses and other
innovators can develop long-term R&D
roadmaps. We could do something similar
for energy transition, with the
International Energy Agency perhaps
leading roadmapping processes for
energy storage, solar power, wind power,
carbon capture storage, electric vehicles,
residential energy efciency, smart grids
and fourth generation nuclear power.
04. PROTOTYPING
Prototyping of new technologies requires
extensive public-private partnerships to
ensure adequate public co-nancing,
supportive regulation, and effective
monitoring and evaluation. Unfortunately,
public nancing and support for
prototyping are widely inadequate. A vivid
example is provided by lacklustre efforts
to invest in large-scale demonstration
projects for carbon capture and storage
(CCS) even though all available pathways
suggest that this technology is required to
decarbonise energy in countries that rely
heavily on coal, such as China and India.
05. PUBLIC-PRIVATE PARTNERSHIPS FOR
SCALING UP
Public-private partnerships can roll out
new technologies at the requisite scale.
Such partnerships need to mobilise
public and private nancing, ensure
sound regulation, and promote
technology diffusion. Business leadership
will be required to think through how
partnerships can be designed.
06. BEHAVIOUR CHANGE
The scale of the sustainable development
challenges requires mass adoption of new
technologies, but also of healthier
lifestyles and resource-saving
behaviours. Mass education will need to
be promoted to raise awareness.
DYNAMIC PARTNERSHIPS
Some worry that such directed
technological change smacks of Gosplan-
style central planning, but this is a
profound misunderstanding of the
challenges facing us, and the available
responses.
All successful technology
transformations have relied on strong and
dynamic public-private partnerships
around shared goals.
Responsible businesses and their leaders
who invest in such partnerships should
and will be amply rewarded in terms of
their bottom line, their brand, and their
ability to attract the best available talent.
RESPONSIBLE BUSINESSES
WILL BE AMPLY REWARDED
IN TERMS OF THEIR
BOTTOM LINE, THEIR BRAND,
AND THEIR ABILITY TO
ATTRACT TALENT.
8
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
The circular economy aims to
move us towards an industrial
economy that is restorative in
nature. Moving from the current
linear model take, make, dispose
to a circular economy requires a
fundamental rethink of how
business operates, with emphasis
placed on reducing the use of
natural resources, designing-out
waste and allowing valuable
biological and technical materials
to deliver value beyond the life of a
single specic product or service.
KEY FACTS
The Ellen MacArthur Foundation was
founded in 2010 with the aim of
accelerating the adoption of the circular
economy. This crystallised and unied
thinking dating back to the 1970s
The Ellen MacArthur Foundation and
McKinsey & Company have
collaborated in making the business
case for the adoption of the circular
economy with their reports, titled
Towards the circular economy
In 2014, Project MainStream was
announced: a collaboration between
World Economic Forum, Ellen
MacArthur Foundation and McKinsey &
Company to help businesses shift
towards a circular economy and as a
result save US$500 million in materials
Key players include Philips, IKEA, Cisco,
Coca-Cola, Renault, H&M, The LEGO
Group, and Unilever.
9
10
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
we reached an inection point in 2002,
when commodity prices started to rise
sharply and we entered an era of
increasing price volatility.
Suddenly it became far harder to predict
resource and energy prices with any
certainty. This has potentially devastating
effects for companies with high xed
costs, which rely on achieving economies
of scale to continue growing. Clearly, in
this volatile context, making gradual
efciency gains will not be enough to fuel
that growth. Indeed the very notion of
business as usual is put under the
spotlight in this new environment and,
with three billion new middle class
consumers coming into the market by
2050, just using a bit less and recycling a
bit more material might not be enough to
cut it.
Moreover, a throughput economy relies on
high volumes of goods and services being
sold, and that calls for a healthy customer
base. However, while productivity has
been steadily increasing over the past 60
years, wages have been largely stagnant
since the 1970s. To counteract this and to
keep the wheels of the economy turning,
large amounts of credit were made
available at low cost. But the era of cheap
credit hit a roadblock with the nancial
crisis of 2008, resulting in less disposable
income for consumers.
THE RULES HAVE CHANGED
So, in two very fundamental ways, the
rules of the game for our economy are
changing, and business leaders,
innovators, academics, students and
scientists are looking for a way out a
new model which will allow us to redene
our notion of economic progress in the
twenty-rst century.
One option is the circular economy, a
model that has been gaining traction
around the world in recent years. Unlike
the linear model based on the idea of
mine, make, sell, dispose the circular
model is regenerative by design.
It relies primarily on optimising two
distinct material ows, biological and
ELLEN MACARTHUR
Founder
TheEllen MacArthur Foundation
Todays linear economy in which
resources are extracted, made into
products, sold and ultimately thrown
away is facing fundamental
challenges. A new regenerative model
the circular economy is taking
root, offering huge opportunities to
those progressive enough to make an
early shift, says Ellen MacArthur.
The economic model we have lived by for
the best part of 200 years has served us
well. In terms of cheap and accessible
energy and materials, the linear model
inherited from the Industrial Revolution
has proved successful, fuelling
unprecedented economic development
throughout the twentieth century. And,
boosted by new discoveries, increased
efciency and new technologies, weve
also felt the benets of steadily declining
commodity prices.
But all that changed in the early years of
the new century. As investment expert
Jeremy Grantham rst observed,
NEW
OPPORTUNI TI ES
MINING/MATERIALS MANUFACTURING
TECHNICAL NUTRIENTS
RECYCLE
REFURBISH/
REMANUFACTURE
REUSE/
REDISTRIBUTE
PARTS MANUFACTURER
PRODUCT MANUFACTURER
SERVICE PROVIDER
MAINTENANCE
COLLECTION COLLECTION
BIOLOGICAL NUTRIENTS
FARMING/COLLECTION
BIOCHEMICAL
FEEDSTOCK
RESTORATION
BIOGAS
ANAEROBIC
DIGESTION/
COMPOSTING
EXTRACTION OF
BIOCHEMICAL
FEEDSTOCK
BIOSPHERE
Ellen MacArthur Foundation, adapted from McDonough &
Braungart (C2C Protocol) and Stahel (Performance Economy)
ELLEN MACARTHUR FOUNDATION CIRCULAR ECONOMY MODEL
11
THE CIRCULAR ECONOMY
technical. Products and services in this
model are designed to circulate
efciently, with biological materials
returning to the food and farming
system, and technical materials being
kept in production and put to new use,
without loss of quality. A circular model
generates new revenue streams, reveals
overcapacity and puts assets to good
use while ensuring that, as leading
Performance Economy thinker Walter
Stahel puts it: The goods of today
become the resources of tomorrow, at
yesterdays prices.
GROWING MOMENTUM
As well as the decline of cheap materials,
energy and credit, there are other
changes underway that are supporting
the transition to a circular economy.
A combination of factors including
reducing home sizes, less disposable
income, the prevalence of the mobile web
and smartphone capabilities has led to
the emergence of a new consumer, one
who is less concerned about owning
stuff, and more interested in the services
or power technology provides.
We see evidence of this in a number of
ways. Just look at the momentum growing
behind the collaborative consumption
movement or sharing economy, and the
huge number of new businesses set up to
exploit the idling capacity of a range of
assets. Empty rooms can be booked
through AirBnB, journeys through Lyft,
and even musical instruments through
Sparkplug. Clothing company Le Tote
provides access to womens fashion for a
at monthly fee, in the same way people
use Netix or Spotify instead of owning
physical DVDs or CDs.
Technological advances are facilitating
these business models nding and
booking the nearest communal car or bike
has only been made convenient with the
advent of smartphones and mobile
networking. Product tagging and tracking
and the the ability to analyse huge
amounts of data through the Internet of
Things are also enabling manufacturers
THE GOODS OF TODAY
BECOME THE RESOURCES
OF TOMORROW, AT
YESTERDAYS PRICES.
or service providers to keep an eye on
their products how much theyre being
used, if theyre performing properly and
when theyre about to go wrong. This
makes product recovery feasible, and
opens up valuable new customer service
or aftermarket opportunities.
Global trends are providing a fertile
environment for a shift in the economy.
And, in addition to offering an exciting new
lens for innovation, increasing circularity
could offer a signicant economic
advantage too.
In 2012, the Ellen MacArthur Foundation
published the rst in a series of reports
entitled Towards the Circular Economy.
These reports have concluded that a
circular economy would not only help
decouple economic development from
use and overuse of nite resources, but
also represent new economic
opportunities worth more than $1 trillion.
As our rst report showed, circular
processes could play straight to one of
Europes greatest strengths its high-
value manufacturing sector, where up to
$630 billion of net material savings can be
achieved per year through improvements
in design, business models, reverse
cycles and improvements in education
and policymaking.
In a world of uncertainty, many are asking
what the future economy will look like in
the context of population growth and
resource constraints. Our research and
analysis tends to indicate that a circular
economy framework could offer guiding
principles for rethinking and redesigning
the future.
There are promising signs that a shift is
taking place. But creating a new system,
which rebuilds economic, social and
natural capital, will require real ambition,
a pioneering spirit and the willingness and
ability to collaborate in new ways.
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
The logic behind creating a circular
rather than linear economy is
becoming increasingly clear to many
companies, argue Martin Stuchtey
and Helga Vanthournout, of
McKinsey & Company. But progress is
slow, with businesses and consumers
needing to break the habits of several
lifetimes to reap the benets of a new
industrial era.
By 2030, up to three billion consumers
from the developing world will enter the
middle class, putting enormous pressure
on natural resources. This is already
showing up in the market: since 2009,
commodity prices have grown faster than
global economic output. At the same time,
even as global competition intensies,
there is growing political and public
pressure on business to improve its
environmental and social performance.
The circular economy offers a way to
address all these issues.
This regenerative economic model helps
companies to create value while reducing
their dependence on resources by
designing products for multiple cycles of
use, disassembly, and re-use. The circular
economy aims to eradicate waste not
just from manufacturing processes, but
throughout the life cycle of products and
their components.
It is built on four principles:
1. Creating business models to capture
more value from a manufactured
product
2. Designing products with multiple
useful lives in mind
3. Developing reverse logistics that keep
the need for quality and cost efciency
in balance
4. Co-ordinating with players within and
across supply chains to create scale
and to identify higher-value uses.
This approach contrasts sharply with the
mind-set embedded in most of todays
industrial operations, where even the
everyday terminology value chain,
supply chain, end user describes a
rigid linear approach.
In the circular economy, the traditional
linear model of manufacturing take,
make, and throw out becomes a
regenerative one that retains and
restores material, energy, and labour
inputs. Re-use, refurbishing or
recycling, not disposal, is the new
default option.
VI SI ON 2030:
MARTIN STUCHTEY
Director
McKinsey & Company
HELGA VANTHOURNOUT
KnowledgeExpert
McKinsey & Company
12
d creating a circular
ar economy is
asingly clear to many
ue Martin Stuchtey
hournout, of
mpany. But progress is
esses and consumers
k the habits of several
the benets of a new
ee billion consumers
ng world will enter the
ing enormous pressure
ces. This is already
market: since 2009,
have grown faster than
utput. At the same time,
mpetition intensies,
olitical and public
ess to improve its
d social performance.
omy offers a way to
ssues.
economic model helps
ate value while reducing
on resources by
s for multiple cycles of
and re-use. The circular
eradicate waste not
cturing processes, but
e cycle of products and
.
It is built on four principles:
1. Creating business models to capture
more value from a manufactured
product
2. Designing products with multiple
useful lives in mind
3. Developing reverse logistics that keep
the need for quality and cost efciency
inbalance
4. Co-ordinating withplayers within and
across supply chains to create scale
and to identify higher-value uses.
This approach contrasts sharply with the
mind-set embedded in most of todays
industrial operations, where even the
everyday terminology value chain,
supply chain, end user describes a
rigid linear approach.
In the circular economy, the traditional
linear model of manufacturing take,
make, and throw out becomes a
regenerative one that retains and
restores material, energy, and labour
inputs. Re-use, refurbishing or
recycling, not disposal, is the new
default option.
THE CIRCULAR ECONOMY
HERE ARE SOME EXAMPLES OF
HOW THE CIRCULAR ECONOMY
CAN WORK:
RENAULT
Renault leases batteries for electric cars,
in large part to recover them more easily
so they can be re-engineered or recycled
for additional use. The French carmaker
has a dedicated plant near Paris that
remanufactures automotive engines,
transmissions, injection pumps, and
other components for resale. The plants
remanufacturing operations use 80 per
cent less energy, and almost 90 per cent
less water, compared with a comparable
new production facility. The plant also
delivers higher operating margins.
JUST BECAUSE SOMETHING
IS DIFFICULT, THOUGH, DOES
NOT MEAN THAT IT CANNOT,
OR SHOULD NOT, BE DONE.
H&M
Global apparel retailer H&M encourages
customers to bring in old clothes in
exchange for discount vouchers. Most
are dispatched to the global
secondhand apparel market. The rest
can be used as substitutes for virgin
materials in other applications, such as
cleaning cloths and textile yarns or to
create damping and insulation materials
for the auto or construction industries.
When all other options are exhausted,
the remaining textiles become fuel to
produce electricity.
CATERPILLAR
Caterpillar anticipates remanufacturing
needs when designing its products and
then uses its dealer network and
aftermarket service infrastructure to
ensure that its components are returned
at minimal cost. The Cat Reman business
refurbishes and uses the parts in
remanufacturing, with the resulting
products sold on at a fraction of the price
of new. The company moved 70,000 tons
of remanufactured products in 2010.
The results, says Caterpillar, are
maximum productivity and lower costs.
RENAULT ELECTRIC CAR BATTERY
LEASING SCHEME
CATERPILLAR REMAN ENGINE PARTS
H&M LONG LIVE FASHION
13
remanufacturing op
cent less energy, an
less water, compare
new production faci
delivers higher oper
RENAULT
LEASING S
of remanufa
The results
maximum
CATERPILL
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
14
VALUE CREATION AND CAPTURE CAN BE MAXIMISED BY
ADDRESSING PRODUCT AND SYSTEM DESIGN SIMULTANEOUSLY
Optimise resource efciency
through system design of
> Manufacturing
> Retail sales channel
> Supply chain
Optimise resource efciency
through
> Specications
> Material selection
> Reduction of materials
Optimise EoL treatment
> Material selection
> Component selection
> Product modularity
Optimise collection
infrastructure through
increased collection rates
> New business models
> Value chain design &
incentives
> Alignment of external
inuencers
Optimise for efciency
in use through
> Material selection
> Component selection
> Technology/software usage
Complement product w/
ancillary services
that increase efciency
Optimise customer
interaction through
> New business models
> Closer interaction
with customer
CREATE USE
RETURN
DESIGN CHOICES
Design System
Design Product
PROJECT MAINSTREAM
Project MainStream is a collaboration
led by the World Economic Forum,
Ellen MacArthur Foundation and
McKinsey & Company as knowledge
partner. MainStream will accelerate
the transition to the circular economy
by taking CEO-led collaboration on
carefully selected pressure points to a
new level. This will unlock the
stalemates that individual
organisations cannot resolve, even
when working with their own partners
and supply chains. MainStream is now
launching its rst three agship
delivery projects on plastic
packaging (bringing together cities
and large players in the consumer
industries), paper eco-design
(improving yields through better
choice and use of inks and additives),
and asset tracking (better end-of-use
value recovery through knowledge
of product whereabouts, ownership,
and quality).
15
The circular economy benets the
environment, by reducing extraction
and manufacturing emissions and
moderating the consumption of natural
resources. But for corporate leaders
who need to satisfy investors and
shareholders with tangible benets,
what does the circular economy have
to offer?
First, more efcient energy and resource
use translates directly into lower
production and operational costs. On
materials alone, McKinsey estimates that
companies could save more than $1 trillion
per year using circular economy principles.
For example, P&G identies partners that
can use its process waste and non-
performing inventory. The strategy has
created $1 billion in value over the last ve
years and the consumer-goods giant has
also achieved zero waste at 25 per cent of
its manufacturing facilities.
IT HAS TO BE SAID THAT
THE CIRCULAR ECONOMY
IS NOT EXACTLY TAKING
THE BUSINESS WORLD
BY STORM.
Second, the circular economy provides
additional ways for companies to connect
with their consumers and thus to build
loyalty. Instead of selling a product, and
not seeing the consumer until it is time to
buy again, in the circular system there can
be more (and more interesting)
touchpoints. For instance, Philips is
beginning to sell lighting as a service,
not as a product. In some cities and
institutions, customers pay for the light,
and the rm does everything else, from
installation to maintenance to recycling.
It makes for a much stronger relationship
than ringing up light bulbs at the cash
register. Caterpillars programme allows
it to make money on second-hand parts,
so that it captures a bigger share of the
total lifecycle.
So that is the case, and it makes sense.
But it has to be said that the circular
economy is not exactly taking the
business world by storm.
Few companies have gone in this direction
in a big way and that is understandable,
given the difculties of adapting business
practices according to the four principles.
Closing product and component loops is
no easy task, despite attractive arbitrage
opportunities. With dozens of
components from dozens of suppliers
(and even countries) embedded in a
product, it can also be difcult to
develop alternative supply chains.
A circular economy on a worldwide scale
will require a lot of players to change
simultaneously, notes Philips CEO Frans
van Houten, and thats a bit of a chicken-
and-egg problem.
Moreover, the power of inertia should
never be underestimated. Many aspects
of business-as-usual reect decisions
made long ago. The take-make-and
throw out model of production has been
familiar since the earliest days of the
Industrial Revolution and companies have
spent 150 years optimising their
production, logistics, and marketing
operations around it.
Consumers have their own hard-to-break
habits. For instance, most people
evaluate the expense of products only at
the point of sale, though that does not
always make sense. The Ellen MacArthur
Foundation has estimated that leasing
high-end home washing machines would
lower the cost of use for consumers by a
third over ve years. Manufacturers
would also earn more by leasing their
eets of machines multiple times before
refurbishment. But who thinks about
renting a washing machine?
Just because something is difcult,
though, does not mean that it cannot,
or should not, be done. Clearly, the era
of low and falling resource costs is
over. At the same time, the idea of
sustainability is spreading.
In the past, respondents most often cited
cost cutting or reputation management
as reasons for pursuing sustainability
initiatives. That is changing. In a recent
McKinsey survey, 43 per cent said their
companies were trying to align
sustainability with their overall business
goals, mission, or values, up from
21 per cent in 2010. Almost half of CEOs
(49 per cent) said they considered
sustainability a top-three priority,
up from 34 per cent in 2010.
As sustainability rises in signicance,
capturing its full value grows more
challenging. To do so, the four principles
need to be ever more integrated into the
core business, and this is not easy. There
are, however, proven approaches and
techniques. The larger point is that
moving toward a circular economy can
help forward-looking companies innovate
and nd new paths to growth, while also
laying the foundations for a new industrial
era that benets companies, economies,
and the environment alike.
COMPANIES COULD SAVE
MORE THAN $1 TRILLION PER
YEAR USING CIRCULAR
ECONOMY PRINCIPLES.
THE CIRCULAR ECONOMY
16
With growing environmental and
technological challenges, China has
very clear reasons to search for a new
model of economic development. But
its not just about achieving the
Chinese Dream in a new, more
sustainable way, says Haifeng Huang
of Peking University. China wants to be
part of a global transition.
The Industrial Revolution brought huge
benets to society, benets that were felt
throughout the twentieth century. But
today the picture has changed.
With many countries facing a growing
income gap and wrestling with serious
environmental problems, it is becoming
increasingly clear that as the Club of
Romes book The Limits to Growth argues
our previous approach to economic
development now has the power to
destroy human life. We need to nd a new
way to secure growth.
It is in this context that the idea
of a circular economy has emerged,
and gained serious consideration
across the world as a creative way
to balance economic, environmental
and social sustainability.
CHINAS CIRCULAR ECONOMY
ITS TIME TO CHANGE
Not surprisingly, the circular economy is
being looked at carefully in China where
industrialisation, urbanisation and
modernisation are still in their early stages,
and where its an increasingly tough task to
strike a balance between stimulating
growth, improving peoples livelihoods and
protecting the environment.
The governments own strategic goals for
2020 indicate why a shift to a circular
economy holds so much appeal.
Within that time, the Chinese economy is
expected to reach RMB3536 trillion, GDP
per capita has been forecast to exceed
RMB250,000, and the population is
expected to grow to 1.4 billion, with 55 per
cent of people living in cities and towns.
However, in these forecasts, traditionally
polluting industries still make up a large
part of Chinas industrial output.
Clearly, if the country continues its
traditional approach to economic
development, the environment and
society will not be able to bear the burden.
And there are dangers for Chinese
industry too, if things do not shift. Chinese
enterprises lack advanced technology
and market competitiveness, and as a
result are about an eighth as efcient as
those in Japan and a fth as efcient as
their US competitors. If energy prices
continue to rise sharply, or if global
environmental regulation gets tighter,
China, the so-called factory of the world,
will face a series of signicant problems.
PROGRESS AT EVERY LEVEL
To stimulate a healthier economy and
tackle the growing logjam of
environmental constraints, China is
paying increasing attention to a circular
economy and sustainable development to
nd a new way to pursue the Chinese
Dream. It is something you see at every
level, from government to businesses,
to individual consumers.
First, the government is focusing more on
the quality of economic development
rather than, as in the past, its speed. The
emphasis on economic development is
also being transferred away from the
heavy manufacturing industry, and more
to the soft service industry.
A high-efciency, low-emission energy
system is being built, and the
development of renewable energy
sources, including hydropower, biomass,
solar energy, geothermal, and ocean
energy, are being sped up. Enterprises
are also focusing on improving labour
standards and testing new approaches
to management.
For the individual, lifestyle and
consumption patterns are also changing.
Environmental issues have become an
increasingly important concern for
informed consumers. For them, products
labelled circular have a growing appeal.
A NEW KIND OF DIALOGUE
In the past, a number of stumbling blocks
have stood in the way of progress, and
two of them relate to Chinas relations
with the rest of the world.
Take technology transfer, for example.
America has the worlds leading
CHI NA LOOKS
TO TAKE THE
CLEARLY, IF THE COUNTRY
CONTINUES ITS TRADITIONAL
APPROACH TO ECONOMIC
DEVELOPMENT, THE
ENVIRONMENT AND SOCIETY
WILL NOT BE ABLE TO BEAR
THE BURDEN.
PROFESSOR HAIFENG HUANG
Assistant Dean, Peking University HSBC Business School
ExecutiveChairman
Ecological Development Union International
DIRECTIONS 2014 SALTERBAXTER MSLGROUP DIRECTIONS 2014 S
17
technology for controlling sulphur
dioxide emissions. However, because of
tariff barriers, US rms can only export
the second best technology, not the best
and most efcient, to countries like
China. The circumstance is the same
when China brings its own products to
international markets.
Foreign investment in China is obviously
welcome, but it can have negative
impacts too. Investing in exporting old-
fashioned products and processes to
China and concentrating investment in
environmentally unfriendly industries like
textiles, chemicals, and electronic
manufacturing, has played a big part in
creating Chinas current environmental
and pollution problems.
This has been an issue in the past but,
thankfully, the dialogue between China
and the rest of the world is changing.
Nowadays, it tends to focus much more
on green issues and on the circular
economy. You can understand why. Mr.
MA Jun, the chief economist of the
Central Banks research bureau, predicts
that China will have the demand for a
staggering RMB2 trillion of green
investment a year in the future.
WHAT CAN CHINA BRING
TO THE WORLD?
In July 2014, China staged its Eco Forum
Global Conference with the theme of
Joining Hands, Leveraging Reforms to
Bring Forth a New Era of Eco-civilization.
As Chinas Prime Minister, LI Keqiang,
stated, Protecting the environment and
stimulating green development requires
the cooperation of the whole world.
Embracing a circular economy is a good
way to promote mutual trust and
business benets between China and
other countries.
China has made its position clear. It is
ready to play a big role in developing a
circular economy not only at home,
but across the world.
PUBLIC POLICY IN CHINA
IS ALSO DEVELOPING
RAPIDLY TO REFLECT
THESE NEW ECONOMIC
AND ENVIRONMENTAL
REALITIES.
Specically, the government is trying to stimulate
green and circular development in nine ways:
Completing the scal interest rate mechanism
to encourage green debt
Banks and rating agencies are introducing more
indices on environmental risk and building up a
green credit system
An environmental measurement system, based
on natural capital liabilities, is being created
A pilot mandatory green insurance plan has
been launched
Listed companies are being encouraged to disclose
important environmental information
A network of green investors is being established
A carbon trading market is being developed
Consumers are getting much better information
to help them choose green products.
Establishing a green bank, using green bonds
as the major nancing mechanism
MADE IN CHINA
1
2
3
4
5
6
7
8
9
THE CIRCULAR ECONOMY
18
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
EVERY
COMPANY
SHOULD
Rober t Metzke tel l s J im Peacock why and how Phi l ips
has embr aced cir cul ar economy thinking as i ts
str ategi c gui ding l i ght. Shor t-ter m pr essur es mi ght
stop other compani es fol l owing sui t, but ther e i s a
r eal danger they wi l l cease to exi st if they fai l to
adapt to a mor e sustainabl e model .
JP: How did circular economy thinking
come into being at Philips?
RM: It emerged as part of our EcoVision5
programme. We understood from life-
cycle analysis that the impact of our
products and services on society and the
environment is orders of magnitude
bigger than the impact that we have
within our own factories.
When you think about sustainable
development in a nutshell, it is really
about providing more people with better
opportunities, whilst meeting the
boundary conditions for environmental
sustainability. We just have this one
planet for all the nine billion people that
will be living here in 2050. If you zoom in a
bit and try to understand some key drivers
behind this, you very quickly get to
econometrics that measure quality of life.
As a leading company in health and
wellbeing, Philips can make a signicant
contribution in the eld of access to
health care. But on the environmental
axis, the biggest two components are
energy use and material resources.
Now, energy use is something Philips has
been addressing for decades, pioneering
in the eld of energy efcient lighting, for
instance leading the LED revolution. But
trying to understand the importance of
closed material loops was the next logical
step for Philips it was the missing piece
needing to be put in place.
And that is what we sought to address
with EcoVision5, by doubling the amount
of recycled materials in our products and
doubling the amount of recycled products
themselves. Formulating that into a
specic programme around the circular
economy is just the next logical step as
well as asking: how can this help us to
drive business, reinvent our business
models, and make it attractive for our
customers and suppliers to support and
participate in it?
ROBERT METZKE
Senior Director of Group
Strategy and Alliances, Philips
JIM PEACOCK
Director, Consultancy and Communications
Salterbaxter MSLGROUP
19
JP: What did you do to bring the rest of
the business on board? Was it a pure
business case argument? Or was it
about connecting it to improving the
lives of three billion people?
RM: It was a bit of both. We started with
the megatrends and the strategy piece to
understand what is relevant to us. We
were in discussion with our supply chain
experts to understand resource security
for example. The interesting thing is that
everything points in the same direction
and leads to the same conclusion.
The other discussion was: what really
has the biggest impact on people in the
world, on our customers? That was linked
to our vision to improve the lives of three
billion people, so we had to dig into what
ways we can have an inuence on
improving lives.
And of course we were looking into new
business opportunities. The early works
published by the Ellen MacArthur
Foundation and McKinsey really helped
to kick-start our thinking; we just put it
on the agenda for internal meetings to
discuss what it all means for Philips.
We tried to quantify it, using individuals
from various markets to translate the
thinking for the regions, to make the
overall business case for a change in
thinking for Philips.
JP: Whats been behind the recent rise to
prominence of the circular economy?
RM: One factor is the perfect vortex in
terms of societal interest. There is a huge
societal interest in environmental issues,
and the debate about climate has
broadened signicantly. Also the
perception of what to expect from whom
has shifted: should we wait for
government to dene new rules of the
game? What is the role of companies?
What can you expect from good
corporate citizens?
This thinking is changing.
Part of it is becoming mainstream
thinking amongst strategists and
economists. On all sides it is coming out
of the niche.
JP: So what role have Ellen MacArthur
and McKinsey played in driving this into
the line of re for business?
RM: I would not underestimate the role
theyve played. It has been stunning and
successful. The trends are there, the
insights are there, but they created a
platform to exchange thinking around it
and to bundle the forces, and that was
very useful.
Ellen MacArthur has determination and
an all-encompassing vision that enables
people to join and to build on it. But the
partnership with McKinsey translating
the thinking into language specically
understandable for business was
hugely important too.
JP: What are the barriers to its adoption?
RM: I dont think it can be stopped.
Companies that dont get it will put
themselves at a signicant strategic
disadvantage and may eventually cease
to exist. So eventually it will spread, and
the question perhaps is whether there
are accelerators that will help us to get
through this transition more quickly and
without the huge supply disruptions
that might happen if we run out of
precious materials.
JP: Is short-termism a threat?
RM: There is enough distraction in the
short term to duck the issues for a while
and not do the right thing; everybody
knows this.
But it will catch up. Investors are
becoming more interested in the role of a
good sustainability strategy on driving
shareholder value. They are increasingly
learning what the impact is on stock
markets. This will enable them to ask the
right questions at shareholder meetings
to trigger action in businesses that have
not yet engaged.
The rest comes back to execution. Every
company should have a north star
where you want to go, who you want to
be in 5, 10, 20 years. And then you have
to back-cast it and make it part of your
strategic planning cycle, and eventually
it can be broken down into very
operational stuff that can be managed
quarter to quarter.
JP: What would be your advice for
organisations looking to adopt circular
economy thinking?
RM: I would urge them to think about what
their company is all about: where they
really can make a difference and what
they want to achieve. Then explore the link
between this and circular economies. If
you can link it to your core strategies, to
your reason for being, then you tap into
the intrinsic motivation of your people.
You make it strategically relevant, and it
creates a lot of energy and direction.
I DONT THINK IT CAN
BE STOPPED. COMPANIES THAT
DONT GET IT WILL
PUT THEMSELVES AT A
SIGNIFICANT STRATEGIC
DISADVANTAGE AND MAY
EVENTUALLY CEASE TO EXIST.
EVERY COMPANY
SHOULD HAVE A NORTH STAR
WHERE YOU WANT TO GO,
WHO YOU WANT TO BE IN
5, 10, 20 YEARS.
THE CIRCULAR ECONOMY
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
20
KY 120
mA 170
NET POSITIVE
10.00
Tilt: 0.0
2.0s 17:21:10:09
v:74 1:90
21
Net Positive asserts that the
ambition of many businesses to do
less harm is simply not enough to
effectively tackle the social,
environmental and economic
challenges we face. Companies
therefore have a duty to go beyond
zero harm and deliver a Net
Positive impact to society that
leaves the world better off than
they found it.
KEY FACTS
The Net Positive Group, made up of
Forum for the Future, WWF, and The
Climate Group, was established in
2013 to crystallise the net positive
intentions announced by several
agship brands
Key players include IKEA, Kingsher,
SKF, Capgemini, Coca-Cola
Enterprises, The Crown Estate and BT.
22
Zoe Le Grand invites you to imagine
what your business would look like if
the net effect of its existence were
positive in the widest sense. More and
more businesses are taking this Net
Positive approach, but the window of
opportunity to create a more equal and
sustainable future is closing.
Imagine a world where businesses exist
for three main purposes: to deliver social
value to customers and society, to restore
the natural environment and to deliver
healthy prots to their shareholders.
Its a world where businesses replant and
replenish the land, use their buildings to
generate clean and green energy and help
their customers to do the same. A world
where they provide fullling, well-paid
jobs and apprenticeships, and help
communities to gain skills. And one where
they work with their clients and supply
chain partners on amazing new
innovations which not only make peoples
lives easier, without damaging
the environment, but also provide
their shareholders with healthy,
long-term returns.
Some sustainability leaders have called
this approach: Net Positive. Its a step
change beyond more conventional
approaches to sustainability and for
those companies slogging their way
towards targets that start with a zero
zero carbon, zero waste becoming Net
Positive can sound like a tall order.
ZOE LE GRAND
Principal Sustainability Advisor
Forum for theFuture
THE NEXT
FRONTI ER OF
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
23
If youre Kingsher and youre reliant on a
product like timber to make 40 per cent
of your products, you need to be sure
that the supply of timber doesnt run out.
So you dont just need to reduce the
trees you cut down, you need to actively
plant more.
Ikea have chosen to focus on greening
their own, and their customers, energy
supplies. By selling more efcient
electrical products and even solar
panels, they can expand market share
whilst reducing carbon emissions for
them and their customers.
Being Net Positive goes beyond
mitigating risk and making incremental
improvements. It encourages companies
to get innovative with their products
and services and enter new partnerships
and markets.
So what does Net Positive really mean?
Why should your business adopt this
approach? Where should you start?
REASONS TO REACH FURTHER
The foundations that businesses rely
upon raw materials, supply chains and a
supportive civil society are being
eroded. To survive in the long term,
businesses need to work harder to shore
up those foundations.
Aiming to minimise harm or to have zero
impact wont be enough. Businesses
need to reach further, become active
contributors to the environment and
society, and move from just minimising
the harm they do towards a position
where the net effect of their existence
is positive.
Many companies may feel they make
enough of a contribution to society
through their tax contributions and the
jobs they provide. But being Net Positive
means taking this even further and in
doing so securing benets for both
society and the business itself.
IF YOU WANT YOUR
BUSINESS TO SURVIVE
FOR THE LONG TERM THE
TIME TO ACT IS NOW.
NET POSITIVE
24
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
THATS GREAT, BUT WHERE SHOULD I START?
Together with The Climate Group and WWF, we brought together
an exciting new partnership of businesses keen to make this a reality
the Net Positive group. The group includes Ikea, Kingsher, SKF, Capgemini,
Coca-Cola Enterprises, The Crown Estate and BT. Together weve identied a set
of key principles that characterise a Net Positive approach and provide a simple
framework to help develop a new strategy or test an existing one. The full list is
in the Net Positive Group report but here are a few of the main ones:
01. FOCUS ON THE AREAS THAT
MATTER MOST
The rst step is to look right along the
value chain and nd out where your
biggest material impacts are, including
the areas which have the biggest impact
on your business, and those that your
business has the biggest inuence over.
BT, for example, realised it could reduce
the amount of carbon emissions created
by its customers. By innovating products,
such as home hubs, and delivering
tele-conferencing and other services
to reduce customer travel, BT managed
to cut carbon while growing its business.
Good news all round.
02. SHOW WHERE YOUR
POSITIVE AND NEGATIVE
IMPACTS ARE
Becoming Net Positive brings signicant
measurement challenges. How do you
demonstrate that your contribution is
really additive? No company can measure
everything down to the nearest decimal
point. So its critical to be clear about
where you draw your boundaries and
report in a transparent, consistent and
authentic way. If you have to make trade-
offs, be clear about where and why. The
Net Positive group will be working this
year to make measurement of Net
Positive impacts easier. Watch this space!
03. INNOVATE ACROSS THE
VALUE CHAIN AND BEYOND
Becoming Net Positive requires
companies to think bigger and to enter
into new partnerships and networks to
create wider positive impacts than would
be achievable alone. For instance, The
Crown Estate is working with farming
tenants to investigate new and improved
methods of food production.
04. CHALLENGE
BUSINESS-AS-USUAL
A Net Positive impact cant be achieved
by business as usual. Indeed, for some,
it challenges their very business model.
Kingsher is trying to move beyond the
selling more stuff to more people
model by experimenting with small-
scale, rental models that provide access
to all the tools customers need for a job
without having to buy new products. It
also provides online tutorials to improve
customers skills.
25
05. WORK WITH OTHERS TO
INCREASE YOUR IMPACT
A Net Positive approach challenges
business to work in new ways. For
instance, the only way Coca-Cola
Enterprises could recycle more packaging
than it uses was to establish JV
businesses in France and the UK to
transform the PET recycling
infrastructure for the benet of the wider
community. Where communities will be
affected, work with them to create a
positive impact for you and for them.
06. BREAK DOWN BARRIERS
The regulatory landscape may not be
designed to support the level of
innovation that a Net Positive approach
requires. You will need to work with
policymakers and lobby for change.
07. DO THE RIGHT THING
Some things cant be replaced. A new
pine forest wont make up for the
destruction of ancient woodlands. Net
Positive results in one area will never
compensate for irreplaceable natural
losses, or ill treatment of individuals
and communities, somewhere else.
Proving youve got this balance right can
be tricky and thats why the Net
Positive group will be looking at this in
more detail this year.
Some cynics believe that being Net
Positive in some areas could make up for
bad practice elsewhere. Dont use it as a
smoke screen. Being Net Positive means
that you also demonstrate a good level of
corporate responsibility across the
board, in line with internationally
recognised guidelines.
THE WINDOW IS
CLOSING ACT NOW
More and more companies are making
Net Positive commitments.
Manufacturers such as SKF are
committing to going Beyond Zero. Velvet
toilet tissue has promised to put more
trees in the world. And its not just the
private sector; public organisations are
stepping up as well. Greater Manchester
Fire and Rescue service, for instance, has
committed to being carbon positive by
focusing on preventing res as well as
putting them out. It is also using re
stations to generate clean, green energy,
reducing carbon and saving taxpayers
money too.
But our window of opportunity to create a
more equal and sustainable future is
closing. Its time for businesses to make a
positive contribution to the environment
and society as well as to the bottom line.
It wont be easy, and there may be some
mistakes made along the way, but if you
want your business to survive for the long
term the time to act is now.
NET POSITIVE
Net Positive Group members
26
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
J ae Mather looks at one companys
experience of putting a Net Positive
approach at the heart of its business
strategy. Kingsher is not only
prepared to experiment boldly, he says,
but also to learn from the mistakes that
inevitably come with being a pioneer.
For many years, zero carbon having no
impact on the environment has been the
goal of forward thinking organisations.
But, in reality, zero isnt enough for those
companies that are right out in front in
terms of sustainability. Increasingly they
see the need not only to tackle their own
impacts, but also impacts that would, in
the past, have been seen as outside their
direct control.
Kingsher whose interests include
B&Q, Castorama, BricoDpt, Screwx
and Koctas falls into this more ambitious
category. It has embraced Net Positive so
that a restorative approach to operating
sits at the centre of how it does business.
THROUGH ITS NET POSITIVE
APPROACH, KINGFISHER AIMS TO:
> Have a positive impact on
people and communities
> Be restorative to the environment
> Become carbon positive
> Waste nothing
> Create wealth and grow
This transition from business as it was
to business as it will be will lead to large-
scale transformations across most areas
of the business, from redesigning its stores
and buildings to changing the products
and services it offers to customers.
But why embark on such a journey?
It comes from a powerful realisation
that global macro trends are all leading
to an increasingly challenging business
environment for a company of its kind,
where pressure on natural resources, and
the impact of growing populations and
climate change all mean that continuing
with a strategy of business as usual is,
simply, not viable.
In order to maintain growth and reduce
businesses exposure to resource
limitations and increasing price volatility
in global supply chains, Kingsher has
decided it needs to completely re-evaluate
and re-design its existing business model.
Simply put, it has transformed a basic
business strategy into a much broader
sustainability strategy.
Take timber, for example. It was identied
that timber is used in up to 40 per cent of
its products. Expected price rises of up to
75 per cent and supply shortages of up to
30 per cent are anticipated by as early as
2020. With global forest cover steadily
reducing year on year, it became readily
apparent that this reliance on timber is
unsustainable, not only for Kingsher itself
but also for the global community. So it has
decided that, to protect timber resources, it
needs to go far beyond just replacing what
it uses to becoming a Net Positive producer
of timber.
The lofty aim is that a Net Positive
threshold is achieved by 2021. This
will be hugely challenging and equally
rewarding and an example of the kind
of champion leadership that is so very
needed in our world.
The rst years 2013/14 Net Positive Report
begins with a quote from group CEO, Sir Ian
Cheshire:What weve learnt in our rst
year is that our challenge is the right one,
but that business unusual isnt easy.
What I like the most about Kingshers Net
Positive model is that it recognises that
mistakes will be made;there will be failures
and that this is OK.
In fact, not only is failure OK, it is to be
embraced and welcomed. We have for
many years been used to living within
social, educational, business and political
systems built on the idea that failure is
something that should be avoided at all
costs. In reality, taking risks and being brave
enough to fail is an essential part of
learning, growing and evolving.
The Chinese character for threat is a
combination of the characters for danger
and opportunity. Net Positive embraces
this type of thinking.
There will be many climate change
billionaires in the world in the years
to come.
Those business leaders who understand
the need to embrace circular business
models and Net Positive thinking will
reduce exposure to the risks that lie ahead.
But they will also build a valuable
new business model one offering
huge material, reputational and
nancial benets.
ONE YEAR I N;
JAE MATHER
Guest Lecturer at theUniversity of CambridgeInstitute
for SustainableLeadership (CISL) and
Non-ExecutiveDirector at Newform Energy
IN REALITY, ZERO ISNT
ENOUGH FOR THOSE
COMPANIES THAT ARE
RIGHT OUT IN FRONT IN
TERMS OF SUSTAINABILITY.
27
Heres how the timber strategy ts
alongside the companys other Net
Positive goals, in terms of overall vision,
aspiration and concrete targets:
BECOMING NET POSITIVE
COMMUNITIES
Vision
To achieve a global net reforestation
Aspiration
To create more forest than is used
2020 target
To achieve 100 per cent
responsibly sourced timber
and paper in all operations
Vision
All homes are zero carbon or net
generators of energy
Aspiration
Every store and customers home
is zero carbon or generates more
energy than it consumes
2020 targets
To achieve energy savings of 37TWh for
customers and 45 per cent reduction
in energy intensity of own properties
Vision
Creating and using products
wastes nothing
Aspiration
Every product will enable a
more sustainable and ultimately
Net Positive lifestyle
2020 target
To achieve 1,000 products with
closed-loop credentials
Vision
Businesses help people to help
each other
Aspiration
Every store and location supports
projects that build local communities
or equip people with skills
2020 target
To achieve 4,000 community projects
completed by internal people that
deliver Better Homes, Better Lives
TIMBER
INNOVATION
ENERGY
NET POSITIVE
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
28
29
Environmental prot & loss
(EP&L) accounting puts a
nancial value on the
environmental impacts across
the entirety of a companys value
chain. This approach not only
gives complex environmental
metrics greater resonance by
translating them into the core
language of business nance
but also provides a measure that
enables companies to better assess
and manage risks and
opportunities.
KEY FACTS
Introduced by Jochen Zeitz, then-CEO
of PUMA, in 2009
PUMA conducted rst ever EP&L
assessment in 2011
Novo Nordisk became the rst
pharmaceutical company in the world
to conduct an EP&L account in 2014
Kering has committed to rolling out the
EP&L assessment across its brands
(including Gucci, Stella McCartney,
Yves Saint Laurent, and Volcom) by 2015.
30
It takes both hard work and a
pioneering spirit to become known as
one of the greenest companies in the
world
1
. Here, Michael Beutler, Director
of Operations in Kerings Sustainability
Department, talks to Annie Lancaster
about how the companys commitment
to rolling out an Environmental
Prot and Loss assessment across
their brands is paving the way for a
standardised measurement tool that
benets everyone.
AL: How would you sum up the EP&L
in simple terms?
MB: Its a way to understand your
environmental footprint going all the way
back to the raw material level, and putting
a value on it so you can understand the
differences between what resources you
use, and what kind of impact that has on
society.
AL: Tell me about how the EP&L came
into being.
MB: The initial concept from then CEO of
PUMA, Jochen Zeitz was created by
Kering and PUMA in 2010 and the rst-
ever EP&L was published in 2011.
And our leadership took that initial
analysis and decided to turn it into an
integral part of how we work with all our
brands on sustainability: how we
understand our supply chain, our
processes, our suppliers, and the impacts
of all our activities.
AL: Was it challenging to get the buy-in
needed across Kerings stakeholders
to start the process?
MB: Once Franois-Henri Pinault decided
we were going to do an EP&L, there wasnt
any pushback from the individual brands.
It makes sense.
But the level of engagement weve had
across the business has been fantastic.
AL: And why do you think engagement
was so good?
MB: Firstly, theres a lot of business value
in mapping and understanding the
supply chain.
Secondly, from a sustainability
standpoint, I think everyone saw that
the EP&L represented the next frontier
a quantum leap forwards. In the sense
that traditional environmental reporting
is one dimensional, an EP&L is a three-
dimensional view.
AL: Presumably it comes with a
corresponding leap in the amount of
effort or work that goes into conducting
something like this.
MB: In the beginning, when we were
mapping processes and categorising
inventory and our suppliers, yes.
A QUANTUM
LEAP FORWARD
But weve completed EP&L reports for
about 73 per cent of the Group thus far,
and in the process were becoming more
and more efcient.
It has taken a lot of dedication to
streamline the process across the
business but particularly from our
sustainability team but our level of
effort per EP&L now is probably one-
tenth of what it was when we rst started.
AL: The EP&L is primarily a
measurement tool; the obvious question
it throws up is, having understood your
environmental footprints, what next?
MB: We take the results and we work with
our brands to identify opportunities to
reduce them. We also have a roadmap of
projects that align into our 2015 targets,
and they all link up we can calculate the
savings each would generate from an
EP&L perspective. So it helps us to
evaluate where we can have the
maximum impact.
AL: Have there already been benets
from its implementation?
MB: Yes denitely. Weve created many
initiatives both public and internal
that are driven by reducing the impacts
weve discovered through the EP&L, for
example metal-free tanning, or sourcing
strategies for some of our key materials.
Its not just environmental sustainability
its also about long-term viability. In terms
of supply chain security, the EP&L tells us
where we can nd sources that are more
reliable for our business to plan around.
Social issues also come to the fore,
such as local livelihoods. On sourcing
particularly, weve denitely identied
issues that we can scale into really
signicant impacts in the long run.
AL: As you mention, its not only about
the environmental impact. Is a Social
Prot and Loss on the cards for Kering?
MB: Were doing something far more
extensive than any other company with
the EP&L in terms of methodology,
depth of analysis, and across all of our
business units.
MICHAEL BEUTLER
Sustainability Operations Director
Kering
ANNIE LANCASTER
Senior Consultant
Salterbaxter MSLGROUP
A
S
S
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
1
Newsweek, 06/05/2014
31
So while theres a lot of value in
something like the SP&L, having
pioneered the EP&L its incumbent on us
to see it through, so its not just an
innovative new methodology, but also an
effective tool that is understood across
the board in terms of its importance from
a business standpoint.
AL: So to what extent would you call
the EP&L a sustainability tool, vs.
a strategic business tool?
MB: Its really both. Every business that
makes something is depleting natural
capital. If you dont understand how youre
using natural capital what the risks are,
the stress points, and the potential for
doing it more efciently and in a way that
is less impactful theres a whole aspect
of your business risk that you just dont
understand. And that means your future
viability and your future strategy cant be
well informed.
AL: Youre very much a pioneer of this
tool; have you seen a lot of interest from
other organisations wanting to run
EP&Ls of their own?
MB: Theres been a lot of interest. Thats
why were working to make a more
standardised EP&L that is comparative
across companies and industries. A
nancial statement is a nancial
statement, but right now in sustainability
reporting, even EP&Ls may not be
comparable across companies. So its
very important for us that we collaborate
with other businesses in the hope that it
becomes standardised.
Were not working on the EP&L for
competitive advantage for us; in the long
run its to benet everyone.
AL: By its nature, an EP&L is about
increased transparency and could
potentially expose you to critical voices.
Have you felt that?
MB: There are risks to transparency.
Some companies believe that an EP&L
account could open them up to criticism
from their shareholders or even to
litigation.
But on the ip side, if youre not
transparent, youre not meeting your
duciary duty.
Weve had nothing but enthusiasm as a
result of the EP&L, but of course
different industries have different
IF THEIR SOURCING
AND SUPPLY CHAIN ISNT
HEALTHY THEN THE
COMPANY ISNT HEALTHY.
perspectives and issues to wrestle with,
that might make the level of exposure
associated with conducting an EP&L
publicly feel less comfortable.
AL: Do you think the concept of an
EP&L arose as a result of something
specic within Kering, or could it have
happened anywhere?
MB: It could have happened anywhere.
We happened to have a leader, rst in
Jochen Zeitz who had the vision and came
up with the concept, and then with
Franois-Henri Pinault who saw how it
could be taken to the next level. So we
had the leadership. I think someone
would have done it eventually, but like
anything new and innovative someone
had to do it initially.
AL: Where do you see the EP&L going in
the next 10 or 20 years?
MB: I hope to see it standardized; scaled
across our industry and other industries;
and standing next to nancial reporting
as a deeper understanding of a
companys risk and opportunities.
If their sourcing and supply chain isnt
healthy then the company isnt healthy.
So it could go in two directions. As an
internal tool, much like management
accounting; or externally, integrated
into nancial performance as a broader
indicator of a companys health.
EP&L
32
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
AL: Tell me about how the EP&L ts
within Novo Nordisks broader
philosophy.
SS: For more than 25 years our approach
to sustainability has been built on the
philosophy of the Triple Bottom Line.
This gives us a 360 lens on how we
make decisions: we consider the
potential implications for the
environment and for society, as well
as the nancial dimension.
This way we are able to make more
balanced choices; by recognising their
implications, we can take action to
mitigate any potentially negative impacts.
On the social side, it is possible for
companies to have a net positive
contribution. In the case of Novo Nordisk,
we benet patients through the products
that we provide; we can develop the skills
of our employees so we have a positive
social dimension there. If we were to do a
social P&L it would most likely be a
positive one.
But on the environmental side there is a
cost. We need to understand that cost,
and recognise that if you consider the
externalities, some of these costs are not
currently priced adequately.
The link to the EP&L is clear. By default
any company using resources to
produce its materials has a negative
environmental footprint. So how can
we reduce that negative footprint?
That is what were trying to answer
with the EP&L.
AL: And what have you learned through
this approach?
SS: Inspired by Pumas activities, the
Danish Environmental Protection Agency
(EPA) wanted to look into whether it would
be possible to do an EP&L for a company
such as Novo Nordisk.
So we agreed to be a pilot, working both
with the EPA and Trucost. Over several
years weve been reporting on our
environmental performance, but we
wanted to go further to take a value
chain approach. So we looked into our
supply chain, going several steps deeper
than our standard reporting.
What we learned when we added it all up
was that of the total cost of our
environmental impact, about 87 per cent,
is generated through our supply chain.
Only the remaining 13 per cent happens
within the companys own operations.
AL: Having understood that the majority
of environmental impacts are happening
outside of your direct control, what
steps are you now taking to mitigate
your impact?
SS: This is where it ties in with our ongoing
sustainability initiatives. For over a
decade weve been managing our
supply chain on the basis of responsible
sourcing asking our suppliers to meet
certain standards and requirements.
Now were seeking to understand what
kinds of suppliers generate the biggest
environmental impacts, and what we
can do about it.
We are working with our suppliers to help
them be more sustainable. Weve found
that our suppliers are keen they see the
benet. And it translates into a better
nancial bottom line because it can be
tied to energy savings, or conversion to
renewable energy, or smarter processes
in so many ways.
AL: As the rst pharmaceutical
company in the world to run an EP&L
account, have you experienced
challenges in being the front runner?
SS: I think any innovation initiative such as
this will have challenges.
One weve faced is a practical one how
do you nd the data for a robust analysis?
As a science-led company we are
generally quite data-driven in our
approach, and the fact that weve been
Novo Nordisk has been called the worlds most sustainable
corporation
1
. Here, Susanne Stormer Vice President, Corporate
Sustainability describes to Annie Lancaster how measuring the
companys EP&L is just one strand of a corporate philosophy that
balances economic, social, and environmental perspectives.
ENVI RONMENTAL
PROFI T AND LOSS
1
Corporate Knights, 2012
SUSANNE STORMER
VicePresident, Corporate
Sustainability
Novo Nordisk
ANNIE LANCASTER
Senior Consultant
Salterbaxter MSLGROUP
DIRECTIONS 2014 SALTE
working with data reporting on our
environmental and social performance for
many years has facilitated that process,
but clearly Trucost needed to go into lots
of what you might call sensitive data
for instance data relating to nancial
interactions with suppliers so it requires
a large degree of trust in your partners.
Another challenge, having understood the
data, is what are you going to do about it.
If youre just going to say oh, thats
interesting its a pointless exercise.
BY DEFAULT ANY COMPANY
USING RESOURCES HAS
A NEGATIVE ENVIRONMENTAL
FOOTPRINT. SO HOW CAN WE
REDUCE THAT FOOTPRINT?
A third challenge is how to translate
the impact into a value in a monetary
sense. We dont have a currency for these
things; the closest we get is with carbon,
because there is a price on carbon. When
it comes to something like water how do
you put a real cost on the availability of
fresh water?
AL: Given these challenges, was it
difcult to convince the whole company
that an EP&L assessment was the right
road to go down?
SS: When reaching out internally in order
to compile the data needed, we were
aware that we were asking people to do a
lot of extra work on top of their already
busy schedules. When you are persuading
people to go out of their way to dig out
data, they have to appreciate the
reasoning behind it.
Here, again, we beneted from the fact
that we have been working with
responsible sourcing and data analysis
for many years. As a result of our Triple
Bottom Line philosophy, there is an
understanding within the company of the
importance and value of sustainability.
Nevertheless, you need to be able to
rely on good working relationships,
not just with external partners but
with colleagues.
A lesson weve learned is that while you
can push your way through an
organisation to get the information or
results you want, if you are unable to
convince internal partners that it is
meaningful and value-creating for them,
youll have a very hard time.
AL: Having gone through that process,
do you feel the EP&L assessment has
generated real value?
SS: It certainly reveals perspectives that
we previously may not have thought
about. For years weve been working at
reducing our environmental impact, so we
have a pretty good idea about how that
impact is split out amongst our own
operations. But looking at carbon
emissions as an example, we began by
focusing on the emissions generated from
production, which was the immediate
largest impact, and then worked our way
into managing emissions from
transportation of products and people.
Now we can see that production, and
indeed the direct impacts of our activities,
is actually only a small contributor to total
carbon emissions with the majority
coming from other parts of the supply
chain. That kind of information is a real
eye-opener, and facilitates conversations
about what we can do across all the
functions of the business from ofces
all the way through to the selection of
materials or processes. It becomes a
much richer and more nuanced
discussion than it would be were you
just looking at your impact from a
helicopter perspective.
AL: The EP&L remains a somewhat
niche measurement & reporting tool at
current; do you think we will see a
broader uptake in the future?
SS: The expectation is denitely growing
for companies to be accountable for their
performance throughout their value
chain. In that regard the EP&L is most
likely the best method. But then again,
its only one dimension looking at
environmental performance.
What would be more benecial
would be to be able to also look at the
social and economic dimension of a
companys contribution.
AL: And that ties into some of the other
approaches were looking at in
Directions such as Net Positive.
SS: Novo Nordisk hasnt made a formal
commitment to being Net Positive the
way some other companies have, but
that is exactly what we are trying to
achieve with the Triple Bottom Line:
our impact should be a net positive one.
If it werent, the world would be better
off if we werent here.
By implication I would say that every
company should be able to say its
contribution to global society is a net
positive one. Otherwise we are in
big trouble!
33
ght
der
do a
y
ading
t
ct
is
e
the
y.
about what we can do across all the
functions of the business from ofces
all the way through to the selection of
materials or processes. It becomes a
much richer and more nuanced
discussion than it would be were you
just looking at your impact from a
helicopter perspective.
33 3333333333333333333333333333333333
EP&L
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
34
35
At the heart of the shared value concept is the idea that the future success
and competitiveness of businesses is directly linked to health of the
communities within which they operate. By working to tackle the big
issues faced by society, whether economic, environmental or social,
companies will generate economic value through new innovations,
access to new markets and by creating business models that foster
long-term sustainable growth.
KEY FACTS
Concept rst introduced by Mark Kramer and Michael Porter in The Harvard
Business Review in 2006
The Shared Value Initiative seeking to enhance knowledge-sharing and
Shared Value best practice founded in 2012 by Kramer & Porter and FSG
Key players include Nestl, General Electric, Walmart and Dow AgroSciences.
FORGI NG
THE LI NK

MARC PFITZER
Managing Director
FSG
36
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
M
FF
DIRE DIRE RECCCTIO CTIO CTIO CTIO CC NNNS 2 NS 2 N 014 014 SALT ALTE
Marc Ptzer charts the emergence of
Shared Value as a driving force for
innovation and growth in companies
determined to create both social and
economic value. Like other new
approaches to sustainability, it is
lling in huge gaps left by earlier
experiments with philanthropy and
CSR but is still in its infancy and its
potential is vast.
For well over a decade, weve searched
systematically for practices that lead to
extraordinary social impact. Our journey
with Shared Value started with the same
idea: what were companies doing that
truly changed the world?
1

MITIGATION
Back then, the emphasis was on
mitigating the negatives. We loved the
principles, but questioned the results.
Tick box CSR had pushed companies into
a multitude of efforts in areas of concern
to all. But were emission reductions,
water saving efforts, or human rights
standards truly making a difference to
climate change, water basins or working
conditions?
Meanwhile, some truly impressive
outcomes did begin to stare us in the face.
Indias Jain Irrigation wasnt trying to save
water in manufacturing; it was growing
the worlds largest drip irrigation
business. Toyota didnt focus on factory
emissions, but led the way in developing
clean mobility solutions.
Here were truly world-changing
developments, promising a thousand
times more potential. Unmet needs were
the target for product innovation, prots
enabled reinvestment and once again
impact was scaled up.
But it all started with investigating other,
ultimately disappointing approaches. Our
deep dive into corporate philanthropy in
2002, for instance, left us unimpressed.
Guided by notions of moral obligations,
investments were diluted. We saw many
heartfelt projects which had little impact.
There were exceptions, of course. Cisco,
with its Network Academies, was on its
way to training four million young people
in ICT around the world because it
powered the global adoption of its
technologies. Nestls vast agricultural
development programmes similarly
enabled it to localise and expand its dairy
or coffee businesses. Social constraints
to growth were the target, changing
conditions unlocked new business
prospects, impact was increased in scale.
Then we turned to the sustainability and
CSR movements.
WE ALSO GRASPED THAT PROFITS ARE NOT ALL
EQUAL. THOSE THAT ADVANCE SOCIETY CREATE
THE CONDITIONS FOR FUTURE GROWTH. PROFIT IS
NOT THE PROBLEM, BUT THE NATURE OF PROFIT
MATTERS IMMENSELY.
1
See : The Competitive Advantage of Corporate Philanthropy by Michael Porter & Mark Kramer in Harvard Business Review Dec 2002; Strategy & Society; The Link
Between Competitive Advantage and Corporate Social Responsibility by Michael Porter & Mark Kramer in Harvard Business Review, Dec 2006; Creating Shared
Value: How to Reinvent Capitalism and Unleash a Wave of Innovation and Growth by Michael Porter & Mark Kramer in Harvard Business Review, Jan 2011.
37
SHARED VALUE
Shared Value gives the competitive leader
a language for adopting purpose-based
strategies, as well as concrete guidance
on how to turn on the social innovation
engine in their companies.
4
POSITIVE AND COMPREHENSIVE
Shared Value is positive it moves the
rationale for investing in society from a
licence to a reason to operate. Purpose is
immensely powerful: it channels
resources to the right kind of ideas and
partners, and it puts re in the
organisation and in peoples hearts.
Shared Value is bringing the best talent
back into business or into partnership
with business.
And it is comprehensive: based in the
interdependence between business and
society, it acknowledges remaining areas
of trade-off while opening the possibility
for breaking these through innovation.
A measure of its comprehensiveness is its
consistency with the related movements
featured in this report. The EP&L and
SP&L movements focus on trade-offs and
seek to apply a price to externalities.
Companies internalising such
environmental and social costs will nd a
way to innovate out of them, and that will
create Shared Value.
SHARED VALUE REPRESENTS
THE MOST SIGNIFICANT
OPPORTUNITY FOR
INNOVATION AND GROWTH IN
BUSINESS TODAY.
CREATING SOCIAL AND
ECONOMIC VALUE
Shared Value had crystallised. Companies
that changed the world found ways to
create social and economic value
simultaneously. By 2011, we were no
longer looking at marginal initiatives but
Shared Value companies, who dened
their purpose around social progress,
powered by strong economics.
We sharpened our understanding of the
linkage between society and business,
and helped codify how Shared Value is
created (through products, value chain
reconguration, and investments in the
enabling environment). We understood
the enormous potential here: solving
social problems protably meant
solutions would not be limited by scarce
public or non-prot budgets.
Yet we also grasped that prots are not all
equal. Those that advance society create
the conditions for future growth. Prot is
not the problem, but the nature of prot
matters immensely.
Shared Value practices are spreading
throughout the world in name or form.
A million viewers have followed Michael
Porters TED talk, thousands of corporate
and cross-sector members have joined
the Shared Value Initiative, hundreds of
companies contribute to the annual
Shared Value summit, dozens of rms
(some trained by us) in every continent are
consulting on Shared Value across the
world: why?
Well, because many now understand
that simply managing the footprint is
not enough.
Shared Value does sit on the shoulders of
the sustainability and CSR giants, and the
mitigation work is far from over. But it is
not sufcient.
For two decades now, a multitude of
companies has scored high on CSR
ratings. And yet simultaneously, trust in
business has crashed and a Living Planet
Index has worsened year-on-year.
Where Shared Value is different is in the
fact that it gives the moral leader a new
set of tools so that their best work on
footprint management is just the
foundation of a whole new world of impact
and value creation.
Another reality is that our social decits
are hurting companies. Mining companies
have seen a ten-fold increase in
community conicts in the last decade,
and over two-thirds of the discount
applied to gold mining companies by
investors today, for example, is due to
political and social risks.
2

Globally, companies face another
paradox. They cant access well-trained
vocational staff, while massive youth
unemployment threatens stability in
key markets. Shared Value gives the
cost conscious leader guidance for
driving both resource and labour
productivity in the value chain. And it
gives the risk averse a business case
for mobilising kindred spirits, both
internally and externally, to address
local development needs.
And Shared Value opens the eld to
immense market opportunities,
represented by the billions who lack
access to proper nutrition, housing,
sanitation, health, energy you name it.
Our recent work in nancial services
uncovered 2.5 billion unbanked people,
$2.1 trillion in unmet credit needs for
SMEs, and a $310 trillion future market
opportunity in impact investing.
3
The reality is, Shared Value represents the
most signicant opportunity for
innovation and growth in business today,
as demonstrated by GE in environmental
and health technologies, Nestl or Dow in
nutrition, Veolia or Kemira in water
treatment, and Intel or Pearson in
education technology and content.
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
38
The circular economy and Net Positive
movements are providing guidance on
achieving resource productivity (value
chain reconguration) and the B Corp
movement is giving an institutional
framework to a purpose-driven company.
MEASUREMENT
Our focus has been on illustrating the
management practices that advance
both social and business conditions. And
in many ways, Shared Value is still in its
infancy. The big frontier is measurement.
We have described how companies,
which systematically measure the link
between achieving new social outcomes
and business returns, unlock further
value creation but these practices are
just emerging.
5
Measurement validates purpose, and
opens the door for authentic cross-sector
collaboration. Measurement provides the
foundation for a new discourse between
government and business, not anchored
in traditional wealth extraction through
taxation, but in incentives to drive social
outcomes in ways that decrease cost to
the public sector.
And importantly, as shown by leading
practitioners, measurement will guide
investors to full their social purpose
in allocating resources to ventures
that outperform the market through
their extraordinary contribution to
social progress.
2
See Spinning Gold: The Financial Returns to
External Stakeholder Engagement by Witold
J. Henisz, 2011
3
See Banking on Shared Value by Bockstette,
Smith, Ptzer et al. FSG, 2014
4
SeeInnovating for Shared Value by Marc Ptzer
et al in Harvard Business Review, Sept 2013.
5
See Measuring Shared Value by Porter, Hills &
Ptzer, 2013
39
SHARED VALUE
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
40
J ohn Bee talks to J im Peacock about the
journey Nestl went on to become a
company focused on creating Shared
Value and suggests its a concept that
could be adopted across many markets
and sectors.
JP: Can you explain how and why Nestl
adopted the Shared Value approach?
JB: We feel that if you can embed a social
purpose deep within an organisation it will
begin to deliver the returns that society
needs it to make.
But to do that requires an end to the
short-term thinking that has led to the
loss of public condence in business over
the past 1015 years, and a conscious
re-engagement with the communities
that the business serves.
We have actively conceptualised that as
Creating Shared Value, because it means
the social issues we seek to have an
impact on become integral to our global
business strategy theyre not just an
add-on. Having said that, weve got a huge
journey to go on before we can have the
sort of impact on society we want to have,
but we think weve made a positive start.
Also, going back to the roots of Shared
Value for Nestl, we had a particular view.
Our chairman was a little bit concerned at
the whole premise behind Corporate
Social Responsibility (CSR). Because it
was predicated on the notion that you
have to give back to society, it implied
something had been stolen and we dont
really share that view.
We want to identify social issues that we
can positively address through our
business propositions. If you look at these
issues purely through the lens of
philanthropy, at a certain point you have
to ask your shareholders permission to
get involved. Whereas if youre looking at
solving social issues through business
solutions that also allow you to grow your
business at the same time, then that
represents future investment and
becomes part of your growth strategy.
As a company weve had a long history of
recognising that there is a shared benet
for communities that comes directly from
our business activities. If you look at
Nestl as a milk producer you can see
that all the way back to the 1920s.
But this all came to a head at the World
Economic Forum in Davos, in about
2005/2006. About that time we began
talking to Michael Porter who
fundamentally disagrees with the belief
that the aims of business or its
shareholders need to be at odds with
those of society. We think theres a third
way and we began calling it Creating
Shared Value (CSV).
CSV was born at Nestl because we
were the rst company that Porter and
Kramer analysed.
JP: How does this all t with CSR and
other approaches to sustainability?
JB: Shared Value is only part of our
engagement with society.
We have consciously looked to build our
corporate business principles in
alignment with the UN Global Compacts
10 principles. We then look to make sure
our impact on the natural environment
on which we depend greatly is as
benecial as possible. Weve increased
our production output by 50 per cent over
the last 10 years, but all of the
environmental impact indicators are going
in the opposite direction.
With traditional CSR, its principally about
mitigating risk and limiting impact, not
about creating new opportunity. When
youve fullled your responsibilities, then
you can talk about creating shared value,
but only then. We dont see the
approaches as mutually exclusive, we
actually see them as mutually reinforcing.
JOHN BEE
Communications Manager
Nestl
WHEN YOUVE FULFILLED
YOUR RESPONSIBILITIES,
THEN YOU CAN TALK ABOUT
CREATING SHARED VALUE,
BUT ONLY THEN.
JIM PEACOCK
Director, Consultancy and Communications
Salterbaxter MSLGROUP
DIRE DIRE DIR DIR DIRE DIRE DDIRE DIR DIRR DIRE DIRE R DIRE DIRE DIRE D RE RE DIRE DIRECTIO CTIO CTIO CTIO T CTIO CTIO O CCTIO CTIO CCTI CT C NS 2 NS 2 NS 2 NS 2 S NS 2 SS NSS 2 SSSS 2 NS NSS NS S 2 NS 2 NS 2 NS 2 NS 2 NS 2 NS NS SS NS 2 S SSSSSSSS NSS NS 2 NS 2 S S NS 2 NS NS NS NS NS NNS S NS 2 NS N 2 S 014 014 0144 0144 014 014 SALT SALT LT T SALT SALT SALT SALT ALTEEEEEEE
JJJ
C
NNN
41
JP: How much convincing did you need
to take the Shared Value route, given
how complex a business Nestl is?
JB: Well, fortunately, our CEO and
chairman bought into it straight away, so
we had top management enthusiasm for
this. Then of course its about making sure
that youre communicating that across
the organisation. Weve systematically
brought it into our annual global training
courses, covering our 3,000 top
performing and high potential managers.
Weve also created some high prole
external opportunities to help move the
concept of CSV forward through a global
forum that weve been running for the
past ve years. This is an idea thats
gathering momentum in sectors we didnt
think it would take off in. Its time has
obviously come.
JP: Can you talk a bit to the commercial
drivers and case for CSV?
JB: Ill give you one very good example.
Were a signicant producer of
chocolate products, and that depends
on cocoa, clearly.
About 40 per cent of global cocoa supply
comes from the Ivory Coast, where there
was major conict from around 2003
-2010. The average life of a cocoa tree is
25 years, and as you can imagine, during
that time of conict not much replanting
was done. So something had to be done to
secure future cocoa supply.
Before the crisis ended we were
developing our Nestl Cocoa Plan, giving
$110 million worth of support to cocoa
farmers. The plan is principally focused
on the Ivory Coast, but also looks to open
new cocoa growing communities around
the world. This involves a lot of R&D
breeding drought- and disease-resistant
strains, for example. And we give the
cocoa plants to the farmers, who are
under no obligation to supply to us. So
were investing in growing the long-term
supply of cocoa but we can also address
social issues while we do that.
JP: How are your shareholders
responding?
JB: Almost exclusively positively. There is
a great deal of condence in our business
and in our ability to deliver our nancial
plan, whilst still being able to address
some of these social issues.
JP: Does CSV t specic markets
particularly, or is it an all-encompassing
concept?
JB: If you look at the diversity of the
organisations in the Shared Value
Initiative, you can see this is an approach
that can be applied to many different
kinds of businesses and sectors.
The thing we learnt very early on is to
focus. And the reason we chose nutrition,
rural development and water is because
we know we can have an impact in these
areas. If Nestl wants to be the leader in
nutrition, health and wellness, its pretty
obvious why we go there. You know, over
one billion Nestl products are sold every
day of the year. So if we cant have an
impact on nutrition, its hard to imagine
who can!
THIS IS AN IDEA THATS
GATHERING MOMENTUM IN
SECTORS WE DIDNT THINK IT
WOULD TAKE OFF IN. ITS TIME
HAS OBVIOUSLY COME.
We choose water because of all the
environmental impact indicators,
we feel that its the most relevant in
terms of our business, but its also
the least understood.
Again, in rural development, we not only
source about $25 billion of agricultural
raw materials each year, but we have
these 465 factories, and half of those are
in developing countries, and two-thirds of
those are in rural locations. So whether
we want to or not, we have an impact on
rural communities.
We focus on the areas where we believe
that we can make the largest difference.
JP: We have talked about lots of the
positives about CSV, did it throw up any
internal challenges that you hadnt
foreseen?
JB: It has been said that while it is very
easy to see where the benet can be
created from CSV in developing countries,
its not quite so apparent in developed
countries. But weve actually found that
there are some good initiatives in
developed economies, including great
examples surrounding sustainable
farming in France, Italy and Poland.
And while we have our CSV focus areas, it
doesnt stop us from engaging with other
social issues when we see the
opportunity. One of the areas weve been
addressing recently in Europe is the huge
problem of youth unemployment. We have
pledged to create 10,000 direct jobs for
people under 30, and 10,000 more
apprenticeships, and were also going out
to our network of suppliers and
customers to encourage them to join a
movement. This is very exciting. So yes,
you want to focus, but you also need to be
aware of other chances to engage.
JP: Where do you see CSV going in the
future? Not just for your organisation
but on an international scale?
JB: Three things that need to happen.
We need to nd a reliable way of
measuring mutual benets.
Were beginning to detect signs in
nancial markets that CSV is going to
move out of the socially-responsible
investment community and into
mainstream investors. We need them to
understand and buy into CSV.
And then we need to think about how CSV
will be taught and propagated within
business education and training.
SHARED VALUE
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
42
43
Benet Corporations are for-prot companies that commit to placing
social and environmental goals on a par with nancial performance.
Performance is therefore judged not only on revenue, growth and
prot but on the positive material impacts a company delivers to
society and the environment. In many states in the US this is now
enshrined in legislation and the approach is gaining traction with a
new generation of businesses around the world.
KEY FACTS
B Lab the company responsible for
codifying the requirements needed
to be a certied B Corp was
founded in 2006
The rst B Corps were certied in
2007 in the USA
Benet corporation legislation was
rst passed in the US state of
Maryland in 2010, allowing for-prot
companies to consider society and
the environment in addition to prot
in their decision making process. 17
US states have now passed benet
corporation legislation
Key players include Patagonia, Ben
& Jerrys, Etsy, and Plum Organics.
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
44
Marcello Palazzi, co-founder of B Lab
Europe, talks to Annie Lancaster about
why it is important we re-evaluate our
economic system and how B Corp has
become a globally recognised standard
for doing business better.
AL: Could you explain a bit about what
Benet corporations are?
MP: In the last 20 years there have been
many different attempts to make
capitalism work in the best possible way.
When B Corp launched eight or nine years
ago, the rst step was exploring the
various different standards for business
to create a more holistic look into all the
different areas of a corporation.
And after several years of rening these
standards, version one of the B Corp
assessment was created. Its now in
version four; the assessment involves 200
questions split into eight or nine sets of
criteria that touch upon everything a
corporation does that has an impact on
people and society.
What B Lab has done is to create a
structure to better align the work of
corporations and the needs of society.
AL: How do you feel about the idea
that what you describe harks back to
business as it used to be before the
belief that shareholder value is all
that matters?
MP: In the US, some of the very rst
corporations were started with a literal
licence to operate, granted by the
citizens community. You can go back
even further at the origins of capitalism
there was a public accountability that
went beyond shareholders.
In the last 25 years we have seen Anglo-
capitalism and the free market doctrine,
which many people are now questioning.
B Corp is providing a return back to
those original values - the concept
of the social contract between society
and corporations.
On the other hand, the world is changing.
One of the key B Corp criteria is diversity,
something that wasnt an issue 200 years
ago. So its an evolving system: not just
going back to a romantic past, but
moving forward too.
AL: How would you answer those who
argue that a business with altruism at
its core is destined to fail in todays
aggressive business environment?
MP: There are lots of answers to that line
of thinking.
If you take the hard-nosed experience of
investment funds, we have enough
evidence to show theres no trade-off:
those that have invested in more
sustainable or ethical companies in the
last 20 years are no worse-off than those
who havent.
But it goes beyond idealism. Humanity is
a huge asset. Were not working in a time
when you can employ slaves you have to
motivate people to work for you; to bring
the whole person to work. Many studies
show that employees are more motivated
in B Corps.
And if you look at the expectations of
shareholders and board members and
society, companies need to be well
governed. The rst test of a B Corp is that
it should be protable, and well governed.
Its a much wider lens than altruism
alone. Theres that old management
theory the distinction between
hygiene and health factors. In the
past CSR was considered a hygiene
factor. But just as a person can look
pretty without being healthy, so too can
a business. B Corp is being healthy
making sure that every organ in a
company your factories, the way
you engage with employees, the
way you relate to investors is
functioning properly.
AL: Tell me about the certication
process.
MP: There are two routes to becoming a
B Corp. One is through the law. In 26
states in the US, the Public Benet
Corporation Statute has been enacted.
There are now 1,100 such companies in
the US.
In countries and states where there is no
legislation as yet, you can go down the
auditing route. The rst stage
assessment is free on our website.
Companies that score at least 80 out of
200 can then ask to be audited by B Lab.
If you pass the audit, you are entitled to
use the B Corp logo.
AL: What do you see as the key
difference between B Corp and, say,
Shared Value?
MP: Shared Value is a great thing. But
B Corp goes further, in the sense that we
have the assessment, the auditingits
PROFI T
B CORP IS PROVIDING A
RETURN TO THE ORIGINAL
CONCEPT OF THE SOCIAL
CONTRACT BETWEEN SOCIETY
AND CORPORATIONS.
MARCELLO PALAZZI
Co-founder
B Lab Europe
ANNIE LANCASTER
Senior Consultant
Salterbaxter MSLGROUP
DIRECTIONS 2014
AL: Are there specic sectors to which
the B Corp approach is more suited?
MP: Its not so much about sectors as it is
about consumers. If consumers share
your values and are prepared to buy your
products because you are different, thats
a big incentive to become a B Corp.
AL: And do you see that consumer
pressure growing?
MP: Absolutely, theres no question. Its
been growing for 20 years. There are
many, many issues that consumers care
about, and with the macro-economic
and political framework within which we
work, they are going to become more and
more challenging.
There is no question that society is
responding. It could respond more
quickly, sure. But on the whole, we expect
that consumers will vote with their feet
more and more.
AL: What benet does B Corp bring
beyond the individual players involved?
MP: A huge issue since the nancial crisis
is economics.
From the beginning B Corp has stressed
the importance of good governance, the
failure of which is at least partially
responsible for the recession weve been
going through. Billions and billions have
been wasted, and you have to wonder
what kind of management these
companies have had.
Thats a big part of B Corp, and it is an
element that is not often included in other
CSR or Sustainability initiatives. Its about
reinventing the economic theory that has
let us down from time to time. It goes
beyond the individual companies it has
a systemic effect. If there were more B
Corps or B Corp-like companies, we would
have a better economic system overall.
45
not easy to become a B Corp. Shared
Value is a little bit more libertarian.
The second difference is that B Corp is
more suitable for smaller and mid-size
corporations, whereas Shared Value is
generally applied to big companies such
as Nestl. Which is fantastic we need to
work together to have a bigger impact on
the wider economy.
There are approximately 250 million
companies in the world. If you add
together B Corp, Shared Value,
Conscious Capitalism, etc, its in the
thousands of companies. Perhaps less
than 10,000. Theres a long way to go.
ITS ABOUT REINVENTING
THE ECONOMIC THEORY THAT
HAS LET US DOWN.
B IMPACT SCORE: 107
What we learned:
The B Impact Assessment incentivised
us to take the time to quantitatively
measure the performance of our
programmes. For example, we provide
several opportunities for employees to
participate in environmental or social
activism. But we didnt know how many
employees participated and to what
degree. But this Assessment asked us
those tough questions, and we took
the time to measure and manage the
participation and outcomes of these
programmes. This has given us a
better understanding of which ones
are most effective and which ones
could be made more robust. Because
the Assessment gathers all of this
information in one place, it allowed us
to really recognise our strengths as
well as see where we have room for
improvement.
What we did as a result:
We have had numerous opportunities
to publicly speak about our
commitment to being a B Corp. This
is an important part of fullling the
third part of our mission statement:
to inspire and implement solutions
to the environmental crisis. We are
trying to share this story more,
because we hope that it will inspire
other businesses to nd ways to
incorporate environmental and social
considerations into their practices.
B IMPACT SCORE: 89
What we learned:
Weve been reviewing and reporting on
our social and environmental
performance since 1989. But the
B Impact Assessment added a new
twist it helped us understand where
we are in comparison to other
companies. There were certain areas
like HR and Supply Chain that we had
always paid attention to, but the
Assessment forced us to look deeper
into the specics of how we could
match or beat best practices.
What we did as a result:
It prompted our exploration on how the
Assessment experience could be
extended to our Scoop Shops, which
are franchised retail locations that sell
our ice cream. This community is an
extension of our brand in localities, and
the Assessment might be an easy way
to engage our franchise partners on
our social mission.
B CORP
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
46
Zoe Le Grand is Principal Sustainability
Advisor at Forum for the Future who,
along with The Climate Group and WWF,
have brought together big companies with
Net Positive commitments to help bring
clarity to this emerging concept.
Ellen MacArthur is the founder of the
Ellen MacArthur Foundation with the
mission to accelerate the transition to a
circular economy and to give the concept
a wide ranging exposure and appeal.
Helga Vanthournout is a Knowledge
Expert at McKinsey & Company where
she works with clients on waste and
resource management (technologies and
economics of waste treatment options
and waste avoidance). She co-leads
McKinseys Special Initiative on the
Circular Economy.
Professor Haifeng Huang is Assistant
Dean of Peking University HSBC
Business School in China and
Executive Chairman of Ecological
Development Union International.
Robert Metzke is Senior Director of Group
Strategy and Alliances at Philips, which was
announced as a Global Partner of the Ellen
MacArthur Foundation in 2013. Robert was
previously Senior Director of the Philips
EcoVision Program.
OUR
CONTRI BUTORS
Martin Stuchtey is a Director at McKinsey
& Company where he advises countries
and companies on water transformation
strategies and broader resource
challenges, including value-capture from
waste. He co-leads McKinseys Special
Initiative on the Circular Economy.
Guido Schmidt-Traub is Executive
Director of the UN Sustainable
Development Solutions Network (SDSN).
Launched by UN Secretary-General Ban
Ki-moon, the SDSN mobilizes scientic
and technical expertise from academia,
civil society, and the private sector in
support of sustainable development.
47
Nigel Salter is CEO and co-founder of
Salterbaxter MSLGROUP.
Jae Mather is a Guest Lecturer at the
University of Cambridge Institute for
Sustainable Leadership (CISL) and
Non-Executive Director at
Newform Energy.
Marc Ptzer is Managing Director of
FSG, who operate the Shared Value
Initiative, facilitating a global community
of leaders who nd business
opportunities in societal challenges.
Michael Beutler is Director of Sustainability
Operations at Kering. Prior to Kering,
Michael was Global Director of
Sustainability and Strategy at SAP, and has
worked at international corporations DHL,
PWC and Ford over the last 20 years.
John Bee is Communications manager
at Nestl, a agship brand in the
adoption of Creating Shared Value as a
central tenet of their sustainability
strategy.
Susanne Stormer is Vice President of
Corporate Sustainability at Novo
Nordisk, the rst pharmaceutical
company in the world to conduct an
EP&L assessment. Susanne sets the
strategic direction for the companys
positioning as a sustainability leader
and a pioneer.
Jim Peacock is a Director, Consultancy
and Communications at Salterbaxter
MSLGROUP.
Annie Lancaster is Salterbaxter
MSLGROUPs Senior Consultant.
Marcello Palazzi is co-founder of B Lab
Europe, and is responsible for launching
the B Corp certication in Europe.
DIRECTIONS 2014 SALTERBAXTER MSLGROUP
48
Our clients include:
Absolut
adidas Group
Allianz
Anglo American
ArcelorMittal
BP
BSkyB
BUPA
C&A
Coca-Cola Enterprises
De Beers
Diageo
Giorgio Armani
GlaxoSmithKline
H&M
Harrods
ING
Jaguar Land Rover
Kering
LOral
LEGO Group
Maersk Group
Marks & Spencer
Philips
Premier League
PVH
RSA
Standard Chartered
Toyota Europe
Viacom
About us:
We work where business strategy,
sustainability and creative communications
meet, creating strategies and stories for
some of the worlds leading businesses
and brands. Our aim is to help business
perform better; communicate better
and deliver better long-term outcomes.
We call this Ideas for Better Business.
Contact us:
Jeff Sutton
Director of Business Development
jsutton@salterbaxter.com
Tel +44 (0)20 7229 5720
salterbaxter.com
@salterbaxterMSL
Salterbaxter MSLGROUP
The Dome, Level 4 Whiteleys Centre
151 Queensway
London W2 4YN
Tel +44 (0)20 7229 5720
About Directions
Directions is in its fourteenth year. It is
widely viewed as the leading annual
publication on trends in sustainability
and communications. Salterbaxter
MSLGROUP also produces regular
supplements and events on key topics
throughout the year.
2012
Prots from
purpose
2013
Authentic?
2011
Opportunity in
the new age of
uncertainty
2009
Mapping the
landscape of
European CR
2010
The Innovation
Edition
2008
Sustainability
gets tough
Copyright Salterbaxter MSLGROUP.
Directions is a registered trademark of
Salterbaxter.
Printed by Park Communications Limited
CarbonNeutral

, Alcohol Free, FSC


chain of custody certied.
Printed on Satimat Green, a paper containing
75% post consumer recycled bre and 25%
virgin bre sourced from well managed,
responsible, FSC

certied forests.
Imagery retouching:
Julian Hicks www.retouchthis.co.uk
Contact us for further information
about our quality printing services
and our environmental credentials
Park Communications
Alpine Way
London E6 6LA
Heath Mason
D: 020 7055 6555
T: 020 7055 6500
info@parkcom.co.uk
Award Winning Printers
Our printing partner:
Salterbaxter MSLGROUP
The Dome, Level 4 Whiteleys Centre
151 Queensway
London W2 4YN
Tel +44 (0)20 7229 5720
salterbaxter.com
@salterbaxterMSL