1.

Environment
Management &
Sustainable
Development
Assignment No.2

Submitted By ,

Batch A GROUP 7

Arun Mohan (MBA09019)

Basant Nayar (MBA 09027)

Karthik Krishnan (MBA09049)

Raghav Warrier (MBA09077)

Rahul V Gopinath (MBA09079)

On Thursday , Dec 23 2010

 1. Briefly explain the concept of Sustainability Sweet Spot and Sustainability

When sustainability is the common ground shared by the business interests (those of financial
stakeholders) and the interests of the public (nonfinancial stakeholders), this common ground is what called
as the sustainability sweet spot. It the place where the pursuit of profit blends seamlessly with the pursuit of
the common good. The best-run companies around the world are trying to identify and move into their sweet
spots and they are developing new ways of doing business in order to get there and stay there.
The truly sustainable company would have no need to write checks to charity or “give back” to the local
community, because the company’s daily operations wouldn’t deprive the community, but would enrich it.
Sustainable companies find areas of mutual interest and ways to make “doing good” and “doing well”
synonymous, thus avoiding the implied conflict between society and shareholders.

A Map to the Sweet Spot

Every action taken in business has two components: an impact on profits and an impact on the world. This
can be represented by a four-celled matrix with two axes, which represent profitability and social benefit (see
Figure).

The northeast corner of the map is conceptually similar to the sweet spot, where stakeholders’ interests and
corporate interests overlap. The goal should be to get as much of the business activity into that quadrant as
possible. Every business decision has to move towards the north and east. The value of the map emerges
when we use it to plot the location of various businesses or activities in order to determine ways to move
them in a northeasterly direction, or to generate ideas for quantum strategic change. If a business or manage
part of one that is currently located in the northwest quadrant (profitable but not sustainable)it is possible to
devise ways of moving the business eastward (more sustainable) without moving south (less profitable).
DuPont has done so by moving from the chemical business toward the soy protein business without
sacrificing revenues or profits. If a business in the southwest corner (neither profitable nor sustainable) the
goal should be to develop strategies and change operations to move toward the northeast corner of the map.
For example, an energy company that profits from burning dirty coal could devote its short-term research
dollars toward clean-coal technology and its long-term effort toward a future in which most energy is derived
from such renewable sources as solar, wind, hydroelectric, and geothermal power. Both initiatives embody
migration toward the northeast corner of the map, where both profitability and social benefit are high. Both
small and large companies have changed their businesses to move further toward the northeast corner of the
sustainability map.

2. How Penobscot River was destroyed in the name of development and it was subsequently
restored -with the contribution and cooperation of all the stakeholders?

PENOBSCOT RIVER

Penobscot river is the 2nd biggest in entire US, 240 miles from its source, fed by 467 lakes & ponds. It alone
serves as watershed for 1/3rd of Maine wildlife and provides energy to entire North East of US. It is also the
homeland of Penobscot Red Indians.

It is a source of salmon, trout bass and alewife for anglers and fishermen. It was considered the
property of red Indians since centuries. They considered the river as a sacred one. There used to be a lot of
adventure sports like rafting, canoeing and trekking.

The PPL Corporation installed several damns on this river to provide hydroelectric energy source to
the North eastern US. They felt using non-polluting renewable form of energy would be better than any other
form of generating energy. As a result of this the whole ecosystem was disturbed to a large extend. The damns
at the lower end of the rivers disturbed the migration fishes through the streams resulting in seizing the
growth of these. As a result of these the flora and fauna of the river was affected. The adventure sports and
fishing came to a standstill. There were many stakeholders including PPL, Penobscot nation, American River,
Atlantic salmon federation, natural resources council of Maine, Maine Audubon etc.

To restore this river a huge project was established where three prominent were sold to Penobscot
River restoration Trust at $50 million. The two damns which were situated at lower end of the river Veazie
dam & Good Works dam were demolished because they block the path for salmon migration. Howland dam
was decommission to provide more upstream passage to fishes.

There was a 90% of reduction of energy in the place but they existing damns were given the right to
increase the capacity to match the demands of the place and licences were renewed. The PPL was given
compensation amount of $50 million. Renovation of heritage & homeland was done and special quotas for
fishing & canoeing was given.
3. How companies should develop win-win relationships with NGOs and other stakeholders?

The benefits of collaborating with NGO’s and external stakeholders are enormous, some steps that can be
taken to achieve this Win-Win relationship are:

 Do your homework
Do a background study, use mapping techniques to identify and reorder opportunities for collaboration.

 Study potential partnerships to determine the likelihood of success

An in-depth study at how an NGO connects with several other organizations, ways it spends money, mode of
raising funds, general and specific objectives of NGO.The specific personalities of NGO leaders can make a big
differencein your ability to work with them.

 Establish a network of stakeholder organizations

Put into use you’re networkingskills to link one NGO leader or organization intoother groups with related
interests.

 Set specific expectations

Partnerships with NGOs and other stakeholders may be highly formal, with memoranda of understanding
that define all the terms of engagement: the purpose, scope, duration of the project, and how disputes are to
be resolved. Or they may be based on handshake agreements, shaped and maintained on an informal basis. In
either case, the best way to ensure success is to clarify expectations from the beginning and avoid overly
ambitious goals.

 Focus on the long run and be always prepared

Many NGOs that are willing to work with business are lookingfor marriage partners and not necessarily a
one-night stand. Therefore, what is needed is to build credibilityand trust over the long haul. Envision what a
long-term relationship would look like and where itmight lead.

 NGOs can be marketplace allies or marketplace adversaries

Some NGOs have become increasingly sophisticated at usingthe marketplace to inflict pain. Thus,
understanding the NGO whether it is a marketplace ally or adversary and aligning the organisation strategy
and relationship with NGO in accordance is important.

 Have an exit strategy.

Just as with any commercial partnerships, NGO partnerships can fail or fall apart. Some NGOs will react badly
and seek to retaliate. The best way to avoid that is to acknowledge the possibility of failure at the beginning
and agree on how it will be handled by all sides. This discussion will serve the added benefit of lowering
expectations appropriately and increasing trust.

For example: Pfizer, for example, provides funding to its local operations groups that are trying to develop
NGO relationships.

4. Explain how GRI promotes sustainable development?

GLOBAL REPORTING INITIATIVE (GRI)

Vision

The Global Reporting Initiative's (GRI) vision is that disclosure on economic, environmental, and social
performance becomes as commonplace and comparable as financial reporting, and as important to
organizational success.

Mission

GRI's mission is to create conditions for the transparent and reliable exchange of sustainability information
through the development and continuous improvement of the GRI Sustainability Reporting Framework.

WHAT IT IS?

The Global Reporting Initiative (GRI) is a network-based organization that has pioneered the
development of the world’s most widely used sustainability reporting framework. GRI is committed to the
Framework’s continuous improvement and application worldwide. GRI’s core goals include the
mainstreaming of disclosure on environmental, social and governance performance. GRI's Reporting
Framework is developed through a consensus-seeking, multi-stakeholder process. Participants are drawn
from global business, civil society, labour, academic and professional institutions.

The Global Reporting Initiative (GRI) promotes international harmonization in the reporting of
relevant and credible corporate environmental, social and economic performance information to enhance
responsible decision-making. The GRI pursues this mission through a multi-stakeholder process of open
dialogue and collaboration in the design and implementation of widely applicable sustainability reporting
guidelines.

GRI FRAMEWORK

Sustainability reports based on the GRI Framework can be used to measure organizational performance with
respect to laws, norms, codes, performance standards and voluntary initiatives; demonstrate organizational
commitment to sustainable development and compare organizational performance over time. GRI promotes
and develops a standardized approach to reporting to stimulate demand for sustainability information –
benefitting both reporting organizations and report users.

The Reporting Framework sets out the principles and Performance Indicators that organizations can use to
measure and report their economic, environmental, and social performance.The Reporting
Framework provides guidance on how organizations can disclose their sustainability performance. The
Guidelines (“G3”) are the foundation of the Framework. The Framework is applicable to organizations of any
size, constituency or location, and has been used already by many hundreds of organizations around the
world, as the basis of their sustainability reporting. Information-seekers can more accurately interpret
disclosed information if it is communicated through the GRI’s credible, comparable framework.

5. What are the strategies suggested by Andrew Savitz for maintaining the future of
sustainability?

 Finding the sweet spot

Finding and identifying the Sweet Spot is one way to develop a sustainability program. The key to finding the
sweet spot is simple to always be on the lookout for the overlap between profit and the public good.

 Minimization Strategy:
It is aimed at reducing ecological damage, reducing employee accidents, and decreasing harm to the
community. A company that pursues a minimization strategy is buffing its credentials as a good corporation
and as a desirable neighbor and partner for the communities in which it operates by reducing risk and costs
thereby enhancing company’s ability to consistently reach or exceed its profitability targets.
E.g. Waste reduction is a simple form of minimization. Minimization  financial benefits when applied to
reducing workplace injuries and accidents. Minimization can also be a strategy for reducing negative qualities
in products.

 Lean thinking:
It emphasizes business as process, examining all the activities that surround the design, production,
consumption, servicing, and disposal or recycling of any good in search of ways to improve the efficiency of
the flow of value from the beginning of the process through its conclusion.

 Optimization Strategy:
Optimization goes beyond minimization because it aims not just to reduce pollution, but to restore the
environment; not just to eliminate employee accidents, but to create a healthier, happier workforce; not just
to decrease harm to the community, but to revitalize it. Minimization and the new mind-set it fosters are
leading naturally toward optimization, both in terms of promising new products and in more efficient
processes. Optimization can also be about discovering or creating new markets. The benefits of optimization
can be achieved by Pushing minimization efforts toward optimization, Looking for new product and service
ideas that grow out of sustainability efforts and Looking for new markets that are “hidden in plain sight,” in
the margins of the more obvious, traditional markets.

 Risk management:
It is one of the most critical components of any business strategy. First, most companies today are running
risks that don’t appear on traditional radar screens. Second, they can often reduce or eliminate those risks if
they can identify them. Third, fostering community support and involvement—when done responsibly—can
prove to be a powerful risk-management tool. A systematic approach to sustainability and stakeholder
engagement will enable forward-looking companies and managers to see beyond the horizon and recognize
new forms of risks before they strike.

 Dematerialization:
It is exploring ways to transform the goods they sell into services and thereby providing the same value at
less cost, or more value at the same cost.

 Rethinking Corporation:
The company should give equal importance to shareholders as well as stakeholders. Sustainability does not
necessarily require companies to deemphasize profit or accept diminished financial results. But it will
eventually demand that businesspeople abandon a short-term, single-minded focus on maximizing
shareholder value and recognize that corporations exist to serve other stakeholders as well. Profits should be
considered as the reward for public good.
Summary of chapter 13 – Measuring and reporting your progress

It is important that the companies embrace policies and practices for sustainable development. The
companies or the big corporate do this more effectively when they are monitored and their non financial
performances that supports sustainable development measured and published. The very establishment of a
reporting mechanism, (i.e. a mandatory submission of report on sustainability of company’s functions)—the
Triple Bottom Line—creates pressure on companies to improve their behavior.
One of the most effective environmental law ever passed in the United States was the “Right to
Know” (RTK) provision of the 1980 Comprehensive Environmental Response,Compensation, and Liability
Act, commonly referred to as Superfund. Right-to-Know Act, RTK requires the companies to report annually
on the amount of hazardous chemicals they have within each company-owned facility. According to law it is
not required of the companies to remove the dangerous materials released to the environment or change
their practices, but just disclose (or make public) honestly how the company’s actions are affecting the
environment and society. Such simple disclosure requirement will put the companies under pressure to take
dramatic, steps to redesign their processes to make it as environmentally friendly as possible. This actually
worked because between 1988 and 2003, there was almost 59 percent reduction in the amount of hazardous
chemicals stored on-site by U.S. companies. Sustainability reporting is now used as a tool for promoting
socially responsible management. It is pressurizing the companies to create sustainability programs to save
their face in front of public. For instance Wal-Mart has shown tremendous interest in implementing
sustainability programs following demands from some of the company’s shareholders.
The companies reporting non financial performances on sustainability should know what to report
and how to report it. For that a sustainability reporting framework, the Global Reporting Initiative GRI is
used. The GRI has 146 individual data indicators, but all of them may not be equally relevant to every
business. The 146 indicators can be grouped into 10 categories which are: Materials, Energy, Water,
Biodiversity, Emissions (including effluents and waste), Suppliers, Products and services, Compliance,
Transport & Overall. Not all the companies describe their sustainability reports exactly in accordance with
the GRI guidelines. They may cover only specific subsets of indicators which they feel is relevant to their
industries or business. There are also companies like Shell, Novartis, and P&G that gives reports exactly as
per GRI guidelines. These companies gain more respect.
Over thousand corporations now issue a periodic environmental or social responsibility report, and
more than seven hundred and fifty use the reporting guidelines issued under the auspices of the GRI. GRI is
now a leading benchmark for measuring, monitoring, and reporting of nonfinancial information reflecting the
organization’s sustainability efforts. It also enables us to compare various companies with each other on their
global sustainability efforts. Many companies now merge the GRI and GAAP information to make an
integrated report which the investors can evaluate. There are also few risks associated with disclosing
sustainability reports. The reports can be challenged by people or other corporate and if the reports are not
supported by evidence of irrefutable nature it can tarnish the image of the company (in spite of genuine
efforts it had taken towards sustainable development).
A rising trend among all the corporate reporting is the integration of Triple Bottom Line into their basic
performance report. Pepsico was the first company to integrate TBL data and financial information in the
annual report. Integrating the Triple Bottom Line will transform the business of future making it more
profitable and sustainable.

Summary of chapter 14 - Creating a culture of sustainability

Sustainability is an integral part of an organization which has long term vision. A vision of
sustainability is having a big picture of the organization and its functions. It is having a bird’s eye view of how
the organization’s products or services impacts environment and society. A vision must seek answers to basic
questions like what resources are consumed by the organization and the impact it is having on the
environment, how the consumed resources are replenished, how does the organization interact with the
community etc. it is required of the managers to come up with vision statements encompassing such
questions. Many managers do not have a concrete idea about company’s non financial performance. They are
also not willing to explicitly disclose or acknowledge any matters regarding the negative performances of the
company. The managers have to realize it is important and extremely essential to be transparent in such
matters to achieve long term sustainability.

Driving the change

When implementing a big change, such as movement toward sustainability, clear and concise
message, expressed in simple terms should percolate to the lowest level in an organization. An example
would be Dupont simple slogan “The Goal Is Zero” that captures the entire essence of the environmental goal.
Also when leaders such as PepsiCo’s CEO, Steve Reinemund get personally involved in sustainability
programs it makes a huge impact on the organization. The CEO will have a significant impact on the top
management and hence influence the way company functions in a big way.

Long term thinking

For achieving long term goals there might be short term tradeoffs. Sustainable development is often
long term goal because it focuses on how your company can survive and thrive in the long term, and includes
consideration of future generations. Many corporate leaders of America believe there are solutions to all the
problems waiting to be discovered and hence does not see the necessity of long term thinking involving
sustainability. They fail to see the fact that natural resources are finite; and technology does not offer a
perpetual escape hatch from any problem or challenge we may create for ourselves.
Summary of the epilogue – The Triple Bottom Line - Andrew W. Savitz
The idea of sustainability is continuously evolving. Companies are finding newer ways to embrace
sustainability, finding newer, broader and better definition of sustainability. Lean thinking is based on the
concept of minimization- ie; to achieve the reduction of waste, pollution, resource depletion, and other costs
of doing business by continuously improving the processes. It is based on the principle that there is scope of
improvement in efficiency and effectiveness of any process which can result in reduction of cost and improve
sustainability. The lean thinking basically operates on following five principles:
1. Understand the value created by each product: We have to understand the exact value of the product.
It is measured by the benefit offered to the customer. The more quality benefit the product offers for
lesser cost the more value the product has.
2. Identify the value stream for each product: the study of process or activities that add real values can
be extremely beneficial as unwanted process can be avoided.
3. Make value flow without interruptions: it is the principle by which we try to make all the process
faster, cheaper and more sustainable.
4. Encourage customers to pull value through the entire system: Process of value creation must be
driven by actual consumer needs. The use of modern techniques of communication and information
sharing will help to know consumer needs.
5. Pursue perfection at every stage: reexamining all the steps of the life cycle of a product will help to
improve efficiency and thereby reduce cost and waste associated with it.

Dematerialization is based on the realization that consumers don’t necessarily want the physical materials
used in manufacturing, shipping, and using many products. For instance when we buy a television, we don’t
require a box of electrical components or an extravagant packing. These physical materials are sometimes not
required or even undesirable, to consumers as well as manufacturers. Getting rid of these practices will
reduce cost and will result in less consumption of resources. The concept of dematerialization is applicable to
product as well as services.

As the evolution of sustainability continues the idea that profit is the only purpose of the corporation
begins to come into question. It gives rise to important other activities that a company must pursue, for long
term benefit. These activities are as important as profits. In the long run we have to merge private profit and
public good.