2011 study making-sustainability-profitable_kurt-salmon

Making sustainability proﬁtable
What business leaders do to drive real value
from sustainability initiatives?

MAKING SUSTAINABILITY PROFITABLE

Key findings
Some companies position themselves more proactively than others in term of sustainability
and seek opportunities to make their activities sustainable, but there is still considerable room
for improvement. Many business leaders ask the question: “How to make sustainability initiatives
profitable?”

This report should help them to identify opportunities to benefit from their environmental initiatives.

Key findings of the survey are:

• Sustainability is not an option any more!
There is a gradual shift in the global mindset and most of the companies start or continue to
integrate this new element into their business transformation. With an increasing pressure from
different stakeholders, ignoring the imperative for sustainability action could put your company’s
business at risk in a very near future.

• Develop a strategy and integrate it fully.
Sustainability transformation must be coherent. The business strategy built on sustainability
offers the framework for articulated and related initiatives. Companies that have fully integrated
sustainability into their strategy execution are more likely to drive value from their initiatives.
Commit the top executives and fully involve management and employees at each level. Free the
necessary resources and avoid the middle management squeeze or the executive vacuum!

• Measure your environmental performance.
Performance evaluation is essential to align your actions with the execution of the company’s
strategy. Metrics will support management for decision-making. To assess investments, take all
aspects of the environmental initiatives payback into account. Increase your traditional cost-benefit
analysis with impacts on risk mitigation and brand value.

• Follow risk and anticipate change.
Environmental risks are real and companies have to protect themselves against them. Assessing
and following threats seriously help to uncover new opportunities and anticipate future changes.
Use sustainability as an income driver and benefit from the change. Move ahead of issues or
stakeholders will force you to do it!

• Move first and make it visible!
Be the first to move to develop the competitive advantage. Communicate about your efforts and
actions that make sense. Pairing profitability and growth with sustainability is more than doable.
Plenty of opportunities exist to do so and it is by embracing sustainability that it becomes the most
profitable.

2


Table of Contents

Introduction 4

Business and Sustainability 9

Sustainability in the business 17

Evaluating, monitoring and reporting sustainability 27

Environmental Risk mitigation 33

What makes sustainability proﬁtable? 39

3


Introduction

I. Forewords
Nowadays, most companies are aware of the increasing necessity to build a future based on
sustainable principles. More and more executives express their convictions that, in a wide range of
areas and corporate activities, the approach towards business has to change from the traditional
way to more sustainable activities.

Still, it is noticeable that, when proactive management decisions related to sustainability are needed,
there is generally a gap between talks and actions. However, some companies seem to position
themselves faster than others and seek for opportunities to make their activities sustainable. Some
have succeeded in making sustainability profitable and drive real value from each one of their
initiatives.

II. Objective of the survey
This report explores how and why companies in Belgium engage for sustainability, how they
integrate different sustainable concepts inside their strategy and what is the level of implementation
within their activities and their different functions. It also covers how these companies assess their
efforts, which difficulties they experienced while striving to engage towards sustainability and how
they manage operational risk linked to the environment. Finally, this survey aims to highlight how
companies that have succeeded in making their sustainability initiatives profitable, differentiate
themselves.

Making sustainability profitable implies making the change towards sustainable business an
opportunity to create value for the company. In other words, it means managing sustainability
issues while offering profitable benefits, in the short and long terms: in the short term by driving
revenues or reducing operational costs, in a longer run by reducing environmental and regulatory
risks in the supply chain and by creating and benefiting from intangibles such as enhanced brand
value and competitive advantages.

This report aims to explore strategies and tools used by companies to identify and benefit from
environmental opportunities. Even if they are complementary to make business sustainable,
environmental and social issues are different kind of challenges. This study focuses especially on
the environmental and economical dimensions of sustainable development.

4


III. How this study is build

Business and sustainability
Environmental challenges Pressures to changes Various responses

Sustainability in the business

Perception Strategy Pitfalls

Measurement
Importance of measurement Difficulty to measure

Risk Mitigation
What is tracked? Who is tracked? How is it tracked?

Making sustainability profitable

IV. Approach
This report is based on quantitative data collected through an online survey and on qualitative
data collected through face to face meetings with people in charge of sustainability within their
company.

The survey was conducted by Kurt Salmon in autumn 2010 and received complete responses from
85 companies. They were selected from a wide range of areas of activities and from medium to
large companies. The panel consists of Belgian companies and multinationals operating in Belgium.
Respondents are either C-level or Management in charge of sustainability and environmental
responsibilities.

Those quantitative data were complemented by 35 qualitative interviews with companies that have
demonstrated that sustainability constitutes a lever for their development.

5


V. Respondents information

Figure 1 - Sector distribution Retail

Transport, Energy & Utilities
2%
Others
10%
21% Telecom & Media
11% Professional Services

18% 11% Financial services

Engineering & Construction
15% 12%
Manufacturing, Consumer
Good and Wholesales

The sample is covering all types of activities across various sectors.

Figure 2 - Turnover distribution

15% 0-500
5%
500-1.000

16% 58% 1.000-5.000

5.000-10.000
6%
> 10.000

Around 40% of the surveyed companies have a turnover over 500 million€.

Figure 3 - Number of FTEs

14% 0-500
5%
500-1.000

15% 55% 1.000-5.000

5.000-10.000
11%
> 10.000

About 45% of the surveyed companies employ over 500 full time equivalents.

6


VI. Acknowledgements

Kurt Salmon is very grateful to all companies, respondents, and interviewees who have been
involved in this survey as well as the companies who accepted to meet us and provided us with
valuable information, in particular:

• Francis Blake, Director at Derbigum
• Fabio Boccalatte, Director CSR and Group Communication at AGC Glass
• Magda Buelens, Public Affairs & Environment Director at Tetra Pak Benelux
• Pierre Coërs, Corporate Senior Sustainability Advisor - Corporate Management for Health
Safety and Environment at Solvay
• Eric Coiffard, Senior Property Manager at Coﬁnimmo
• Stephan De Brouwer, Managing Director at McDonald’s Belgium
• Isabelle de Cambry, Associate Director Corporate HSE & CSR at UCB
• Olivier Dautrebande, Eco Manager at Total Belgium
• Bruno Defrasnes, Director Sustainable Development at Electrabel
• Philippe Dembour, Head of Corporate Responsibility and Sustainable Development at ING
• Veerle Demol, CSR Communications Officer at KBC
• Jean-Christophe Donck, Vice President at UCB
• Guy Ethier, Senior Vice-President Environment, Health & Safety at Umicore
• Concetta Fagard, Vice-President Group Reputation, Vice-President Group CSR, Sponsoring, PR
& Events at Belgacom Group
• Marc Flammang, Managing Director at Bank Degroof Foundation
• Stéphane Geerts, Director General Services at Group RTL Belgium
• Aurelie Gerth, Public Affairs and Media Relations Manager at Unilever Benelux
• Mia Goetvinck, Director Business Excellence/CSR at Ricoh Belgium
• Dr. Hildegard Deweerdt, Environmental expert at KBC Bank
• Laurent Kahn, General Manager at EXKi
• Catherine Kinet, Head of Corporate Social Responsibility at BNP Paribas Fortis
• Rikkert Leeman, Chief Technical Officer at Beﬁmmo
• Pascal Léglise, Quality and Sustainable Development (CSR) Director at Carrefour Belgium
• Olivier Marquet, Managing Director at Triodos Belgium
• Xavier Milcent, Global Marketing Manager at ExxonMobil
• Florence Rossi, Corporate Social Responsibility & Quality Manager at Sodexo
• Hannelore Schotsaert, Marketing & Communication Manager at BMA Ergonomics
• Géraldine Tondreau, Sustainable Development Advisor at Electrabel
• Vincent Vanwijnsberghe, Government Affairs & Public Policy Manager at Baxter
• Mieke Vercaeren, Advisor public affairs at Colruyt
• Gaëlle Vervack, Responsible Renewable Energy and RUE at Elia

7


Business and Sustainability

Global warming is unequivocal! More and more companies acknowledge those
facts and endorse their part of responsibility
Despite many quarrels between eco-partisans regarding the environment. Accordingly they
and eco-sceptics, there is now one certainty: started to integrate sustainability principles
there is no doubt about the truthfulness of within their activities. This trend has been
global warming and its consequences such as encouraged through initiatives of diverse
an biodiversity. institutions at international, national and even
community level.
For years now, many scientific and public
figures show us key messages: In this context, this part of the report tends to
identify how and why companies in Belgium
• Global warming is unequivocal: the world’s engage for sustainability. It will first assess
average temperature is rising, what are the challenges perceived as the
most difficult for the future. Then, it looks
• Most of this warming comes from human into the different pressures pushing company
activities, in particular GHG such as CO2 due to take measures and to start initiatives.
to the burning of fossil fuels, Finally, it examines which actions are taken by
companies to respond to those challenges and
• It is translated into more negative than pressures.
positive consequences, and the severity is
likely to increase.

Furthermore, other major environmental
challenges have reached common acceptance
such as energy shortage, water stress, waste
management, ocean fish depletion and
deforestation, to name only a few.

In the end, no matter if scientific, eco-partisans
or eco-skeptics are right, the general public is
now convinced about the necessity to limit our
impact on the planet. Clients, consumers, as
well as employees and business partners are
now expecting companies to respond to these
challenges in an appropriated way.

9


I. Companies are preparing to face climate challenges
Figure 4 - What are the most difficult challenges related to sustainability that you are expecting to face in
the near future?

Rise in energy cost 69%

Climate change and upcoming relevant regulations 59%

Rise in transportation costs 34%

Rise in commodity prices 31%

28% Public opinion regarding environmental decisions

28% Air pollution and upcoming relevant regulations

28% Waste Management

28% Water scarcity and upcoming relevant regulations

20% Lack of resources needed to produce

20% Bio-diversity and land use related issues

11% Chemicals, Toxics, and heavy Metals and upcoming relevant regulations

0% 10% 20% 30% 40% 50% 60% 70% 80%

While global society is aware of the different key natural resources. Those resources, like
challenges, the results highlight 4 major oil, commodities and industrial metals, are
challenges that companies expect to face in gradually reaching their limits. On numerous
the near future. areas, companies cannot continue to go
forward with business as usual regardless
For most of the surveyed companies, “rise of the environment. Since energy has taken
in energy cost” and “climate change and a central position in our society, it makes
upcoming relevant regulations” represent this challenge highly visible and shows the
the 2 most difficult challenges for the near constraints imposed by our planet. However,
future. These are closely followed by the “rise like any challenge, it can be seen as an
in transportation costs” as well as the “rise in opportunity. It is an early warning in order to
commodity prices”. reorient how markets and society function and
hence how companies operate in their day to
For a majority of companies, rise day activities.
in energy cost and climate changes
regulations will be the 2 most chal- Challenges expressed also reﬂect concerns on
lenging issues to manage in the near air pollution and in particular on climate change
future. as regulators worldwide are determined to put
pressure to lower this at a sustainable level.
Worries expressed by companies reﬂect
the awareness that the business as usual
is currently putting too much pressure on

10


II. There is an increasing pressure to make companies act in a more
sustainable way
Figure 5 - What are the main sources of pressure that drive companies to pay attention to sustainability
issues?

According to respondents, 4 main drivers
Didier Bellens, CEO Belgacom
pressure their company to pay attention to
“CSR helps us to anticipate on societal
sustainability issues: the necessity to strengthen
trends and stakeholder expectations. It
their competitive position, to meet consumers’
drives innovation and opens doors to
expectations, to manage the risk of regulation as
promising new business areas”
well as to attract, motivate, and retain talented
employees.

Competition is the most important factor that drives companies to address
sustainability issues.

The main source of pressure to address
Francis Blake, Derbigum
sustainability issues comes from competition. If
“Through our program of innovation which
they want to keep one step ahead, companies
started less than 10 years ago, we grew
have to move to strengthen their competitive
from a company active in rooﬁng systems
position. Environment being more and more
to one that is ‘Making building smart’. A
important in customers’ minds, companies must
sustainable approach and a strong R&D
adapt to meet consumers’ expectations. Some
program have led us to the development
companies however gain from a competitive
of more eco-friendly solutions which
position by beating environmental expectations!
permitted to gain a signiﬁcant competitive
advantage”

11


On the other hand, regulatory risk is constantly Furthermore, on the strength of employee’s
pressuring companies. Some institutions, such expectation, companies tend to act more
as the European Union, play an important role, responsibly. Indeed, in the fierce competition
pushing companies with more regulations to for talent, potential employees also growingly
fight against climate change. The cap-and- take into consideration the sustainability
trade system for the carbon market and the argument and actual employees want to be
extended producer responsibility, requiring proud of their work and of their employer.
companies to take the ownership of the
product they launch on the market, are good
examples of the numerous initiatives taken by
the authorities.

Stakeholders’ pressures box Financial partners: Banks and Hedge funds
are now including environmental factors
Competition: Through providing more inside their investment decisions
sustainable products & changing • Equator principles: new standards for decision making
about project finance loans
behaviours. • Carbon Principles: agreement to look hard at carbon risk
• See Derbigum text box of electric power projects financing (2008, JPMorgan,
Morgan Stanley, and City group)

Consumers: Consumer awareness and Investors and Stock Market: ranking system
expectations increase. They demand that refers to sustainability performances.
• SRI indexes: DJSI, FTSE4Good, ASPI, Ethibel Excellence
information such as what is in the product, Europe,etc...
where it comes from and how it is made. • Ranking Agencies: Vigeo, SAM, Eiris, etc.

Authorities: Be it from international Financial market: Market uncertainty
institutions (United Nations, European • Energy costs variation
Union, etc.), national or local government,
the number of environmental regulation Local Communities: Local communities are
boomed in the last two decades. more self-powered and companies need to
• At European level, directives and regulations are directly involve them for opening or expending ope-
impacting companies’ activities: RoHS (restriction of
hazardous substances), WEEE (waste electrical and rations in a region.
electronic equipment), REACH (registration, evaluation • The local community of southern India succeeded to
and authorization of chemicals) remove Coca-cola’s license to operate in Kerala for its
• Due to the presence of a contaminating product bottling plant due to an over-exploitation of ground wa-
(cadmium) within their Playstation cables, Sony wasn’t ter sources and the emission of toxic sludge. As a Result
allowed to supply their product just before Christmas many people in India have cut down or given up on Cola
consumption
2001 in the Netherlands

NGOs & Opinion leaders: Retaining
Employees: Today employees are looking considerable public influence
for a meaning in their day to day work. • Chiquita was pressured in the 1990’s to change its way to
work with local farmers
They need to be proud of the company • Al Gore’s recent campaign on climate change has tre-
they work for! mendously attracted the attention of general public
New employees and competition for talent.
• New generations are more sensitive to green concepts Medias: Traditional media (TV, radio,
newspaper) but also new media (internet)
Business partners: B2B customers are increase the awareness of consumers
increasingly asking their suppliers to reveal • After a campaign of media harassment through
Facebook, Greenpeace urged the agribusiness giant
what their products contain and how they Nestle to abandon oil palm and engage in a policy of
make them. «zero deforestation»
• Walmart is pressuring for sustainability principles • The movie «home» from Al Gore has risen the awareness
compliance concerning products, requesting its 70 000 of several million viewers
suppliers to lower fossil fuel use and waste.

12


Our Point of View
Best performers are always one step ahead of the competition. Indeed, being one move ahead
allows you to be better prepared to deal with upcoming problems. We believe that all the signs are
present, it is time to jump!

In the last few years, watchdogs and opinion leaders have been more urgently raising awareness on
sustainability. Media play an important role as well. Major business publications and newspapers,
have increased their focus on sustainable development topics and are definitely on the watch for a
corporate blunder. Consequently, sustainability issues climb the general public agenda and climate
change becomes an increasing concern.

As the results show it, consumers, employees, communities as well as businesses and financial
partners now expect companies to take their responsibilities and to respond to the challenges
in an appropriated way. Those changes of behaviour pressure and affect significantly company’s
activities (See Stakeholders’ pressures box above).

In addition, numerous examples show that in the race to sustainability, companies that move first
gain the most significant competitive advantage.

13


III. In response to these pressures, companies identified appropriate
approaches targeting the highest impact

Figure 6 - Ranking of the most effective actions to reduce a company’s environmental impact

1 Purchase of Clean energy 63%

2 Production of Clean energy 41%
Rank of the action by order
3 Carbon footprint analysis 46% of perceived effectiveness
to reduce a company’s
4 Waste management 78% environmental impact.

5 Cost identification & reduction 72%
Percentage of respondents
6 Green Procurement 54% already using the action
within their company
7 Products/services optimization 58%

8 Fleet management optimisation 68%

9 Usage of clean technologies/green IT 59%

10 Smart buildings 46%

11 Environmental Risk Management 53%

12 Search for Subsidies 30%

The survey assessed several levers that can For the respondents, the actions and
be used as a response to environmental opportunities perceived as the most effective
issues. On one hand, one question covered are, by order of effectiveness: the production
the perception on effectiveness of those and use of clean energy, the use of a carbon
actions regarding the reduction of companies’ footprint analysis to assess and mitigate GHG,
impact on the environment. On the other hand, and waste management.
another question assessed which levers where
effectively used by companies to respond to Concerning the actions already used, the
environmental issues. most used ones are the improvement of waste
management, the monitoring and reduction
of costs and the improvement of the fleet
selection.

There is a mismatch between the actions perceived as the most effective and
the ones effectively used.

The results show a mismatch between the these actions, the purchase of green energy
actions perceived as the most effective and the is the fifth initiative the most used and the
levers currently used by companies to respond production of green energy locally is the 11th
to the environmental issues. For example, initiative. Nevertheless, waste management
the use of clean energy is considered as the and costs identification & reduction are, in
most effective action, yet regarding the use of both cases, in the top 4 actions.

14


Our Point of View
Most mismatches between actions perceived as the most effective and those currently used by the
respondents can be explained by the perceived returns on these actions. The best way to reduce
the impact is rarely the cheapest, let alone the easiest! In this regards, governments and institutions
can have a significant impact.

In the same way, the most significant mismatch of the results is the fleet management which in
Belgium can be explained by the federal auto premium as well as the regional incentives. For
obvious reasons, policy makers are very active in limiting road transport nuisances which are
reflected in the the various European eco-taxes on road transport and fuel consumption.

Similarly, even if clean energy is perceived as the most impacting action that a company can take
to reduce its impact on the environment, it is generally costly. Indeed, producing your own “green”
energy is a considerable investment for which the payback period is relatively long. Additionally,
many companies do not own the building they work in, which in case of solar panels and windmills
makes it more complex. On the other hand, purchasing clean energy is much easier but it is an
investment for which the returns are intangible and difficult to measure financially. Hopefully,
more and more companies are seeing the benefits through the costs and clean energy is definitely
becoming trendy. Again, governments can and are playing a significant role through “Feed in
Tariff ”, green certificates, and other regulations and incentives towards clean energy production.

Likewise, the results show that a carbon footprint analysis can be very useful to help reducing the
company’s impact. In regards to GHG, it can be used as a starting point from where you can identify
where to act in order to have the strongest impact on your emissions. However, it is a complex
process for which companies usually do not have the internal competencies and knowledge. In
addition, the analysis needs to be done continually or on a regular basis to be the most effective.

Though, waste management is a good
match because reducing waste to a Cradle to cradle at BMA Ergonomic’s, Hannelore Schotsaert
minimum and by doing so increasing
productivity, is part of doing efficient "Most of the chairs used in an office environment are out of use after 7
business which is a priority for most years on average. Undoubtedly, most of those chairs are designed to
companies. Nevertheless, the mindset last longer!
on waste management is evolving.
The change in perspective from an BMA Ergonomics’ AXIA chair is, through its Design for Disassembly an
unbounded world with unlimited alternative to the classic cradle to grave products. BMA Ergonomics
resources to a constrained world operate a withdrawal guarantee. After years of intensive use, BMA
highlights the need for another Ergonomics come and pick up your old Axia chair. In exchange, you will
approach to waste management. even receive a money coupon to use for a new chair (around 50 EUROS
The best initiatives start ahead in in 2010/2011). The old chair returns to the factory. In the recycling shop,
the supply chain and aim at closing especially equipped for this purpose, and is completely taken apart.
the loop through a cradle to cradle
product life-cycle. Some of the components are directly reused in the manufacturing of new
chairs. Others are sent back to their suppliers, who recycle the parts and
use them in the production of new materials. Today, BMA Ergonomics
guarantee that their products consist of at least 67% recycled materials."

This is an example of a Cradle to Cradle Design in which technical
materials are viewed as nutrients for new products. This kind of design
seeks to create systems that protect our planet by developing almost
waste free processes.

15


Sustainability in the business
Companies finally acknowledge their envi- assesses the proportion of respondents who
ronmental responsibility. Therefore, they start fully or partially implemented sustainability
increasingly to integrate sustainability prin- within their strategy. In the first place it looks
ciples within their business activities. As shown into the reasons why some did not develop
below, this fact is reflected by an increased sustainability within their strategy. Secondly, it
environmental focus in their core strategy. explores why the others did develop it. Finally,
the report studies how companies structure
In this context, this part of the report highlights their organisation to support environmental
the trend to engage in sustainability through a initiatives.
strategy oriented towards planet concerns. It

I. Environment is no longer an option, it is now taking an important
role within corporate strategy, and this trend will strengthen in the
near future
Figure 7 - To what degree does companies’ strategy focus on the different elements of the «Triple P»:
People, Planet, Profit?

Planet
24% Planet Planet
34% 36%
People
29%
People People
Profit Profit
29% 30%
49% Profit 34%
37%

5 years ago Today 5 years from now

5 years ago, profit was by far the highest to be more balanced between the 3 elements
concern of the triple P mix (People, Planet, and what is more, there is an increasing trend
Profit). Nowadays, businesses strategies seem for planet concerns.

Results confirm that companies are increasing their focus on environmental
concerns.

It is manifest that companies tend to integrate behaviours internally. Externally, companies
sustainability concerns within their core claim not only to be willing to reduce their
strategy. This shift is visible and companies are impact but more and more that they commit
responding to constantly growing pressures themselves to protect the environment.
and try to stimulate environmentally sound

17


Our Point of View
To survive in today’s changing environment, companies are required to adapt their business model.
As regards to the environment, they must find ways to stand out from other players and to benefit
from competitive advantages. The starting point for this is to develop a strategy oriented toward
sustainability. We firmly believe that in a near future, companies that do not have an adapted
environmental business strategy will find difficulties to stay in the market.

During our interviews and meetings we saw environmental leaders using appropriated sustainability
oriented strategies that helped them to:

• Cut operational costs and expenses related to environmental issues,
• Manage and reduce environmental and regulatory risks,
• Drive tangible revenues from differentiation of products and services offered,
• Drive intangible revenues from an improved brand image and through improving relationship with
their customers, employees, and other influencing stakeholders.

II. Most companies formalised their engagements through the
integration of sustainability aspects within their strategy
Figure 8 - Does your company have developed a comprehensive Sustainability Strategy?

Yes, a formal comprehensive
and documented strategy
25%
34% Yes, general guidelines about
environment and social
responsibility

41% No, we do not have a
documented Sustainability
Strategy

Our survey reveals that more than 70% environment and social responsibility.
of the surveyed companies developed a
sustainability strategy, consisting, for 34%, On the other hand, 25% of respondents still
of a formal comprehensive and documented don’t have any documented sustainability
strategy or, for 41%, of general guidelines about strategy.

The majority of companies have formalised their engagements on the
environmental challenge, ranging from general guidelines to more formal
documented strategy

18


Our Point of View
As seen previously, in our complex and interconnected world, taking the environment into
account is no more an option. On the contrary, it can be seen as an opportunity. While the world
becomes global, it is more and more difficult for companies to differentiate themselves. To this
end, an environmental perspective can help to reduce risks, cut costs as well as to drive revenues
and enhance hard to measure but significant intangible value. Hence, the development of an
environmental strategy has become a critical point for competitive differentiation.

Indeed, developing a strategic approach to environmental issues helps to identify the opportunities
related to the environment a more natural part of doing business. We are confident that building
an appropriated environmental strategy will provide companies with an essential framework for
actions. A structured and formalised approach will translate the c-level commitment towards
environmental issues and is an essential tool to develop coherent actions aligned with the core
activities of the company.

During our visits we observed several examples of a successful sustainability strategy creating real
value for the company. Nevertheless, it is worth mentioning that for some, temptations to fool the
audience are real. Several pitfalls should be avoided and could be revealed as problematic in the
future:

• Some companies are exclusively committed on “trendy” topics such as GHG reduction. Of
course, climate change is an issue of utmost importance for the future. However, to ensure the
viability of their business on the longer run, companies must embrace sustainability globally and
accommodate their business model accordingly. You cannot see the forest for the trees.
• When reporting results, a year’s comparison can make a tremendous difference in the perceived
results of the efforts announced. Making bold statements should not only look good but be good
and translate real commitment!
• In various cases, especially in the retail industry and fast moving consumer goods, companies are
announcing efforts and formalising engagements without consulting the operational level on the
feasibility of their commitments. This can easily lead to unreached targets.

III. Why have some companies not yet included sustainability within
their strategy?
Figure 9 - Primary reasons why companies do not yet have a sustainability strategy?

Does your
company
have a
Lack of human resources to drive the changes 63%
developed
sustainability Not relevant for our sector of activity 42%
strategy or Why?
guidelines?
26% No clear vision of what could be done
No
25% 16% We are waiting for the right time
Yes
11% We don’t see the benefit
75%
11% There is no time to implement such a change

01
0% 02
10% 03
20% 04
30% 05
40% 06
50% 60%0

19


Among the 25% of respondents who have not 40% believe that the development of such
yet developed a sustainability strategy, more a strategy is not relevant for their sector of
than 60% claim that they do not have enough activity and 26% claim that they have no clear
human resources available to do so. About vision on what could be done.

The most important reason for not integrating sustainability within their
strategy is the lack of human ressources.

When looking at the size of the companies Moreover, 57% of the companies which believe
who did not implement a sustainability that the development of a sustainability
strategy, the human resource issue makes strategy is not relevant for their sector of
sense: 78% of these companies have less than activity are active in the professional services
500 employees. sector (not including bank, ﬁnance and
insurance activities).

Our Point of View
We are convinced that in the today’s world no company big or small, in manufacturing or services
can afford to neglect environmental issues.

It makes senses that the small companies and service companies feel less concerned about
sustainability than others because their impact is already small, the pressures on their activities is
limited and they are usually more ﬂexible to adapt quickly without supporting unbearable costs.
Nonetheless, stakeholders’ expectations are rising. Even if the pressures are lower, they rise as well
for smaller companies and for the professional service industry. Different reasons make us believe
that even those companies should take sustainability into account within their strategy.

Firstly, more and more large customers are putting pressure on suppliers, big or small, and encourage
them to comply with environmental standards. Indeed, as it is the case for 54% of the respondents,
many companies are developing “Green Procurement” practices to assess the sustainability of their
suppliers. As a result, even for small companies and the service industry, a sustainable strategy can
be used as a serious asset to differentiate oneself from its competitors.

Secondly, legislation applies also to smaller companies. To meet ambitious commitments made
at International level, and in particular at EU level, authorities will increase their requirements
towards companies in the coming years. Notably, a recent study on SMEs and the environment
in the European Union, conducted jointly by Planet SA and DTI, highlights that small and middle
sized companies account for 64% of the industrial pollution in Europe. Hence, some legislation will
accordingly be directed towards them. As the REACH directive demonstrated, regulation can have
a serious impact on small businesses.

Thirdly, we live the information age which has two major impacts on companies, taking all categories
together. On the one hand, there are now plenty of tools allowing a higher level of information to
track environmental impact. New sensors and information systems make tracking affordable for
smaller companies. On the other hand, information travels faster and almost at no cost, which
makes small companies more vulnerable to watchdogs and other stakeholders’ scrutiny than they
ever were.

20


IV. When and for which motives did companies integrate sustainabi-
lity within their strategy?
Figure 10 - For which motives did companies integrate sustainability within their strategy?

Does your Improve corporate and brand reputation 78%
company
have a
developed Differentiate the company’s products 62%
sustainability
strategy or Motivate and retain employees 60%
guidelines?
Comply with legal and stakeholders requirements 59%
Why?

No Cost reduction 52%
25% Identify new growth opportunities 48%
Yes
75% Increase efficiency 47%

Customer retention 47%

Improve risk management 43%

01
01
0% 02 20% 0330%
10%02 03 04 0405
40% 05
06
50% 60%07 70% 0 80%
06 08 0
The four main reasons put forward by respondents to explain why they chose to integrate
sustainability within their strategy are:
• The improvement of their corporate/brand reputation: 78%,
• The differentiation of their products: 62%,
• The fact that it helps to motivate and retain employees: 60%,
• And the fact that it helps to ensure the compliance with legal regulations and other stakeholders
pressures: 59%.

Figure 11 - How long ago did companies integrate sustainability within their strategy?

35
35%
34%
30%
30

25%
25

20%
20 22%
19%
15%
15

14%
10%
10

8%
5%5
4%
0%0
Less 6 - 12 1-2 2-5 5 - 10 10+
than 6 months years years years years
months

21


Another question assessed the moment in time having done it in the last 5 years, and more than
when sustainability started to be implemented 20% during the last year.
within their strategies. More than 75% reported

Most companies implemented sustainability in their strategy to improve
their brand reputation and differentiate their products.

There is a recent shift in the way corporate matter of fact, since new generations are more
drive changes towards sustainability. While sensitive to green concepts, sustainability is
companies were used to perceive sustainability now significant in the competition for talent.
constraints as negative, many see them now as
businesses address sustainability in a way that It is interesting to assess when companies
is directed to preserve or improve their brand started implementing a sustainability strategy.
reputation. In addition, many companies know Most companies did it during the last half-
that they could capitalise on sustainability to decade. However, our meetings revealed
differentiate their products and strengthen that in the past, even if sustainability was not
their competitive advantage. expressed directly into the strategy, several
actions were done already. This changes and
Employees’ motivation and retention is also there is now a clear necessity for companies to
identified as an important priority for which express it more formally. The trend can also be
sustainability plays a growing role. As explained confirmed by the recent increasing number of
before, employees increasingly search for a new sustainability reports which has boomed
meaning in their day to day work and need to in Europe in the last ten years.
be proud of the company they work for. As a

Our Point of View
There are many motives for companies to develop an environmental perspective in their strategy.
We identify three basic reasons that encompass all motives.

First of all, a sustainability strategy helps companies to yield tangible profits and reduce costs.
Companies reported to us that when they started addressing sustainability within their strategy, they
uncovered upside potentials on both the short and long run. Among other benefits, sustainability
pushes them to increase efficiency, to reduce their waste as well as to be more innovative and to
uncover new opportunities to increase sales.

Secondly, by acting towards sustainability, companies provide consumers and employees with a
proof of genuine concern to the growing global unease about the future and about doing the
right thing for the next generations. Hence, implementing sustainability into the strategy has a
tremendous impact on brand reputation and definitely helps to attract and retain customers as
well as employees. There is now a growing need for companies to be more visible regarding their
environmental behaviors.

Last but not least, sustainability helps them to manage the downside risks. Risk management and
compliance with legal constraints as well as with stakeholders’ expectations become crucial for
some companies to keep selling their products.

To sum up, integrating sustainability within your strategy becomes a “must do” because it
lowers business risks while protecting value creation! This fact is strengthening over time: as the
results shows, during the last half-decade most companies started to officially commit towards
sustainability. Before that, it was risky to communicate on environmental matters because it often
meant exposing yourself to watchdog’s scrutiny. Nowadays however, increasing upsides exceed
risks. What is more, not to talk about it may well reveal being even riskier!

22


V. Which structure is supporting sustainability initiatives within the
company?

Figure 12 - Who is responsible for ensuring that the environment is taken into consideration in your company?

Board of Directors 31%

CEO 62% CFO 12%

Management Team 51%

CSR/En-
Purchase & Prod. & Mktg & Adm. & Account.& Financial
vironment HR IT dpt.
Logistic Engin. Sales Fiscal dpt. Control dpt
Unit

45% 26% 23% 18% 14% 8% 5% 3% 3%

For most of companies surveyed, the CEO, the the environment is taken into consideration
Management Team and a speciﬁc Environment within the company.
or CSR unit are responsible for ensuring that

Figure 13 - Which structure is supporting sustainability initiatives within the company?

At each level of the company, almost
everybody is involved to some extent 19%

Several teams, each dedicated to
Number 16%
a department
of persons
involved in
the company 7% A team/departement with more than 5 people

A team of 2 to 5 people 29%

1 single person 29%

05 10 15 20 25 30
0% 5% 10% 15% 20% 25% 30%

Regarding the number of employees working reported that their company has dedicated 1
to support the ecological dimension of single person or a team of 2 to 5 people to
sustainability in the company, most respondents support sustainability initiatives.

Top management functions are generally responsible for a sustainability
and most respondents have a unit dedicated to sustainability comprising 1
to 5 people.

23


To make sustainability part of their day to day
activities, most companies have put in place Umicore: A clear example of commitment
a dedicated team for CSR activities (1 single Due to its historical activity, mining and
person or a team of 2 to 5 persons). During
smelting, Umicore, formerly know as «Union
our meetings we observed that the team is in
general composed of people who previously Minière» faced pollution issues.
worked for the same company but in other Thanks to the commitment of its CEO, it
functions (related or not to environment and has gradually evolved into a responsible
sustainability), notably people from the Quality company specialized in materials
or Safety departments. However, in some technology. Its engagement is clearly
cases, companies hired new comers, generally
visible in its statement «materials for a
experts in CSR.
better life». During the transition period,
The persons accountable to ensure that the communicatioon from the CEO has
sustainability is taken into account in the been strong and clear. Their sustainability
company are for most of respondents their approach has also been clearly detailed
CEO and Management. The CEO can have a key in their booklet «The Umicore Way» which
role to make sustainability initiatives effective
is distributed to all Umicore employees
and a clear message from the top ensures
leadership for sustainability and optimises worldwide.
the chances for a successful implementation
throughout the organisation.

24


Our Point of View
If the commitment is real, “Green teams”, as we call them, are very important to catalyse initiatives
and make environmental actions more coherent with the company’s strategy. Nevertheless, having
a team assigned to deal with environmental matter is not sufficient. The latter cannot do much if the
CEO, the corporate culture and the resources investment are not there to back it up! Furthermore,
relying solely and blindly on such a team can undoubtedly create problems as well. Notably, by
being isolated from the rest of the company the team can sometimes deter other employees’
involvement. To avoid such issues, it should be actively involved in the company’s process and
convey and stimulate employees’ commitments.

There are several pitfalls that managers should bear in mind concerning the structure used to
support environmental initiatives:

First, the support of top management is essential. Most of successful initiatives we learned were
backed up by c-level engagements. A clear message and vision must come from the CEO to push
the entire company to act responsibly. This is even more the case for companies historically not
involved in environmental matters. Such support shows to the entire company that environment
is an important aspect of the strategy and that the company looks towards the future through a
sustainability that goes beyond short-term targets.

Second, if top management is where commitment starts, middle-management is generally where
sustainability initiatives are brought to a halt. Since middle-managers are frequently holding what
seems to be the weight of their agencies on their shoulders and are often “squeezed” from all
around, they are stuck between the call for more sustainability, from top management or the “green
team”, and all the other day to day objectives such as boosting profit margins, increasing sales or
cost cutting targets. To respond to those pressures, middle-managers have to prioritise. Obviously,
if the environmental areas are not high enough in their priorities, they will go by the wayside.
Hence, involvement of operational management is critical.

To avoid middle-management squeezed from all directions to overlook environmental objectives,
they must get a clear signal that sustainability and environment is a part of their job. Signals can be
given through the integration of sustainability goals within their job descriptions, bonuses, and the
definition of environmental metrics as key performance indicators of their activities. TNT Express
for example has given CSR targets to all its managers and includes CSR and environment within
the bonus schemes. Ensuring that incentives stimulate to prioritise green initiatives is necessary to
align employees’ goals with environmental targets. The number of trainings given on sustainability
can also send clear messages to executives and employees in general.

Finally, aside from the lack of involvement from the top and operational management, another
recurrent problem for green initiatives is the lack of resource investment. To be meaningful,
sustainability strategies like any other strategies require the availability of various resources. These
can be material or immaterial, be human or financial and it can even be information, knowledge,
involvement or commitments. All these resources are decisive to guarantee the success of initiatives.
Of course, companies could, and often should, perform pilot project to assess the potential of an
opportunity. Even so, while the same initiatives prove to be very successful for other companies, we
have seen pilot project being so poorly invested in that it had no chance to yield positive results. To
sum up in one sentence: “the wise one does not seek to jump halfway across a ditch!”

25


Evaluating, monitoring and reporting
sustainability
Along with the integration of sustainability shows improvements and helps to identify
principles within the business activities areas that need attention and initiatives that
comes the need to assess, monitor and should ultimately be discontinued. Secondly, it
report on sustainability performances. is essential to communicate on achievements
Leading companies are now integrating both internally and externally. Last but not
key environmental concerns into their least, managing and measuring the company’s
management, measurement and reporting environmental performances provides a
processes. Yet, a majority of companies are protection for the long-term share-value.
only starting to evaluate, measure and report
their environmental performances and face This section highlights the importance of
difficulties to do so. monitoring and reporting on environmental
performances and underlines the fact that
An appropriate measurement and monitoring most companies face difficulties to evaluate
brings substantial beneﬁts to the company. environmental initiatives and to measure their
Firstly, potential initiative and performance environmental performances adequately.
evaluation are essential to implement, follow up It presents the major roadblock to adapt
and align actions with the company’s strategy. assessment and measurement in order to
The metrics will support management during integrate the company’s environmental
decision-making processes and post decision considerations.
analysis. Hence, measuring performances

I. Measuring sustainability performances is important but measuring
it precisely is a real challenge
Figure 14 - Are you able to measure and monitor your sustainability performances?

50
50% 46%

40
40%
33%

30%
30

20%
20

10% 9%
10%
10

1%
0%
0
Not at all No Imperfectly Yes Absolutely

About 42% of the respondents reported their remaining 58% face difficulties and among
company as able to wholly measure and them, 11% are ultimately unable to do so.
monitor their sustainability performances. The

27


Most of respondents were imperfectly able to measure and monitor their
sustainability performances

While companies strive to reduce their constitutes a major issue for decision makers.
environmental impacts and take many
sustainable initiatives, most face difficulties The results show that companies investing in
measuring results and tracking their sustainable initiatives are more often than not
environmental performances. Since for an imperfectly able to monitor environmental
initiative to be really meaningful for the performances. Consequently, they cannot
company, progress needs to be measured, this properly estimate returns on their initiatives.

Our Point of View
Performance evaluation is essential to implement, follow up and align actions with the company’s
sustainability strategy. Decisions should not be taken blindly. An old management adage says “You
can’t manage what you do not measure”. We can at least say that you cannot manage what you do
not know about. Metrics support management during decision-making process and post decision
analysis. Clearly, measuring performances does not only show improvements, but also help to
identify areas that need attention and initiatives that should ultimately be discontinued. Without
a doubt, information is a basis for managing business and to ensure an alignment between results
and objectives. Finally, it is also essential to communicate on achievements.

Accordingly, many companies face difficulties to make their actions visible and miss a substantial
part of the return they could get from environmental initiatives. Although respondents indicated
that sustainability dimension of their strategy mostly consist of improving brand reputation and
differentiate their products, they communicate mainly through low-impacting media such as
Sustainable Development websites and CSR reports. As a result, many actions are not conspicuous
enough and fail to be noticed by general public. An appropriate measurement and reporting is
crucial to capitalise on past achievements and to gain visibility by providing essential information
to the outside world.

However, monitoring sustainability results is far from being an easy task. Environmental issues tend
to be complex and in many cases potential solutions will uncover new issues that can be even worse
than the initial one. This complexity makes measuring performance a real challenge. The traditional
cost-benefit analyse is not appropriate to measure potential initiatives and to compute returns on
current projects related to the environment. Indeed, payoffs from environmental initiatives can take
various forms and are often diffuse, delayed and not easy to see.

Hence, to measure fully the results of environmental actions, companies need to broaden their
measurement methodology. They should take into account the various aspects that returns can take.
Those are traditionally not taken in consideration into investments calculation and performance
measurement. For example, protecting your brand reputation and shielding the company against
upcoming regulations. To help in this process, we recommend categorising payoffs as in Daniel
C. ESTY and Andrew S. WINSTON (Authors of Green To Gold, John Wiley & Sons, Inc. – 2006)
framework presented in Figure 15. In this framework, the traditional cost-benefit point of view
is aggregated with less certain payoffs that are generally hard-to-see intangibles or risk related
benefits.

28


Best performers we met had often changed their Figure 15 - D. Esty and A.Winston strategic
environmental related investments decisional framework
process and their performance measurement to
take those less certain returns into consideration.
Obviously, those returns cannot be measured
precisely. However they exist and constitute a Capitalize
Capitalize Build
real beneﬁt for the company. Hence, they should on the
Revenues Reputation
not be disregarded! To sum up once more in one upsides
sentence: “In the country of the blind, the one-
eyed man is king.”
Manage
Reduce Mitigate
the
Cost Risks
downsides

High Certainty Low
Short Run Long Run

II. Companies face difficulties when measuring and monitoring
sustainability performances
Figure 16 - What are the main difficulties that you experienced in measuring and monitoring your sustainability
performances?

Lack of indicators and data 44%

Lack of knowledge and expertise 39%

Internal level of priority 39%

Suppy chain complexity 37%

17% Consumer awareness

14% Lack of international regulations and standards

01 02 03 04 05 0
0% 10% 20% 30% 40% 50%

The survey questioned companies on the main difficulties they experienced when measuring and
monitoring their sustainability performances. The results show that main difficulties are related to
1. The lack of indicators and data for 44% of the respondents
2. The lack of knowledge and expertise on tracking environmental performances for 39% of the
respondents
3. The internal level of priority for 39% of the respondents
4. The supply chain complexity for 37% of the respondents

29


Main difficulties for companies to track environmental performances are
related to the lack of indicators and data as well as the lack of knowledge
and expertise.

The lack of indicators and data is not If environment is not perceived as a priority
surprisingly the highest difficulty of measuring then the urge to measure it is weak. This can be
and monitoring performances. First of all, partially explained by the lack of involvement
sustainability is usually a new dimension of top management and middle-management
for which data collection was not originally overlooking environmental aspects, as we have
planned in the company’s reporting structure. seen above in the chapter “Which structure is
Secondly, as we have seen the aforementioned supporting sustainability initiatives within the
performances can take many forms that are company?” in page 18.
sometimes difficult to evaluate.
Finally, supply chain complexity is a major
In addition, as sustainability is a recent difficulty, especially for companies that face
concern, companies often lack of knowledge difficulties to identify the causes of their
and expertise in tracking environmental environmental impacts and when the highest
performances. The company has to either impact occurs outside the company’s walls.
train current employees in order to learn the However, companies can no more consider that
necessary knowledge, hire new employees with what occurs outside their internal activities is
specific skills or ultimately get the expertise not part of their business. Even if the supply
from the outside. chain is very complex, not assessing suppliers
correctly can lead to serious troubles.
We can also see that difficulties are also
coming from the internal level of priority and
the undervaluation of environmental aspects.

Our Point of View
While for some companies, the collection and use of accessible data to generate appropriate
environmental indicators is already business as usual, most companies need to develop new metrics
more appropriate than previous ones with regard to sustainability. Hence, the lack of indicators
and data is perceived as a major difficulty. Even so, gathering underlying environmental data
and indicators alongside with economic and social ones is critical for management and decision
making. Hence, the question is why this lack of data and indicators. We know that sustainability
is usually a new dimension for which data collection was not originally planned in the company’s
reporting structure. Therefore, companies need to adapt. Various methods, numerous techniques
as well as countless solutions exist to identify what to track and to ensure a reasonably correct level
of information on environmental performances. The problem is that companies face difficulties to
implement such a change.

Those difficulties are often due to the lack of knowledge and expertise. The first step to overcome
this issue is probably to get help from the outside. Several environmental leaders we visited were
partnering with knowledgeable actors and specialists to shape an appropriate reporting system
regarding their environmental performances. Experts, and sometimes academics or even NGOs,
can offer a real added value to companies seeking to make their sustainable initiatives profitable.

Another recurrent issue is the low internal level of priority of environmental challenges although the
CEO and top management commitment are a key success factor. A clear message must come from
the executive committee, and the CEO himself must commit the whole company to improve its
sustainability. From there and let alone the building of a coherently aligned sustainability strategy,
companies can start implementing systems to track relevant information and evaluate performance
towards sustainability.

30


Also, a common dream among top managers would
be to have all the information they need on a company
Pierre Coërs, Corporate Management for
within one single indicator. Similarly, we met companies
Health Safety and Environment at Solvay
who were trying to synthesise all information about
“Concerning indexes and tools, at Solvay
sustainability and their environmental impact into one to
we regularly perform evaluations of
three metrics. Unfortunately, it is not an easy task and it
indicators necessary to manage the risk.
more often than not lead to focusing attention to a bunch
This allows us to identify what we need in
of trees regardless of the whole forest. To manage the
house and to answer questions from the
environmental aspects of a company correctly, using a
different stakeholders. We have about 55
wide range of metrics is definitely wiser. In this regard,
parameters; some measured for a very
Pierre Coërs, member of the Corporate Sustainability
long time, others have been modified to
Commiittee of Solvay, came up with a comparison that
better respond to changes. Their respective
illustrates this remarkably: the dashboard of a manager is
importance also changed with time,
not that different from the one of an airplane‘s pilot. The
especially lately given the recent increase
challenge of limiting the impact of our activities on the
of focus on climate change and the renewal
environment is inevitably multidimensional and the focus
of our strategy.
of managers, as well as for pilots, has to shift according
to the situation.
The idea is to have a large number of
parameters, but to focus on some, given
Another difficulty lies in the choice of what and how to
the circumstances. The metaphor of an
monitor. Among the most relevant metrics we observed,
airplane cockpit explains it quite well: A
were those disigned to inform about Energy consumption
pilot has countless instruments. However
(reduction and use of renewable sources), Air quality
he does not pay attention to all the
(greenhouse gas emission and emission of particulates),
instruments at the same time. Some are
Water (reduction and pollution) and Waste management
for the take off, other for the landing, other
(reduction and quantity recycled). Assessing the carbon
for flying or assessing weather outside.
footprint becomes increasingly popular amongst large
It must be the same for managers. For
companies. With regards to GHG, it helps considerably to
me, business is still an organization that
realize the sources of highest impacts and to understand
responds to external pressures, but it may
which levers would be the most effective to mitigate
as well anticipate future pressures in order
them.
to gain market shares.”

Finally, companies find it difficult to track their business
correctly due to its complexity. However, even if the
supply chain is very complex, assessing it rigorously is
likely to pay off.

Some of the companies we visited decided to mic contribution to the country’s GDP. Hence, to
follow specific metrics appropriated to their bu- improve the indicator value they must reduce their
siness activities. emissions beyond the reduction rate achieved by
- Tetra Pak is closely tracking the progress made the entire world/country. They call it the “AGC En-
in recycling of its products. One of the goals of vironment Indicator” and use it to analyze their en-
Tetra Pak is that the cartons they manufacture are vironmental impact in an objective manner by put-
recycled after use and likewise in every country. ting it in relation with their economic contribution:
The challenge is that they do not control recycling;
they can only facilitate it by working with other
partners in every country. Nevertheless, about
20% of the cartons they manufacture were recy-
cled in 2010 worldwide.
- Cofinimmo and Befimmo are closely monitoring
indicators of progress that assess the environmen- The indicator is calculated by comparing their sales
tal performance related to major renovations. to the global/country GDP and the amount of subs-
- AGC Group found an interesting way of calculating tances of concern (SOC) emitted from their activi-
the impact of their activities. They estimate their ties on total global/domestic SOC.
environmental impact in relation to their econo-

31


Environmental Risk mitigation
Environmental risk is not an issue that As we will see, various methods and tools have
companies can afford to neglect in Belgium. been developed and used to measure the risk
Impacts on reputation, finances, consumer on their operations, but companies are still
trust, boycotts and other risks linked to the facing some difficulties in identifying all the
environment can no longer be ignored. Still, sources of potential environmental risks and
it seems that many companies only start to threats.
integrate environmental risk management into
their daily management and that others do not In this context, this part of the report tends
assess environmental risk recurrently. to identify which risks are assessed by
companies. Then, it looks into the different
Nevertheless, companies are becoming stakeholders that companies regularly assess
more inclined to evolve towards greater and particularly the influence those can have
risk integration in the management of their on their activities. Finally, it examines the
activities. Obviously, the goals put forward different tools used by companies to identify,
by companies do not always reflect a genuine assess and measure potential threats and their
concern for environmental protection. Above likely outcomes on companies’ results.
all, companies are afraid of the potential
consequences that an environmental incident
can have on their activities.

I.What is under the environmental risk scrutiny?
Figure 17 - What potential long term risk does your company currently assess?

#1 Rise in energy cost 66%

#5 Waste Management 59%
Ranking of the
#2 Climate change related risks 50%
# most difficult
challenges
#3 Rise of transportation cost 49% perceived for the
near future
#5 Public opinion regarding environmental decision 46%

#5 Air pollution related risks 30%

#5 Water scarcity related risks 26%

#9 26% Lack of resources needed to produce

#4 24% Rise of commodity prices

#11 21% Chemicals, Toxics, and heavy Metals related risks

20% Inability of future technologies to respond to environmental challenges

#9 16% Bio-diversity and land use related issues

01
0% 10%02 03
20% 30% 04 40%05 50%06 07
60% 0
70%

33


The survey highlights that the primary long change with respectively 59% and 50%,
term risk that companies are currently complete the top 3 topics of environmental
assessing is the rise in energy cost, assessed risk assessment. These are closely followed by
by more than 66% of the surveyed companies. the rise of transportation cost and the public
Subsequently, waste management and climate opinion regarding environmental decisions.

The first risks to be assessed are generally related to financial risks

The first risks to be assessed are generally not However, the results presented in Figure
the ones perceived as the most challenging 17 show some contradiction with this last
for the near future but those that have a direct assumption. Clearly, there are discordances,
and visible impact on the company’s financial especially regarding “Waste management” and
results. Previously in this report, we had “Rise of commodity price”. As regards waste
identified which environmental challenges, management, it can be explained by stronger
that companies expected to face in a near legal requirements which push companies to
future, were perceived as the most difficult (see pay more attention to risks relating thereto.
Figure 4 in page 6). According to the results,
the most difficult challenges are, by order of On the other hand, concerns regarding “Rise in
importance: “Rise in energy cost”, “Climate energy cost” and “Rise of transportation costs”
change and upcoming regulation”, “Rise in are positioned similarly. Those topics impact
transportation cost” and “Rise of commodity noticeably directly on companies financial
price”. It seemed reasonable then that these performances and are accordingly managed
should as well be the ones that are primarily first.
assessed through risk management.

Our Point of View
The concept of risk can often prove to be difficult to measure. Often, when the risk contains a
subjective component such as the view of the company in the eyes of other stakeholders, companies
seem to disagree between the perception of the risks and the need to manage those risks closely.
Yet, even if they are difficult to assess, those risks can seriously impact the company in the long run.

However, when the risk in question is more objective, for example the likelihood of a direct impact
on financial performances, it becomes easier to grasp and to track because it can be translated into
tangible impacts to the results of the company.

As we will see below, pointing out the different risks and assessing the expectations and influences
of the different stakeholders is of great importance.

34


II. Who is under the environmental risk scrutiny?
Figure 18 - Assessment of the main sources of pressure that drive companies to pay attention on sustainability
issues

Responses show that the stakeholders that are followed by Employees and Business as well as
the most regularly assessed are Rule makers, Financial partners.
Customers and Competition. These are closely

Rule makers are the most rigorously scrutinised stakeholders

The results show that the main sources of Despite a reversed order, the Top 3 sources of
pressures identified previously (see Figure pressure identified corresponds to the Top 3
5 in page 7) are effectively the ones that are stakeholders regularly assessed.
the most closely watched by our respondents.

Our Point of View
From Rule maker’s for regulation to NGO’s for their influence on public opinion, stakeholders are
pressuring companies to face their responsibilities towards the environment and inevitably to
manage whatever environmental risk they deem as related with their activities.

35


Stakeholders’ influence can affect companies significantly, resulting in some cases to brand damage
and strong financial consequences. Assessing them is thus essential to ensure that the company
keep its licence to operate. In other words, stakeholders possess the power to revoke a company’s
right to operate. If a company crosses the line, stakeholders’ pressure can ultimately destroy its
business. Hence, a licence to operate illustrates stakeholders’ power and can be fragmented into
regulatory, economic and social licences which are monitored and enforced by a variety of actors,
which commonly seek leverage by exploiting a variety of licence terms.

Taking seriously into account stakeholders’ point of view as well as their influence on your business
does matter. Knowing and mapping your stakeholders play an essential part in managing today’s
environmental issues.

Questions to be addressed by companies are:
• Who are the key players that the company has to face?
• How can they interact or interfere with the company’s activity?
• What are their interests and concerns?
• Which level of influence do they have on the public opinion? On company’s activities?
• What is the possible impact of each of them, today? In the future?
• Are we putting (enough) effort to understand their key concerns?
• Are we prepared to answer their requests?
• Which type should then be prioritised?
• Finally, which ones should be selected to initiate relation?

The last question is capital and should be based Guy Ethier, Senior Vice-President
on the answers from the previous questions. Environment, Health & Safety at Umicore
Partnering with appropriated stakeholders may We learned from history the added value
well be the best way to deal with external problems to work hand in hand with stakeholders:
and pressures. Recently, we have seen more and whether with client and suppliers, through
more leaders which, like Delhaize with WWF, collaboration around our « sustainable
engage partnerships with NGOs, authorities and procurement charter », or with authorities
communities. Many companies entrusted us that to repair soil pollution and the impact of
they used to ignore and to avoid confrontation our previous activities, as Union Minière.
We even work with outsiders, as Michael
with complainers. Now they tend to be growingly
Broungart (author of Cradle to Cradle).
debating with big protesting groups.

III. From talk to action, what are the methods and tools used to measure potential
environmental risk?

Figure 19 - Methods and tools used to measure potential environmental threats and their possible
impact on future results

Develop and monitor KPIs 50%

Does your Perform Internal survey 50%
company
include the How? Perform Scenario analysis 50%
sustainability No
dimension
in its
38% Study future trends 40%
recurring risk
management Yes Follow financial indicators 33%
process? 62%
Perform external survey 28%

15% Perform pre/post analysis

10% Use a software suite to manage environmental risk

0% 10% 20% 30% 40% 50%

36

2011 study making-sustainability-profitable_kurt-salmon

2011 study making-sustainability-profitable_kurt-salmon

Recomendados

Recomendados

Mais conteúdo relacionado

Mais procurados

Mais procurados (13)

Destaque

Destaque (11)

Semelhante a 2011 study making-sustainability-profitable_kurt-salmon

Semelhante a 2011 study making-sustainability-profitable_kurt-salmon (20)

Mais de Kurt Salmon

Mais de Kurt Salmon (9)

Último

Último (20)

2011 study making-sustainability-profitable_kurt-salmon