Sustainability 1 CORPORATE SUSTAINABILITY A New Frontier Sustainability

Sustainability 1 CORPORATE SUSTAINABILITY A New Frontier Sustainability

Sustainability 1 CORPORATE SUSTAINABILITY A New Frontier Sustainability 2 DEFINITIONS Sustain To give support to Support the weight of Keep up or prolong To bear up under Sustaining Aiding in the support of an organization through a special fee (sustaining member) Sustained yield Production of a biological resource under management procedures which insure replacement of the part harvested by regrowth or reproduction (ca. 1905) Sustainability 3 What is Sustainability?

Meeting our societys needs in ways that dont compromise the ability of future generations to meet theirs. At its core, sustainability is about being responsible with resources people, land, energy, water, materials and capital. Clark S. Davis, Vice Chairman HOK, A Green Convergence: Linking Environmental and Organizational Sustainability, Horizons, RubinBrown, Spring 2009. Sustainability 4 What is Sustainability? The word sustainability is all too often confused with simple survival in challenging economic conditions Now is the time for the forward thinking organization to assess the market, look at competitors and evaluate its long-term plan. Keys to sustainability are customer satisfaction and satisfaction of your personnel. John F. Herber, Jr., Horizons, RubinBrown, Spring 2009. Sustainability 5 Drivers of Sustainability

Economic considerations 74% Ethical considerations 53% Innovation and learning 53% Employee motivation 47% Risk management/reduction 47% Access to capital/shareholder value 39% Reputation or brand

27% Market position/share 21% Supplier relationships 13% Cost savings 9% Improved government relations 9% Source: KPMG Survey Sustainability - Stakeholders U.S. Public Organizations

Financial Shareholders (Institutions --Individuals) Bond holders Banks Employees (including unions) Other capital sources (venture capitalists) Customers

Alliance partners Direct suppliers Upstream suppliers Contractors SEC IRS Occupation Health and Safety FDA EPA Accounting standards (FASB, IASB, PCAOB) FCC Political Supply chain

Regulatory Federal government State & local governments International governments United Nations EU OPEC NATO Social Local communities General public

Academia Charitable organizations Environmental & social organizations 6 Sustainability 7 Corporate Sustainability Reporting (CSR) Beginnings highly unstructured Corporate Social Responsibility reports 1997 Global Reporting Initiative Amsterdam-based nonprofit organization Increased rigor and comparability Extends from crafting a CSR to specific performance indicators Primary areas economic, environmental, social performance (labor practices) human rights, society, and product responsibility Strongly supported and implemented in Europe

Currently in Version 3 of Global Reporting Standards for CSR Sustainability - Profile of CSR Sustainability Reporting Guidelines (Version 3) Strategy and analysis Organizational profile Report parameters Governance, commitments, and engagements Management approach & performance indicators Reporting on trends Use of protocols Presentation of data

Data aggregation Metrics 8 Sustainability 9 Sustainability Reporting Expanded Listing Integration to strategic planning What is strategic management? Business Continuity Planning Disaster Recovery

Data backup Ability to adapt Economic/financial Environmental Social performance (labor rights) External orientation Focus on strengths Prepare for unknown developments Compensation and benefits Diversity Human rights Products & services Product responsibility

Society (overall impact) Sustainability 10 CSR ASSURANCE STANDARDS Purpose = creditability of reports Flexible approach Internal systems (including internal audit) External assurance (published conclusions on quality of the report and information contained) Processes for preparation of report Assess validity of quality of performance by organization Professional assurance providers (including but not limited to CPAs) Stakeholder panels Others Sustainability 11 Qualities of External Assurance

Competent external groups or individuals Systematic, documented, evidence based approach Assessment of reasonableness of CSR performance evaluation Quality of data Selection of items covered Completed by individuals independent of organization or stakeholders Report follows GRI Reporting Framework Results in written, publicly available opinion Also includes statement assurance provider about relationship to the organization Sustainability 12 Final Thoughts leading companies view social and environmental responsiveness as an asset and an opportunity, not as a liability or cost. They recognize that an investment in the structures and systems to ensure strong social and environmental performance often pays dividends in terms of improved process

and production quality, improved production efficiency and yields, improved innovation, lower risk, improved reputation, and increased profitability. Marc. J. Epstein, Implementing Corporate Sustainability: Measuring and Managing Social and Environmental Impacts. Strategic Finance, January 2009 Sustainability 13 Final Thoughts Continued A lean strategy is the relentless pursuit to eliminate waste in all business processes. Traditionally used on the plant floor Today, throughout the organization Companies that have implemented lean are finding sustainability initiatives an easy extension of this philosophy. Mike Lewis, Horizons, RubinBrown, Spring 2009. Sustainability 14 Examples of CSR Starbucks

Reports have been issued since 2001 An extensive CSR report Follows GRI guidelines (Version 3) Includes prior goals and performance indicators Includes independent assurance report Moss Adams, LLP (Accounting and Consulting firm) Since 2002 Establishes 2015 goals Examples of CSR Sustainability 15 Royal Dutch Shell Reports have been issued since 1997 An extensive CSR report Follows GRI guidelines (Version 3)

Includes prior goals and performance indicators Assurance Internal controls established to validate information External review committee report included in the report (estab. in 2005) Objective is to insure report is balanced, relevant, and responsive Independence is not clear dir_shell_sustainability_reports.html Sustainability 16 Examples of CSR Others

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