Leadership for the 21st century

Monday, September 03, 2012

18:00 - 20:30

Never doubt that a small group of committed people can change the world. Indeed, it is the only thing that ever has.

Those words by Margaret Mead capture the dynamic of every new era, when a handful of leaders see change before others and play an active role in shaping it. And it seems that a handful of today's leaders have decided that sustainability is the defining feature of our future.

Whether pioneering EVs (Carlos Ghosn, Nissan), calling for reform of the financial system (Paul Abberley, Aviva Investors), rejecting short-term investors (Paul Polman, Unilever), or advocating EP&Ls (Jochen Zeitz, PPR and PUMA), these leaders believe they are signposting the future.

But what makes these leaders different? Why are they more aware of environmental and social issues? Are they better leaders as a result? Will they generate more profits than their counterparts? Does it just boil down to them understanding our evolution from self-interest to enlightened self-interest?

Through our September audience, panel of experts and diverse roundtables, we aimed to shed insight into leadership in the 21st Century. Here's a little more about our panel:

  • Paul Abberley, Aviva Investors. Paul has used the power that comes with GBP200bn in investment funds to challenge the morality of the City, and is one of the few investors to challenge the sustainability credentials of their investee companies.

  • Sally Uren, Forum for the Future. Sally and Forum have influenced some of the most remarkable strategies (Unilever, M&S, Kingfisher, O2 etc.). She explained the importance of leadership at all levels, from the category buyer to the CEO.

  • Syed Azmatullah, expert in cognitive thinking. He is mapping the evolution of leadership from the front left to back right of the brain, as collaboration starts to replace direct competitive instincts. We enjoyed his 2012 Guardian article on the subject.

  • Mick Bremans, Chairman of Ecover. Ecover has shown extraordinary leadership, building a successful business with over $100m in annual revenues whilst inspiring companies and sectors through a commitment to environmentally sensitive products.

This was an important event for those involved in changing organisations, and the broad topic made it a good event for those outside the sustainability function.

Speakers

Mick Bremans Ecover

See bio

Paul Abberley Aviva Investors

See bio

Sally Uren Forum for the Future

See bio

Syed Azmatullah

See bio
Round Tables

Supply Chain

Product footprinting: why do it? Tesco recently withdrew from carbon product labelling, but O2 found that it drove change in the supply chain. We ask this table if product footprinting has the capacity to change, and if it should play a big role in corporate strategies.

Carbon Strategies

What about carbon?  Public opinion polls show belief in climate change is rising in the US due to extreme weather, but carbon prices are at record lows and the UK governments want to water down its 2013 carbon commitments. What does carbon leadership look like in 2012?

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Choosing a carbon strategy
Solutions:
● There are two main approaches to this, the incremental and transformational approaches.
● Incremental approach:
○ Identify where carbon reductions are possible, and use this to set the base target.
○ Slow, robust, achievable.
● Transformational approach:
○ start with a target in mind and fill in the gaps to hit the target.
○ ambitious, good leadership needed.
● In both cases, it is useful to:
○ Translate energy reduction needs to a CO2 target. One metric, e.g metric tonnes of CO2 emitted, allows clearly defined goals and clarity when talking to customers and other stakeholders.
○ Roll up total emission reductions from different units into a package.
○ Identify in which areas you can make most impact.
○ Setting dates and timelines is important.
○ Learn from other companies.
○ Evaluate the risks of adopting a carbon strategy, which may include increased, costs, decreased competitiveness, and a smaller customer base.

Obstacles:
● Defining the scope of carbon counting. What counts as emissions and what does not? For example if you sell cars, are you also responsible for the emission people emit while driving.

How to embed that strategy

Solutions:
● Monitoring of changes. Need valid and comparable information to assess progress.
● Define responsibilities and actions for people within the organisation.
● Communicate your aims to customers.
● Reward staff for taking environmentally conscious actions, such as cycling to work.
● Incentivise the uptake of green technologies at the company, and for the employees at home.
● If have a multinational business, implement the same low carbon standards across all business locations.
● Have a personal carbon calculator for each of the staff. Reward staff who meet their carbon limits.
● Have leaderboards in different offices to introduce competition for being energy efficient. This and similar concepts can be used to harness competitive psychology to encourage people to consider their impacts on carbon emissions.

Obstacles:
● Getting the staff involved in an environmentally conscious ethos.
● Communicating the impact of reducing one tonne of carbon is a confusing and abstract concept.
● Demographics of the company can affect uptake.

Examples:
● Merrill Lynch has dedicated funds to spend on activities which help reduce their emissions.
● Bank of America subsidises electric vehicles for staff to use.
● Tesco adopts the same energy efficiency standards for all its stores worldwide.
● At WSP Consultants there was an opt in scheme which involved financial incentives as a reward/penalty system for staff who went above or below their carbon limits.

Finance & Corporate Sustainability

What is the sustainability data that, if measured, will have the biggest impact on a business strategy? We ask the table to identify 5 "high impact" data sets, looking at the tangible and intangible, own operations, supply chain data, in use , price volatility, EP&L's, closed loop etc.

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After the introductions we began by discussing how the data will necessarily vary be sector, for example performance regarding energy usage may be more significant for companies in the energy sector. However some particular areas in which metrics may be useful across all sectors were mentioned, such as health and safety. The table considered how exactly these metrics could de defined, with challenges existing across sectors and uncertainties regarding how the data can be acquired. It was also suggested that a score looking at carbon and water impact would be relatively fundamental for most sectors and a good indicator of a company's approach to the sustainability problem. It was concluded that substantial difficulties will be present if one wishes to look across all sectors and produce standardised metric systems.
After considering the type of data that may have an impact upon business strategy the group moved onto to how this data will be presented and analysed. With regards to annual reporting, it was considered whether this data should be explicitly stated or simply alluded to in the letter to shareholders. This led into an interesting discussion regarding research which demonstrates a strong link between the language used in the opening address and an organisation's seriousness regarding sustainability. For example, if a company uses both the words “money” and “future” within their report it was suggested that this indicates a better performance on both future sustainability and profit. A common feature was a focus on the idea that sustainability should not be considered a side-aspect of a company's reporting. In particular, in must be considered as core to the business and financial accounting – with research demonstrating that companies perform better over the long term when it is considered a fundamental aspect of their strategy.
The table also discussed the possibility of establishing independent panels to constructively criticise an organisation's performance with regards to these various metrics. This feedback and the ensuing discussion could be included in the annual report and will be used to allow companies to improve in their sustainability performance.
In conclusion the table found that there doesn't exist a simple magic bullet for all sectors and that tools need further development with communication between industry leaders being paramount. Furthermore, any data that is reported must be relevant. In this instance this implies that any data is useful for analysts and investors in enabling them to make better long-term investment decisions.

Summary Points

- ESG (environmental, social and governance) considerations have been shown to counter any short-term losses over the long-term. (Example)
- Implement independent panels to provide constructive criticism and feedback of a company's sustainability reporting. (Example)
- To encourage adoption of metrics, successful adoption can be linked to bonuses, with target setting designed in the same way as for profit driven motivation. (Solution)
- To encourage consumer engagement with a sustainable business strategy less reporting language should be used in communications. (Solution)
- No universal standard on required sustainability data and how it is to presented. Sector specific frameworks could be developed. (Obstacle)
- It is unclear at this stage how analysts can avoid being misled by good marketing and presentation standards as opposed to good data. (Obstacle)
- At present analysts often to read an entire financial statement before getting an understanding of a sustainability policy. How can this be amended? (Obstacle)
- Ideas regarding ESG are developed within the academic literature, however these concepts are not at the forefront of most investment strategies. How can the adoption of these ideas be encouraged? (Obstacle)
- How to encourage organisations to excel? Will people simply aim for the minimum standards required to pass their requirements? (Red Flag)

Communications

What are the most effective ways of influencing consumer behaviour? With this becoming this big issue for a number of leading companies, this table will draw 5 "high impact" initiatives, which could include gamification, reward schemes, positive buying campaigns, behavioural economics, new language, access over ownership etc.

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The group discussed and analysed tactics for influencing sustainable consumer behaviour. The table selected four to focus on and draw out the pros, cons and challenges from each. These were gamification, reward schemes, behavioural economics and new language. The group then voted on which of these four had, overall, the most potential to impact consumer behaviour.
One common theme that emerged was the need for targeted communications, taking a segmented view of society, properly understanding the audience and the levers behind their behaviour - a one-size-fits-all approach was regarded as potentially highly ineffective and could result in negative change. In addition, the group discussed the need to make the experience of change as easy as possible for the consumer.
Overall, the group vote suggested that targeted behavioural economics is likely to be the best way to achieve change.

Things to consider…
- Changing behaviour without educating the consumer may underplay the seriousness of the issues
- Too much focus on selling sustainability through materialistic benefits (e.g. lower energy bills) may result in diminishing a society’s capacity for altruistic behaviour over time – ‘winning the battle but not the war’ (http://www.guardian.co.uk/sustainable-business/strengthening-altruistic-values-change-behaviour?INTCMP=SRCH)
- Any approach needs to fit the culture and current values. US citizens (climate scepticism) will have a different starting point to those in Thailand (status gained through civil contribution)
- Different generations can be driven by different ‘needs’ following Maslow’s hierarchy of needs from birth to old age, so different types of rewards are needed. (http://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs)
- When considering gamification as a tool, there’s a need to remember the different elements of ‘fun’ and ‘reward’.
- The ‘game’ needs to fit the audience - would some audiences be happier with a ‘sustainability crossword’ than an online game?
- Forcing participation through initiatives is not very successful and often results in negative reactions and poor engagement
- Community level, as well as individual level, reward and competition can be effective at driving change
- Focus on opt in initiatives and let the consumer make the first step
- The relationship between, and motivations of, sustainability and marketing departments are not always conducive to driving consumer behaviour change, but this is very important

Examples
- Volkswagen Fun Theory (Speed Camera Lottery – incentivising individuals to drive under the speed limit)
- Transisition Towns – Community level attempts to normalise sustainability
- University incentive schemes – free beer and pizza for most energy efficient building
- Recylebank - rewards people for taking everyday green actions

Technology

Does leadership include changing attitudes to some of the technologies that could transform the sustainability of our economy? Solutions such as nuclear power, artificial meat and GM crops have the ability to transform the economy, but they all face popular opposition for often emotional reasons.

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This evening round table theme was about the role leadership can play in changing attitudes towards technologies that could drive our economy towards sustainable paths, with particular focus to some “controversial” technologies (nuclear energy, GMO, etc...), characterised by strongly polarised public debate, often led more by emotions and values rather than rational arguments.

In fact the discussion developed into a much broader multi-voice colloquium about the challenges faced by companies in delivering sustainable products and services, which undergo consumer decision making process that is definitely not rational. One question was in the air throughout the discussion: should the supply (somehow e.g. via education, product design that reduces consumer cognitive burden) induce consumers to adopt a rational decision making approach (“based on facts and figures”)? Or should the supply just accept that decision making both in technology adoption and use is greatly influenced by non-rational features of human thought process, and this may even help positive changes towards sustainable behaviour, as emotions and values induce more commitment than a difference in figures? Needles to say that the question remained unanswered and, although still fuzzy in boundaries, the embryos of two parties supporting one or the other approach seem to emerge from the participants group...

CHALLENGES/OBSTACLES
• Emotions do count a great deal in consumer choices.
• Culture counts a great deal as well.

SOLUTIONS
• Education.
• Product/Service design can help consumer making.
• Emotion has lead change: this should used to engage individuals.
• Inspiring individuals (leaders) do foster changes.

EXAMPLES
• Unilever: “We are encouraged to look what really happens at the base of the pyramid” and provide solutions at that level. Understanding what really the demand is helps to provide effective solutions, but their benefits must be thoroughly explained to the potential end users.

WARNINGS
• Cultural differences require differentiation in solutions, what works in the West may not be exportable in the East or in the South.
• The political system plays a role: in parts of the world decision making is less accountable thus swifter; “rational” sustainable choices in these conditions are made top-down.
• Solutions must be cost effective.
• Avoid over-engineered products: avoid non-essential features.

Energy Effeciency

Waitrose has recently taken two if its stores "off grid", which plans to supply sustainable energy to the local community. What are the arguments behind this strategy, and should more companies be looking at decentralised energy strategies?

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OVERVIEW:
The suggested table topic prompted a broader discussion on the potential of decentralised energy strategies and their increasing role in the changing energy market. The unique potential of energy reduction and decentralised energy investments to decouple the economic growth of a company from rising energy costs and security of supply concerns were identified as the principle drivers for their increased interest. The table also recognised that the uptake of both energy reduction and decentralised energy investments is limited by technical, policy and price forecasting risks. This is coupled with a lack of senior management support and in some cases a general apathy towards energy reduction opportunities. These inhibitors to increased investment were discussed by the table and solutions were presented where possible, a summary of which is given below;

INVESTMENT INHIBITORS:
• “Apathy outweighs technical limitations” - It is possible to convince both investors and stakeholders that energy reduction projects are technically low-risk investments, but there exists a negative cognitive lock and an indifference towards energy reduction investments that ultimately limits their adoption.
• “Resilience of Energy Security” – While energy security was recognised as a driver for energy reduction topics, the table asked if the potential for decentralised energy strategies is limited by companies being overly confident about the future availability of energy? Do companies correctly price for, and subsequently act upon the risk of electricity price increases, along with the potential for electricity unavailability in the near future?

• “Government Policy” – The role of Government and policy makers was a recurring inhibitor that arose under a number of different guises. Firstly, revenue based support mechanisms when adjusted post implementation creates a general unease amongst investors and a long-tail of headaches that undermine original business plans. Secondly, the support mechanisms that are put in place are often unsuitable and could be improved; the renewable heat incentive was given as an example.
• “Energy Price Forecasting” – While there was a general consensus that energy prices will rise, the rate and time scale of this rise is unknown, making it difficult to model future cash flows and appraise energy reduction projects with a sufficient confidence for investors.

• “Senior Management Support” – The need for senior management buy-in is a fundamental barrier to integrating energy reduction strategies into a business. There is also a need to make strategies sufficiently robust that they would not be affected by changes in senior management positions.

• “How much low-lying fruit is there?” – Of the broad spectrum of energy reduction opportunities available to companies there is only a finite number of cost-effective opportunities that they can avail of. Once these have been exhausted arguing energy reduction investments becomes more difficult.

Corporate Strategies

A 2010 survey for the UN Global Compact found 93% of global CEOs see sustainability as important or very important to their future success. Does the table see a disconnect?

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This month’s Green Monday topic concerned leadership. Traits of good leaders were examined, along with the challenges today’s CEOs must overcome in order to drive sustainability change in their organisation.

Summary
Through the discussion, three general themes emerged. Brand hygiene and protection is a key driver for CEOs, building a business case for action is vital for CFOs, new business models developed through collaboration with suppliers, partners or customers will drive step change improvement – these take leadership.

The 2010 survey for the Global Compact found that 93% of global CEOs see sustainability as important or very important to their future success. The Corporate Strategy roundtable discussed the possible disconnect between this finding and their own experience, and in the process identified some causes and challenges.

What follows is a summary of points brought up in the roundtable discussion following the plenary session. Comments are non-attributed. The notes have been grouped under Obstacles (O), Solutions (S), Examples (EG) & Red Flags (RF).

Brand Protection
(O) Organisations with strong brands view protecting their ‘brand hygiene’ as a driver in their response to sustainability. (EG) Greenpeace recently drew attention to the environmental record of a global car manufacturer with respect to its fuel efficiency record and its lobbying stance on the European emission reduction negotiations.

Sustainability Payback
(O) The financial payback on capital expenditure for sustainability is a key metric. If an initiative’s breakeven point is beyond 12-18months, it is very hard to sell to CFOs. Sustainability initiatives have a reputation (sometimes unfairly) that payback periods are outside normal commercial thresholds. (EG) One CFO stated in his first meeting with the Environment Manager that any sustainability initiative must have a business case.

Sustainability Risk
(O) Companies must address the risks associated with sustainability. Risks identified were reputation, resource scarcity e.g. commodity and electricity price rises. Companies need to decide strategically where they will be positioned in relation to their peers with regard to their sustainability strategy. (EG) One company mentioned that they were adopting an ‘in the pack’ strategy versus a leader or laggard position. This raised the issue of benchmarking themselves against their peers to understand where the pack was, and this changes all the time.

Closed Loop Manufacturing
(O) Closed loop manufacturing is a concept intended to reduce and reuse waste from an industry. However for products that are international in nature, there can be a big energy and carbon investment required to close the loop. (EG) For example cars can be manufactured in one country, sold in another, and end their life in yet another. Despite this, one global car manufacturer believes it has the potential to close the loop of 95% of materials at the moment, years ahead of government regulation.

Collaboration
(O) It is difficult for one company to drive change in an industry in relation to sustainability. Supportive government policy is critical to level the playing field across the industry.

Leadership for Change
(S) Despite these obstacles, there are examples of leadership bringing about beneficial change in organisations.

(EG) A drive to zero waste policy introduced at a large construction materials organisation has reduced waste generation enough to close three internal landfills and saved the company a significant amount of money.

(EG) A large high-street retailer forecast £40m yearly losses when they introduced their sustainability initiative, but broke even in the second year and made £100m in the third.

(EG) Employees at an international consumer goods company have been amazed at the scale of change in sustainability achieved by a new CEO after he appointed as CEO.

(S) The role of collaboration within business models of the future has potential to help organisations transition to more sustainable business models.

Red Flag
(RF) However the top level of the organisation must take ownership of sustainability initiatives and integrate them into their core business values, or these initiatives run the risk of being cut when tough business decisions need to be made.

(Notes written up by Elliott More (egm27@cam.ac.uk), who is researching Corporate Sustainability Strategy for a PhD at the University of Cambridge)

Energy Policy & Strategy

Why are some of the leaders in sustainability seeing a business case for major investments in renewable energy, whilst others are ruling it out on payback period grounds? We expect this table to look at issues such as exposure to price volatility,  energy security, community energy and reputation.

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Common themes driving success stories in renewables that the group identified were: making strong business case arguments for projects; highlighting the benefits of renewables in quantitative as well as qualitative terms; and seeing it as one of a series of measures that can be developed in parallel (rather than only coming after all energy reduction opportunities are implemented). Attendees saw overcoming opposition to renewable deployment, providing real world examples of projects and word-of-mouth recommendations as critical to success.

From the discussions, there appear to be no major technical hurdles to a wide range of renewable technologies. However, there may still be a perception that they are not yet proven, so those with larger estates and multiple opportunities for projects have greater scope to act as test-beds and demonstrate leadership that way. One of the ways to overcome this belief is through collaborations and forums for information exchange, whether that is through community or business led ventures.

A recurring theme was the lack of a joined up strategy and direction for renewable energy policy. This has created uncertainty and unpredictability for companies looking to invest in the long term, a prime example being the abrupt feed-in-tariff changes for photovoltaic systems.

Participants considered that in general, even promising government initiatives like the Green Deal could be at risk of scepticism if an organisation’s knowledge of the initiative is not sufficient – a lack of transparency on policy details and complexity are seen as risky and therefore a barrier to investment. In addition, for some organisations there is no way of getting round short payback hurdles, and even with policy renewable support may be insufficient to overcome those. A single unified framework for renewable energy and carbon policy could further organisations’ understanding and overcome unease around investing for the long term.


Discussion Summary Points

Obstacles: What are the obstacles to further investment in renewable energy?
• No clear strategy/ or long term direction around renewables.
• Meeting internal investment hurdles can be challenging.
• Long term commitment beyond normal business planning horizons.
• Lack of shared information or easy collaboration with those that have done it before.
• Tight resource may mean that even it can be challenging to tackle renewables and energy efficiency in parallel.
• Ultimate benefactor from renewables may not be the investor in landlord/ tenant situations.

Examples
• Investing in a PV project due to senior level buy-in to ‘try it’ which is then challenged when the returns change.
• Having a clear strategy to roll out renewables across an estate making organisation able to flex and respond to policy changes.
• Investing in a package of different types of technology to help reduce the payback period for newer technologies.
• Using third party funding to get projects over the line, while benefitting from lower energy bills.

Solutions
• Consider third party capex and ensure strong business case arguments can be made to overcome financial hurdles.
• Raise awareness of the number and track record of renewables projects in the UK to demonstrate they are tried and tested.
• Use word-of-mouth and first hand experience from peers to win confidence and gain trust.
• Quantify the benefits to show why the obvious technologies may not be the best e.g. “sexy” PV vs. “boring” ground heat-pump.

Opportunities
• Collaborative solutions for furthering renewables deployment can involve a community angle to capitalize on word-of-mouth effect – higher risk, but can be seen in very positive light.
• Scope for those with large estates and range of sites to demonstrate and test emerging technologies.
• Still gap for free information exchange to share real world examples and overcome perceived difficulty.
• There is external funding for renewables projects – perhaps surprisingly it’s a shortage of projects that’s the challenge.

Red-flags
• One bad experience can create perception that all renewables are a bad idea (blade problems causing turbine to catch fire).
• Presenting a new policy as an opportunity before all the details are understood can mean even a good opportunity is ruled out later (e.g. Green Deal).
• Explaining the benefits of the project in simple terms is important for sign off – any sign of complexity can be seen as risk and result in an idea being written off.

Resource Efficiency

Which ways of looking at resource efficiency are most like to resonate with a CEO? Do lenses such as "closed-loop" offer more growth potential than an Elkington "Zero" approach; Is Peter Diamandis's "abundance" dangerous or motivating?

Plenary roundtable - 1

How is the mind-set of a CEO changing? This table will hear from Syed Azmatullah on how resource scarcity is shifting the leadership mind-set from the LH to the RH side of the brain, and will discuss the soft and hard skills required by a C21st century leader. Who is the table's most admired leader and why?

Plenary roundtable - 2

What causes a CEO to want to engage an organisation in sustainability? We expect this table to consider things such as the influence of other CEO's, investors, thought leaders (e.g. Jonathon Porritt), internal business cases, personal legacy etc

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1. Why are (most) CEO’s unengaged?
Most CEO’s operate in a world view where ‘the business of business is business’ and that anything else (like sustainability) is seen as a distraction from the primary purpose of profit-maximisation. This is reinforced by the expectations and measures of success within the financial system and industries that creates a strong tide in which companies swim. Therefore for a CEO to actively support sustainability requires swimming against this tide and challenging this world view.

However we are moving into a ‘new era’ shareholders are no longer the only stakeholders; this diversification of stakeholders implies that businesses have a much broader responsibility to society.

A key example of this diversification is the historical relationship between farmers/NGOs and corporations. In the past, these two groups have been diametrically opposed, with groups such as Greenpeace and milk farmers performing public acts of contempt for business – their goals were seen to be at odds and a partnership deemed impossible.

In this ‘new era’, stakeholders need to share a common vision and goal - something that must be addressed by corporations.
• Specifically, businesses must communicate with these “small groups affecting good change”.
• Partnerships between these different groups is mutually beneficial and highly sought after.
• It is no longer possible to ignore influential stakeholders in this described ‘new era’.

2. What helps CEO’s to ‘get it’?
Ultimately the group felt this came from the CEO’s personal conviction, especially when principles are turned into practice by seeing the practical opportunities and implications for the business. This often involves ‘joining up the dots’ from external indicators, often from a wider range of stakeholders. For example:

Consumer feedback and market research drives business towards sustainability.
1) Companies survey consumers, analysing market trends. Using this, businesses respond to demand while at the same time hoping to “predict” the future of the market. Inevitably, businesses then hope the final result will please shareholders.
• This approach represents a practical, logical, linear approach towards business and sustainability.
• One major concern is the replicability of this approach or is this ‘consumer feedback model’ only relevant for big branch-network companies? Should smaller companies be bolder and lead their consumers?
2) The broader version of this argument is that companies see sustainability and profitability as a balancing act or trade-off.
• However as external constraints become more acute sustainability and profitability will become two sides of the same coin.
• It may take a sudden “Ah ha!” moment for a CEO to realise this, or the see-saw may slowly tip.
• This suggests that CEOs are always inspired by the commercial side – ensuring that their involvement with sustainability will result in a ‘win-win’ scenario, however…

Sustainability is (and should be) driven by a different ‘tipping point’ – one based on personal conviction, ethics, values and morality.
This ‘tipping point’ can be more dramatic.
• A personal or collective decision that ethical/moral business leadership must prevail
• Challenging the status-quo based on an conviction that they have always held, or learnt about later in life
• Deciding that the term “good for business” needs to take on a new meaning
• This new meaning relates to core business values, and not merely profit as the only goal
• This scenario relies less heavily on the ‘win-win’ approach –but rather redefining what success looks like from a more holistic perspective.

3. How do you maintain momentum for an engaged CEO?
Experience suggests:
• Primarily getting it embedded into the business culture and core processes, especially sustainability performance objectives for Directors
• Providing speaking platforms for CEOs to talk about their ambition
• Create a set of public statements to hold the company accountable to.

Plenary roundtable - 3

What is the best language for motivating the mainstream? Polar bears might work for "green” consumers, but we ask the table what language should be used by companies who want to make sustainable products and services attractive to the mainstream.

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The table consensus was that this is the biggest and most important issue which must be cracked in order to translate 'sustainability' to the mainstream; without this no significant change will occur. Currently, marketers are failing by not portraying their sustainability messages inclusively with the attributes of the product/brand; there must be a duality of benefits (eg. the product is tasty and sustainable, or it will save you money and is sustainable). Many marketers are simply shunning the responsibility of the sustainability message because they don't want to change from the status quo and/or are driven purely by sales figures.

The future of consumerism will be radically transparent, with consumers demanding information - it will become hard to hide things down the supply chain. However, there is a caveat; too much information is bad - it must be relevant.

The sustainability message is not far from being normal (2018??), and we are now at the tipping point - it is there for the taking!

1. Solutions
•This should not be about 'eco' products, but about 'sustainable' products and businesses
•Consumers desire a feeling of belonging when buying products
•The message must be both an emotional and a rational one
•Sustainability is not a customer proposition, it is a proof point for the customer
•The emphasis should be on behaviour rather than attitude
•The sustainability sales pitch must be matched to the consumers interest - under and over selling is detrimental.
•The product must be better designed and affordable; it is not purely the marketing department's responsibility
•Don't cannibalise brand by introducing sustainability; use what you already have to drive the message.

2. Obstacles
•The mainstream are unaware of what sustainability really means
•Sustainability is a low priority for most consumers (outside the early adopters)
•There is a perception that if something is sustainable it might not work properly or will cost more.
•Sustainability has been communicated as something which is too large, scary and complex for individuals to grasp and/or make a difference
•'Green' is seen as backward and should avoided

3. Examples
•China is aware of sustainable message because they can see the smog - visualisation is key
•Recycling in now mainstream - it is easy and has become 'the norm'
•In the energy market the main driver is price, consumers are also wary and distrustful of the Big 6; in this market, re-branding is key.
•In the context of the housing market, the messages is one of a lifestyle and an investment - this duality must be used in the marketing of sustainable products

Ecosystems & Natural Capital

How do you make a case for the leader(s) of an organisation that investing in the better management of natural capital will benefit the organisation? This may involve a discussion of long term v's short term decision-making, language, valuation tools, communication benefits etc.

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SUMMARY
The discussion was about the issues/challenges/solutions to make a business case for investing in the better management of natural capital for the organisation. The central aspect of the discussion was around ‘how to do it’, ‘what tools to use’ and ‘how to quantify’ or ‘if to quantify’ the natural capital. There was a common agreement that it makes sense to better manage the natural capital to mitigate the organisation’s risks since people seem to understand that resources are limited. But group was divided on the methodology of doing it i.e. on one side, valuing in currency seemed to be an easy solution while on the other side spatial analysis, quantifying (without putting $/£) and comparing the piles of natural capital components could mitigate the risk of getting carried away with the money element. The main aspects discussed are listed below:

CHALLENGES/OBSTACLES
• Public/Government organisations seemed to be more short-term than private sector
• Difficult to do in the long-term
• Methodology to use
• Natural capital doesn’t provide ROI and ensuring that it’s considered as part of investment related decision making
• Not knowing whether the numbers used for quantification are right or not
• The subjective comparison when not using the numbers
• Value-addition of investing in natural capital management, when risk-mitigation is already done at the project level

SOLUTIONS
• Regulations and make it main-stream
• Use of straight forward and interesting business language
• Spatial Analysis and mapping with risks to support decision making
• Quantification and comparison in quantities to be more holistic
• Use of ‘losses to operate’ and not ‘ROI’ to avoid short-term decision making
• Use of some numbers to measure and compare
• Use of integrated reporting

EXAMPLES
• Puma’s Environmental profit and loss account http://safe.puma.com/us/en/2011/11/puma-completes-first-environmental-profit-and-loss-account-which-values-impacts-at-e-145-million/
• George Monbiot about putting a price on nature and ecosystem services:http://www.guardian.co.uk/commentisfree/2012/aug/06/price-rivers-rain-greatest-privatisation

WARNINGS
• Pressure to quantify sustainability
• Reputation right on top of the agenda
• When you’re a tenant of the natural capital rather than the owner
• Negative behavior change (hoarding) due to ‘free now, will have to pay later’ language use

Plenary roundtable - 4

How can leaders collaborate to generate transformative change? Enlightened leaders on their own can't turn the super-tanker, but how could leading people and companies collaborate to deliver transformational change? Adopting practices, buying together, working with policy makers etc

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Summary:
Through our roundtable discussions, it was clear that leaders can effect changes but it is a slow process that involves numerous strategies to drive changes with transformative results.

In recent discussions and thought processes, “Collaboration” is the buzz word currently use widely in the corporate world – it’s all about sharing knowledge to over come a common sustainable issue. However the issue is whether is the collaborative effort is it for a common good or for profit maximization. This is usually viewed as monopolistic in nature and it is usually frown upon by regulators with suspicious.

So this begs us to the next issue - How do we create a bigger change through the corporate world? Would it be leadership only? Do we redefine what is sustainable growth target? The challenges are now bigger in nature and hence require creative thinking, diverse thoughts, industry group/industry collaboration to effect a change in green strategy initiatives.

Discussion highlights:
In order to discuss the above leadership issue, it was suggested that we should focus our discussion into various groupings below:

Social Enterprises/NGO
• Joint study groups with multi national companies with local enterprises to create a new platform/solution to deliver a “service” or a “product” that is sustainable in nature. This requires a two way collaboration effort in order for innovation to flourish and to create a new way of doing business.
• By sharing and working on a collaborative commercial issue – it provides a very formidable platform that delivers improved yields. (eg in the agriculture industry – encourages trust to be build between supplier and farmer, creates transparency, increase profitability, win / win situation)

Industry Wide Collaboration
• Specific commercial issues that relates to certain industry: usually high profiling issues that will put commercial risk on the industry brands. In circumstances such as this, it requires quick solution immediately but without identifying systematic industry issues that will and may occur again in the future. It is best to have high level discussion directly with NGOs to resolve these issues and agree on a solution

Cross Sector Trade Groups
• Identifying different sectors within a region to collaborate on providing end to end sustainable supply chain process

Co-operative Structure
• Shared benefits/trade, another collaborative effort but more formalized. Probably the most sustainable structure for companies of the future to be part of a sustainable solution.

Collaboration with Customers
• How to influence consumers’ demand/supply and drive them towards making sustainable green choices in their buying patterns?
• Require high collaboration with customers
• Eg – Energy companies working closely with customers to reduce energy usage (ie reduce bills)
• Solution – need to create a humane design centered process between lifesytle, energy consumption and maximization of profits for the energy companies. This strategy creates trust and transparency and consumers will likely stay with companies who epitomize this vision and values. It gives the energy company an opportunity to reinforce its brand value.

Note – To create a robust group that can influence green strategies, we need to have proper conversations about commercial and sustainable issues. These groups need to build trust amongst themselves through commitment and dedication to the common cause.

Conclusion
- Leadership on tackling green issues are slowly gaining traction but not sure about the direction though
- Growing importance of the need to address green issues
- During recession, green strategy may or may not be the forefront of CEO’s /company strategy (short term focus again)
- Western vs Emerging Market issues have yet to be addressed
- High profiling of green issues, creates opportunities and risks as well (creative tension), diverse of ideas – the concept of Edge of Chaos. Can lead anywhere in terms of how sustainable issues are being championed
- Lots of discussions on collaboration but not sure “we” are actually doing it and generating new ideas
- No longer the low hanging fruits, easily wins wins, need more vision and innovation to tackle the larger “sustainable” issues
- At the early stages, pushing boundaries, competitiveness in society, - driven by the greater good (or it could be maximizing profits)

Venue Detail

Bank of America Merrill Lynch: King Edward Hall

King Edward Hall | 2 King Edward Street | London | EC1A 1HQ

Directions

Bank of America's offices are a very short walk from St Paul's tube station (Central Line). Exit the station at Cheapside/Newgate Street. Go past the BT centre, with it on your right-hand side and take the first available right down Edward Street. Continue down this road for 80m and the entrance to the venue is on your left-hand side.

Do not go to the main reception desk at their offices when you arrive. You are looking for an entrance that leads you directly into the King Edward Hall.