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Presentation at IOD India 3rd Global Summit on Sustainability
11 October 2012




                      Board Strategies
                      and Governance
                      for Sustainable
                      Value Creation




                                        Charles OMalley
Charles O'Malley presentation IOD India 12 October 2012
Fiddling while Rome burns?
The Context

The Destination

 The Journey

 The Strategy

   The Prize

The Summary
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012
The Context

The Destination

 The Journey

 The Strategy

   The Prize

The Summary
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012
The Context

The Destination

 The Journey

 The Strategy

   The Prize

The Summary
Transformation                Changing markets and economic and social systems



                                 Innovation                                          Creating opportunities



                                 Efficiency                                               Reducing costs



                                 Reputation                                Protecting and improving reputation



                                 Risk                                                     Reducing risk


Graphic: from Spiral Dynamics   Adapted from : Bieker, T. , Institute for Economy and the Environment, University of St. Gallen 2002
Transformation                             Shaper of society



Innovation                         Solving stakeholder challenges



Efficiency
                                       Enlightened self-interest


Reputation


                                    Short termist and laissez faire
Risk


  Source: Johnson, G. Exploring Corporate Strategy. Pearson Education, 2007
Tools & techniques            Culture             Vision & leadership


                     Hardware                Mindware              Heartware

                                                                     Vision
Transformation
                                                                              Passion
                                                     Collaboration

                                                 Engagement

Innovation                                 Corporate
                                            culture

                                  Technology

Efficiency
                           Systems


                     Reports
Reputation
                   PR

                    Risk
Risk             management
Transformation




Innovation




Efficiency




Reputation




Risk
Transformation




Innovation




Efficiency

                 Most companies
                 today are still in the
Reputation       process of moving
                 from Level 1 to
                 Level 3
Risk
The Context

The Destination

 The Journey

 The Strategy

  The Prize

The Summary
Paul Polman: Unilever was an early adopter of the
                                      principles of sustainability... we have embedded this
                                      thinking into the day-to-day activities of all our brands.
Leadership                            We are not going further and committing to meet our
                                      ambitions for future growth objectives without
                                      increasing the overall environmental impact of the
                                      company across its value chain.
Engagement

                 Peter Bakker: Beyond just being a
Integration      CEO, I agree we all need to become
                 much more concerned citizens of this
                 planet. Its not going in the right direction
                 at the moment.
Accountability

                                      Indra Nooyi: Our basic belief  that companies today
Collaboration                         must marry performance with ethical concerns  is
                                      resonating more than ever before... This acknowledges
                                      that businesses have a responsibility to the
                                      communities in which they operate, to the consumers
Transparency                          they serve and to the environment whose resources
                                      they use.
Leadership

Engagement

Integration

Accountability

Collaboration

Transparency
Keith Weed, CMO at Unilever:
                 CSR departments are redundant
Leadership

Engagement

Integration

Accountability

Collaboration

Transparency
Leadership

Engagement

Integration

Accountability

Collaboration

Transparency
Leadership

Engagement

Integration

Accountability

Collaboration

Transparency
Leadership

Engagement

Integration

Accountability

Collaboration

Transparency
Leadership

Engagement

Integration

Accountability

Collaboration

Transparency
Leadership

Engagement

Integration

Accountability

Collaboration

Transparency
Leadership

Engagement

Integration

Accountability

Collaboration

Transparency
Source: The Sustainability Executive: Profile and Progress, PwC
The Context

The Destination

 The Journey

 The Strategy

  The Prize

The Summary
Charles O'Malley presentation IOD India 12 October 2012
The Context

The Destination

 The Journey

 The Strategy

  The Prize

The Summary
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012
Transformation                Changing markets and economic and social systems



                                 Innovation                                          Creating opportunities



                                 Efficiency                                               Reducing costs



                                 Reputation                                Protecting and improving reputation



                                 Risk                                                     Reducing risk


Graphic: from Spiral Dynamics   Adapted from : Bieker, T. , Institute for Economy and the Environment, University of St. Gallen 2002
Leadership

Engagement

Integration

Accountability

Collaboration
                 Source: The Sustainability Executive: Profile and Progress, PwC



Transparency
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012
Charles O'Malley presentation IOD India 12 October 2012

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Charles O'Malley presentation IOD India 12 October 2012

Editor's Notes

  1. In 2008 New Scientist ran a feature on The Folly of Growth
  2. Source: Etheridge et al. (1996) J. Geophys. Res. 101:4115-4128 Methane heat retention capacity is 25 times that of CO2Source: Blunier et al. (1993) J. Geophys. Res. 20:2219-2222 Nitrousoxideheat retention capacity is 200-300 times that of CO2Source: Machida et al. (1995) Geophys. Res. Lett. 22:2921-2924
  3. northern hemisphere average surface temperature anomalies. Source: Mann et al. (1999) Geophys. Res. Lett. 26(6):759-762
  4. Shiklomanov (1990) Global water resources
  5. decadal frequency of great floods (one-in-100-year events) after 1860 for basins larger than 200 000 km2 with observations that span at least 30 years. Source: Milly et al. (2002) Nature 415:514-517
  6. percentage of global fisheries either fully exploited, overfished or collapsed. Source: FAOSTAT (2002) Statistical databases
  7. loss of tropical rainforest and woodland, as estimated for tropical Africa, Latin America and South and Southeast Asia. Sources: Richards (1990) In: The Earth as transformed by human action, Cambridge University Press; WRI (1990) Forest and rangelands
  8. mathematically calculated rate of extinction. Source: Wilson (1992) The diversity of life, the Penguin Press
  9. Image: http://www.ritholtz.com/blog/2012/04/crb-index-back-to-1749-present/
  10. http://www.igbp.net/download/18.1b8ae20512db692f2a680007761/IGBP_ExecSummary_eng.pdfGlobal Change and the Earth System: A Planet Under Pressure (2004), W. Steffen, A. Sanderson, P.D. Tyson, J. J辰ger et al, published by Springer-Verlag Berlin Heidelberg New York. ISBN 3-540-40800-2.
  11. Source: Global Footprint Network and WBCSD Vision 2050, 2010
  12. Image: from Vision 2050 report by WBCSD
  13. What became clear to all of us during the credit crunch, is that no one is driving the trainhttp://www.theinnercirclemissives.com/2011/05/runaway-train.htmlhttp://theragblog.blogspot.co.uk/2009/11/barack-obama-stop-runaway-train.html
  14. And yet despite these worrying trends, politicians still have 99% of their attention on getting the economy moving again, and only 1% (if that) focused on the systemic issues in terms of the environmenthttp://www.spokesman.com/blogs/commcomm/2009/nov/18/onboard-uss-titanic-sort/
  15. CR is anchored at top management, leading to high credibility of CR efforts both internally and externallyTone from the top is visible and palpable in both written guidelines and principles as well as strategic direction and activitiesCorporate culture is positively influenced by strong commitment; reinforcing responsible business behaviour of all employeesTNT example:CEO und Board members are very present and active in media and public sphere with regards to sustainability / CSR topics, especially in the companys focus areasFormer CEO Peter Bakker has received various prestigious awards for his leadership and personal commitment to advance and combine sustainability with long-term business success This tone from the top is reflected throughout the company, in both written commitments as well as actions taken: vision and mission, business principles, core values and qualities and a credible pledge to protect the environment, promote social values and to conduct operations with integrity and respect for the interests of all stakeholders
  16. Systematic identification of relevant stakeholder groups and their concernsInstitutionalized interactions and strategic partnerships to include concerns and formulate solutionsSystematic internal and external reporting on how concerns have been taken into account and progress was made
  17. Integrated into every part of the business: corporate strategy, finance, marketing, operations/production, procurement, supply chain management, human resources, facilities management, internal audit, risk management, legal, etc.CR is aligned with corporate strategy in which CR is perceived as a buinss driverCR is incorporated in products & services, taking life-cycle considerations into account CR is embedded throughout operations, e.g. in purchasing, investments, Human Resources, facility managementEmployee engagement as strong motivational factor for employees, increasing both performance and loyalty towards the firmEngaged employees communicate better both internally improving teamwork and innovation as well as externally as company and CR ambassadors
  18. Clearly defined responsibilities, decision-making powers and processes for CR-related issues throughout the companyCentral team has the role as initiator and coordinator; CR activities are performed by business functions / line managementThe lines and divisions are also responsible for achievements or not reaching set targetsClear and transparent metrics (qualitative and quantitative) tailored to the business and strategy allow for a continuous and transparent measurement, monitoring and controlling of CR-related activitiesTargets are set in all dimensions of sustainability and at all levels; reported on publicly and progress is measured and reported consistently
  19. Systematic internal and external reportingDisclosure of success stories as well as remaining CR challengesDisclosure of targetsDefinition of relevant external ratings and focused management of a companys performance in these ratingsConsistent CR message through all channels and audiences (AR, road show to investors, Online, social media, etc)
  20. We face unprecedented challenges
  21. We need to find a way of reconciling our perpetual growth economic model with a planet of finite resources
  22. CR is anchored at top management, leading to high credibility of CR efforts both internally and externallyTone from the top is visible and palpable in both written guidelines and principles as well as strategic direction and activitiesCorporate culture is positively influenced by strong commitment; reinforcing responsible business behaviour of all employeesTNT example:CEO und Board members are very present and active in media and public sphere with regards to sustainability / CSR topics, especially in the companys focus areasFormer CEO Peter Bakker has received various prestigious awards for his leadership and personal commitment to advance and combine sustainability with long-term business success This tone from the top is reflected throughout the company, in both written commitments as well as actions taken: vision and mission, business principles, core values and qualities and a credible pledge to protect the environment, promote social values and to conduct operations with integrity and respect for the interests of all stakeholders