INSEAD Library

Includes bibliographical references and index

Digitized

Contmts The Sustainability Advantage The Sustainability Advantage Foreword by- John Elkington and Oliver Dudok van Heel . . . . . . . . . . . . . xv Introdfiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 External Pressures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Clarifying the Terminology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 The Need For a Business Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.1 The Intent of This Book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 . . TheProposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 . aTheProblem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 aTheProposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 SD Inc .. A Hypothetical Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 The Education Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 The Seven Bottom-Line Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 . Benefit 1: Easier Hiring of the Best Talent . . . . . . . . . . . . . . . . . 23 . The War For Talent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23. . AmactingTopTalent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 The Cost of Recruiting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 The Potential Hiring Benefit of a Sustainable Development lmage . . . . . . 26 Benefit 2: Higher Retention of Top Talent . . . . . . . . . . . . . . . . . 28 . The Cost of Turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 . Why Employees Stay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 The Potential Retention Benefit of'a Sustainable Development Vision . . . .37 Benandt 3: Increasing Employee Productivity . . . . . . . . . . . . . . . . .40 The Vision . Commitment Relationship . . . . . . . . . . . . . . . . . . . . . . . .41 . The Involvement . Commitment Relationship . . . . . . . . . . . . . . . . . . . . 47 The Commitment . Productivity Relationship . . . . . . . . . . . . . . . . . . . . 49 . The Bottom-Line Benefit From Higher Individual Productivity . . . . . . . . 52 . The lnnovation Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53 The Bottom-Line Benefit From Higher Team Productivity . . . . . . . . . . 5 4 The Bottom-Line Benefit From Improved Working Conditions . . . . . . . . . 56 Benefit 4: Reduced Expenses in Manufacturing . . . . . . . . . . . . . .60 Waste = Squandered Corporate Assets . . . . . . . . . . . . . . . . . . . . . . . . . .60 . Savings From Materials and Energy Substitutions . . . . . . . . . . . . . . . . . .61 . Savings From Reducing the Materials. Energy. and Water Used Per Product .68 Savings From Redesign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Savings From Reducing. Reusing. and Recycling Scrap Material . . . . . . . .73 Savings From Reusing and Recycling Returned Products . . . . . . . . . . . .77 . Savings From Packaging. Transportation. and Approval Cycles . . . . . . . . . 79 Tracking Environmental Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 The Potential Benefit From Reduced Manufacturing Expenses . . . . . . . .-81 Benefit 5: Reduced Expenses at Commercial Sites ............ 83 Savings On Employee Discretionary Consumables . . . . . . . . . . . . . . . . . 84 . Savings From Improved Waste Handling . . . . . . . . . . . . . . . . . . . . . . . . . 86 Savings From Energy Efficiencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87 Savings From Water Conservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95 Savings From Lower Landscaping Costs . . . . . . . . . . . . . . . . . . . . . . . .96 . Savings From Reduced Office Space and Less Business Travel . . . . . . . . . .97 The Potential Benefit From Reduced Expenses at Commercial Sites . . . . .98 Benefit 6: Increased Revenue/Market Share . . . . . . . . . . . . . . . 100 . Increased Mind Share From Endorsements by External Agencies . . . . . . .101 Increased Mind Share From "Noisen About Environmental Products . . .107 The Funnel: Differentiate or Die . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 Increased Market Share From Attraction of "Green" Consumers . . . . . .110 Increased Revenue From Higher Customer Retention/Loyalty . . . . . . .114 New Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 . Increased Profits From "Dematerialization" . . . . . . . . . . . . . . . . . . . . . 117 . New Revenue Opportunities From Environmental Services . . . . . . . . . .119 The Potential Benefit From Increased Revenue and Market Share . . . . . .120 Benefit 7: Reduced Risk, Easier Financing ................121 Lower Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 Lower Balance Sheet Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 Lower Operating Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .128 . Lower Capital Cost Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 Lower Sustainability Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 Lower Cost of Capital: It's Easier to Attract Investors . . . . . . . . . . . . . . . 131 The Potential Benefit From Reduced Risk . . . . . . . . . . . . . . . . . . . . . . 135 . Conclusion .......................................... 139 Real Bottom-Line Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .139 . "Yeah. but ..." . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 The Sustainable Development Profit Center . . . . . . . . . . . . . . . . . . . . . 147 . Changing the Rules of the Game For Your Advantage . . . . . . . . . . . . . . 151 Appendix: Sustainability Advanta-ge Worksheets . . . . . . . . . . . . . .154 Assumptions about the "SD Inc." Hypothetical Company . . . . . . . . . . . . 155 Education Investment Required to Achieve Benefits . . . . . . . . . . . . . . . 156 . Attracting and Hiring the Best Talent . . . . . . . . . . . . . . . . . . . . . . . . .157 . Retaining the Best Talent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .158 . Increased Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .160 . Reduced Manufacturing Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .161 . Reduced Expenses at Commercial Sites . . . . . . . . . . . . . . . . . . . . . . . . . 162 Increased Revenue and Market Share . . . . . . . . . . . . . . . . . . . . . . . . . . 163 . ReducedRisk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164 Total Bottom-Line Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 . Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 Bibliography . . . . . . . . . . . . . . . . . . . . . Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195 About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203