Section
2: Natural Advantage a Business Imperative
In
Chapter 6 we showed that there are many drivers
for change for business to embrace sustainability;
there are many win-win options for most business.
Chapter 6 also showed how Porter's 5 Forces
Model provides a framework within which to
understand how sustainability strategies could
help business. Shaun Mays, in his report Corporate
Sustainability: An Investor Perspective,1
points out that 'in assessing the external
environment, approaches such as Porter's five
forces are used. However, most companies and
analysts also look at the political and social
environment when looking at the future of
the industry in which they operate.
Sustainability
provides a framework in which to assess this
"sixth force"; the political and social forces
that are also driving a company's external
environment.' (See Figure 8.1 for key sustainability
principles and characteristics of less and
more sustainable companies.) By way of example,
Mays refers to the Canadian based CIRANO research
centre's industry level study looking into
environmental regulation and productivity.
Regulatory change is one of these additional
political and social drivers that are additional
key reasons for business to change. We consider
some of these in detail now, starting with
changing consumer demands.
Further
Aspects of the Business Case for Sustainable
Development
SustainAbility
The
SustainAbility report, Buried Treasure:
Uncovering the business case for corporate sustainability,
2001 also has an ongoing web-based dialogue
linked to it. Other reports such as The
Power to Change: Mobilising board leadership
to deliver sustainable value to markets and
society (written in partnership with the
International Business Leaders Forum) also address
the business case.
View
Website
World
Resources Institute
Stalking
the Elusive Business Case for Corporate Sustainability,
December 2001. This report provides valuable
insights into traditional and emerging valuation
methods that can be applied to different sustainability
strategies, and builds on an earlier report,
The Next Bottom Line: Making sustainable
development tangible . The World Resources
Institute, in collaboration with UNEP and WBCSD,
has also recently produced a report entitled,
Tomorrow's Markets: Global trends and their
implications for business , which identifies
19 critical global trends that companies and
the financial sector should be aware of in terms
of future risks and opportunities.
View
Website
WWF
and Cable and Wireless
To
Whose Profit? Building a Business Case for Sustainability,
2002.
View
Website
Global
Environment Management Initiative
Environment:
Value to the Top Line , November 2001;
This report builds on a 1999 report Environment:
Value to Business .
View
Website
Association
of British Insurers
Investing
in Social Responsibility: Risks and Opportunities,
2001. View
Website
Accountability
and The Center for Corporate Citizenship at
Boston College
Conversations
with Disbelievers: Persuading Business to Address
Social Challenges, October 2001. This is
an ongoing initiative based on a report written
by Simon Zadek and John Weiser.
View
Website
The
Conference Board
Doing
Good and Doing Well: Making the business case
for corporate citizenship, 2000. Report
written by Simon Zadek.
View
Website
World
Economic Forum, Yale and Columbia
University
Esty,
D. and Cornelius, P (eds) Environmental
Performance Measurement: The Global Report 2001-2002
.The World Economic Forum/ Harvard annual
World Competitiveness Report also provides growing
material on the national competitiveness case
for social and environmental investment.
View
Website
The
International Business Leaders Forum
Recent
and forthcoming publications that cover aspects
of the 'business case' include: Human
Rights and Business: A Geography of Risk
(in collaboration with Amnesty International);
The Business of Enterprise; Creating
the Enabling Environment for Global Corporate
Citizenship; and a CEO-signed statement
entitled Global Corporate Citizenship: The
Leadership Challenge for CEO's and Boards
(produced in partnership with the World Economic
Forum).
View
Website
The
US-based groups Business
for Social Responsibility and CSR
Europe both offer extensive business case
rationales and materials on their websites.
The
US-based Council on Foundations and Walker Information
Inc. have produced a research report entitled,
Measuring the Business Value of Corporate
Philanthropy , October 2001.
View
Website
Mining
Sector (MMSD) initiative
The
Mining, Minerals and Sustainable Development
Project (MMSD) was an independent two-year project
of research and consultation seeking to understand
how the mining and minerals sector could contribute
to the global transition to sustainable development.
It was a project of the International Institute
for Environment and Development (IIED) commissioned
by the World Business Council for Sustainable
Development (WBCSD).
View
Website
Climate
Change and Insurance
Insurance
is in the front line of climate change. As the
widespread floods of autumn 2000 demonstrated
so clearly, it is insurance companies that will
have the responsibility of dealing with many
of its consequences. Furthermore, it is insurers
who must be equipped to analyze the new risks
that flow from climate change, and to help customers
manage these risks. Climate change is no longer
a marginal issue. We live with its effects every
day and we should prepare ourselves for its
full impacts in the years ahead. It is time
to bring planning for climate change into the
mainstream of business life. For this reason,
the ABI commissioned Dr Andrew Dlugolecki, an
internationally respected authority on climate
change and insurance, to undertake this report
on the impacts of climate change on the insurance
industry. This is one of the first studies to
rigorously analyze the practical implications
of climate change for a key business sector
and its customers.
View
Website
A
Changing Climate for Insurance: A Summary Report
for Chief Executives and Policy Makers
This
report was prepared for by Dr Andrew Dlugolecki.
A chartered insurer with a PhD in Economics,
Dr Dlugolecki held a series of senior positions
in the insurance industry and left Aviva plc
in December, 2000. During his career he became
known for his work on climate change and insurance,
which arose out of his early work on motor insurance
pricing for General Accident. Dr Dlugolecki
was the chief author of the Insurance and Financial
Services chapter in the Second Assessment Report
of the Intergovernmental Panel on Climate Change
(1995) and edited that chapter in the Third
Assessment Report (2001). He also contributed
to UK Government reviews (1991, 1996) and chaired
two research reports on climate change for the
Chartered Insurance Institute (1994, 2001).
Download
PDF
Key
Reference: Vellinga, P. V., Mills,
E., Bowers, L., Berz, G., Huq, S., Kozak, L.,
Paultikof, J., Schanzenbacker, B., Shida, S.,
Soler, G., Benson, C., Bidan, P., Bruce, J.,
Huyck, P., Lemcke, G., Peara, A., Radevsky,
R., and van Schoubroeck, C., Dlugolecki, A.
(ed) (2001) 'Insurance and Other Financial Services',
Chapter 8 in Climate Change 2001: Impacts,
Vulnerability, and Adaptation , Intergovernmental
Panel on Climate Change, United Nations and
World Meteorological Organization, Geneva. Working
Group 2.
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PDF
References
from the Book
1.
Mays, S. (2003) Corporate Sustainability: An Investor
Perspective: The Mays Report, prepared with BT
Financial Group for the Department of Environment
and Heritage, Australian Government.
2.
This articulation has been contributed by Dr Ian
Woods, Senior Research Analyst, Sustainable Funds,
AMP Global Investors, Australian Equities.
3.
Lajeunesse, R., Lanoie, P. and Patry, M. (2001)
Environmental Regulation and Productivity: New
Findings on the Porter Analysis, CIRANO Working
Papers/CIRANO (RePEc:cir:cirwor:2001s-53).
4.
Figure 8.1 demonstrates the approach to assessing
corporate sustainability by one investment institution.
5.
Suzuki, D. and Dressel, H. (2002) Good News For
A Change: Hope For A Troubled Planet, Allen &
Unwin, Sydney
.
6.
Responsible Shopper provides access to information
regarding various products from clothing to shoes
to toothpaste, investigating hundreds of companies
on a range of issues, including sweatshops, pollution,
ethics and discrimination.
7.
IFC (International Finance Corporation) (2002)
The Business Case for Sustainability In Emerging
Economies, IFC, Ethos Institute, Sustainability
Ltd.
8.
Misra, M. and Misra, P. (2002) Best Employers
in India 2002 Study, Hewitt Associates LLC Mumbai.
9.
Pfeffer, J. (1998) The Human Equation: Building
Profits by Putting People First, Harvard
Business
School
Press, Boston
.
10.
Jones, R. (2001) The Big Idea, Profile Books,
London
,
p47. Quoting Sir John Brown CEO of BP Petroleum.
11.
Wilkinson, A., Hill, M. and Gollan, P. (2001)
'The Sustainability Debate', International Journal
of Operations and Production Management, vol 21,
no 12, pp1492-1502.
12.
Sheehy, B. and Dickie, P. (2002) 'Facing the Future',
Australian submission to the Report of the Mining
Minerals and Sustainable Development (MMSD) Project
Breaking New Ground, MMSD/Earthscan, London.
13.
The Federal Government of Australia
has published online and in hardcopy 17 booklets
of best practice in environmental management and
mining. (Refer to Australian Government Sustainable
Industry: Sustainable Minerals).
14.
Robinson, S. (2001) 'Looking Beyond the Bunker',
Chemistry and Industry Journal, 5 November, pp688-689.
15.
Braithwaite, J. and Drahos, P. (2000) Global Business
Regulation, Cambridge
University
Press, Cambridge
.
16.
Ibid, p269.
17.
Ibid, p280.
18.
Kumarasivam, K. (1996) 'Implementation of EMS
in Malaysia
',
paper to the ISO Conference 14000: Regulatory
and Trade Challenges, Canberra
.
19.
Thailand Environment Institute (1999) How Can
It Benefit Business? A Survey of ISO 14001 Certified
Companies in Thailand, Thailand Environment Institute,
Bangkok
.
20.
USAID (United States Agency for International
Development) (2002) 'Field Report: East Timor
- April 2002. Joint Report between Office of Transition
Initiatives (OTI) and USAID/East Timor Mission',
USAID, Bureau for Democracy, Conflict and Humanitarian
Assistance, OTI, Washington, DC.
21.
This material was drawn from the UNEP Press Release,
'Impact of climate change to cost the world US$300
billion a year'.
22.
The Carbon Disclosure Project began on 1
November 2003
with a group of 87 institutional investors with
assets of over US$9 trillion under management
who wrote to the 500 largest quoted companies
in the world, asking for the disclosure of investment
relevant information concerning their greenhouse
gas emissions.
23.
We will not attempt to debate here the relative
merits or otherwise of the name given to this
form of investment but concentrate instead on
its salient attributes, and therefore we will
assume for the purpose of this discussion that
the terms are synonymous.
24.
Mays, S. (2003) Corporate Sustainability: An Investor
Perspective: The Mays Report, prepared with BT
Financial Group for the Department of Environment
and Heritage, Australian Government.
25.
Garz, H., Volk, C. and Gilles, M. (2002) More
Gain than Pain, SRI: Sustainability Pays Off,
WestBL Panmure.
26.
Dunstan, B. (2003) 'Henderson Top of the Global
Pack, in theory', Australian Financial Review,
24 October.
27.
Deni Greene Consulting Services (2001) A Capital
Idea: Realising Value from Environmental and Social
Performance, prepared with Standards Australia
and Ethical Investment Services for the Australian
Department of Environment and Heritage.
28.
Lewis, A. (2002) Morals, Markets and Money: Ethical,
Green and Socially Responsible Investing, Prentice
Hall, London
,
p20.
29.
Deni Greene Consulting Services (2001) A Capital
Idea: Realising Value from Environmental and Social
Performance, prepared with Standards Australia
and Ethical Investment Services for the Australian
Department of Environment and Heritage.
30.
Margolis, J. and Walsh, J. (2001) People and Profits:
The Search between a Company's Social and Financial
Performance, Lawrence Erlbaum, Mahwah
,
NJ
.
31.
Schafer, H. and Stederoth, R. (2002) 'Portfolioselekton
und Anlagepolitik mittels Ethikfilters: Ein Uberblick
zum Stand der Empirischen Kapitalmarktforschung',
Kredit und Kapital 35, Jahrgang, Heft 1, S, pp101-148.
32.
Hildyard, N. and Mansley, M. (2001) The Campaigners
Guide to Financial Markets, The Corner House,
Dorset
.
33.
Geczy, C., Stambaugh, R. and Levin, D. (2003)
Investing in Socially Responsible Mutual Funds,
Research Paper, Finance Department, Wharton School,
University of Pennsylvania.
34.
Angel, J. and Rivoli, P. (1997) 'Does Ethical
Investing Impose a Cost Upon the Firm? A Theoretical
Examination', Journal of Investing, Winter.
35.
Alfred Rappaport is one of the founders of the
shareholder value mindset, which gained importance
in the 1980s and is still growing and increasingly
accepted worldwide. Rappaport has written a ground-breaking
classic book on Corporate Strategy in relation
to Shareholder Value creation, Creating Shareholder
Value - The New Standard for Business Performance,
1986.
36.
Garz, H., Volk, C. and Gilles, M. (2002) More
Gain than Pain, SRI: Sustainability Pays Off,
WestBL Panmure.