The cases listed below draw primarily upon publicly available information. They highlight how the Value Driver Model can apply to a company through the Model’s S/GPR metrics. For details on the S/GPR calculation, please see “The Value Driver Model: A Tool for Communicating the Business Value of Sustainability.”
Measures a company’s revenue volume and growth rate from products it defines as sustainability-advantaged in comparison to their predecessors and/or competitors.
BT incorporates facets of sustainability growth, productivity and risk into its operations, including through its June 2013 Net Good programme announcement, which committed to tripling the size of its product portfolio that reduces customer carbon emissions. Additionally BT is starting to track revenue internally. The company reduced its own energy use by 3.3 per cent in 2012 versus the previous year, and continually attempts to minimise the environmental impacts of its suppliers and clients collaboratively through initiatives such as the Better Future Supplier Program.
Following an in-depth cradle-to-cradle analysis of all quantified inputs, outputs and operational process data, Fujitsu tracks progress and sets goals on sustainability criteria. Fujitsu’s focus, for example, on new “super green” products that reduce energy and resource demands resulted in 33 per cent savings in fiscal year 2011 over a target of 20 per cent. The company also improved the environmental efficiency of these products 4.1x against 2008 results – well above its goal of 3.5x. Goals for 2013 included reducing GHG emissions for customers and society by 26 million tonnes, partly through increasing the energy efficiency of over half of its newly developed products. From an S/R perspective, the company set goals for reducing use of “priority chemicals”, such as those related to volatile organic compounds (VOCs), by 10 per cent in 2012, after a 60 per cent reduction in 2011. In 2013, the company aimed to further reduce this chemical use to below average 2009-11 levels. Fujitsu also achieved a 9.6 per cent improvement in biodiversity impact as measured through its internal Biodiversity Integration Index, primarily due to reduced energy consumption.
With sustainability emerging as a clear focus in recent years, Industrials Conglomerate General Electric (GE) now reports annual sustainability-advantaged revenue of USD 25 billion and a growth rate that far exceeds the rest of its businesses. Given the growth of GE’s ecomagination line of businesses, which helps customers reduce their environmental impact, its S/G figure is calculated at 3.7x as of 2012. The ecomagination line grew from USD 18 billion just a few years ago, at a time when the rest of its revenue was relatively flat. GE also reported USD 130 million of energy efficiency savings over the first five years of the eco-efficiency component of its ecomagination efforts.
Automobile manufacturer General Motors (GM) claims roughly USD 1 billion per year in revenue from sales of waste materials that would otherwise incur a disposal cost, including scrap metal, paint sludge, cardboard boxes and worn-out tyres. The firm’s progress has led to a larger goal of zero landfill use for the entire company. Considering GM’s recently reported operating income of USD 1.4 billion, this USD 1 billion per year in revenue contributes significantly to the company’s ability to curb losses as it recovers from the 2008 financial crisis and focuses on new technologies.
IBM’s Smarter Planet sales, products and services which contribute to ‘smarter’ systems for economic growth, such as smart grids, water management, solutions for traffic congestion and green buildings, are growing at five times the rate of overall revenue. With a target of USD 20 earnings per share by 2015 along with other long-term goals, the company sees Smarter Planet sales contributing a meaningful percentage of these earnings. IBM reported USD 20 billion in anticipated revenue growth, with USD 7 billion, or 35 per cent, coming from this area between 2010 and 2015, with about half of that already achieved as of November 2013.
Kimberly-Clark focuses on sustainability-advantaged products with over 13 per cent of its overall revenue from this area in 2011. The company expects 22 per cent of revenue in 2012 and 25 per cent by 2015 to come from sustainability-advantaged products. The 2011 revenue equates to an S/G figure of over 50x, representing a significant proportion of the company’s growth. For example, its Scott Naturals product line, paper products made from partially recycled content, reached USD 100 million in sales over the past five years. Ensuring high standards in its dealings with suppliers is an important business goal is part of the Kimberly-Clark Code of Conduct. As such, the company focuses on managing social risk in its supply chain, with a goal of 100 per cent supplier adherence to its social standards by 2015.
Information technology company NEC has a comprehensive plan to evolve towards a sustainable business strategy. Fiscal year 2012 saw 59 per cent of sales come from what NEC calls “Solutions for Society”, which it defines as ICT innovations for social infrastructure such as disaster prevention, security, smart energy solutions and so on. The company aims for sales of Solutions for Society to reach 69 per cent of the total revenue by 2015. These solutions include NEC striving to become what it calls a “Social Value Innovator”, generating new business models and social infrastructure through information and communications technology, as well as a focus on climate change solutions. Lastly, five per cent of operating income and 25 per cent of non-Japanese revenue is targeted to come from Solutions for Society by 2015.
Office Depot’s efforts to encourage consumers to make smarter purchases resulted in USD 2.27 billion in sales of greener products in 2011, up four per cent from 2010. The company offers customers a green book catalogue to highlight environmentally-conscious shopping choices and also maintains a “GreenerOffice” web store with over 10,000 products selected for their positive environmental attributes. The company also offers a suite of services – called Green Solutions – which was developed interactively with some of its larger clients and includes more efficient lighting products. As for company leadership, the Senior Director of Environmental Strategy for Office Depot also holds the position of Co-Chair of the Sustainable Purchasing Leadership Council, which is working towards developing a rating methodology to measure the impact of an organization’s spending and establishing an institutional green procurement standard (similar to LEED certification for buildings).
Consumer goods company Procter & Gamble set a goal in 2007 of USD 50 billion in revenue over the subsequent five years derived from sales of products that have an improved environmental profile. The company reported USD 52 billion, or an S/G of 66x. The company has made steady progress since 2007 through sales of products that outperform their predecessors or competitors’ products by at least 10 per cent in at least one environmental category without performing worse in any other category. The company has also achieved an S/P calculation of 10 per cent in sustainability-driven gains during this period, particularly from reduced energy consumption.
Engineering company Siemens has committed to revenue growth from sustainability. The company’s fiscal year 2012 revenue saw 42 per cent, or over EUR 33 billion, come from its environmental portfolio for an estimated S/G calculation of 2.2x. As a result, the company reports it is on track to achieve its target of EUR 40 billion in revenue from its environmental portfolio by 2014. As of its most recent reporting, the company’s environmental portfolio comprised contributions of 70 per cent from energy efficiency solutions, 22 per cent from renewable energy and 8 per cent from environmental technologies, such as those related to air pollution control.
In 2012, Toshiba earned JPY 5.8 trillion in total revenue, of which JPY 0.67 trillion of sales came from environmentally conscious products. This far exceeded its goal of JPY 0.5 trillion. Sales of products it categorised as “greening by technology” totalled JPY 1.32 trillion. These two areas totalled approximately JPY 2 trillion out of JPY 5.8 trillion, or 34.5 per cent, of overall revenue. Finally, the company achieved 29 per cent resource use savings by weight, which reduced transportation emissions as well as costs – a sustainability-enhancing process often known as dematerialisation – and reduced chemicals of concern across 17 categories of business activity.
Measures the aggregate financial impact on a company’s cost structure as reported by the company from all sustainability-related initiatives in a given time period.
Diversified products and technology company 3M was one of the first public companies to implement a corporate environmental sustainability strategy, with its Pollution Prevention Pays (3P) programme established in 1970. Over the past 37 years, the 3P programme has organised over 10,000 specific projects that have reportedly prevented more than 1.9 million metric tonnes of pollutants, representing savings of nearly USD 1.7 billion based on aggregated data from the first year of each 3P project. This equates to an S/P[i] figure calculated at five per cent. The company only measures the first year of pollution and cost savings for each identified project, but the programme has likely led to longer-term efficiencies of more value. Going forward, 3M expects an increase of approximately USD 5 billion in revenue from sustainability-advantaged products over the next five years, as it works to further embed sustainability into the overall company strategy.
AT&T’s focus on sustainability-driven productivity gains via more than 14,000 projects has saved the company USD 151 million from 2010 to 2012. The company’s efforts in this area involve closely tracking fuel savings from its efforts to deploy 15,000 alternative fuel vehicles by the end of 2018, as well as building and maintaining a project database that will help identify and scale the best energy efficiency strategies it finds going forward. As of 2012, AT&T deployed 7,000 alternative vehicles, or 10 per cent of the company's total corporate fleet.
Chemicals company BASF places a strong emphasis on the efficient use of resources through its Verbund initiative, which claims EUR 1 billion a year in savings for an S/P figure of roughly nine per cent. The initiative involves a series of ongoing efforts, including reusing by-products from one process as raw material for others. The company also focuses on reduced energy use through optimised logistics, accounting for an estimated 60 per cent of its sustainability-advantaged productivity gains.
Unilever’s Sustainable Living Plan aims to double growth while halving the company’s greenhouse gas, water and waste footprint across the entire lifecycle of its products. Over the past four years, the company’s productivity savings have reached almost USD 400 million as it prepares for this plan. Unilever estimates its eco-efficiency programmes have saved about USD 130 million in energy costs, USD 240 million in materials expenses, USD 22 million in water expenditure and USD 13 million in waste disposal.
Measures performance over time on the critical metrics that a company (often in consultation with stakeholders) believes pose meaningful risk to revenue and reputation.
Alcoa is the world’s largest producer of aluminium as well as a large miner of bauxite and refiner of aluminium products supplying the aerospace, automotive, packaging and construction sectors, often with lighter materials contributing to improved sustainability performance. Alcoa entered a joint venture with Saudi mining company Ma’aden, which aims to become a low-cost producer of aluminium and related products. Alcoa and Ma’aden recently announced completion of an engineered wetlands wastewater management system in Saudi Arabia, which will reduce water demand by nearly two million gallons per day and save more than USD 7 million annually which would otherwise be used to purchase fresh water.
As of one of the world’s largest companies, by market capitalisation, Apple is the focus of much attention when it comes to its sustainability practices. As a result the company has taken steps to be efficient in its operations and products, manage and understand its social impacts and maximise its use of renewable energy. All products are at least twice as efficient as United States’ Energy Star guidelines, and some products, such as desktop computers, are more than seven times as efficient. These efficiency levels are the highest of any of their competitors. Likewise, Apple has stated its commitment to using renewable sources to generate 100 per cent of its operational energy. As of 2012, the company achieved 100 per cent renewable energy at all of its data centres and 75 per cent for its corporate facilities, which is a 114 per cent increase since 2010. The company also has a supply chain management practice, which includes audits of suppliers in order to reduce social risk.
Brazilian construction company Odebrecht is a consortium constructing the USD 7 billion Santo Antônio hydro-electricity plant near Porto Velho, in the remote north-west region of Brazil. The company has found financial advantage in training women to address skill shortages in remote areas of the country while also minimising risk of community conflict, thereby helping maximise project returns. To enhance and maximise workforce stability and community engagement, Odebrecht has a policy of recruiting as much as possible of its workforce from local communities near development sites. A key challenge for the Santo Antônio project was the need to recruit thousands of workers in a short period of time. Given local labour shortages, Odebrecht recognised that it would be highly inefficient to disregard the female half of the local population, so it launched a free local pre-hire skills training programme, Acreditar, providing a pathway to jobs at the site for local women as well as men. By training and recruiting local women and men – rather than paying for workers to fly in and out from other regions – the company found significant savings on a per capita basis by a ratio of around 9:1, or BRL 624 (USD 304), to train each worker, compared to BRL 5760 (USD 2809) to fly in workers from other areas. Further, Odebrecht has found that having greater gender diversity on its construction sites has changed the way in which workers relate to each other, making it a more agreeable environment for both women and men. While these impacts are difficult to quantify, Odebrecht managers consider the change in workplace culture to positively affect productivity, retention and the company's reputation as an employer of choice in the local area. In addition, the company considers high levels of local employment on the site to have enhanced its relationship with the local community, which is critical in the context of large infrastructure and extractives projects. The company has indicated that employing more women on-site has been key.
To create their products, beverage companies such as The Coca-Cola Company require access to fresh water, which can be scarce in areas of the developing world, and not addressing this resource constraint poses a significant potential risk to revenue and profitability. As a result, Coca-Cola has focused on water management as a business-critical aspect of its sustainability efforts. The company implemented locally-relevant water resource protection sustainability programmes in 2012 and is currently performing hundreds of source water vulnerability assessments. Coca-Cola has achieved 20 per cent gains in water efficiency from 2004 to 2011, and the company and its more-than 250 bottling partners in over 200 countries have committed to achieve an additional 25 per cent in water efficiency gains by 2020. Furthermore, Coca-Cola has a water neutrality goal of returning to communities the equivalent water volume that it uses in finished products and production by 2020. In terms of results, Coca-Cola measures water use efficiency, or litres (L) of water used per litre of product produced. This performance metric has been improving annually, with the company reporting 2.12L of water per litre of product produced in 2012, down from 2.70L in 2004, or an improvement of 21.4 per cent over the previous nine years. Coca-Cola's compliance with internal wastewater standards has also improved with time, increasing from 85 to 98 per cent. In addition, its percentage of water replenished is 52 per cent, up from 35 per cent in 2011, achieved through community water projects such as watershed protection, community water access, rainwater harvesting, reforestation and agricultural water use efficiency. These calculations allow Coca-Cola to demonstrate its sustainability progress and strategic management of risks.
Manager of Investor Engagements with the UN Global Compact
danielle.chesebrough (at) unpri.org
bostwick (at) unglobalcompact.org