Reinventing Responsibility by SAS Institute

FUTURE BRIGHT REINVENTING RESPONSIBILITY

CONTENTS

Introduction by Mikael Hagström

Alyssa Farrell: Five strategies for corporate sustainability

Klaas van den Berg: ‘Sustainability secures a place in the corporate strategy’

5 Questions for Dennis Pamlin

Poste Italiane Group: A handful of data, a lot of energy savings

5 Questions for Marc Cornelissen

Kjell Nördström: Sustainability management: how to overcome short termism?

5 Questions for Ingrid Zeegers

Henry Terlouw: The Hague wants to be climate neutral by 2050

5 Questions for Marcel Werner

Jonathan Hornby: Business analytics to measure corporate sustainability

5 Questions for Bernd Jan Sikken

Ruud Koornstra: ‘Sustainability is not a trick, it‘s a mindset’

5 Questions for Wubbo Ockels

Profile SAS

Colophon

OUR RESPONSIBILITY FOR SUSTAINABLE BUSINESS

How to reduce carbon emissions without loss of quality of life or a reduction in profitability is a key issue. It is fair to say that consumers, business partners, companies and governments are increasingly critical about the effects that products and services have on society and our environment. These attitudes are major influencers on their spending patterns and are thus important developments to take into account as an industry. Donâ&#x20AC;&#x2122;t be mistaken, these attitudes on sustainability are long-lasting. This new approach is also resulting in a completely new relationship between customers and suppliers, which may greatly impact the business of your organization. This change requires a clear repositioning of responsibility. As senior management, you are not only responsible for your enterprise, but also for your environment. More and more companies recognize this and are searching for alignment between the three priorities of People, Planet & Profit in their strategic choices. And the advantages can be significant. The businesses adopting sustainable strategies are saving money, finding new business opportunities, becoming more innovative, being more energy efficient, using natural resources more intelligently and are better integrated with suppliers and partners. Strategic management of your environment pays off. Sustainability is everyoneâ&#x20AC;&#x2122;s responsibility. The inspiring entrepreneurs and pioneers in this book confirm this vision. They are the new leaders who are achieving concrete successes with sustainable entrepreneurship. They are doing the daily missionary work to create a lasting awareness for durable sustainability in the organization, channels and industries they operate in. The visions that these pioneers share in this book are based on their ideas of sustainability being an integral and long-term strategy. Their goals are open and measurable, inspiring and relevant. And they show commitment. Those who embrace the opportunities know that sustainability is an inevitable choice and a smart business decision.

Mikael HagstrĂśm Executive Vice President, EMEA and Asia Pacific SAS

Accelerate green initiatives through awareness, leadership, technology, stakeholder involvement and innovation

Five strategies for corporate sustainability

There's no denying the fact that we're operating in an eco-aware economy. Glance at the cover of any major business or IT magazine and youâ&#x20AC;&#x2122;re sure to see at least one article focused on the lowering of corporate carbon emissions or the greening of IT practices.

Gartner has highlighted 10 key predictions that would affect IT and business decisions in 2008 and beyond. Three of the items on the list were: By 2009, more than one-third of IT organizations will have one or more environmental criteria in their top six buying criteria for IT-related goods. By 2010, 75 percent of organizations will use full lifecycle energy and carbon footprint as mandatory PC hardware buying criteria. By 2011, suppliers to large global enterprises will need to prove their green credentials via an audited process to retain preferred supplier status. These and other green-related trends will have a profound effect on most businesses and government agencies over the next few years. How your organization reacts and communicates its efforts in environmental sustainability is important. How can you begin to balance the risks and opportunities that environmental sustainability requires? What operational measures and behavioral changes can you pursue to improve enterprise-wide environmental sustainability? We offer the following five strategies.

By Alyssa Farrell

1. Increase your company's eco-awareness Eco-awareness begins with an evaluation of your organization's sustainability strategy. Start by measuring the consequences of your corporate activities in terms of tons of carbon, kilowatt hours or gallons of water. Once you've assessed your environmental impact, set realistic goals to reduce or offset those levels. The next step is to embrace a green accounting methodology that you can trust. It should be auditable and the data points collected can be used for what-if decision making. Another step that some eco-aware organizations have pursued is to establish a specific governance body or a sustainability council to guide green investments. To maximize corporate investment, this cross-divisional group coordinates strategies that might otherwise remain in functional silos.

CASE: Cisco is an example of a company that has taken great strides to increase its eco-awareness and carbon conscience. The technology and communications leader made its environmental strategy a top corporate priority in 2007 and established the cross-departmental Cisco EcoBoard to develop a strategy for reducing the company's carbon footprint and delivering ecologically sound products. Currently, Cisco is driving environmental initiatives in three areas: customer solutions, responsible operations and product stewardship. All three areas are measured and monitored through an executive dashboard for sustainability.

2. Lead with green in mind The more aware your organization becomes about sustainability issues, the more its strategic plans will begin to reflect this new awareness. In particular, your short-term and long-term planning should include an evaluation of environmental risks and opportunities. Executives should set goals and targets for sustainability and communicate these goals to everyone in the organization. Leaders should report on progress regularly and actively manage to reach goals by integrating environmental outcomes into business planning. Consider adopting a corporate sustainability report that complies with internationally recognized standards, such as the Global Reporting Initiative, which offers globally applicable â&#x20AC;&#x2DC;Sustainability Reporting Guidelinesâ&#x20AC;&#x2122; for voluntary use. If you do begin following these standards, be proud of your accomplishments and integrate sustainability updates into your shareholder or annual reports.

CASE: ConocoPhillips in Norway is one organization that is leading with green in mind. When working in potentially hazardous environments such as gas processing units, conditions can change and the risks to people and assets can multiply in the blink of an eye. At the same time, operations on this scale are costly to maintain and, with fluctuating energy prices, controlling costs without compromising health and safety is a major concern. With a decade-long history of SAS usage, ConocoPhillips Norway is now deploying SAS Strategic Performance Management to help target resources and manage its business more effectively. The system combines data on various events (triggers) and their day-to-day follow-up within agreed procedures. Flaring - when oil or gas is burnt off - is also covered. Garbage disposal is yet another example, with SAS software helping to ensure that targets for scrap metal and recycling are met.

3. Involve stakeholders Stakeholder engagement is a key ingredient in corporate sustainability. Customer advisory boards, nongovernmental organizations (NGOs) and supplier panels can all provide direct feedback to prepare you for market forces and demand transparency in your green initiatives. Stakeholders hold you accountable to follow through with commitments, and they can be the source of inspiration for new products, services and solutions. In particular, engaging your suppliers as stakeholders in your strategic planning for corporate responsibility is critically important. Their supplies and processes directly affect your indirect carbon footprint. Even more importantly, the supply chain can deliver powerful market pressures when all suppliers are working toward a common goal. The combined activities of your supply chain can have one of the most substantial impacts on reducing total greenhouse gas emissions.

CASE: DuPont, a leading chemical manufacturer, worked with the Environmental Defense Fund to engage a broad stakeholder community in establishing a process for ensuring the responsible development of nanoscale materials. While nanotechnology holds great promise during the â&#x20AC;&#x2DC;use phaseâ&#x20AC;&#x2122; of the product life cycle, more information was needed to ensure that nanoproducts were developed in a way that minimized environmental, health and safety concerns. The resulting Nano Risk Framework is a groundbreaking tool that will set a safe, level playing field for companies pursuing nanoscale materials.

4. Invest in technology How can you use your existing business intelligence and performance resources to help with environmental sustainability? If you have invested in a technology infrastructure that allows you to see and manage performance indicators throughout your organization, make it a priority now to add green goals to the list of things you're already measuring. Continue to break down information silos and learn how to leverage your intelligence platform to integrate and manage data assets that are related to your green initiatives. Understand what data is required for you to measure your corporate footprint with the Greenhouse Gas Protocol and to meet reporting standards of the Carbon Disclosure Project. You should also work to understand data correlations so you can identify which metrics are the most important to improving sustainability, capitalize on talents in your human capital, and improve transparency internally and externally.

CASE: Waitrose is a company continuously looking at ways to reduce waste as part of their sustainability strategies in addition to conserving energy and water. Waitrose is one of the UK’s best-known grocers, with a brand promise based on high-quality products, from fresh fruit and vegetables to packaged goods, combined with outstanding customer service. With some 190 branches carrying over 15,500 product lines - and 30 percent of the range new each year Waitrose needs to ensure it predicts demand accurately to supply the right products to the right stores in a timely way. Ordering the correct stock is essential to maximize sales and ensure the least waste possible. Now, with the help of a SAS demand forecasting solution and support from SAS partners, Waitrose is achieving more accurate store replenishment, satisfying the needs of its valued customers and balance sheet alike. Since the system rolled out, the branches have seen a reduction in stockholding of at least 8 percent and a fall in wastage of up to 4 percent. “We have achieved increased productivity, efficiency and financial gains across our 190 or so branches,” says Gail Richmond, Manager of the Branch Ordering Development at Waitrose. “We had originally estimated a 2 percent drop in wastage, so this is far better than predicted.”

5. Focus on innovation Awareness, leadership, technology and stakeholder involvement are important in your green initiatives. But the most important factor in environmental sustainability is innovation. You have to set out to change paradigms, create new solutions and collaborate with customers in ways you never have before. Your corporate spirit attracts talent and capital to your organization. If you can lead and communicate with innovative green initiatives, you’ll also attract new customers and better retain existing customers.

CASE: Novozymes is a Denmark-based world leader in bio-innovation. One of the ongoing objectives of Novozymes’ researchers is to consistently improve the enzymes that render a more cost-effective and sustainable process for producing commercially viable biofuels. JMP statistical discovery software from SAS is an integral tool in Novozymes’ research; it plays a key role in designing experiments, analyzing data, and presenting the results of that data to colleagues and customers. The result of Novozymes’ research is a huge reduction in the cost of producing biofuels from corn and cellulosic biomass through the use of enzymes. When it comes to setting your organization’s goals for sustainability, don’t think small. Think like Novozymes and determine how your green initiatives can have the largest overall impact.

Green is here to stay Is corporate sustainability just a passing fad? We don't think so. It is fundamental to business performance today because of the constrained energy and labor markets, and it is a standard that consumers will continue to hold companies to more and more as time passes. The five strategies we've mentioned here can be combined to form a comprehensive management plan for sustainability, but you don't have to treat them equally. If you're just starting out in your green efforts, pick one of the five as your focus and work toward adopting the others in the future. The strategies you choose to emphasize through greater investment of time and resources will offer unique value to your customers and shareholders - and for generations to come.

Alyssa Farrell, Manager of Sustainability and Performance Management Solutions, has responsibility for SASâ&#x20AC;&#x2122; sustainability solutions. Farrell works with customers to understand best practices and solutions for managing their business with environmental responsibility in mind.

Klaas van den Berg leads Sustainability Barometer PricewaterhouseCoopers:

‘Sustainability secures a place in the corporate strategy’ The time for companies to embrace sustainability especially for the positive effect on their image seems behind us. Even so, sustainability advisor Klaas van den Berg finds that defensive motives, like compliance requirements or cost considerations, still predominate. Yet, he believes that the turning point is approaching. “More and more companies are now consciously committing themselves to the development and marketing of sustainable products and services.”

“Entrepreneurs see concrete opportunities in higher margins, in more turnover and in growth markets. You also see this in the Sustainability Barometer of PricewaterhouseCoopers”, says Van den Berg. “But if companies claim their products and services are green, they have to be able to prove this. This claim must be credible both internally as well as externally. Organizing a reporting structure to underpin these claims and the corresponding independent testing are considerable challenges.” Klaas van den Berg leads the Sustainability Advisory Group of PwC. As a consultant for more than two decades, he has been involved with management systems, responsible supply chain management, social reporting and with the verification of information on sustainability. He is also closely associated with the development of the Sustainability Barometer. “The reason we set up this barometer was the desire to get a clear picture of the position of sustainability on the agenda of the Dutch corporate world”, adds Van den Berg. “That is why each quarter we ask Dutch key players in the business community questions about sustainability. Besides general questions on the focus on the topic of involved organizations, special themes are also addressed. Examples are the developments surrounding Green IT or sustainable purchasing. Since the second measurement, the effects of the crisis have been included in the barometer as well.”

Klaas van den Berg ‘At the moment we are at the start of the third phase of sustainability in which there are real opportunities for companies.’

Balanced business case From the barometer of Fall 2009, it emerges that the focus of participating organizations on sustainability is fairly stable, despite the crisis. For 70 percent of the participants, sustainability initiatives and investments remain unchanged. More than half of this group also indicates that sustainability is an integral part of corporate policy. Van den Berg believes this is good news. “But in my opinion it is much more encouraging that about 20 percent concentrate on sustainability even more than before. It seems that this group realizes that sustainable projects have a distinguishing capability and are of economic value.” This outcome is in harmony with the developments that Van den Berg also comes across in his advice practice. “There are already large companies that go one step further with their policy on sustainability. A company like Philips has set as a target for itself that 30 percent of their products and services have to be ‘green’ in 2012. Carpet and artificial grass producer Desso is aiming for 100 percent sustainability in 2020. The motives transcend idealism. These companies want to distinguish themselves by sustainable products and services, and by doing so they capitalize on an increase in market demand.” The Netherlands is not demonstrating significant leadership in the area of sustainability. In realizing sustainable energy or climate targets, Van den Berg feels that government policy plays an important role. “The Dutch subsidy policy gives insufficient stimuli concerning developments in sustainable 13

energy. We have subsidy budgets for investments that quickly become oversubscribed, and companies can only apply for these budgets when project preparations are already in an advanced stage. If the budget is exhausted at that moment, then an enterprise misses out. In Germany the subsidy regulation is financed from the energy profits. If there is great demand for this budget, then the increases the energy price in order to finance the subsidy. In this case it concerns marginal increases, yet with regulation like this, companies know for certain that they are eligible. Good ideas therefore have more chance on realization.â&#x20AC;? The Sustainability Barometer also shows that the Dutch corporate market expects an active and stimulating role from the government. More than 90 percent of the participants expect a new green deal. Furthermore, a simplification of procedures surrounding sustainable projects can also have a stimulating effect on innovation and green entrepreneurship.

Sustainable profile If sustainability initiatives are to become more economical, they require a concrete business case. But how do companies set up such business cases? Enterprises have to be able to substantiate their green claim, both internally as well as externally. Internally to show that these products and services, and any additional efforts, actually result in a greater margin. And externally to prove that the claim is based on the truth and can be independently tested via assurance, Van den Berg explains. â&#x20AC;&#x153;The profile of products and services will thus be expanded. Besides the obvious financial parameters, environmental and social aspects need to be intelligible too. Possible questions are: what are the raw materials, how much water is used, what is the energy consumption of production and transport, are acceptable labor conditions guaranteedâ&#x20AC;?? If companies succeed in making the product profile comprehensible and testable, and if it is also found that sustainable products result in a higher margin, then this has an adhesive effect on other

Why is your organization focusing on sustainability now? (more answers possible) Basis: more attention for sustainability. (n=55)

56%

Customers are increasingly expecting this

55%

Gives us competitive advantage

51%

Sustainability will pay back in the medium to longer term

40%

Sustainable innovations are crucial to get through the recession

36%

It stimulates our results

25%

We want to increase our sustainability ratings

20%

Governments are tightening their purchasing demands Other

13%

Source: Sustainability Barometer PwC

35%

It gives us cost savings

companies. “It is up to the first movers to show that investments in sustainable operational management can also be economically justifiable. This leverage was clear when hybrid cars were introduced by Toyota about ten years ago. There was a lot of skepticism amongst other car brands. These cars are now part of a mature market segment, with very healthy margins and an enormous growth potential. Other brands are now also fully devoted to this market.”

Three phases of sustainability The production of green products concretely means that a company has to collect, integrate, monitor, validate and report on a lot of information. This a complex process, as it includes very different aspects, and each one has its own accounting units. In this process Van den Berg sees a logical continuation of earlier reporting obligations, as the necessity for this is increasing. He recognizes three phases in which companies can find themselves. According to Van den Berg, companies are first of all compliance motivated, then they have a cost efficiency focus and are finally driven by strategic opportunities. “Initially, companies focused on compliance with regulation and would make the obligatory visit to all departments and compose the sustainability report with information on energy consumption, emission and waste. Internally, this was usually seen as additional work but at least the company complied with the rules. The next dimension has a slightly more economical point of view as it focused on cost savings. When a company uses less energy, optimizes the logistical processes or drives back the amount of waste, then this results in money. In this case, performance improvement is the central issue. Currently, we are at the start of the third phase, in which companies see sustainability as a business driver. This includes being distinctive in the market, getting better margins on products or even opening up new markets.” “But even if companies recognize the potential of sustainable products and services, they remain

Sustainable entrepeneurship in the financial crisis, the government should take a lead by giving the right example. Especially now, non financial results should play an increasing role in rewarding top management 26%

52%

20%

The crisis has a negative effect on financing sustainable (energy) projects 21%

70%

Shareholders will have less attention for sustainability than before the crisis 32%

59% 6%

Investors will really start rewarding sustainable companies 56%

38%

63%

32%

The 2 billion euro governmental investments in wind parks in sea is enough 9%

58%

30%

The recent crisis measures of the government show a sustainable ambition 9%

Disagree strongly

70%

Disagree

Agree

21%

Source: Sustainability Barometer PwC

Green plans will be scrapped on a major scale because of the recession

Agree strongly

reticent in investing in the information and reporting systems that at first glance do not provide any concrete financial information. We notice that the sustainability paragraph in the annual report is insufficient reason to opt for a valuable and robust monitoring system. The burning platform or the urgency is still often lacking. Management does not – yet – ask for this information, nor do shareholders insist on this.” Van den Berg believes this situation will change when it is clear that non-financial information becomes crucial in strategic management decisions. In combination with other product specifications, data on the social and environmental aspects of products will then turn into management information on which operational management is based. “The information then becomes valuable and the gap between the sustainable reporting and the financial reporting gets smaller. Large retail chains like Walmart and Tesco have already started this. They have made their strategy open, and obviously they have the scale to demand this product or production information from suppliers. This is certainly a burning platform for the latter group. Not presenting this data could possibly mean the loss of an important customer.”

The pressure to pay more attention to Corporate Responsibility is back at its level of a year ago. Do you feel more pressure to look at CR within your organization?

2% Yes No Don’t know

49% 45%

50% 48%

February 2009 (n=209)

October 2008 (n=233)

63% 31%

May 2009 (n=229)

58% 39%

June 2008 (n=165)

Source: Sustainability Barometer PwC

The pressure comes from … (more answers possible) Basis: feels pressure to pay more attention to CR within the organization (n=145)

57%

Board

42%

Employees

37%

Customers

36%

Government

24%

Consumers

NGO

Suppliers

Other

14%

Source: Sustainability Barometer PwC

20%

Shareholders

Charting your own course Data quality, availability of data and willingness within organizations are determining factors in gathering relevant sustainability data, and in improving the transparency surrounding green products and services. Important in this context is that management is also evaluated on these performances. When sustainability KPIs are part of an assessment system within companies, then this information automatically gets a different status. “The essence in this case is to bring the data together in a logical and seamless way. This is a major challenge for many organizations because the data is acquired from various departments sometimes working with different systems. There is the uncertainty about the criteria that are to be monitored and the corresponding metrics. Which information do companies have to record in order to correlate relevant connections and to monitor sustainable activities?” A system with corresponding authorizations, controls and critical reviews is an important precondition for an assurance provider to base his judgment on. Certainly at the beginning of the professionalization of sustainability, Van den Berg feels it is wise to not give all sustainability aspects the same status. “Doing business is about making choices, and this is no different in the case of sustainable entrepreneurship. One cannot drive on a hundred parameters, a focus on a couple of relevant KPIs often offers enough insight and improves the internal capacity. Ensure that these KPIs are embedded well within the organization, communicate about this clearly in reports and make sure that these data are as reliable as financial data. Companies will initially have to develop information and reporting systems themselves. Trial and error is unavoidable here. The opportunities for sustainable products and services are for the taking, it is up to the companies to execute.”

Dennis Pamlin Senior associate at the Chinese Academy for Social Sciences

questions for

Dennis Pamlin Dennis Pamlin is senior associate at the Chinese Academy for Social Sciences. As a strategic economic, technology and innovation advisor, he works with companies and government on sustainability initiatives such as IKEA goes renewable. He also initiated World Wildlife Fund’s (WWF) Trade and Investment Program work in the BRIC countries. “It is time to move beyond incremental improvements and tap into the potential that the new generation of technologies provides.”

What are good examples of sustainable business initiatives? “My heart goes out to organizations that are making changes that will allow them to keep making profits, whilst reducing the overall resource consumption. BYD for instance, that built the world's first mass-produced, plug-in hybrid car. In Baoding, a relatively small city in China, 150 new alternative energy companies have emerged, making use of wind and solar power, bio-diesel, and energy efficiencies. Telecom operators and major ICT companies such as Cisco, Ericsson, HP, IBM and SAS also offer interesting solutions to deliver real sustainability.” How has sustainable entrepreneurship taken shape within your organization? “We’re the first generation of global citizens. The global economy and challenges require that we think as such. Also, the new network economy is not about competition, but about collaboration. My mission is to make sure that making and saving money go together. I help companies and governments see the same map of the same economy and to move from concept to reality and find new markets and customers.” Who in the organization should be responsible for building sustainability strategies? “The CEO and board must be fully committed. Also, it must be clear that everyone in the organization is involved. Sustainability will never happen if only Environmental Health & Safety and Corporate Social Responsibility departments are held responsible.” What are reasonable sustainability objectives for most businesses? “Enterprises need to shift from a product to a services perspective, applying life cycle approaches that support cradle-to-cradle strategies along all value chains and using ecosystem services sustainably. Also, they need to make sure that they offer something that 9 billion people can use. In the end, it’s all about developing new things and increasing sales.” How sustainable are you? “Material things don’t matter much to me. My pleasures are meeting friends, reading books, listening to classical music and visiting the theatre. I am a vegetarian. To me, sustainability isn’t a matter of being perfect or feeling guilty, but a journey wherein transparency can help us. Transparency is like a Dracula strategy. You need to drag beautiful things into the light in order to save them. That’s why we have to differentiate emissions. My own big bad emissions such as air mileage must be an investment in a more transparent society through clean technologies such as videoconferencing.”

Energy manager Luciano Blasi, Poste Italiane Group:

â&#x20AC;&#x2DC;Based on energy models, we can provide local energy managers with performance indicators for energy usage.â&#x20AC;&#x2122;

SAS helps manage demand and increase energy efficiency

Poste Italiane Group: a handful of data, a lot of energy savings In 2004, anyone who wanted to talk about optimizing energy costs would have had a hard time finding a sympathetic audience among a company's employees or its board of directors. At that time, the Poste Italiane Group was also committed to continuing its transition from a typical government-run administration to that of a private organization, which follows a profit-generation approach.

The organization’s proposal to examine and reduce energy costs in this climate was considerable. Italy’s largest employer with approximately 150,000 employees had energy distribution channels throughout the territory, a lack of information standardization among suppliers and a special nature of its assets, some of which were built in the Middle Ages. Despite the many challenges, Poste Italiane Group made the courageous decision to start Progetto Speciale Energia (the Special Energy Project), headed by expert Energy Manager, Luciano Blasi, and with the support of the company’s IT department. The goal was simply defined: monitor and optimize electric energy, fuel and water consumption at all government real estate properties. The broader project objective would define a program - developed in three separate stages - that studied and analyzed energy consumption with a special focus on training, information sharing and full accountability for responsibilities. Blasi’s team started counting and classifying each asset and supplier type based on the energy consumption of the parent company, Poste Italiane SpA. “We are dealing with an overall structure that includes 14,500 buildings, half a terawatt per year in electric power, 8.5 million liters of heating oil and other heating fuels, and gas consumption of more than 20 million cubic meters,” specifies Blasi, “with a procurement policy involving various players.” Furthermore, the buildings can be classified into three macro groups in terms of energy consumption. The vast majority, such as administrative offices, have much less of an impact on consumption than automated facilities, such as postal centers which operate 24/7. The automated facilities are where Blasi will concentrate his efforts going forward. So far, the Poste Italiane Group has decreased its energy consumption by 1 percent per year, in addition to reducing its overall carbon dioxide emissions by 7 percent. These are significant results for the company, but Blasi still sees a lot of room for improvement. “My main purpose is to reach our energy efficiency goals in at least 250 facilities,” Blasi explains. “Including those with the highest energy consumption, such as data processing centers, executive centers and perhaps the largest branches. Of course, reducing costs is a goal, but that is preceded by goals for awareness, consumption control, sustainability and reducing our environmental impact.” 21

The IT aspect “In 2004, our IT structure was centered on an individual productivity platform with fully integrated databases,” recalls Blasi. “At the time, their purpose was mainly management control rather than energy monitoring.” The billing statement served as the starting point for a preliminary analysis of consumption and subsequent monitoring, as it contained simple data elements that wouldn’t require a complex, shared platform. A billing statement contains two necessary and sufficient data items: consumption and charges. Even today, billing statement data is the basis for reporting and analyzing results. An accurate analysis of consumption can identify peaks or anomalies - and thus points of intervention - by informing the facility manager, who directly reviews energy costs. Before 2006, the calculations were made parametrically, based on occupied square footage. A further complicating factor is the large number of buildings in operation, which makes it impossible for Poste Italiane to use a traditional, off-the-shelf energy audit tool for analysis, demand management and efficiency improvement. Therefore, Post Italiane needed a business intelligence tool that would process only the acquired data and could produce forecasts based solely on this data. “In 2006 we started to exchange ideas with SAS to draw up a business intelligence plan, and in the spring of 2007, we completed the definition of the tender,” states Blasi. “We had no doubts in selecting a technology partner because their solution ensured that a balance would be obtained between performance and ease of customization and management, preventing the need for long and costly consulting. At the start, we worked directly with SAS to define user needs and the required level of customization,” says Blasi.

The project team wants to increase the local awareness on responsibility for energy usage.

Poste Italiane Group provides postal and express services, integrated communications, logistical services and financial products in Italy. The organization has 15,000 locations of which 200 sorting and distribution centers scattered over Italy. The services are provided by 150,000 employees, a fleet of 50,000 vehicles and 11 airplanes. The broad offering of services and products, among which also internet and mobile telephony, are offered via a range of channels.

‘A great win is that we are now involved with the procurement process because we have insight in usage.’ Subsequently, with the help of consulting partner Crisma in Rome, the organization started implementation. “In this initial stage, SAS Business Intelligence analyzes demand and provides information on users’ macro behavior,” Blasi explains. “With SAS we should be able to get to stage two, which moves from using billing data to accurately collected measurement data. Therefore, it will be possible to correct operation and maintenance behavior for systems, and indirectly, for our larger facilities.”

Future developments Currently, the system is a virtual distributed structure where data pertaining to the individual locations is stored and analyzed. But the future intent is to allow each territory manager to directly input and receive information from SAS and monitor his own consumption by means of a Web-based tool. This is the second stage of the project Sistema di Flussi Integrati per la Gestione Energetica (SFINGE) or Energy Management Integrated Flow System, and Blasi expects significant developments in various areas. For example, the process of instilling responsibility in the facility managers will lead to the definition of energy performance objectives, and hopefully the appointment of energy managers within each territory. Blasi says he will also continue with the policy of taking small steps that can add up to real energy savings. “Right now,” he says, “90 percent of the lamps used by the group already use low-energy bulbs and the plan is to switch soon, wherever possible, to LEDs.” Blasi recommends small steps because giant strides are impossible. The problem of energy dispersion from structures, for instance, is extremely complex. Retrofitting using cutting-edge insulation technology is absolutely out of the question because of the huge investments it would require. Blasi is satisfied, in this instance, to be consulted about the finalization of guidelines and specifications pertaining to the purchase and management of energy-consuming assets. This too is a small but significant victory. Blasi concludes, “of course, top management focuses on business objectives and also on the search for a correct balance between investments that are made and energy savings that are achieved.”

Marc Cornelissen Polar Explorer and Sustainability Pioneer at Icentials

questions for

Marc Cornelissen As an expedition leader, Marc Cornelissen witnessed the impact of climate change on the North pole with his own eyes. He has since been actively devoted to climate research and the sustainability of society. He initiated the ‘Ben & Jerry's Climate Change College’ in 2005. This European project supports environment-minded young entrepreneurs. Via his company Icentials, he helps companies design and realize sustainable growth strategies.

What are good examples of sustainable entrepreneurship? “What inspires me, are companies that have shaken up an industry with their approach to sustainability. Ben & Jerry’s is such an example, as their energy-neutral ice-cream is made with sustainably acquired dairy products. And the company has already been discussing energy issues with both their suppliers and society since 1978. Patagonia, producer of outdoor sportswear, has also noticeably influenced its industry. They use plastic bottles, organic cotton, reusable polyesters and environment friendly dyes for their sustainable and recyclable fleece jackets. I certainly respect the way in which Tendris is creating an acceleration in innovation within the light industry. These trendsetters are not put off by paying the price of one’s mistakes.” How has sustainable entrepreneurship taken shape within your organization? “We use wind energy, compensate for our carbon emission, meet via conference calls and have eliminated the need for commuter traffic as much as possible. The profit for society is helping organizations in making their primary processes sustainable. This especially involves continuity, and we investigate which products and Innovations are needed to ensure that we still have a market in the future. In order to deploy the transition to a circular economy, companies have to explore new forms of collaboration and unknown territories. They have to start thinking differently, and must organize processes in a completely different way.” Where should the responsibility for sustainability lie within an organization? “Sustainability is often still considered a separate branch of the Corporate Social Responsibility department. If sustainability is embedded in the core activities of an organization, then everyone is jointly responsible for sustainability performances. This includes an assessment and rewarding of the board and top management with regard to these performances.” What are realistic targets to set within an organization? “The targets depend on the context and maturity of the organization. In order to establish targets, companies must first show how they manage the dimensions of people, planet and profit. They can subsequently assess how this corresponds to the best practices in their sector. By measuring with key performance indicators, companies can measure their progress and celebrate successes. Once again the old principle applies: to measure is to know.” How sustainable are you in daily life? “People nearly expect me to have a sustainability aureole, but I too am confronted with the same daily dilemmas as everyone else. I do live a sustainability-conscious life, though I also book air holidays for my family. Besides, the North pole is difficult to reach without a plane. Creating a smaller footprint will not solve everything. In my opinion, the solution can be found in working together to create a society in which we can live together and do business in a sustainable manner.” 25

Kjell Nordström

‘Stop thinking in short terms.’

Kjell Nordström Sustainability management:

How to overcome short termism? Most businesses have accepted sustainability as a mainstream concern and try to integrate it into strategy and execution. According to professor Kjell Nordström, sustainability should be a guiding line for innovation. Business leaders should overcome short termism and take the driver’s seat in sustainability developments.

Kjell Nordström is ranked number nine among management thinkers in the world and number one in Europe with co-author Jonas Ridderstråle. He inspires business leaders all over the world with his sharp views on successful business models in an information- and knowledge-laden world. In his vision, competing in today’s market economy requires a temporary monopoly and acute awareness of social change and responsibilities. Business leaders also have to learn how to practice infinite innovation: continuous pursuit of value for all stakeholders. Sustainability management clearly plays a part in this.

Taking responsibility A much-used definition of sustainability is the explanation by the World Commission on Environment and Development. This describes sustainability as ‘forms of progress that meet the needs of the present without compromising the ability of future generations to meet their needs’. Sustainability at management level means taking responsibility for the entire business impact up and down the value chain. Nordström sees climate change as a big issue on the world’s agenda. “We have changed the climate in our society beyond comprehension. And we have something similar going on in our economic and social systems: the amount of information we distribute. This information overload can be as noxious to personal lives as carbon emission to the climate.”

Sustainable innovation Nowadays, ‘more’ often means ‘more of the same’: a surplus of similar companies, producing similar things according to similar best practices. Companies need to be different. Not only is a green corporate spirit a good way to get noticed by potential customers, it will also help attract talent and capital to your organization. According to Nordström, it’s even sexy. Business leaders clearly feel the same, but let emphasis on short-term economics is paralyze actual initiatives. “In the end, laws and standards set by consumers will hold companies to more and more responsibilities. Truly funky businesses need to take the driver’s seat themselves, and drive the development and even the law.” 27

The constrained energy and labor markets are pushing sustainability upwards on the corporate agenda. In Nordström’s vision, technology, institutions and values are important drivers of green initiatives. But the key factor will be innovation. “To make real changes, we have to rethink our basic assumptions and break free from the logic of the past. A good example of innovation along sustainability lines are restaurants serving house-made sparkling and still water in reusable bottles. Thus, they have found a way to make money while reducing the environmental costs of both manufacturing and transporting bottles of water and waste management.”

Seven principles In his latest book ‘Funky business forever’, Nordström offers seven principles for organizing businesses. “The firm of the future is small. 60% of all employment will be offered by companies with now more than 150 members. It’s also flatter and temporary in the sense that people work in projects and small, creative teams. It works horizontal and circular, which is about organisational democracy. The future company is also increasingly networked in order to cooperate productively with customers, suppliers and even competitors. It has identified in what areas it’s really world-class and buys the rest from world-class partners. Thus, the network becomes the relevant unit of analysis and action. Control will become more indirect. Information systems will be used to increase control by measuring more things, at multiple levels and at a greater frequency.”

‘Sustainability requires goals than challenge people to go further that they thought possible.’

Dr. Kjell Nordström is not only professor at the Institute of International Business at Stockholm School of Economics. He is also the enfant terrible of the new business world. His speeches and presentations are always dynamic, challenging and current. On the world wide ranking of business thinkers, Nordström ranks 13th and he tops the European list. With his partner dr. Jonas Ridderstråle, he encourages companies to win customers by being different. Together, they wrote the bestsellers ‘Funky business’, ‘Karaoke capitalism’ and ‘Funky business forever’.

Kjell Nordström enfant terrible

Explore the unknown Both innovation and sustainability require appropriate goals to challenge people to perform beyond what they thought to be possible, is Nordström’s opinion. “Business intelligence solutions enable organizations to identify strategies that address environmental, human and economic issues. They can also help them to identify the right metrics and find the right data to describe and measure greenrelated metrics. All this makes it easier to move relevant knowledge from individual levels to group and organisational levels.” Nordström states that the only way to break out of short termism is by measuring in other terms than financial results. “Define success and what to measure it on. Separate the main issues from the smaller ones. For this purpose, the market offers extremely sophisticated sustainability management tools. In fact, the possibilities they offer go beyond our imagination. The fact that we can’t get our head around the technology has become the limiting factor. Most people are genuinely bad in mathematics. That makes it extra hard to fantasize about unknown things like measuring environmental impact and return on decency. While Leonardo da Vinci could only dream of flying, today there’s so much that we can do!” 29

Ingrid Zeegers Director Sustainable Business at Philips Electronics

questions for

Ingrid Zeegers Ingrid Zeegers is responsible at Philips’ development and design of sustainable business. Zeegers is one of the exponents of the principles of cradle-to-cradle in The Netherlands, and under her supervision the Electronics division now has a different view on the use of materials, energy efficiency and product propositions. A view that leads to considerable savings. Innovative solutions, like the EnergyCare vacuum cleaner, have been developed under the Philips Green logo. “Sustainability requires systems innovation and is a shared responsibility of the entire organization and its value chain.”

What are good examples of sustainable entrepreneurship? “A new generation of companies is completely focused on sustainability. Very inspiring are the hybrid tuk-tuk (a motrized mini taxi in Asia) and the energy generating dance floor of Enviu. Innovaders is doing well with the Wattcher. This smart gadget gives an insight into the energy consumption at home, and helps private individuals with saving energy. Fashion brand Kuyichi has become internationally successful with organic cotton, including clothing and bags that have been produced according to fair trade principles.” How has sustainable entrepreneurship taken shape within your organization? “The first environmental activities began in 1972 after the publication of the report ‘The limits to growth: a global challenge’ by The Club of Rome. Frits Philips was also involved with this. Since 1994, improving the environment has been a core objective of our company, and sustainability has become integrated in corporate processes. The EcoVision 4 program runs from 2007 to 2012 and contains ambitious targets. For instance, 30 percent of the turnover in 2012 must come from green products. In order to realize this target, a technical innovation program for the entire value chain has already been ongoing for two years. We are sharing knowledge with suppliers and waste processors and are thinking of new business models together.” Where should the responsibility for sustainability lie within an organization? “Philips wants to embed sustainability in all positions. After all, everyone can think along on how we can do things smarter.” What are realistic targets to set within an organization? “It is important to articulate a serious ambition. Our goal is to realize 30 percent of the total revenue in 2012 via green products, with a 25 percent higher efficiency in energy consumption than in 2007. Furthermore, 1 billion Euros has to be invested in sustainability. We use sustainable performance indicators to measure this. Philips annually accounts for all of these aspects in the sustainability report, which is checked by an accountant.” How sustainable are you in daily life? “I do notice that I am becoming increasingly sustainable in my daily routine. I go to the health food store, I no longer have a car, I use energy-saving bulbs and eat less meat. I recently bought the Wattcher, which is so much fun. Just as in my work, I notice that it is still quite difficult to find the right solutions. This is a process that has to become more and more fun, as well as easier.”

Henry Terlouw realizes an ambitious climate policy in the court capital

The Hague wants to be climate neutral by 2050

Picture The Hague in 2050. This climate neutral town has completely emission free transportation. The Hague has no carbon dioxide emissions. Plus, all of The Hague’s energy is generated cleanly. This situation sounds like a utopia at the moment. But however ambitious these goals are, the council’s Climate Policy Advisor Henry Terlouw means business.

The environment and climate issues have been high on The Hague’s list of priorities for many years. “As a city on the sea front, subjects like climate change and rising sea levels are literally very close to home,” says Henry Terlouw who represents the council. He explains why The Hague is so ambitious and what he feels is necessary for these plans to actually be realized. “Considering our location directly on the sea front, we certainly can’t ignore this development. And even though The Hague’s emission levels are peanuts on a worldwide scale, we have consciously opted to take responsibility. We see it as the council’s task to boost sustainable developments and to be well prepared for all the possible effects of climate change for our town and residents. We also want our council to set a good example. This is why we have defined a substantial but realistic objective. The organization of Hague’s local government will be completely carbon dioxide neutral as of January 1st, 2010.”

Lack of definitions Terlouw also confirms that The Hague as a town wants to be climate neutral by 2050. The interim objective is for emissions across the city to be reduced by 30 percent by 2020. The council organization needs to be carbon dioxide neutral in 2010. These ambitions have been included in a project plan. However, Terlouw does feel this plan has a number of snags. “The tricky thing is that there is no fixed

Henry Terlouw ‘It’s difficult that there’s no clear definition for climate neutral organization.’

definition for the term ‘climate neutral organization’. There are a number of different interpretations. In our case it means that we will be generating 70 percent of the energy requirements in a carbon dioxide neutral way and that the remaining 30 percent will be compensated for in the The Hague Climate Fund. It also wasn’t easy to establish the scope of the council organizations and the associated emissions. So which organizations should be considered part of the council bodies and which shouldn’t? We have opted for a practical approach and are focusing on the civil service and the council services, including buildings and vehicles. Our largest emission sources are therefore gas, electricity and heating in the 120 buildings, electricity for public lighting and water pumping stations and finally the fuel used by vehicles.” The amount of emissions of council organization’s have been based on energy usage, which amounted to 41,000 tonnes of carbon dioxide. This amount is not easily eliminated or compensated for. “Collecting this information was not exactly easy,” according to Terlouw. “The fuel information relating to the 550 vehicles was largely available via the leasing companies, even though they use various different systems. The energy usage within our buildings was harder to map out. In many cases, managers could only supply outdated and fragmented details and in many cases the data was related to different years. What we were left with was a very rough estimate.”

Progress control This estimate was sufficient as a starting point. But in order to effectively safeguard the project’s progress, Terlouw needed reliable information. “It’s very important to use data from the same year and based on the same measurement units. This is the only way to effectively and carefully calculate the carbon dioxide equivalents. And the scale is important too. We not only want to create an accurate image for the entire council, but also per individual building. A reliable image of gas usage in cubic meters, electricity in kilowatt hours and town heat in Gigajoules. We will be using this information to determine the emission levels at various different milestones in the project. Furthermore, it’s just as important for us to be able to easily monitor the progress of the carbon dioxide neutral organization. This is de only way we have the possibility of determining causes and making the necessary adjustments if there are any changes or other special circumstances.” The council is also considering the introduction of smart energy meters in its buildings, in order to be better equipped to measure usage and emission levels. However, certain measures need to be introduced before anything can be monitored in the first place. The Hague will be focusing on three different areas: savings, sustainability, or rather using as much clean energy as possible, and compensating for the remaining greenhouse gas emissions. “The scale of measures differs enormously within these objectives,” according to Terlouw. “We can instantly realize major changes where new buildings are concerned. The Hague is growing and there are currently plans in place for 30,000 to 40,000 new homes. These buildings will have a 50 to 100

year life span. By thinking ahead about the different measures for driving back emission levels means that the 2050 objective is becoming more tangible. This is somewhat different for existing buildings. These demand a clear action plan in which we need to join forces with building societies in the public market, the business community and residents. Working together in this way gets an additional boost as the local government will be setting up discussion platforms and provide focused information. And we will introduce an energy label which is compulsory for all buildings that the council rents. The category of this label will certainly contribute towards the eventual choice.â&#x20AC;?

The Hague Climate Fund With this last comment, Terlouw touches on the subject of sustainable purchasing. The purchasing policy is responsible for direct and indirect emissions. â&#x20AC;&#x153;For example, we only purchase green electricity. This has instantly reduced emission levels to 16,000 tonnes. Plus, we also need to consider the indirect effects of our purchasing activities. For example, flights are now also included in the mobility section of the project. Climate neutral operations mean we need to limit these trips and always compensate for them. In such cases we consciously opt for an own compensation regulation in the The Hague Climate Fund. Not for participation with initiatives elsewhere in the world. The council deposits the compensation fees into the Climate Fund, which is subsequently solely used for local energy saving projects. This approach is actually more expensive compared to regular methods. But we are really contributing to

our own objectives, plus the compensation is guaranteed to benefit the climate.” In order to increase the scope of the fund, the council is encouraging other large organizations in the city to participate.

Saving costs money The compensation costs represent one of the financial aspects of The Hague’s ambitions. Driving back the energy usage in itself will result in lower emission levels as well as less expenditure. “However, in many cases those savings will require investments and so a realistic timescale to recover these investments is a central focus point. This is why investment funds and subsidies has been applied for in order to finance the saving measures. The funds will be paid off using the savings. All measures with a recovery period of less than 25 years will be considered for this. In order to demonstrate the potential savings, it was necessary to subject the buildings in question to energy performance research.” This showed that a 20 percent saving is certainly very realistic. Various adjustments have since been carried out or planned into the maintenance or renovation plans. The Hague will always opt for innovative techniques wherever possible. “We are the first in The Netherlands to be using geothermal heating for homes. A special installation pumps the water up from a depth of around two kilometers. The water’s temperature is approximately 70° Celsius and this heat is used to heat 4,000 homes in The Hague’s South Western area. We use sea water, with an average approximate temperature of 11° Celsius, to heat 800 homes of the Duindorp community along the coast.”

The Hague is focusing on three tracks: savings, sustainable energy and compensation of greenhouse gases. Consideration for innovations The Hague’s goal of being climate neutral by 2050 isn’t trendsetting in the Netherlands. Other cities have announced comparable objectives and endorse the Climate Agreement between the government and the Dutch city councils. Yet The Hague is definitely a trendsetter with its ambitions for 2010. “We are certainly one step ahead with our concrete approach,” Terlouw proudly says. “We have clearly opted for a realistic objective, which we are realizing with the possibilities available to us now. The ambitious character of our plans does mean we will be considering the expected innovations where energy usage and savings are concerned. This is not something we want to gamble on. We need everyone in and around the town to reach our goals. However, in many cases we will need to win over the business community and the residents for them to also provide a contribution within their capacities.”

Low emissions by business community An important argument for participating is the fact that the subject touches everyone, both the business community as well as the residents. Lower carbon dioxide emission levels almost automatically mean a healthier living climate. “We will need to reach a climate agreement with the town, which is why discussions have started with all those involved. The key questions are; what do we need to reach the goals and what can we do about it together? The communication is currently still quite fragmented.

Henry Terlouw ‘The emissions of businesses in The Hague are relatively favorable.’

We will first need to create an unequivocal image. For example, The Hague’s climate ambitions were recently distributed in a public leaflet. We wanted to clearly show why we mean business and that this is in literally everyone’s interest.” The business community, large and small, also represents an essential chain in this initiative. “The Hague’s business sector has a relatively favorable emission picture.” The city isn’t home to a great deal of industry, but mainly can boast many business services. Plus quite a few of the offices in The Hague are managed by the Dutch Government Building Department, which has its own objectives where climate neutrality is concerned. We have regular meetings with the business community and we use the Sustainability Platform to discuss how we can jointly design the climate policy. We want to persuade them to play an active role in our objectives.” Terlouw feels The Hague is very much on the right track. Even though the goals are ambitious and the sustainability subject has many different aspects. “The short term objective of a climate neutral council organization is now within our reach. However, this doesn’t mean that we will subsequently sit back and relax. One part is still based on the compensation and energy usage needs to continue to drop. This is essential because our horizon is still much further away. Keeping a clear sight on the final objective remains crucial and we must show all those involved every milestone we pass. This way, being a climate neutral city by 2050 is certainly no utopia for The Hague.”

Marcel Werner Manager Corporate Social Responsibility at Teijin Aramid

questions for

Marcel Werner Teijin Aramid is a worldwide leader in the market of aromatic polyamides, or aramids. These fibers are used in products that require strength, light weight and sustainability. The company considers Corporate Social Responsibility in all of its important decisions. At Teijin Aramid, Marcel Werner is responsible for Corporate Social Responsibility and in this position acts as the company’s social conscience. “Our technology driven market consists of countless sustainable innovations,” adds Werner.

What are good examples of sustainable entrepreneurship? “The CSR strategy of postal company TNT fully concretizes sustainability via the ‘Planet Me’ environment program. Employees consequently have an active role in limiting carbon emissions, and they are very likely to apply energy saving measures in their homes too.”

How has sustainable entrepreneurship taken shape within your organization? “Teijin Aramid is a frontrunner in using Eco Efficiency Analysis (EEA) as a strategic compass for R&D and product development. Via this instrument we can quantify the financial, ecological and social values of products and production processes. Our researchers for instance assist in the development of testing methods for leprosy research. Their knowledge of synthetic threads is very useful here. Generally speaking, we have pursued a solid program on ethics and integrity over the past years, in order to appoint the most important values together and to increase the awareness of these values. CSR is an integral part of the new strategic targets that have recently been formulated. Our CSR ambassador platform acts as a generator of ideas and will certainly help to anchor CSR further in the organization.”

Where should the responsibility for sustainability lie within an organization? “The final responsibility lies with the CEO. If he does not believe in sustainability, then you can forget about it. The top managers fulfill a pivotal role in translating the strategy into practice. But employees also have to take and carry responsibility for sustainability initiatives. The CSR manager or department helps in anchoring these initiatives as a process within the organization, and in making the targets transparent.”

What are realistic targets to set within an organization? “Whether or not targets are realistic all depends on the type of organization. Our objectives have been recorded in the CSR report of 2008, and include for instance an improvement of 2 percent in energy efficiency and a 2 percent decrease in carbon emission. From 2010 onwards, we also want to carry out an EEA for every investment request of 5 million euros and more, as well as for many existing processes and products. These are realistic targets, but quite a lot still needs to be done. We ultimately want to be at the same level as the top 25 chemical companies in the Dow Jones Sustainability Index.”

How sustainable are you in daily life? “At home we try to live energy consciously - to the extent that this is possible with two adolescent daughters and two small children, and in a house that is more than a century old. I frequently cycle the 15 kilometers to my work. I am fairly sustainable in daily life, but I am definitely not a super freak.”

The art of the possible

Business analytics to measure corporate sustainability By Jonathan Hornby In the abstract, business analytics presents a range of powerful options to uncover meaningful insights that promote action. And that promise is compelling to virtually any organization. But the case becomes even more persuasive when we consider how it can be applied to one of the fastestemerging issues in corporations today: sustainability and the corporate ‘environmental footprint’.

Today, companies are seeking to strengthen the so-called ‘triple bottom line’ that conceptually expands the traditional financial framework to encompass rigorous reporting on the organization’s performance on sustainability issues such as the carbon footprint, community development, occupational safety and dozens of other metrics.

Three planning challenges Unfortunately, significant barriers have impeded decisive corporate action. In the first MIT Sloan Management Review Business of Sustainability Survey, researchers articulated three major roadblocks. The first is a basic lack of information upon which to base sustainability efforts and decisions. Despite the high profile for sustainability, managers often find themselves forced to speculate about drivers of sustainable performance and lack a deep understanding of issues that are relevant for their industry. Accessing, interacting with and analyzing the fundamental data about energy, water and waste is a nonnegotiable premise for effective sustainability. Second, companies often have conflicting definitions of precisely what sustainability means to their organizations. This makes it extremely challenging to develop a meaningful business case for sustainable investments and presents an often insurmountable barrier to the effective cross-functional collaboration that is necessary for success. Third, without that business case based on accepted definitions, companies struggle with precisely 40

‘Traditional reporting and analysis can often fall short.’ Jonathan Hornby

‘Accessing, interacting with and analyzing the fundamental data about energy, water and waste is a nonnegotiable premise for effective sustainability.’

how to measure the ROI of sustainability efforts. What’s more, tangible and intangible costs and benefits abound in the sustainability discipline - but they can be especially challenging to forecast because the goals for greenhouse gas emissions reductions established by governments are often in 10- and 20-year time horizons, far exceeding the typical one to three-year payback period. Traditional reporting and analysis can often fall short when attempting to predict future impacts of sustainability investments. Business analytics plays a critical role by enabling the organization to balance today’s ROI objectives with longer planning horizons. These challenges are not uncommon for emerging business issues. Sustainability is a new discipline for most organizations, one where there isn’t a generation of tested and proven models to call upon and modify. As a result, many organizations forego the effort to model the intangible benefits that may result from sustainable practices. Or, they minimize important externalities such as environmental or societal costs and benefits - all of which can become tangible with business analytics.

The ROI matters Despite these challenges, creating the strongest possible business case is an essential mandate for today’s sustainability directors. That’s because although few observers fail to see the importance of efforts to reduce carbon output and minimize environmental impact, these benefits are highly unlikely to achieve primacy in profit-driven enterprises. In a report from the Economist Intelligence Unit, 41

researchers report that the top three motivations for sustainability initiatives are brand enhancement, revenue growth and cost savings - in other words, outcomes that have a direct impact on profitability. Environmental protection only placed fourth on the list, amply demonstrating that pragmatism and not altruism is the dominant motivator. However, while the pro forma income statement in the analysis is paramount, the attention organizations are paying to sustainability matters is definitely not merely pro forma. The actions, when implemented, are far-reaching and transformational. For example, GE announced that its Ecoimagination program to reduce environmental impact generated a 17 billion dollar revenue stream and reduced costs by more than 100 million dollars since 2005. And the US Army reports that 80 percent of its construction meets Leadership in Energy and Environmental Design (LEED) standards, reducing its energy costs by 8 percent.

Delivering green analytics Transformational organizations require a combination of descriptive and predictive insight - the ability to track meaningful green indicators, validate strategies and costs before investing, identify causal relationships and forecast outcomes. And in these areas, business analytics can make the difference. Such a business analytics framework can empower the organization to: Measure sustainability activities using accepted methodologies and protocols. Report on environmental performance to shareholders and regulators. Improve sustainability metrics using analytical techniques such as optimization, forecasting and data mining to deliver metrics that matter. Reduce resource usage by accurately forecasting resource requirements needed to reach desired outcomes for a department or enterprise. With business analytics, we start to see the â&#x20AC;&#x2DC;art of the possibleâ&#x20AC;&#x2122; with respect to sustainability. You can measure emissions and resource consumption throughout a value chain or product life cycle. You can ensure regulatory compliance. And you can build green strategies with predicted ROI. You can determine which conservation efforts or greenhouse-gas reduction strategies will have the greatest impact - physically and financially. And you can identify ways to profit from environmentally respectful goods and services. Undoubtedly, embracing sustainability initiatives will lead to meaningful - sometimes profound changes to processes and culture. This transformation can be an exciting opportunity to innovate and redefine, to explore new business models and markets. By providing the right information and insights, business analytics can be a key enabler of strategic sustainability initiatives.

In a report from the Economist Intelligence Unit, researchers report that the top three motivations for sustainability initiatives are brand enhancement, revenue growth and cost savings â&#x20AC;&#x201C; in other words, outcomes that have a direct impact on profitability. Environmental protection only placed fourth on the list, amply demonstrating that pragmatism and not altruism is the dominant motivator.

SAS and corporate sustainability Sustainability has remained a top priority with SAS precisely because of its potential to deliver tremendous business value. Itâ&#x20AC;&#x2122;s not just the right thing to do; itâ&#x20AC;&#x2122;s the smart thing to do. In addition to employee engagement practices, from health care to expanded job opportunities, SAS has made great progress in reducing its environmental footprint. For example, a 1 megawatt solar array is providing clean, renewable energy to the public energy grid for the local utility. Several construction projects at SAS offices around the world utilize low-environmental-impact design principles. Notably, SAS is pursuing Leadership in Energy and Environmental Design (LEED) certification for a new conference facility and a new cloud computing facility located at its global headquarters.

Bernd Jan Sikken Associate Director World Economic Forum

questions for

Bernd Jan Sikken Bernd Jan Sikken leads multi-stakeholder initiatives at The World Economic Forum (WEF) that aim to find solutions for fundamental issues such as demographic shifts and environmental sustainability. As an Associate Director Sikken plays a role in the independent organization that is committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas. What are good examples of sustainable business initiatives? “There are many good examples. An interesting one to highlight is Interface, a modular carpet manufacturer. Interface has undergone a major transformation while maintaining a clear business focus. The company is well on its way to realize its Mission Zero commitment to eliminate any negative environmental impact by 2020. Chairman Ray Anderson initiated this journey to – what he calls - Mount Sustainability in 1994. Interface has defined seven fronts of sustainability, including waste elimination, use of renewable energy, and closing the loop. Also financial institutions such as Rabobank, APG and HSBC offer powerful examples. Through their sustainable investment strategies, they help recognizing and rewarding companies that move society towards sustainability.” How has sustainable entrepreneurship taken shape within your organization? “As part of our mission to improve the state of the world, we work with leaders from governments, business and NGOs to address a broad range of global challenges. We currently have a portfolio of 33 multi-stakeholder initiatives of which more than a third focus on driving environmental sustainability. Furthermore, our Annual Meeting of the New Champions in September 2010 will focus exclusively on sustainability. The program centers on how to increase energy efficiency, lower carbon emissions, develop green technology, and rebuild basic infrastructure. We expect that over 1,500 leaders from business, politics, science and technology will participate.” Who in the organization should be responsible for building sustainability strategies? “I believe that, in the next decade, most companies will fully integrate sustainability into their core business strategies. I also believe that, in order to transform effectively, corporate sustainability needs to be a broad, collective responsibility within companies. Still, top management plays an important role as it not only needs to make sure that sustainability is fully integrated into the business strategy, but also needs to set the example and provide the institutional support.” What are reasonable sustainability objectives for most businesses? “The objectives depend on the type of organization and industry. What’s important is that companies set bold, yet realistic objectives. Keeping it simple is another imperative: define a select number of well understood targets instead of many. Furthermore, sustainability requires a lifecycle approach with consideration of the environmental impact across the whole value chain. Shifting the burden is relatively easy; reducing it collectively is a bigger challenge!” How sustainable are you? “The pursuit of a sustainable lifestyle is a journey wherein you constantly learn and discover how you can do better. For me, it took off with simple choices such as eating less meat, buying more local and biological food, and recycling and reusing as much as possible. Just like corporate sustainability can impact a company’s bottom line, a sustainable lifestyle may also reward consumers with other advantages such as saving money and healthier living.” 45

Ruud Koornstra on sustainable innovations and the new way of business

‘Sustainability is not a trick, it’s a mindset’ The business card of entrepreneur Ruud Koornstra also states, besides the usual contact details, the three words Dream, Dare and Do. Koornstra is the founder of Tendris and dreams of a better world, in which people dare to take responsibility. ‘Do’ stands for taking action, something that is necessary to kick start sustainable initiatives. “Sustainability offers endless opportunities for a better world and for profitable entrepreneurship. The Pharox LED lamp is a shining example.”

TV producer Ruud Koornstra became an overnight multimillionaire in 2000 by selling the company that is now called IDtv. The former student of Child Psychology and rugby player was 36 years old at the time, yet he was not planning on becoming rich and lazy. Together with partners, he founded Tendris Holding, an initiation company for sustainable initiatives and companies. “We wanted to fill the missing link in sustainability by translating ideas into companies and to actually carry out these ideas.” “Sustainability means making things better than they are today, without this resulting into losers”, explains Koornstra. “To improve society from this point of view, one must not be afraid of questioning existing rules and structures. This requires guts, operation perspective, partnership and innovation.” The latter one will, according to Koornstra, certainly not be initiated by large enterprises. “The establishment detests revolutionary change. The larger the company, the more difficult it is to anchor a sustainable mindset in daily practice. Some companies have to reinvent themselves before there is talk of sustainability.” “There is an increasing awareness that one will not be better off at the expense of mankind, nature or the environment. Yet unfortunately many CSR managers are often frustrated by to the fact that there is still insufficient awareness on sustainability in the top levels of their company. You also see CEOs who have a near schizophrenic relationship with sustainability. They realize the importance of the concept as individuals, but they serve other interests in their position as director.”

‘Besides people, profit and planet, there is also the fourth ‘p’ for pleasure.’

Plenty of solutions So where should the necessary innovations come from? “They traditionally come from small companies and startups, from pioneers that are flexible enough to work in the new sustainable dimension. I will challenge anyone about the fact that there is a sustainable alternative for every non-sustainable product. Companies and people that understand the sustainability principles see more and more possibilities, and the scarceness in energy makes one creative too. It is up to Tendris, but it is also up to the government, NGOs, companies and consumers to support the parties and get them up and running.” Can sustainability be combined with a free market? “Entrepreneurship and sustainability go together excellently! There is ample evidence that good money can be made with this. Sustainability is not expensive. We also should get rid of the Calvinistic thought that man must do penance in order to improve the world. Sustainability is not about driving around in a car that you really dislike. Asking people to drive and fly less doesn’t work either. Besides people, planet and profit, in my opinion you can also add the fourth ‘p’ for pleasure. Isn’t having a good time the highest goal? You just have to think of good ideas. When there are no longer any restraints, then there are plenty of solutions for lots of sustainability challenges.”

The right to speak Koornstra certainly has every right to speak. The first company that Tendris rebranded, was the energy company Durion, now called Oxxio. Oxxio shook up the energy market with well-oiled purchasing and sales teams, a minimum of overheads, as well as green energy. Subsidiary company RePay International developed the VISA Greencard that compensates for the carbon dioxide emission of the credit card expenses. “In the most difficult credit card country in the world, the Greencard has proven that you can earn money by giving something back. The underlying concept is currently being rolled out worldwide and is known as ClimaCount. Climate compensation is in fact a waste of time and effort, although it is a very good forerunner of solutions that are better for the environment.”

Symbol for sustainable renewal Other initiatives from Tendris include the Agis health insurance policy for vegetarians, carbon dioxide neutral travel with Greenbookings and fuel savers for cars. Subsidiary company Lemnis Lighting is currently in the spotlight. The developer of sustainable lighting solutions based on LED technology introduced the Pharox LED lamp in November 2006, which is 90 percent more economical than a light bulb with the same output. According to Koornstra, the LED lamp is a serious competitor for energy savings light bulbs which contain mercury, as an intended successor of the traditional light bulb. “For me, the LED light bulb is the symbol for sustainable innovation.”

‘There is ample evidence that good money can be made with sustainability.’ “The light bulb has been around since 1854 and has barely changed over the past century. More than 19 percent of the total electricity consumption is used for lighting. A light bulb’s output, or the usable light produced per unit of energy, is only 5 to 10 percent. This means that a 100 watt lamp converts only 5 to 10 watt into light. The LED light is twice as economical, lasts eight times longer and contains no dangerous materials, making it completely recyclable. Several preconceptions have to be dispelled: it is, for instance, not necessary to buy new fittings. The Pharox fits into a normal wide fitting, it gives a warm light color and does not get hot. Within two years, consumers can recover the purchasing costs via economical energy consumption. This technology has already been applied successfully in public areas, offices and in greenhouse farming. The use in horticulture enables a layered cultivation of small crops, which saves even more energy.”

Light or view? Unfortunately there is resistance from the establishment, for instance with regard to the ancient measuring method for public lighting. The Lemnis LED lights are very suitable for street and tunnel lighting, but they are not suitable for the measuring equipment of the officials responsible for lighting regulations. They work with a ‘photopic light curve’, whereas according to scientific data, it would be more logical to take as starting point a ‘scotopic lumen curve’. “You actually measure the light level in a bucket, whereas you could also measure the view in the whole environment.” However, Koornstra has respect for Philips, a company that has an interest of 10 percent in Tendris.

This multinational is hereby taking sustainable innovation very seriously as well as using sustainability as a critical success factor. “Philips is a large and sometimes inflexible organization, and the company has already been producing light bulbs for over a century. They initially did not really believe our announcement of a LED light that lasts 25 years, and that it only uses 10 percent of the energy of the current light bulb. Through the dedicated efforts of people like Ingrid Zeegers and Rudy Provoost, Philips is now truly convinced.” Thanks to Pharox’ fans Bill Clinton, Tony Blair and Kofi Annan, Koornstra and his light now travel the world. Koornstra can use Clinton’s connections to get in contact with a minister from India who wants to reduce the energy consumption. “There is also a lot of interest in China, a country in which a huge urbanization movement is taking place. Within eleven years, 350 million people have to live in cities that are yet to be built. Organizing the energy consumption efficiently is very attractive with respect to both carbon dioxide emission as well as finances.”

What’s stopping you? It is striking that the Dutch Secretary of Environment, Jacqueline Cramer, is working on advertisements asking the Dutch consumers what is stopping them in purchasing energy-saving LED lighting. “The secretary wants to stop the use of the traditional light bulb, but would rather do so by seduction than

by prohibition. This commercial is part of a campaign of the National Postcode Lottery and the World Wildlife Fund. They are handing out 2,5 million free LED lights produced by Lemnis and so anticipating on the phased abolition of the traditional light bulb.” Koornstra also praises the efforts of the Dutch minister of Finance Jan Kees de Jager. “After several tough rounds on the racetrack in Assen in my electric Lotus, he announced that taxation for electric company cars will decrease to 10 percent as of January 1st, and that the vehicles will be exempted from BPM (a Dutch tax on the purchase of private cars and motorcycles) until at least 2018. By using fiscal measures, you can stimulate environment friendly initiatives and discourage behavior that causes environmental pollution.”

The new way of business Back to the new sustainable way of doing business. What advice does Koornstra give companies that want to take this route? “Let’s be clear that first and foremost sustainable entrepreneurship is not just an option, it’s the only correct way to go. It is not a trick, but a mindset that you have to share within the whole chain. First of all, you have to make good and financially attractive sustainable products. You must also communicate honestly. Who still believes in advertisements? You mustn’t speak lingo, but speak ‘transparento’. This means using comprehensive language with regard to your vision, choices, behavior, business model, interaction with people, product production, results and sustainability performances. You must have the guts to reconsider everything, you have to be willing to verify a checklist, pass on costs efficiently and you have to keep measuring performances. Innovation and entrepreneurship combined with the right vision and leadership will create an invincible combination.”

‘Sustainability is making things better than they are today, without this resulting in losers.’

Ruud Koornstra once was a producer of television programs such as Villa Felderhof and Lingo. He has been working on a better world since 2002 with Tendris Holding, his innovation company for sustainable initiatives and companies. Koornstra is also a member of the Board of Governors of the Chair Social Venturing of the Universiteit Nyenrode, he holds a position as chairman of the NijenRoad Society for Social Venturing & Entrepreneurship, and he is board member of consumer organization Goede Waar & Co. He drives an electric Lotus and lives with his family in a self-supporting house. Koornstra has written down his experiences in finding solutions for a better world in his book called ‘Met een lampje de wereld redden: Wat LED je?’ (Saving the world with a little lamp: What’s stopping you?). Koornstra also writes a weekly column for Het Financieele Dagblad (The Financial Daily Paper).

Prof. dr. Wubbo Ockels Astronaut, professor and sustainable entrepreneur

questions for

Wubbo Ockels Wubbo Ockels was the first Dutch astronaut in 1984. His flight aboard space shuttle Challenger motivated him in propagating a sustainable futuristic view. He spreads this idea as professor at the Aerospace Engineering faculty of the Technical University (TU) Delft and via innovative transport and energy concepts. Well-known examples are the Nuna solar car, the energy-generating Laddermills, the Superbus and the Hydrokite, a combination of an airplane and a sailing boat.

What are good examples of sustainable entrepreneurship? “Sustainable entrepreneurship means taking risks. Nothing ventured, nothing gained. A building company and a contractor have worked very hard on the construction of energy-neutral residencies in the Frisian town of Kollum. The first energy-neutral neighborhood has been built in Heerhugowaard, consisting of 1,500 homes with solar panels, wind turbines and a planted forest that compensates for the carbon emission. My Ecolutions company is working on a self-supporting sailing boat, together with two other companies. All of these projects show that a sustainable society is within reach.”

How has sustainable entrepreneurship taken shape within your organization? “The TU fulfills an important role in the development of knowledge and skills to speed up the transition of energy. The young generation is enthusiastic and intelligent enough to create a better future. For this reason, the government really needs to invest more in research, development and in innovating the energy policy.”

Where should the responsibility for sustainability lie within an organization? “Everyone at any level can contribute. The CEO has a clear position as the leader that determines the direction. People can also invent many initiatives locally. These can include very simple solutions, like decreasing the amount of fluorescent lighting in offices.”

What are realistic targets to set within an organization? “The Netherlands could be 100 percent ‘clean’ in 2050. Targets differ, depending on the kind of organization. The above is nearly impossible for oil companies, as their shareholders demand huge profits from oil. Banks such as Triodos and Rabobank are important contributors, as they financially support sustainable energy initiatives. We must learn to make the right investments based on their present as well as on future values. Analytical software makes this return on investment measurable and predictable, and is therefore an important key to success.”

How sustainable are you in daily life? “I sold my house in order to build our ‘Ecolution’ sailing boat, and we now live in a house with solar panels. I can get everywhere on my bicycle in Amsterdam. I do not think that you can solve energy problems by tightening one’s belt. You can, however, by creating new forms of transport and communication, and by dealing with nature more wisely. This also involves having a good time when doing so. Guitarist Jan Akkerman, for instance, performed a gig in 2007 in Groningen using energy produced by a kite. Because of the playfulness that is involved, initiatives like this get people to dream and actually act upon these dreams.”

ABOUT SAS CEOs, CFOs directors and managers have to make many decisions daily which influence the path of an organization for the short and the long term. SAS, the leader in business analytics software and services, has fulfilled its mission to deliver proven solutions, as SAS Sustainability Reporting and SAS Energy and Emissions Management, that drive innovation and improve performance since 1976. The privately held company helps organizations across industries realize the full potential of their greatest asset: data. In this way, SAS has a vision to transform the way the world works, giving customers the power to make the right decisions. SAS solutions are used at more than 45,000 sites in over 100 countries – including 92 of the top 100 companies on the 2009 FORTUNE Global 500 list – to develop more profitable relationships with customers and suppliers; to enable better decisions; and to move forward with confidence and clarity. More than 11,000 SAS employees – in more than 50 countries and 400 SAS offices – provide local support for global implementations. SAS’ record of revenue growth in every year of existence makes it a stable business partner, enabling SAS to reinvest a substantial percent of revenues in R&D each year to continually improve products. More than being ‘green’, sustainability means that SAS takes a long-term view when making business decisions, whether they involve attracting, retaining and motivating the best employees; serving customers; or caring for the physical environment. From LEED-certified buildings to a solar farm generating energy for the region, SAS strives to meet the sustainable demands of doing business. SAS believes that a healthy workplace environment is critical for employees and for the business. Focusing on people and relationships leads to more productive, satisfied and dedicated employees. A healthy work-life balance is critical to this success.

COLOPHON Realization: SAS Nederland B.V. Project owner: Ilanite Keijsers (SAS Nederland) Text: Alyssa Farrell, Jonathan Hornby, Caroline Jooren, Petrick de Koning Photography: Erik Fecken, Ilya van Marle, Anja Robertus Cover: Philip van Tol (Amsterdam) Design: Goedhart Ontwerp (Aarlanderveen) Print: Jan van Gils (Alphen aan den Rijn) Project management: ProductionWorks (Alphen aan den Rijn) The book â&#x20AC;&#x2DC;Future Bright, Reinventing Responsibilityâ&#x20AC;&#x2122; has been produced in commission by SAS Nederland. Information from this publication may only be used, copied or reproduced by print, photo copy, film, internet, or any other method with the explicit written permission of the managing board of SAS Nederland and with a source reference. SAS Nederland is not responsible or liable for any statements made by the persons interviewed in this book.