1. The Business Case

There is a strong business case for sustainability. Done right, it adds value, saves money, drives innovation, reduces risk, enhances your brand, and increases both customer and employee loyalty. It is not a cost to your business; it is a value creator.

Whether you are embarking on sustainability for the first time or trying to reignite momentum for it within your firm, the key to making it stick within an organization is to demonstrate the business value it will bring to your company over both the short and long term. This chapter is broken down into several sections to help you do just that. First we’ll focus on the external market and public policy forces that provide both risk and opportunities for your company. Then we’ll discuss top-line competitive advantage, highlight Interface as an example of a company to aspire to that is fully realizing the benefits of sustainability, and run you through an exercise on using sustainability to protect your brand.

When I wrote my first book, Return on Sustainability, there were very few case studies, books, or reports that demonstrated the bottom-line business benefits of sustainability. Today that has changed, so I’m not going to exhaustively list all of these case studies and reports because Natural Capitalism Solutions has already done that through the Sustainability Pays² study. This study pulled together more than 45 separate reports that highlight the numerous ways in which companies are realizing value from their sustainability efforts.

They are experiencing these types of value:

Cost savings

Reduced risk

Enhanced brand value and customer loyalty

Lower recruiting and retention costs

High employee satisfaction

Meeting investor expectations

More engaged suppliers

Competitive advantage and differentiation

New top-line revenues

There is a business case for sustainability and I am going to write in depth over the next few pages about the numerous market forces and regulations that are taking place around sustainability that can lead to all of these benefits. While global agreements and federal legislation on environmental and social issues have been stalled, the market hasn’t been waiting. It has been moving on these issues. So read on and think through how each of these market forces might apply to your company, and identify both risks you want to avoid and opportunities you want to capitalize on.

The numerous market forces around sustainability are shown in Figure 1.1.

As of early 2013, SRI investments represented $3.74 trillion or almost 10% of the U.S. investment marketplace.⁴ This is being led by investment firms such as these:

Pensions: BlackRock, TIAA-CREF, the California State Teachers’ Retirement System (CalSTRS), CALpers, Calvert Mutual Funds.

Investment Funds: Calvert, Trillium, Sentinel Investments, MMA Praxis Mutual Funds, Neuberger Berman Mutual Funds, Parnassus Investments, Pax World, TIAA-CREF.

Venture Capital: Kleiner Perkins and Bright Capital, Acumen Fund, Big Issues Investment, Central Fund, City Light Capital, Clean Technology Venture Capital, Root Capital, Good Capital, TBL Capital, and many more.

Based on Sustainability Index Update Q3 2012.⁷

A separate study performed by Ethisphere showed that between 2007 and 2011, these same types of companies “outperformed the S&P 500 by delivering a nearly 27% return to shareholders, compared to the S&P’s negative 8.5% shareholder return during the same period.”⁸

So, if someone is dismissing your arguments about sustainability, don’t try to sell them on the social or environmental issues. If money is all they care about, meet them where they are and say: “Okay, I agree with you. Let’s focus only on maximizing shareholder value,” and then show them the numbers. This will shut them up pretty quickly and go a long way toward strengthening your business case.

In 2011, over 50% of pension funds had an SRI portfolio.

80% of firms believe there’s no performance trade-off between SRI/ESG strategies and traditional investments.⁹

A study by Notre Dame and Georgetown found that those companies that are large emitters of greenhouse gas (GHG) emissions see their market cap reduced because of these emissions. Specifically, their study found that a company’s value declines by $202,000 for every additional 1,000 million tons of carbon they emit.¹⁰

In fact, there is a movement being led by Paul Polman, the CEO of Unilever, who has stopped reporting quarterly earnings. He stated that he cannot run his company effectively or smartly for the long term if he has to manage this way. He told investors that if they don’t like it, that’s fine, because Unilever doesn’t want them as shareholders with what the company is trying to do. He’s lost a few shareholders but also attracted many others who share the company’s vision and values, while simultaneously seeing the stock price rise.

It is taken seriously because, as of mid-2013, 655 institutional investors with more than $87 trillion under management support the CDP’s efforts, and Table 1.1 shows CDP’s growth over ten years. To give context, this amount is greater than the entire economies of the United States, the EU, Japan, Russia, India, and China combined.

The business results from companies reporting to the CDP have been quite positive.

Companies in the 2011 Carbon Disclosure Leadership Index (CDLI) provided approximately double the average total return of the Global 500 between January 2005 and May 2011.

61% reported financial savings from addressing climate change.

Respondents had a payback period of three years or less.¹²

The strongest force pushing adults toward purchasing green are their kids who “pester” their parents into buying green. The Energy Defense Fund found that 42% of adults admitted to coming under pressure from their children to be more environmentally friendly.¹⁶ Figure 1.3 demonstrates how green consumption preferences around the environment have risen.

I’ve found this to be true as I’ve worked with companies over the past eight years; sustainability is the tiebreaker if price, performance, quality, and convenience are the same. This is more important than any celebrity endorsement.

However, one important point to note is that there is increased skepticism as well. According to this study, more consumers are worried about “greenwashing” and want to verify company claims:

The Business and Consumer Behaviour 2013 survey showed that in 2012, 23% of consumers switched brands if their regular brand or service provider was having a bad effect on the environment, people, or society, or behaving unethically.¹⁸

About one in three consumers say they don’t know how to tell whether green product claims are true.

One in ten consumers blindly trust green product claims.

24% of consumers are verifying green claims by reading the packaging. 17% are going online, reading studies.

Several studies support this idea across all age groups, but especially for Gen Y or millennial (those born after 1982) employees. I’ve also seen it firsthand with my Gen X (1965–1982) peers and even the baby boom generation; people are craving the opportunity to find more meaning in their day-to-day jobs.

Consider the fact that 86% of baby boomers and 85% of Gen Ys say that it is important that their work make a positive impact on the world. Even in the middle, 75% of those in Gen X see making a contribution to society through their work as important.²⁰

Although it might have been okay for our parents’ generation to “check their values at the company door” each day and relegate caring about the environment and community to the evenings or by volunteering on weekends, today’s workers are not willing to do that. They seek a higher level of engagement and want to make a difference in their day-to-day work.

This is especially important now because employees are feeling more hopeful and mobile than they have at any point in the past few years. They are feeling more confident and will be factoring sustainability into their decisions to work for a company, into whether to leave a job, and even into their pay considerations.

Consider the following four factors in play: recruiting, productivity, compensation, and turnover.

According to a 2011 PricewaterhouseCoopers (PwC) study, 88% of graduate students and young professionals factor an employer’s corporate social responsibility position into their job decision.²¹

A Stanford research study found that graduating MBA students rate the Corporate Social Responsibility (CSR) criteria of ethics, treatment of employees, environmental sustainability, and caring for communities and stakeholders high on their list of job criteria.²²

At the highest level, sustainability provides a means of connecting with employees’ senses of moral purpose, self-identity, creative energy, and desire to contribute to “making the world a better place.”²³

One of the strongest endorsements employees give their company is the enthusiastic declaration that the company allows them to put their time and discretionary energy toward their life’s work.²⁴

Take a look in Table 1.3 at the results from a study by the Hay Group, which found the performance difference from those who found meaning in their work.

A Stanford study showed that over 97% of graduating students would make a financial sacrifice to work for a company that exhibited all four characteristics of social responsibility.²⁵

The CSR Branding Survey found that almost 50% of respondents between the ages of 18 and 24 would choose a position with a socially responsible company, even if they had to take a pay cut.

The 2010 CSR Branding Survey revealed that 44% of young professionals say they would discount an employer with a bad reputation.²⁶

The aforementioned PricewaterhouseCoopers study showed that 86% would consider leaving a job if their employer’s CSR performance no longer held up.²⁷

Today’s employees want to work for companies that have a reputation as a great place to work. People want to be part of a winning team, one that is not just keeping up with the times but is making a positive difference in the world.

Organizations are being asked about their social, environmental, and climate performance in supplier scorecards, in requests for proposals (RFPs), and in bids for work. This is being led by the largest retailers, such as Walmart, Target, Microsoft, HP, and P&G.

In fact, if you do a quick search, more than 1,000 companies will show up with some type of sustainability requirements in their RFP requirements. Most cities and government agencies (including federal) are also incorporating these into contract bidding requirements. All of this is putting a demand through companies’ value chain for not only more sustainable products but also more sustainable practices and services.

Walmart, for example, pushed more than 100,000 suppliers to produce more sustainable products with its “Eco-Index” and released its Environmental Key Performance Indicators in late 2012.

This is an outgrowth of many of the social aspects of sustainability including affirmative action and sweatshop labor issues. While the environment has taken a more primary role as of late, human rights, workers’ conditions, and even human trafficking (such as the California Transparency in Supply Chain Act) are once again playing a major role in supplier questionnaires. Much more media attention is being paid to employees seen jumping to their deaths at the Foxconn factory in China, to the garment factory fires in Bangladesh, and even to employees collapsing from heat inside a major online retailer’s Lehigh Valley warehouse here in the United States.

The demand to answer questions around sustainability is such that some manufacturers in Southeast Asia are actually dedicating a person to the job of responding to these social and environmental questionnaires full time because the questions keep changing and the number of requests keeps rising.

According to Evan Mills, a scientist at the Lawrence Berkeley National Laboratory, “Climate change stands as a stress test for the insurance industry in that it now pays an average of $50 billion a year in weather- and climate-related insurance losses, including property damage and business disruptions. Such claims have been doubling every decade since the 1980s.”²⁸

This is incredibly important to business because the insurance industry is the world’s largest industry and represents 7% of global GDP. If they are seeing their costs rise, they are going to pass those fees along to the consumer and businesses. In fact, back in 2007, the National Association of Insurance Commissioners voted to require insurers to submit annual Climate Risk Reports.

According to NASA, 2012 was the hottest year on record in the United States and the ninth hottest globally ever. In fact, with the exception of 1988, the nine warmest years in the 132-year global weather record have all occurred since the year 2000.²⁹ While many people talk about global warming and climate change, I prefer to focus on extreme weather events, which are increasingly more common and severe. This is because while there are people still willing to debate whether global warming is occurring, there is less debate about the increase in severity of these extreme weather events.

From a business-case perspective, just think about all the natural and financial disasters that have been in the news over the past seven to eight years, and how each event changed the stakeholder conversation with companies:

In 2007 the topic of interest was climate change and the collapse of the U.S. housing market.

In 2008 it was toxins in children’s toys from China.

In 2008–2009 it was the global financial crisis.

In 2010 it was the BP oil spill.

In 2011 it was the Fukushima Tsunami.

In 2012 it was the financial crisis in Greece, the worst drought in the U.S. in 50 years, and Superstorm Sandy.

In 2013 it was the Cyprus bank default.

As Bob Willard says, sustainability “is a survival strategy to thrive in a new, changing, dynamic world. It’s not so much about saving the world, but in preparing the company to prosper in the future.”³⁰

Two of the primary ways in which this is playing out are through the Equator Principles and through one small but often overlooked section of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010.

The eight Equator Principle Performance Standards include questions about the following:

1. Assessment and management of environmental and social risks and impacts

2. Labor and working conditions

3. Resource efficiency and pollution prevention

4. Community health, safety, and security

5. Land acquisition and involuntary resettlement

6. Biodiversity conservation and sustainable management of living natural resources

7. Indigenous peoples

8. Cultural heritage

Lenders that are following the Equator Principles are beginning to put just as much pressure on companies to change practices as the SRI investment firms, and social and environmental requirements are becoming the norm in major lending agreements.

The Episcopal Church passed the Genesis Covenant in 2009, which asks all its churches to reduce GHG emissions by 50% within ten years.

Ecobuddhism is a term of its own. The Dalai Lama was the first to sign the declaration, which encourages all people to target 350 parts per million (PPM) on CO2e in the atmosphere as the only way to continue human existence on the earth. It asks people to act now.³²

The Muslim Seven Year Action Plan (2010–2017) on Climate Change is an action plan for the global Islamic community. It investigates every level of Muslim activity from daily life to annual pilgrimages, from holy cities to future leader training.

Former Pope Benedict XVI started a movement within the Catholic faith when he urged international leaders to reach a credible agreement on climate change back in 2011, asking all faiths to “keep in mind the needs of the poor and of future generations.”³³

The Jewish Environmental and Energy Imperative was signed by 50 Jewish leaders, establishing a goal of reducing Jewish community greenhouse gases by 83% of 2005 levels by 2050.³⁴

It seems as though not much has happened globally over the past few years around sustainability. The reality is that there actually has been movement in a number of countries, states, and municipalities that all provide both risks and opportunities to companies. Therefore, when you are making the business case for sustainability within your firm or to your stakeholders, there will be times when the market forces won’t be enough and you’ll need to demonstrate to key decision makers how current and future regulation might impact their decision making. I’ve highlighted a few areas in the next few pages to pay attention to.

While most of the focus has been on oil, the cost of electricity has gone up as well, about 50% in the past decade, from a U.S. average of 8 cents per kWh to 12 cents per kWh. This also affects the bottom line and makes it more difficult to forecast future operating expenses. Controlling transportation and electricity costs will give any company a huge advantage in the marketplace, lower risk, and provide certainty to the CFO and facilities manager who are looking to better manage these variable costs.

The European Union’s Climate Exchange (ECX), which is a platform for trading carbon credits on the stock market,³⁷ was launched in 2005 and was aimed at reducing greenhouse gas emissions to 8% below 1990 levels by 2012. Although it struggled early on because it set the cap too high and it put too many permits on the market at too low a price in the coming years, the number of permits was revised in July 2013, which will likely impact business costs in Europe from 2014–2020 as companies look to adapt.

California just enacted the Global Warming Solution Act (AB32), which creates an in-state carbon cap-and-trade program and requires the state to reduce its GHG emissions to 1990 levels by 2020. Large emitting businesses will have to not only trade and report emissions but also work to reduce emissions, which might impact prices.

The U.K. requires energy and GHG reporting through its Climate Change Agreements (CCAs) program, and in the U.S. three regional GHG initiatives have been created: the Western Climate Initiative, the Regional Greenhouse Gas Initiative (RGGI), and the Midwest Greenhouse Gas Reduction Accord. Only the RGGI is operational, but when the economy picks up, business should be ready for action across these 22 states and 5 Canadian provinces.

New regulations surrounding water conservation have been implemented in the U.S. after the record drought that affected the United States in 2012. Both the drought and the new public policies will impact business in the cost, availability, and new regulations related to water use.

The European Union has been leading the charge on various chemical and toxin issues, mostly through its Registration, Evaluation, Authorisation, and Restriction of Chemicals (REACH). It requires “all companies manufacturing or importing chemical substances into the European Union to register these substances with a new European Chemicals Agency (ECHA) in quantities of 100 or more tons per year and will shift to 1 ton per year by 2018.”⁴⁰ Any company importing goods into Europe could be affected.

This is a major game changer because in the United States the EPA has to prove that a chemical is harmful, whereas REACH requires companies to certify that the chemicals in their products are safe before they are sold to the general public.

There was no way for consumers to verify all the claims out there or compare among products, which forced the FTC to come up with new rules to ensure that any claims that companies make about the environmental attributes of their products are truthful and nondeceptive.⁴¹ These updates to the FTC will not only allow consumers to make informed comparisons, but will also force companies to truly know what is in their products and might cost them to do so.

This conflict-minerals regulation, however, affects a far greater number of industries and specifically references tin, thallium, tungsten, and gold. Moreover, there is a growing movement to include coltan, which is the key ingredient in most modern communication devices, including the iPhone, iPad, and Galaxy IV, as well as other rare earth elements.

Numerous countries, primarily in the EU, require state-owned and the largest publicly traded companies to produce sustainability reports, and in a few European countries, pension funds are already required to disclose whether they make socially and environmentally responsible investments and how they do so. Other countries that have adopted a variation of the same type of mandatory corporate social responsibility law include Australia, Austria, Canada, China, Denmark, France, Germany, Greece, Holland, Indonesia, Italy, Malaysia, Norway, Portugal, Spain, Sweden, and the United Kingdom.

This is being led by two organizations, the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB). Although there have been other efforts, including the Prince’s Accounting for Sustainability Project (A4S), which is working with Global Reporting Initiative (GRI), the IIRC and SASB are the ones leading the charge on developing the protocols for integrated reporting, with SASB looking to combine efforts with GRI for companies to have to create only one report.

A major reason for this new type of integrated reporting, beyond just demonstrating social and environmental impact, is because where companies’ true brand value lies has shifted dramatically over the past 35 years. As Bob Willard demonstrates, a company’s value has shifted from tangible assets (cash, property, plant equipment, accounts receivable) to intangible assets (goodwill, brand value, etc.) in a major way, going from 95%/5% respectively in 1978 to 35%/65% today. Therefore, a company’s value is much more at risk from social and environmental issues because so much of their value is an intangible asset.

ISO has three programs related to sustainability that companies should be aware of, because these might be legal requirements in countries outside of the U.S.

ISO 14001: Specifies the requirements for an environmental management system.

ISO 26000: This standard offers guidance on socially responsible behavior and possible actions.

ISO 50001: This is a management system standard for energy.

Why do we always hear about “bottom-line benefits” and “cost-savings”? I think it is because for years business has been looking at social and environmental issues from a defensive posture. They have been more comfortable in thinking about risk reduction.

Take the opposite approach. Play offense. Focus on opportunities and realize that sustainability can be an accelerant for growth and opportunity. Determine what new products or service options your company could create around sustainability that would contribute to the top line of your business. This will get the Board’s and CEO’s attention.

One example of how much more excited leadership can get about top line than bottom line came from one of our contractor clients. When we first started working with this technology contractor, in our initial meetings we asked them about their business practices. They were pretty humble about everything they did, and we found ourselves just tinkering around the edges in terms of finding ways to potentially save the company money and reduce their environmental footprint at the same time.

However, after about 60 minutes of our initial 90-minute conversation, they began to talk about their “Ship-to-Shore” power program. This is when a light went on for us: There was a huge growth opportunity for them financially. It also just happened to be about the most impactful and sustainable thing the company could do.

We quickly pivoted from focusing on the low-hanging fruit internally and spent the rest of the conversation identifying ways they could build on and grow this business, which would have a greater impact on the planet and also on the company’s top line.

As Laszlo and Zhexembayeva write in Embedded Sustainability, “Differentiation is all about creating unique (and, to customers, uniquely valued) attributes for your company.”⁴² Typically, companies try to differentiate themselves using price, performance, aesthetics, or customer service. As mentioned earlier, Generation X and Y consumers tend to choose those companies and products that have environmental or socially just attributes when all other things are equal. So in many ways, sustainability attributes serve as a way to reinforce product quality, process, and brand uniqueness as well as your competitive advantage.

Laszlo and Zhexembayeva also make the case that “in the embedded sustainability model, a product or service that embodies sustainability does not compromise on functionality or price. There are no trade-offs in usability, reliability, or durability. However, the product—whether a light bulb, household cleaner, bank loan, or car—will look and feel very different from its conventional counterparts”⁴³ in that the consumer will know its sustainability benefits.

One example in the ski industry is that of Stevens Pass, a ski resort in Washington State. While many resorts were struggling to compete against one another, Stevens Pass looked at sustainability as a way to deliver value to its customers (skiers) while finding ways to save money and take action on climate change at the same time.

According to Ross Freeman, former Environment and Sustainability Manager at Stevens Pass, the marketing department was looking for a way to differentiate itself from other local ski areas in the Puget Sound region—Crystal Mountain, The Summit at Snoqualmie, and Mount Baker.

They didn’t have access to traditional capital resources, which so many resorts use to build higher speed lifts, gondolas, or new facilities. So the resort decided instead to try to become one of the greenest ski resorts. To do this, they worked with a local waste facility, Cedar Grove Composting, to increase their recycling and compost all of their food waste; the resort also partnered with the utility company to purchase 100% renewable energy, making this one of the greenest ski resorts in North America. They did this because their customers are typically early adopters of sustainability and they’ve found this to be a true differentiator for their customers.

One of their largest customers, Walmart, had just released their environmental guidelines and the customer was beginning to ask questions of their suppliers about the environmental attributes of their products. So my firm Sustainable Business Consulting (SBC) and one of our partners began to perform a Life Cycle Assessment (LCA) and carbon footprint for this client’s product so that they could share the environmental benefits of their new product with Walmart and hopefully gain market share and increase top-line revenue.

However, our client found themselves bogged down by other priorities and they were not able to provide us with the data we needed to make the calculation. We kept insisting they get us the data immediately because we knew it was necessary to respond to the customer request and that if they dragged their feet any further they would lose their competitive advantage. They just kept saying they were busy and they’d get it to us whenever they could. Eventually, six months passed and one of their competitors stepped in with a product very similar to theirs, was able to respond to the supplier request, and won the business. Our client had the differentiation and competitive advantage, but they never capitalized on it and ended up losing out on millions in the process.

It’s not enough to just have the competitive advantage; you need to communicate it and act on it!

The founder and owner, Ray Anderson, had an epiphany in 1994 and challenged his then 21-year-old company to adopt a bold vision and a new model for business: a sustainable enterprise. He wanted to not only reduce the company’s environmental footprint, but transform how business was done—from that of a purchasing model to one of leasing. The idea was that customers could lease individual carpet tiles and replace them as needed versus having to buy an entire new carpet every time. This was a bold and risky idea because it meant potentially sabotaging his own bottom line and how the company had made money for a long time.

He was undeterred, though. He asked his engineers to calculate the company’s environmental footprint and set out the most ambitious goal of any CEO of any company at the time: zero impact and zero emissions by 2020. He called this project Mission Zero and it had seven key aspects:⁴⁴

1. Eliminate Waste: Remove all forms of waste, in every area of business.

2. Benign Emissions: Eliminate toxic substances from products, vehicles, and facilities.

3. Renewable Energy: Operate facilities with 100% renewable energy.

4. Close the Loop: Redesign processes and products to close the technical loop using recovered and bio-based materials.

5. Resource Efficient Transportation: Transport people and products efficiently to eliminate waste and emissions.

6. Sensitize Stakeholders: Create a culture that uses sustainability principles to improve the lives and livelihoods of all of stakeholders—employees, partners, suppliers, customers, investors, and communities.

7. Redesign Commerce: Create a new business model that demonstrates and supports the value of sustainability-based commerce.

The results have been staggering. As of 2012 the company had seen the following benefits:

Net GHG emissions were down 82% in absolute tonnage.

Renewable energy usage was up 30%.

About 74,000 tons of used carpet had been diverted from landfills.

Fossil fuel usage was down 60%.

Water usage was down 75%.

Renewable and recycled materials usage was up 25%.

From a financial standpoint, these benefits have been realized:

They’ve cut costs by $4.5 million.

Sales have increased by two-thirds.

Profits have doubled.

The company is halfway to its goal of Mission Zero and it anticipates that it will achieve that goal in 2020. The best part is that all of these efforts have paid for themselves over time. For more information, look up either of these stories:

Ted Talk by Ray Anderson, at www.youtube.com/watch?v=iP9QF_lBOyA

Full Interface story, at www.interfaceglobal.com/sustainability/interface-story.aspx

The circumstances at your company are probably not the same as what Ray had at Interface, but this is the type of thinking and courage that today’s CEOs need to embrace because the business case is truly a win-win.

1. Business as usual (BAU)

2. Further financial crises

3. Massive market disruption and strict environmental and social regulations

We use this exercise because the market and regulations are constantly shifting around sustainability, and the issues and concerns for most stakeholders right now might change, be passé, or be firmly cemented into society three to five years from now.

We’ve witnessed this in several ways. Let’s use the consumer market for eggs as an example. Five to seven years ago the popular sentiment started shifting toward buying eggs that were organic. Then it slowly evolved as trends changed to local, then cage-free and naturally fed. And soon it became hormone and antibiotic free. Who knows where it will go next, and that is exactly the point. Sustainability is constantly changing and businesses need to plan ahead for ways to protect their brand from both market changes and new public policies.

Going through the Protecting Your Brand exercise will help you articulate potential future policy and market conditions, and determine how those conditions could impact the company. It will help you analyze business trade-offs, risks, and opportunities and uncover ways for your company to prosper by responding to those forces. It enables you to take a proactive stance versus a reactionary one. It will allow you to play both offense and defense.

Each scenario runs across three time periods; the short term (1 to 3 years), medium term (3 to 5 years), and long term (6 to 10 years). Although the latter is truly not “the long term” by traditional standards, because the current average length of a CEO is just over 8 years⁴⁵ and the average tenure of an employee is about 4.6⁴⁶ years, I decided to use 6 to 10 years as long term.

Huge market opportunities exist for meeting new market forces and regulations around sustainability.

More than 45 separate studies demonstrate that there is money to be made on sustainability and companies can increase profitability, reduce risk, meet stakeholder expectations, and improve brand value by incorporating it into their practices.

When making the business case for sustainability, you will want to vary it depending on who you are talking to, so be sure to demonstrate top-line revenues to the CEO, bottom-line savings to the CFO, risk reduction to Investor Relations and Legal, recruiting benefits to HR, and consumer issues to Marketing and Branding.

Companies that have ESG criteria in their management outperform those companies that do not; SRI investments have outperformed the S&P 500 for a decade.

Not only are employees considering sustainability in their job decisions, but Gen X and Gen Y employees are expecting it. They are showing a willingness to take a pay cut, and now that the economy is improving, they are showing a readiness toward leaving companies with poor social and environmental practices.

Sustainability can be your competitive advantage and differentiator, especially when price, performance, and quality are similar. But it’s an advantage only if you use it.

As the value of companies increasingly is reflected in terms of intangible assets, a company’s value is more at risk from social and environmental issues than ever before.

Use the Protecting Your Brand exercise to get ahead of the next crisis—whether that is financially, socially, environmentally, consumer, or politically driven.