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Moody’s releases assessment of environmental risk by sector

The SSC Team December 15, 2015 Tags: , , , , Strategic Sustainability Consulting No comments

Moody’s, the bond credit rating agency, recently published two new reports, their global assessment of how environmental risks affect credit ratings and a report that shows how these risks vary across industry sectors (registration required to view).

It’s great to have both reports published because one can see how Moody’s approaches the data and then the results of applying their assessment standards.

Essentially, the agency looked at direct environmental impacts AND consequences of regulatory/policy impacts, crunched those numbers with materiality and timing projections, and, voila – they’ve published a risk profile by industry of 86 global sectors.

The highest risk sectors are projected to hold more than $2 trillion in debt with material credit exposure to environmental risk.

Which sectors are at the highest level of risk? Of course, coal is up there on the top, but some of the others are bound to surprise you.

Check out Moody’s assessments and let us know if you see any surprises on the high-risk list.

If your organization is looking to assess its own climate risk, or perform a materiality assessment to help prioritize sustainability efforts, contact us today.

Straight talk with the CEO to get better sustainability results

The SSC Team December 3, 2015 Tags: , , , Strategic Sustainability Consulting No comments

Sustainability decisions and reports are data-heavy. And not only that, sustainability data may be unfamiliar to many, including your own CEO.

One of the worst things a sustainability executive or sustainability consultant can do is jargon-speak and data-overload when presenting to corporate leadership.

“Too many executives overestimate the CEO’s understanding of, and desire for, detailed functional data. Many of the best CEOs are generalists who lack deep expertise in most functional areas,” writes Joel Trammell for Entrepreneur.

Remember that the CEO, and in many cases other executives, are relying on you – either as an consultant or as the in-house expert – to analyze the functional data and deliver your expert opinion on that data.

Here are Trammell’s three tips for turning down the data noise and turning up the sustainability signal to get better results:

  1. Keep the big picture in mind. Deliver “concise insight” into how a sustainability program is tracking on goals and how those goals are supporting the company’s overarching goals. Drop the details, and focus on impact.
  2. Focus on the future. When talking about a new sustainability program or report, focus on how the results of the report are going to affect the company’s future performance. Asking for an expensive LCA? Don’t dwell on the cost of the actual LCA assessment, instead frame the ask around how the LCA will “identify risk.” And, by identifying risk the LCA will give guidance on mitigating it, and the result will be long-term, low-risk operations in a more sustainable marketplace. Win!
  3. Ask for support when you need it. “Only the CEO can mitigate conflicts between departments and allocate resources where they are most needed,” said Trammell. This is especially important for sustainability executives, as we are trusted with advising and changing how other departments operate. Not everyone likes change. If you are feeling push back from purchasing on the new sustainable purchasing processes, directly provide guidance on how the CEO can proactively remove barriers in purchasing so he or she can see the positive results you promised from the program (Note: Don’t tattle. Keep it professional with clear action steps from the CEO).

By focusing on the big picture, the future, and framing how your role is working with and for other departments, you can keep your communication with the CEO focused and relevant.

Are you looking to pitch to company executives, but need to translate sustainability performance in a language that the C-suite understands? Let us know!  

Use the “8 Habits” of creative genius to shape your sustainability activities

The SSC Team November 24, 2015 Tags: , , , , , Strategic Sustainability Consulting No comments

Approaching sustainability shouldn't be 100 percent data, data, data driven.

Use these 8 Habits of the creative geniuses in our midst to help your organization build a sustainability team and sustainability programs that can help lead your company on the path to greener operations.

Creative minds:

1. Look for inspiration in unexpected places

If you’re looking to figure out how to take the first steps in sustainability, know that someone has likely gone before you. Most sustainability planners know about looking at industry best practices, but we focus more on peer benchmarking inside and outside of a client’s industry. Just because you work in the mining sector, doesn’t mean you can learn lessons from consumer products.

2. Make slow decisions

There are a million different options for addressing both environmental and social sustainability efforts. For each set of stakeholder groups, there are programs, policies, supply-chain choices, upstream/downstream evaluations, risks, rewards, and more. As a team, and as a company, it’s probably a good idea to take it slow to come up with a really, truly effective program.

3. Find internal motivation

Sustainability professionals often come with buckets of “passion” for doing our kind of work, so this one should be easy. Passion is a motivator, but make sure your sustainability professionals also have the skill set to get the job done.

4. Start from scratch

Ok, so doesn’t this contradict looking for inspiration in unexpected places? Not really. Starting from scratch is more of an exercise. For example, instead of saying, “Let’s use energy efficient lighting and LEED practices in our new headquarters building,” the team should spend time considering, “What is a headquarters?”

A free-flow exercise might generate discussion about work-from-home policies, investing in teleconferencing, and eventually result in a much smaller, more efficient “energy efficient, LEED certified” HQ.

5. Be willing to take risks

 “Training employees to be comfortable disagreeing with others and receptive to disagreement will create an atmosphere of innovation.” Creating a corporate value system that includes sustainability as an ingrained part of the culture will give employees the confidence they need to address disagreement or bring new ideas to the table. Lunchroom compost bin, anyone?

6. Always try new things

Because of the constantly changing nature of sustainability, this one isn’t hard. New regulations, scientific findings, and processes are always being published. However, if you’ve been stuck in a rut generating the same old sustainability report and waste audit these past few years, maybe it’s time to step it up. Take that risk and try something to really push your sustainability efforts to new gains.

7. Find connections between experiences

Sustainability is not a stand-alone effort focused on just reporting carbon reduction efforts or mitigating supply-chain risks. Sustainability can be found in all areas of your organization, and the world you operate in. From your built environment to your supply chain to your HR policies and everything in between, it is all connected, and the sustainability team should be seeking ways to become the system, not stand outside and report on it.

8. Be open to magic

But magic is about being open to new ideas. At SSC, this generally translates to “reading, a lot.” Wehave a suite of tools help our clients, but if we’re stuck thinking that our products and services “are what they are” then we won’t grow.

Your sustainability efforts should be the same. Read our blog, read business blogs, sustainability articles, research papers, case studies. You’ll start to see the connections and maybe The Great Idea Fairy will visit you!

Has your organization come up with an insanely creative way to be more sustainable? Let us know in the comments! 

If your investors are assessing your climate risk, shouldn’t you be?

The SSC Team November 12, 2015 Tags: , , , Strategic Sustainability Consulting No comments
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This summer, the World Resources Institute and the UNEP Finance Initiative consulted with more than 100 energy, climate, and finance experts to create a discussion framework for investors to weigh exposure to the risks of climate change.

Essentially, it is a toolkit for investors to evaluate a company based on climate risk factors not directly related to physical risk. Most investors can already pick out obvious physical risks, i.e. investing in coastal property as sea levels rise. But non-physical, climate-change effected risks are also important.

The WRI discussion framework addresses those risks, called carbon-asset risks. They include public policy, regulation, technology, unpredictable market conditions, and shifting public opinion.

This discussion framework is an excellent tool for investors to weigh risks as they choose to make investments, but we argue that companies themselves should be looking at this tool to discover their own carbon asset risks and then engaging in some deeper-level analyses and audits.

For example, the assessment recommends that investors look beyond carbon footprinting and delve deeper into company supply chain audits that may uncover risks. For example:

  • Geographic location (are too many of your suppliers in the path of a super-typhoon?),
  • Local regulations (are the countries your source your raw materials from looking to legislate and increase your costs?),
  • Diversification in operations or production (are your products and services too dependent on fossil fuels?).

This discussion framework, while absolutely useful for investors, can also be used as a cheat sheet for your own business. Next step: Start auditing and taking action now to mitigate your climate risk.

Reducing exposure to risk is crucial, not only to become more attractive to investors, but also to become a more sustainable organization overall!

If you’re ready to start looking more deeply at your carbon asset risk, contact us to learn more about sustainability assessment and supply chain analysis.

Using Risk as a Lens for Sustainability Decision-Making

The SSC Team October 1, 2015 Tags: , , Strategic Sustainability Consulting No comments

Dispatch from SSC President Jennifer Woofter

I often tell clients that sustainability is not a stand-alone concepts, but a lens through which  companies can make good business decisions. It's another set of criteria, another flowchart of questions, that lead to optimal choices.

That said, sustainability is not a perfect lens in and of itself. Sure, there are sustainability concepts and frameworks (like materiality, zero waste, and The Natural Step) that aim to provide guidance on how to think about sustainability, and protocols on how to use sustainability to make decisions. But I find that it's often lackluster -- at the end of the materiality process, or the Natural Step "ABCD process" we often look around the table and say "okay, that seems reasonable, but what does it mean for ACTUAL planning for next quarter? And what does it tell us about changes needed for next year's budget?"

Here is where risk, and it's associated tools, comes in. By marrying traditional risk assessment, mitigation, and adaptation methodologies with sustainability concepts, we can start to answer questions like:

  • How likely is it that climate change is going to have a significant impact on our operations in the next three years?
  • How big of an impact is water scarcity going to be for our supply chain in the next decade?
  • How resilient is our business to labor unrest in Asia?
  • Of all the options for adapting to increasing sustainability regulation, which ones are likely to be the most effective?

There is SO MUCH WORK to be done at the intersection of sustainability and risk. It's really exciting work, and if you've done any reading on the subject lately, I'd love to hear your thoughts in the comments below! 

5 Ways to Benchmark Your Sustainability Performance

The SSC Team September 24, 2015 Tags: , , , , Strategic Sustainability Consulting No comments
A dispatch from SSC President Jennifer Woofter As we work with clients to advance their sustainability journey, we're always looking for ways to slice and dice the information we gather. I thought it might be helpful to share some of the common ways we analyze an organization's performance:

Company Now vs. Company Then

How does the client's current performance compare against it's performance in the past (1 year ago, 5 years ago, etc.). This works best when we've been working with a client for a while and can judge how much progress has been made since our initial assessment.

Company vs. Industry Peers

We look at client performance against a representative peer group -- so for example, a midsize mining company would be compared against other midsize mining companies.

Company vs. Industry Leaders

We look at client performance against the sustainability leaders in the industry -- so we might compare a midsize mining client against the current mining constituents of the Dow Jones Sustainability Index (DJSI).

Company vs. Value Chain Partners

We look at the client's performance against its key upstream suppliers and downstream customers. This analysis provides great insight into risk mapping and alignment -- is the client paying attention to the things its customers care about?

Company vs Sustainability Standard

Comparing a client's sustainability performance against other external standards (ISO 14001, GRI, CDP, SASB, DJSI, etc.) is another way to spot omissions and mis-alignment. It can also help to spot the areas where the standards overlap -- where the client may get the most bang for the buck in closing a gap. What other ways to benchmark are we missing? Let us know in the comments!

How Sustainability Practitioners Should Give Feedback

The SSC Team September 15, 2015 Tags: , , Strategic Sustainability Consulting No comments

Enjoy this article from the SSC blog archives:

As consultants, it's our job to deliver feedback to our clients throughout the sustainability consulting engagement--and we've gotten pretty good at identifying, refining, and delivering news (both good and bad) about a company's "state of sustainability" and roadmap for action. But when we read the article, Don’t Sugarcoat Negative Feedback, in Harvard Business Review, we realized that the art of providing feedback has a much broader application to companies pursuing sustainability initiatives. Here are some of our takeaways:

USE FACTS IN YOUR FEEDBACK

Berglas: Deliver constructive feedback rapidly in its raw form. This doesn’t mean harshly; there’s a way to soften blows without delaying them if you strive to be empathic. Just never make it seem like you’re avoiding hard cold facts. All that does is make the facts seem worse than they are.

Focusing our feedback on facts is a great way to create some space between participants, so that no one feels blamed, guilty, or shamed. It also allows everyone to (more) objectively assess the situation--including whether the feedback being provided is correct, how a solution should be constructed, and how responsibility and accountability for change should be allocated.

Wrong: [After 20 minutes of praise and exultation about everyone's awesome sustainability work.] "Look, even though we're all doing our best, it's not enough. We're falling behind on our performance data, and that's shown up in some recent press. We can't let our industry leave us in the dust. Come on, guys, we've got to improve!"

Right: "Our three-year carbon emissions are up 4.3%, while Competitor A is holding steady and Competitor B actually decreased its emissions by 1.1%. A report, which is getting press coverage this week in the New York Times and a number of "green blogs", calls us out for poor energy and climate performance in our industry. Let's talk about what that means in light of last month's board meeting where there was consensus about aiming for the top 25% of our industry across all sustainability issues."

DON'T PREDICT THE OUTCOME

Berglas: Resist the urge to prophesy. The absolute worst thing a CEO, coach, or consultant can do when offering constructive criticism to someone is to provide a timetable for the process that a person who must change should be expected to conform to.

While goals and targets are critical elements of effective sustainability planning, changing people (and institutions) is an uncertain process. When you need to address employee engagement and organizational culture issues, don't make promises that you can't keep. Yes, you can get a new Code of Ethics in place by the end of the year, but can you put a clear time line on when your emerging-market suppliers are going to really *get* the concepts of anti-bribery and corruption? You can provide a clear road-map, but putting calendar dates down for personal and organizational change is a dangerous proposition.

BE HONEST ABOUT THE EFFORT REQUIRED TO CHANGE

Berglas: Don’t minimize the challenge. When you critique someone with a history of success you have to assume that the flaws you see in them are (a) entrenched, and, (b) something they have long grappled with to suppress or get past. Saying, “No big deal” to that sort of issue can scare the socks off someone who knows that what you’re targeting for change is an issue they have battled unsuccessfully for years.

Sustainability is probably the biggest, most complex challenge that the world has ever faced -- and individual organizations trying to navigate a highly interconnected system in which it has limited leverage and resources is not an easy task. (Hah, understatement!) So don't portray the journey as all rainbows and kittens. It's going to be hard, and there are going to be really tough decisions. People need to understand that the road is going to be long, and the challenges are going to be scary--but that all great, epic adventures start with a seemingly insurmountable mountain to climb.

Looking to start a new sustainability project but need to gain support? Find out ways to gain that support for your new project or idea here!

What Sustainability Practitioners Need to Know About Water

The SSC Team September 8, 2015 Tags: , , , , Strategic Sustainability Consulting No comments

Enjoy this article from the SSC blog archives:

While carbon emissions management and reporting tend to be the first "big picture" sustainability issues that companies tackle, water is poised to become "the next big thing" in terms of corporate sustainability risk management. As always, we're staying on top of it--culling through the best resources and guides to help our clients effectively tackle the issue.

Because we love to share- and don't want to re-create the wheel- here are three articles that bring home the most important tools, concepts, and frameworks related to corporate water management. Enjoy!

The four pillars of water risk assessment 

In this economic climate and as part of our natural lives we are all familiar with undertaking risk assessments in our everyday professional and personal existence; from the most basic travel decisions ensuring punctuality, to the most comprehensive health and safety issues ensuring the safety of our colleagues in the workplace.

How far away is a standardised approach to water reporting? 

With corporate awareness of water-related risk growing exponentially, so the demand for a standard means of measuring and reporting water usage increases. Katharine Earley explores current practice in benchmarking usage at a global level, and examines the tools and guidelines available to companies as they unravel the complex web of their water footprint. 

Reporting water risks: A step-by-step guide 

An increasing number of companies are experiencing detrimental water-related business impacts, including operational or supply chain disruptions and property damage from flooding, to name a few. These impacts can be costly -- in 2011 they cost some companies up to $200 million -- and have caught the attention of investors around the world. To make the reporting process easier, WRI has aligned its Aqueduct Water Risk Atlas with CDP’s water questionnaire. 

If you are interested in corporate water management, you'll love our free white paper Every Last Drop: Water and the Sustainable Business. Got another water resource to share? Leave a comment, or talk to us on Twitter (@jenniferwoofter).

What Sustainability Practitioners Need to Know About Water

The SSC Team September 8, 2015 Tags: , , , , , , , , , , , , Strategic Sustainability Consulting No comments
Enjoy this article from the SSC blog archives: While carbon emissions management and reporting tend to be the first "big picture" sustainability issues that companies tackle, water is poised to become "the next big thing" in terms of corporate sustainability risk management. As always, we're staying on top of it--culling through the best resources and guides to help our clients effectively tackle the issue. Because we love to share- and don't want to re-create the wheel- here are three articles that bring home the most important tools, concepts, and frameworks related to corporate water management. Enjoy!

The four pillars of water risk assessment

In this economic climate and as part of our natural lives we are all familiar with undertaking risk assessments in our everyday professional and personal existence; from the most basic travel decisions ensuring punctuality, to the most comprehensive health and safety issues ensuring the safety of our colleagues in the workplace.

How far away is a standardised approach to water reporting? 

With corporate awareness of water-related risk growing exponentially, so the demand for a standard means of measuring and reporting water usage increases. Katharine Earley explores current practice in benchmarking usage at a global level, and examines the tools and guidelines available to companies as they unravel the complex web of their water footprint.

Reporting water risks: A step-by-step guide

An increasing number of companies are experiencing detrimental water-related business impacts, including operational or supply chain disruptions and property damage from flooding, to name a few. These impacts can be costly -- in 2011 they cost some companies up to $200 million -- and have caught the attention of investors around the world. To make the reporting process easier, WRI has aligned its Aqueduct Water Risk Atlas with CDP’s water questionnaire. If you are interested in corporate water management, you'll love our free white paper Every Last Drop: Water and the Sustainable Business. Got another water resource to share? Leave a comment, or talk to us on Twitter (@jenniferwoofter).

Should You Pare Down Your Sustainability Agenda?

The SSC Team August 27, 2015 Tags: , , , , , , Strategic Sustainability Consulting No comments
Enjoy this blog from the SSC archives: At the beginning of the year, a lot of people find themselves making long lists of things to achieve over the next 12 months. And ambitious sustainability agendas are no exception--it seems like we're always being pushed to do more, move faster, and achieve greater sustainability performance. After all -- we know that global challenges can't be solved by half-measures. Today, we're challenging the idea that you must do "better" sustainability by doing "more" sustainability-related activities. Instead, let's look at the benefits of doing less. And we'll start by reviewing an article called The Art of Adding by Taking Away by Matthew E. May, published last January in The New York Times. May begins his article with a quote from ancient Chinese philosopher Lao Tzu: “To attain knowledge, add things every day. To attain wisdom, subtract things every day. Profit comes from what is there, usefulness from what is not there.” This saying sparked something in May, who began to investigate the logic of problem solving by taking things away: "It dawned on me that I’d been looking at my problem in the wrong way. As is natural and intuitive, I had been looking at what to do, rather than what not to do. But as soon as I shifted my perspective, I was able to complete the project successfully." May finds that there are many ways to tie the "doing more by doing less" thinking into the business world:
  • By removing distractions, companies can focus on what really matters.
  • By searching for patterns and finding common elements, companies can spot opportunities earlier and streamline decision-making.
  • By removing product features, companies can drive innovation and reach new audiences.
So what does this mean for sustainability practitioners? Take a hard look at your company's sustainability activities -- are they clearly aligned and focused with your business strategy? Are they designed to mitigate your biggest environmental and social impacts? Are they responsive to your key stakeholders? Or...are your company's sustainability activities spread too thin and flow in so many directions it is difficult to adequately keep track of them? If your sustainability agenda doesn't revolve around a clear strategy, it's time to get off the merry-go-round and do a little paring. Here's what we suggest:
  • Conduct a materiality assessment to identify and prioritize your (internal and external) stakeholders and what they care about. This will give you a short list of sustainability topics that are the most important, and a longer list of "nice to have" activities to tackle as time permits.
  • Assess each of your existing sustainability activities against a materiality matrix. If you find that activities are falling outside of the "must have" sustainability priorities, you should consider redirecting resources to more important places.
  • Develop guidelines to help you address the importance, effectiveness, and urgency of any new activities under consideration. This will keep you on the straight and narrow going forward.
If you'd like some help in conducting a materiality assessment, please contact us! We love to take clients through this process--it's enlightening, empowering, and energizing to identify what's important (and what you can leave behind). In the meantime, we love May's final advice about how to apply this thinking to your own life: "First, create a “not to do” list to accompany your to-do list. Give careful thought to prioritizing your goals, projects and tasks, then eliminate the bottom 20 percent of the list — forever." "Second, ask those who matter to you most — clients, colleagues, family members and friends — what they would like you to stop doing. Warning: you may be surprised at just how long the list is." "The lesson I’ve learned from my pursuit of less is powerful in its simplicity: when you remove just the right things in just the right way, something good happens." Have you tried this approach? We'd love to hear what you're giving up in 2014, and what you're making more room to do! Leave us a comment or join the conversation on Twitter.