Sustainability - Beyond Compliance

By Carla Kalogeridis

An internationally recognized thought leader on sustainability and corporate water strategies, Will Sarni, director and practice leader, enterprise water strategy-sustainability for Deloitte Consulting LLP, is a frequent speaker for corporations, conferences, and universities, as well as a columnist on sustainability and water strategies. He is the author of Corporate Water Strategies (Earthscan 2011) and coauthor of the upcoming book, Water Tech - A Guide to Innovation, Investment and Business Opportunities in the Water Sector (Routledge 2013).

Sarni has been providing environmental and sustainability consulting services to private- and public-sector enterprises for more than three decades, with a focus on developing and implementing corporate-wide sustainability strategies, as well as broad-based climate and water programs. Sarni’s diverse client list includes Fortune 500 companies, multinational corporations, and non-governmental organizations. He has managed complex projects throughout the United States, Europe, and Asia, working with some of the world’s most recognizable companies, and is a key team member on the development of the Best Global Green Brands sustainability performance methodology highlighting the value of sustainability in creating brand value.

Here’s a taste of what you will learn from keynoter Will Sarni at the AIAG Corporate Responsibility Summit, which runs from April 24-25, 2013 at the Surburban Collection Showplace in Novi, Mich.

AIAG: U.S. sustainability efforts seem to be gaining momentum. What are some specific ways you’ve seen them gain traction over the last several years?

Sarni: Sustainability has been a journey for 10-plus years as focus has slowly evolved over time. Companies are looking at sustainability issues as beyond compliance, and are considering environmental and social issues in a very different way. What are the risks around environmental and social issues that are not covered by compliance and regulations? What are the business opporunities around those issues, and how do we engage with stakeholders?

There’s no shortage of corporate responsibility or corporate sustainability programs. If you look at multinational companies, they all have programs built around specific issues that are relevant to their business, whether the primary focus is energy, green building practices, water, raw materials. The programs are primarily resource-focused and tied into the company’s understanding of risk.

Companies are engaging with stakeholders in a very different way, as well. They are looking at how to connect with their entire value chain—customers, consumers, and communities where they operate. There is no shortage of initiatives, all tailored to line up with a company’s business strategy and what’s important to them.

AIAG: What are examples of sustainability opportunities especially relevant to manufacturing and automotive?

Sarni: Certainly, energy is key, so we’ve seen companies taking a hard look at their energy spending and risk. They’re looking at price volatility and changing regulations, and mapping out a global energy strategy that goes beyond just buying energy to thinking about energy as a significant spend. We’re seeing companies do the same thing with water, which essentially is free, although prices have gone up about 18 percent in the U.S. over the past two years and 7 percent in the last year.

Raw materials are a focus, as well. Does a company have enough raw materials to continue running its business? Do they need to think creatively around recycling materials, and how do they build a recycling program to ensure a reliable and affordable supply of materials for  manufacturing? As any resource becomes more expensive, there’s an added price risk component.

AIAG: How are manufacturers approaching these issues?

Sarni: Look at water, for example. Typically, when we think of companies that view water scarcity as a business risk, we think of food and beverage companies. But in the automotive sector, one company has a well-developed, leading water strategy that it has focused on for 10-plus years. So you’re starting to see companies in the manufacturing sector take on resource issues that you might not think are important to them, but it turns out they are, in fact, important.

AIAG: Where is water’s importance in relation to other sustainability measures i.e. green building, energy, waste, GHG, etc.?

Sarni: The bottom line is you can’t do anything without water. You can’t grow crops; customers can’t use your products in some cases; and you can’t manufacture anything without water. Over the past few years, companies have recognized that there is increased competition for water and that scarcity impacts pricing and availability. Fortunately, Detroit is in a good position, but for automotive companies moving into water-scarce or water-stressed countries, it’s a critical resource issue. Companies have to consider how that will affect their supply chain and manufacturing operations, especially in areas of expansion. 

Water is moving up the corporate agenda on its own, but is also being coupled with issues like energy because there’s a risk component for water scarcity that’s tied to power generation. In the U.S. over the past year-plus, we’ve seen several examples of power plants being shut down because there wasn’t enough water to cool the plants.

AIAG: Could the U.S. soon feel the effects of an impending water crisis? How do you envision the impact on the Great Lakes, and what can the manufacturing industry do to adapt?

Sarni: What we’ve seen over the past year is the drought impacting the agricultural sector, power production, shale gas development, and more, so the issue is current and rippling through various industry sectors. You’ll see more and more companies factor water availability into siting considerations and how they operate their business. If you can project access to water out over several decades, you still want to be efficient, but you are in a better place and don’t have to worry about it as much. The Great Lakes is water-rich and less at risk than other regions, but multinational companies based in Detroit have to be thinking about what’s happening globally.

AIAG: How does the perception and outlook of sustainability differ within the U.S. and outside of it, and how should our industry adjust accordingly?

Sarni: If we compare what’s going on globally, in Europe, there tends to be more of a regulatory framework around reporting and disclosure. In the U.S., it’s not regulatory-driven, it’s driven on a voluntary basis with a business focus. U.S. multinational companies that build a sustainability program and report their performance are recognizing the business value in developing a program. It’s not driven by compliance, so they look at it as adding value to the company, to shareholders, to employees, to customers, and the communities where they operate. That’s enough—that’s the business case.

If you look around globally, there’s a difference between a regulatory mindset and a voluntary, business-value mindset. That’s not to say that European companies don’t understand the value—they certainly do—but it’s embedded in a regulatory framework. It’s interesting that voluntary reporting is alive and well in the U.S. because companies see value in it. If you’re reporting, you’re developing a strategy, and you’ve made a commitment to reach out to stakeholders.

AIAG: What can attendees expect to learn from your presentation on Resource Risk and the Circular Economy?

Sarni: Primarily, I’ll talk about energy, water, raw materials, and risk, as well as efficiency in using those resources. There’s a concept called “circular economy” that takes a look at how we use resources and thinks about how to drive reuse and recycling as much as possible. It’s about moving away from raw material requirements and mitigating resoource risk.

We’ll also talk about stakeholder expectations and expand on expectations for multinational companies that green consumers have as far as company behavior, environmental issues, social performance, waiver practices, etc.

The rise of social media is a critical aspect as well. It used to be that a company could manage its reputation and build its brand value through very structured communications. Now, it’s not exactly a free-for-all, but with everyone having access to social media, the feedback on how a company is doing is fast and furious. There’s a very short period of time between when a stakeholder identifies an issue and a company responds.

Historically, companies would reach out to their customers or their employees. Now, everybody is a stakeholder. Someone reading a blog or someone looking at a news clip on their mobile device could become engaged and comment on how you’re doing. It’s amazing how fast a company can post something and get feedback, and companies are doing a good job of understanding how to participate in that dialogue.

That focus ties back to resource issues, too, because stakeholders anywhere can comment on how you’re using water or energy. If you’ve got a manufacturing facility in Asia and a group of stakeholders disagrees with your water use, it could impact your consumer base in developed economies or in the U.S. Today, there is interconnectivity between regions and between groups of people that we’ve never seen before.

See Mr. Sarni discuss these topics and more at the 2013 AIAG Corporate Responsibility Summit!  Visit www.aiag.org for more details and the complete agenda!

Date:

April 24 - 25, 2013

Location:

Suburban Collection Showplace

46100 Grand River Avenue

Novi, MI 48374

Registration:

Register online at www.aiag.org or call (248) 358-3003.

Contact Shannon Osburn at sosburn@aiag.org for sponsorship and exhibiting opportunities.

Carla Kalogeridis (carlak@arion-media.com) is AIAG’s e-news editor.