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sustainable development is being transformed

sustainable development is being transformed

Since its foundation as a set of philosophical principles and values, sustainable development has evolved to a more specific and significant set of applications that is redefining business models, changing the scope of policy initiatives, transforming governance and expanding the voices of global citizens.

From the compliance and "command and control" decision making of previous generations, the growing imperative of sustainable development has given rise to a more dynamic and interactive process at global, regional and local levels.

Business and civil society leaders, with increasing support from selected governments, strategic and sophisticated specialists, investors and innovators. Simultaneously, factors such as marketplace innovation, fundamental technological transformation, new global policy frameworks, regulations and incentives, and innovative financing mechanisms, are driving progress.

Significant challenges, however, face the continued evolution of sustainable development: the global economic crisis and evolution of financial and trade systems, poverty and economic development, climate change impacts, water and other global scale ecosystem stresses, and the crisis of trust and legitimacy facing businesses and governments.

"Facing up to this [economic] crisis…is an opportunity we must seize…we will invigorate national economies, create employment and livelihood opportunities, improve human well-being and achieve our sustainable development targets."

At the same time, the opportunity to align the sustainable development agenda with future wealth creation and improved transparency and governance has never been greater, nor has the urgency to act and the need to scale up existing best practices.

Occupying a special place in this evolution of sustainable development are the global companies that have received the World Environment Center's (WEC) Gold Medal Award for International Corporate Achievement in Sustainable Development.

The 25th anniversary year of the Gold Medal Award provides the opportunity to examine how the winners' past achievements have advanced sustainability and raised the bar for future value creation for business and society. The companies spotlighted here have helped guide some of the most significant innovations and can still be considered leaders today, even though they may have won the award years ago.

Yesterday's sustainability agenda focused primarily on operational-level policy and technical problems in specific geographic areas. Today's sustainability agenda is dominated by major systemic challenges that no one company, government agency or even group of actors can successfully resolve alone.

The most notable challenges include: climate change; energy efficiency and the demand for low-carbon technologies; water access and quality; ecosystem protection and services; urbanization and demographic shifts; and the need to integrate social and economic impacts into every aspect of the marketplace.

The ability to achieve success in these areas will build upon the ideas and initiatives of many of the Gold Medal Award companies over the past 25 years as evidenced through the following evolution of priorities:

From Compliance to Prevention and Global Footprint Reduction

Early Gold Medal awardees such as 3M (the first awardee in 1985) and Procter & Gamble (1992 awardee) were at the forefront of applying new ways of thinking to advance environmental protection.

3M's pioneering Pollution Prevention Pays (3P) program was an industry first in systematizing the concept of pollution prevention on a companywide basis and documenting the results. Procter & Gamble was an early proponent of using lifecycle analysis to identify and quantify environmental and other impacts associated with all phases of product development and use.

Today, most of the awardees play a leadership role in efforts to measure and decrease their overall footprint, including collective efforts to develop frameworks and tools to manage global carbon and water footprints.

From Assertion to Accountability and Transparency

Sustainability metrics, public reporting, increased transparency, stakeholder engagement mechanisms and their relationship to broader changes in corporate governance represent critical elements for demonstrating sustainability leadership.

The BP Group (1988 awardee) played a key role in developing the Public Environmental Reporting Initiative (PERI), one of the first examples of voluntary sustainability reporting. The Dow Chemical Company (1989 awardee) established its Corporate Environmental Advisory Council in 1992 to advise senior company executives on major issues and strategies impacting its business. Other awardees now have formal mechanisms for stakeholder consultation at the operational and corporate levels.

From Pilot Projects to Scale Along Global Supply Chains

Every significant product, technology and process innovation begins with an experiment or demonstration project that can subsequently be scaled. Philips Electronics (1998 awardee) initiated its Supplier Sustainability Involvement program in 2003 to raise performance levels of suppliers through training and audits. This broadened into The Philips Supplier Declaration on Sustainability to encompass environmental and social issues, thus providing a sustainability platform to unify the company's value chain management process.

The 1994 awardee, S.C. Johnson, continues to differentiate itself at both ends of the global supply chain through innovative processes for sourcing raw materials for its products around the world and growing the marketplace for greener products.

From the "Backroom" to the "Boardroom"

WEC awardees have been pioneers in getting sustainable development onto the agendas of corporate "C-Suites," boards of directors and major shareholders. While more still needs to be done to embed environmental, social and governance issues into financial markets and pricing signals, these issues are now no doubt part of the boardroom agenda in leading companies.

DuPont (1987 awardee) has, for several decades, institutionalized environmental and sustainability leadership at the very top of the company. Its chief executive officer chairs its Sustainable Growth Steering Team, which helps the company make strategic level decisions. Shell (2001 awardee) has maintained a Corporate and Social Responsibility Committee of its board of directors for a number of years. The chief executive officer also chairs the Sustainable Development and HSSE Executive Committee that reviews performance and sets priorities and targets.

From Individual Action to Strategic Alliances and Systems Change

Nearly all WEC awardees are engaged in industry-wide alliances to level the global playing field and achieve scale and systemic impact. CEMEX (2002 awardee), for example, has been a leader in mobilizing its business to provide housing for lower income citizens and in creating the Cement Sustainability Initiative within the World Business Council for Sustainable Development.

Many have also established global strategic partnerships with environmental and development NGOs to better achieve their sustainability goals. The Coca-Cola Company (2009 awardee) works with both Greenpeace to introduce climate friendly refrigerant gases and with WWF to protect critical watersheds to preserve access for current and future users.

Johnson Controls (2004 awardee) is working with the Clinton Climate Initiative, the U.S. Conference of Mayors and other city governments to improve energy efficiency, reduce greenhouse gases and lower costs in municipal and private sector buildings around the world through its "Smart environments" strategy.

From Short-term Targets to Long-term Strategic Vision

Some of the best managed global companies build their business strategy around an ambitious "Big Vision" that is supported by interim targets and building blocks.

To fulfill its public vision of a "low carbon society," Ricoh is applying its experience gained over many years of technological innovation to develop product, process and systems designs that embody energy and resource conservation and recycling.

Marks & Spencer's (2008 awardee) "Plan A" led the company to rethink and redefine its product value chain by integrating Oxfam into a business process for recycling clothing to lower income-families. This gets consumers directly involved in driving sustainability results and creates the opportunity to rethink the role of external stakeholders in creating business and societal value.

From Product Innovation to Redesigning Business Models and Markets

A number of the awardees have developed internal programs and external alliances aimed at fundamentally re-imagining and transforming their business models, and in some cases, even the markets in which they operate, while continuing to innovate existing products, services and clean technologies.

IBM (1990 awardee), through its "Smarter Planet" strategic initiative, recognizes that the inter-connectedness of individual and global communications can provide a platform for smarter business solutions to address global problems. While this and other developments are at a relatively early stage, they are potentially the most revolutionary aspect of sustainable development and hold the greatest opportunities for addressing the myriad of global scale problems related to climate change, natural resource utilization, economic development and future wealth creation.

Future Agenda for Action

Actions of these and other WEC Gold Medal Awardees presage the future sustainability agenda and will result in a continuing redefinition of roles and responsibilities for global companies, governments, multilateral institutions, non-governmental organizations, universities and individual consumers, investors and citizens.

New leadership and business models, new technological, institutional and societal innovations, and new levels of understanding and commitment will be required to advance this agenda for action.

This article is based on the report, "Changing the Global Agenda: Business and Sustainable Development from Rio to Copenhagen and Beyond," by Jane Nelson and Terry F. Yosie, which will be available in July at www.wec.org. Jane Nelson is senior fellow at Harvard's Kennedy School and a World Environment Center board member. Terry F. Yosie is WEC's president and CEO.

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