Changing the System: The 10 Sustainability Challenges for Canadian Business in 2013 by jkilcoyne1


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                  the system
                         The 10 Sustainability
                      Challenges for Canadian
                             Business in 2013

                                  Inspiring new
                        research and innovating
Produced in part by               new solutions
letter from tima bansal, NBS
We first assembled our Leadership Council to identify     In its role as connector and catalyst, NBS looks
business sustainability challenges in 2007. At the        forward to helping these leaders and their
time, business leaders were optimistic about the          companies tackle the challenges ahead. By
opportunities that lay ahead: The business case           bringing together academic and industry experts
for social responsibility was coming into focus.          with similar visions but different knowledge and
In the subsequent six years, most organizations           experiences, we will produce frame-breaking new
have experienced the proverbial win-win: they             insights. We will reveal new business models that
realized significant economic value by integrating        benefit both business and society. The challenges
sustainable business practices into their products,       may be great, but that means the potential for
services and overall operations. They were able to        growth is also great.
sell sustainability internally because short-term costs
were rewarded with short-term gains.                      I hope managers are inspired to partner with
                                                          researchers and tackle these challenges. And I
Further progress, however, requires larger                hope you enjoy reading this report.
investments with longer time frames. To continue
their journey to sustainable business, these leaders      Sincerely,
recognize the need to tackle system-wide challenges
beyond the boundaries of their organizations. They
see the need, for example, to educate consumers
and convince them to consume responsibly. The
need to work with government regulators to produce
integrated public policies on environmental and social    Tima Bansal, PhD
issues. And the need to collaborate with unlikely         Executive Director, Network for Business Sustainability
partners, even competitors, to rewrite the rules for      Professor, Richard Ivey School of Business
supply chain management. These are not easy tasks.

Canadian Business Sustainability Challenges 2013                                                                    2
letter from valerie chort, Deloitte
Canadian business leaders have reached a pivotal           Today’s sustainability challenges are the source of
moment in their sustainability efforts. The period of      tomorrow’s sustainability opportunities. Capitalizing
low-hanging sustainability fruit is over. It is now time   on these opportunities means we need to develop
for leaders in the Canadian marketplace to raise           innovative, collaborative and adaptive solutions,
the bar, reach high and wide, and create innovative        particularly in the areas of measurement, leadership,
sustainability opportunities.                              new business models and education.

As the challenges identified in this report and those      I believe this report can help Canadian businesses
over the previous five reports show, sustainability        move towards finding solutions that will help
is not an easy path to follow, let alone set. With         advance Canada’s sustainability agenda.
continued economic uncertainty, regulatory changes
and commodity price fluctuation comes significant          Sincerely,
pressure to do more with less, invest only in high
value projects, and accept lower risk investments.

It is clear that Canadian business leaders are
rethinking the way they approach sustainability in two
key ways. Internally, leaders are searching for ways       Valerie Chort
to sustain the behaviours and performance achieved         Partner & National Leader
to date. This means refocusing on the sustainability       Sustainability & Climate Change
issues that matter most, using integrative approaches      Deloitte
to move beyond incremental gains, and adopting
smarter tools to drive management and decision-
making, such as full cost accounting and life-cycle
assessments. Externally, leaders want to create
greater sustainability impact on the marketplace.
This means collaborating with industry peers on
challenging issues, learning leading practices
from other sectors, and engaging stakeholders
up and down the value chain to generate shared
performance improvements.

Canadian Business Sustainability Challenges 2013                                                                   3
executive summary
A group of Canadian business leaders met in            6.  How should companies navigate issues
September 2012 to identify the issues inside               regarding Aboriginal rights and entitlements?
their organizations, in their value chains, in the     7. How can Canadian organizations become
marketplace, in government and in society that limit       more innovative?
sustainable development. In a one-day roundtable       8. How can companies embed social license
facilitated by management researcher Tima Bansal,          to operate into their strategy?
these leaders identified 10 issues facing Canadian     9. How can business and society prepare
businesses and phrased them as questions for the           effectively for the impacts of climate change?
research community and other members of the            10. How can companies respond to the proliferation
business community to start answering:                     of voluntary and mandatory reporting
The 10 Sustainability Challenges For Canadian
Business in 2013                                       Over the next year, NBS will conduct a systematic
1. How can businesses contribute to effective,         review (comprehensive research study) of Challenge
    integrated public policy on the right issues?      #2: Collaboration. We will commission the best
2. How can companies best engage value                 academic team in the world to review the existing
    chain, industry and NGO partners to achieve        body of knowledge, and from that review, we will
    sustainability goals?                              produce a practical guide for business leaders to
3. How can businesses help Canadians become            engage value chain, industry and NGO partners
    informed, inspired and engaged in a national       in sustainability. We will also convene a public
    dialogue about responsible consumption?            forum to address Challenge #3: Civic Engagement.
4. What corporate structures enable companies          Bringing together researchers, business leaders and
    to deliver on sustainability goals?                policymakers, the forum will start a national dialogue
5. How can companies keep their long-term              on sustainability.
    sustainability agenda on track despite
    leadership changes?

Canadian Business Sustainability Challenges 2013                                                                4
Who Produced This Report                                                                       Although there are still many gains to be made         What is “Business
                                                                                               in environmental and social practices in most
This report is published by the Network for                                                                                                           Sustainability”?
                                                                                               Canadian companies, the business leaders who
Business Sustainability (NBS) and was produced
                                                                                               helped produce this report have been at it for         Business sustainability refers to
with the help of Deloitte. NBS is a Canadian
                                                                                               a while. And Canadian business leaders are             business models and managerial
non-profit organization dedicated to changing
                                                                                               increasingly looking beyond their organizations        decisions grounded in financial,
management practice by giving business leaders
                                                                                               to broader societal issues. Many say they have         environmental and social concerns.
authoritative resources on important sustainability
                                                                                               “picked all the low-hanging fruit” with respect        Sustainable companies:
issues. Funded primarily by public grants from
                                                                                               to their organizations’ environmental and social       • Create long-term financial value.
the Canadian government, NBS is located at
                                                                                               impacts. Their companies have reduced emissions        • Know how their actions affect
the Richard Ivey School of Business (Western
                                                                                               and gone paperless. They have reduced                    the environment and actively
University) in London, Ontario and the Université
                                                                                               packaging and hazardous substances associated            work to reduce their impacts.
du Québec à Montréal in Montreal.
                                                                                               with their products. They have dramatically            • Care about their employees,
                                                                                               reduced the amount of water and energy they              customers and communities
Why We Wrote This Report                                                                       consume and the amount of waste they produce.            and work to make positive
NBS’s goal is to advance Canada’s sustainability                                               They have attracted highly engaged employees             social change.
agenda. Business leaders have articulated a                                                    who are strongly invested in sustainability. They      • Understand these three
desire to adopt new business models, to move                                                   have written supplier Codes of Conduct and               elements are intimately
away from the post-industrial economic paradigm                                                found ways to monitor supplier performance.              connected to each other.
founded on the principle of “growth at all costs.”
                                                                                                                                                      Compared to companies that focus
They recognize the need for a new model that
                                                                                                                                                      on short-term profits and make
“decouples” economic growth from environmental
                                                                                                                                                      decisions based solely on the bottom
or social impacts. Canada itself is already showing
                                                                                                                                                      line, sustainable companies think long-
evidence of this “decoupling.” In 2010, the last
                                                                                                                                                      term. They forge strong relationships
year for which data are available, Canada’s per
                                                                                                                                                      with employees and members of the
capita emissions hit a historic low of 20.3 tonnes of
                                                                                                                                                      community. They find ways to reduce
carbon dioxide equivalent per person1. That same
                                                                                                                                                      the amount of natural resources they
year, Canada’s gross domestic product (GDP) grew
                                                                                                                                                      consume and the amount of waste
by 3.4 per cent – a greater annual growth than any
                                                                                                                                                      and pollution they produce. As a
in the preceding ten years2.
                                                                                                                                                      result, sustainable companies thrive,
                                                                                                                                                      surviving shocks like global recessions,
                                                                                                                                                      worker strikes, executive scandals and
                                                                                                                                                      boycotts by environmental activists.
1 Environment Canada. “Canada’s Greenhouse Gas Emissions: Monitoring, Reporting and Verification of Greenhouse Gas Sources and Sinks.”
  Retrieved from Oct 17, 2012.
2 Industry Canada. “GDP and Growth in the Canadian Economy.” Retrieved from Oct 17, 2012.

Canadian Business Sustainability Challenges 2013                                                                                                          5
time to change the system
With many operational and technical improvements         Many of the initiatives these Canadian companies
already achieved, these companies now face               want to launch are large-scale projects or asset
more formidable challenges. “We already have a           investments with payback periods of years and
business with a small environmental footprint, so it’s   even decades. Not only is it difficult to get support
increasingly difficult to find ways to further reduce    for long-term projects, but the global economic
our impact,” said Debbie Baxter, Chief Sustainability    crisis has necessitated cuts to sustainability and
Officer for LoyaltyOne. These companies are looking      corporate social responsibility (CSR) departments
beyond the boundaries of their own organizations         across many organizations. Those cuts have changed
to advance sustainable business practice. It is a        how companies approach their environmental and
significant undertaking.                                 social initiatives: “Following the economic crisis,
                                                         everyone is operating in an expense-constrained
Business leaders are faced with the challenge of         environment,” said Karen Clarke-Whistler, Chief
educating individuals about responsible consumption      Environment Officer of TD Bank. “In a climate of fiscal
– at a time when consumer appetites seem                 restraint, sustainability cannot reside in a siloed CSR
insatiable. They want to engage more effectively         department. The business case for sustainability has
with government bodies to generate legislation that      to be made across the entire organization and built
is coherent across multiple levels of government         into organizational strategy.”
– but don’t know the engagement approach that
will ensure success. They feel the need to test new      The path forward is unclear. The principles that drove
business models but struggle to reconcile risk-taking    economic growth over the last sixty years clearly no
innovation with investors’ demands for quarterly         longer suffice. Canadian business leaders are looking
returns. They aim to “decouple” their companies’         for new business models, new partnerships and new
growth from environmental and social impacts.            insights to illuminate the way forward.
They are keen to develop collaborative – rather than
combative – relationships with environmental non-
government organizations but lack clear models
for mutually beneficial engagement. They see
opportunities to effect industry-wide change but
can’t convince sectoral competitors to work together.

Canadian Business Sustainability Challenges 2013                                                                   6
NBS is committed to fostering those partnerships          with your local Chamber of Commerce or industry
and helping build that path by connecting visionary       association as topics for educational workshops
business leaders with global management scholars.         and seminars over the coming year. Find non-profit
Every year, NBS convenes a group of Canadian              organizations, universities and colleges that can partner
business leaders – our Leadership Council – whose         with you to start addressing them.
companies are actively pursuing sustainability.
These business leaders identify the issues inside         Academic Researchers
their own organizations, in their value chains, in        Study the issues that matter to managers. Business
the marketplace, in government and in society that        leaders rely on sound insights to inform their decision-
limit their sustainable development. These issues         making: these Challenges provide a roadmap to the
establish the annual “Canadian Business Sustainability    topics of most interest to practitioners. Where scholarly
Challenges.” NBS then conducts rigorous academic          publications already address business challenges, NBS
research on the top Challenges, producing practical,      gathers and synthesizes the best evidence. Many of
objective decision-making resources for business          the issues, however, have yet to be explored thoroughly
leaders. The resulting resources are available for free   by academia. We encourage researchers worldwide to
to business leaders worldwide via the NBS website:        investigate these important management questions and                                              to share them with colleagues in other disciplines.

Who Should Read This Report
This report is for business leaders, academic
researchers, government representatives and other
societal change agents with the capacity and desire to
change the way organizations do business in Canada.

Business Leaders
Start the conversation about sustainability. Whether
you’re the CEO of a TSX-listed company or the
founder of a family-run small business, every business
leader has the capacity to drive change. Think about
the Challenges raised in this report as they relate
to your own organization. Build some of the issues
into your long-term planning. Raise the Challenges

Canadian Business Sustainability Challenges 2013                                                                      7
sustainability challenges for 2013
Producing the List of Challenges                        Council members not in attendance included:
                                                        Paul Berto, Director of Corporate Communications
The Sustainability Challenges emerged from a            and External Affairs, The Home Depot Canada;
one-day roundtable of 15 senior business leaders        Mona Frendo, Director, Policy Co-ordination and
who gathered in Toronto on September 25, 2012.          Regulatory Affairs, Industry Canada; and Carmen
These business leaders included Debbie Baxter,          Turner, Leader, Sustainability and Community
Chief Sustainability Officer, LoyaltyOne; Paula         Engagement, Teck.
Brand, Director, Integrated Decision Making Division,
Environment Canada; Grete Bridgewater, Director,        The roundtable was facilitated by Tima Bansal, a
Environmental Programs, Canadian Pacific; Karen         professor of strategic management at the Richard
Clarke-Whistler, Chief Environment Officer, TD          Ivey School of Business (Western University) and
Bank Group; John Coyne, Vice President, Legal           Executive Director of the Network for Business
& External Affairs and General Counsel, Unilever        Sustainability. Bansal led the group through the
Canada; David Dougall, Director of Accessibility        process of sharing and capturing Canada’s business
& Sustainability, Research In Motion; Tim Faveri,       sustainability challenges, ranking them in importance
Director, Sustainability and Responsibility, Tim        and then prioritizing the ones that should be closely
Hortons Inc.; Brenda Goehring, Corporate Safety,        investigated by researchers. The following list
Health & Environment, BC Hydro; Deborah                 represents the outcome of that discussion.
Kaplan, Sustainability Principal, SAP Canada;
Peter MacConnachie, Senior Sustainability Issues
Management Specialist, Suncor Energy; Matthew
McCulloch, Director, Consulting Group, Pembina
Institute; Chris McDonell, Manager, Aboriginal and
Environmental Relations, Tembec; John Page,
Director, Ethics, Environment and Corporate Social
Responsibility, TELUS Corporation; Luc Robitaille,
Corporate Director Environment, Holcim (Canada)
Inc.; Jane Sadler Richards, Butyls Global Specialist,
Sustainable Development, LANXESS Inc.

                                                        2013 Leadership Council Members

Canadian Business Sustainability Challenges 2013                                                                8
canadian business
sustainability challenges
The 10 Sustainability Challenges for Canadian Business in 2013

  1                       2                         3                       4                       5

How can                 How can                    How can                 What corporate          How can
businesses              companies best             businesses help         structures enable       companies keep
contribute              engage value               Canadians become        companies               their long-term
to effective,           chain, industry            informed, inspired      to deliver on           sustainability
integrated public       and NGO partners           and engaged in a        sustainability goals?   agenda on track
policy on the           to achieve                 national dialogue                               despite leadership
right issues?           sustainability goals?      about sustainability?                           changes?

  6                       7                         8                       9                      10

How should              How can                    How can                 How can                 How can
companies               Canadian                   companies               business and            companies
navigate issues         organizations              embed social            society prepare         respond to the
regarding               become more                license to              effectively for         proliferation of
Aboriginal              innovative?                operate into            the impacts of          voluntary and
rights and                                         their strategy?         climate change?         mandatory
entitlements?                                                                                      reporting

Canadian Business Sustainability Challenges 2013                                                                        9

How can businesses contribute to effective,
integrated public policy on the right issues?
Building sound public policy on                    makes it impossible for companies to
environmental issues is undeniably                 educate consumers about responsible
                                                                                                    “How do you create
complex. But the uncertainty created by            use of their products and services. For          resilient business
governments’ failure to act compounds              example, in different cities in the same
companies’ existing planning challenges.           province, consumers might be expected
                                                                                                    strategy despite
Canadian companies still await decisions           to recycle the same paper coffee cup four        a lack of clear,
from government regarding issues like              different ways: in one city, both the cup
carbon pricing, a national cap-and-trade           and lid are recyclable; in another, both
                                                                                                    integrated public policy?
system for greenhouse gas emissions or             the lid and cup are recyclable but through       We want to be ahead
feed-in tariffs for new energy generation          different streams; in another city, the cup
sources within individual provinces. They          is recyclable but not the lid; and in the last
                                                                                                    of the curve instead
also await clarity around the intersection         city, both cup and lid must go to landfill.      of reacting to sudden
of environmental policy with energy,
economic and social policy. As a result            “How do you create resilient business
                                                                                                    regulatory changes.”
of this inertia, companies refrain from            strategy despite a lack of clear, integrated     GReTe BRidGeWATeR
investing in new technologies and training         public policy?” said Grete Bridgewater of        director, environmental Programs
                                                                                                    CANAdiAN PACiFiC
staff in new standards and procedures – or         Canadian Pacific. “We want to be ahead
they are forced to make educated guesses           of the curve instead of reacting to sudden
regarding the ultimate impacts of policy.          regulatory changes.”

In areas where governments have                    “It’s not an issue of how companies should
overcome inertia and created energy,               deal with climate change – it’s about how
economic and social policies, those                to deal with governments not sending clear
policies often conflict with each other            signals on climate change policy,” said Luc
at the municipal, provincial and federal           Robitaille of Holcim (Canada). “It’s hard to
levels. Not only does such conflict                invest in equipment and training if we don’t
place large human resource demands                 know which way the government will move
on companies trying to comply with                 and when.”
multiple and conflicting policies – it also

Canadian Business Sustainability Challenges 2013                                                                                       10

How can companies best engage value chain, industry
and NGO partners to achieve sustainability goals?
Effective collaboration can help accelerate        A number of industry initiatives prove   “It’s not enough for
sustainability across a value chain or             that organizations can partner to
industry. Companies can do everything              address sustainability challenges.       individual companies
possible to improve their environmental            Examples include the Forest              to commit to a life-
and social impacts within their operations,        Stewardship Council and the Marine
but their absolute measure of sustainable          Stewardship Council internationally      cycle perspective.
performance depends upon the actions               and Responsible Care and Canada’s        Those companies need
of suppliers, distributors and all other           Oil Sands Innovation Alliance (COSIA)
members of their value chains. Business            nationally. Established in March 2012,   support from partners
leaders are frustrated at failed or                COSIA represents a public pledge by      up and down the value
nonexistent partnerships with industry             12 of the largest companies operating
peers or environmental organizations:              in the oil sands to actively share       chain to improve the
“Big brands need to share best practices           intellectual property and expertise to   sustainability of their
and solve mutual sustainability problems,”         reduce their industry’s environmental
said Tim Faveri of Tim Hortons. “If                impacts. This includes innovations       products and services.”
other organizations see no value in                related to tailings ponds, water
                                                                                            JohN CoyNe
collaborating – and they’re buying from            management, land reclamation             Vice President, Legal & external
the same suppliers as us – how can we              and greenhouse gas emissions.            Affairs and General Counsel
advance the sustainability agenda?”                                                         UNiLeVeR CANAdA

 Research Topic: Collaboration
  in 2013, NBS will investigate how organizations can engage value chain, industry and NGo partners
  in sustainable goals. With a Guidance Committee consisting of academic experts and Canadian business
  leaders, NBS will find the best research team in the world and lead them through a comprehensive review
  of the leading research on this topic. For more information on how NBS develops authoritative resources
  on the issues that matter to business, read the section “Addressing the Challenges” on page 22.

Canadian Business Sustainability Challenges 2013                                                                               11

How can businesses help Canadians become informed, inspired
and engaged in a national dialogue about sustainability?
Canada lacks a national identity when                                      have a responsibility to provide
it comes to sustainability, and a number                                   sustainable products and services,
                                                                                                                                         “The average consumer
of factors are to blame. There is a lack of                                consumers also have a role to                                 likely doesn’t know what
consumer understanding and engagement:                                     play when it comes to responsible
people are confused about the term                                         consumption,” said Luc Robitaille of
                                                                                                                                         ‘responsible consumption’
“sustainability” and how it relates to them:                               Holcim. As a 2009 report on Socially                          is or how to treat issues
“How do we connect our customers                                           Conscious Consumerism revealed,
to sustainability?” asked John Page of                                     consumers are largely unwilling to buy
                                                                                                                                         like energy holistically.
TELUS. “Most people buy phones based                                       products or services based on their                           They may realize their
on price and features – not on whether                                     environmental or ethical features. It’s
the materials were sourced sustainably                                     unclear whether this disinterest in
                                                                                                                                         car needs gas or their
or the phone can be recycled after use.”                                   sustainable products is a symptom of                          phone battery is dead,
                                                                           a culture obsessed with low price or of
“The average consumer likely doesn’t                                       an inability to link personal behaviour
                                                                                                                                         but they don’t connect
know what ‘responsible consumption’                                        to societal impacts. Regardless of the                        those things to personal
is or how to treat issues like energy                                      cause, the result isn’t encouraging:
holistically,” said Peter MacConnachie of                                  companies can make all the responsible
                                                                                                                                         behaviours or to broader
Suncor Energy. “They may realize their car                                 products they want, but if consumers                          issues such as the full
needs gas or their phone battery is dead,                                  won’t buy them, nothing will change.
but they don’t connect those things to
                                                                                                                                         life-cycle impact of the
personal behaviours or to broader issues                                   There is also a lack of national thought                      product and its use.”
such as the full life-cycle impact of the                                  leadership related to sustainability.
                                                                                                                                         PeTeR MACCoNNAChie
product and its use.”                                                      Although environmental advocate David                         Senior Sustainability issues
                                                                           Suzuki has been voted Canada’s Most                           Management Specialist
There is also a lack of engagement by                                      Trusted Person the last three years in                        SUNCoR eNeRGy
individual Canadians: “While companies                                     a row,3 a single person or organization

3 Reader’s Digest. Most Trusted Canadians: 2011 Trust Poll Results.
  Retrieved from October 16, 2012.

Canadian Business Sustainability Challenges 2013                                                                                                                        12
alone cannot shape the collective                  reform? Can we learn from Unilever’s
identity: At a time when the views of              successful spearheading of the Marine
pop stars and celebrities garner more              Stewardship Council to drive civic
attention and credibility than views of            engagement? How did countries like
scientists and economists, who are                 England establish a national dialogue
thought leaders and what should they               around disposal of nuclear waste in
be saying?                                         the early 2000s? What can we learn
                                                   from the South African Peace and
Canadian companies need help                       Reconciliation Council that ended
establishing a national dialogue on the            apartheid or Canada’s Truth and
issue of sustainability. They envision a           Reconciliation Commission, which is
citizenry aware of and committed to                addressing the issue of Indian Residential
sustainable living. They wonder what we            Schools for First Nations people?
can learn from cities like Guelph, Ontario
or from institutions like the University of        “Canada succeeded in making recycling
British Columbia that have successfully            an accepted norm in the home in the
– and legitimately – branded themselves            late 1990s,” said Debbie Baxter of
as places in which people care about               LoyaltyOne. “What are the tools we can
the environment. What was the catalyst             use and the leaders we can engage to
for British Columbia’s citizens forum on           ignite people’s commitment to cycling,
first-past-the-post voting and electoral           carpooling or responsible consumption?”

 Taking Action: Civic Engagement
  in 2013, NBS will help industry leaders tackle the issue of informing
  and engaging Canadians in the topic of sustainability. With a Guidance
  Committee consisting of academic experts and Canadian business leaders,
  NBS will convene forums and engage global Thought Leaders to establish
  a national dialogue on sustainable business practice. For more information
  on how NBS convenes industry and academic experts, read the section
  “Addressing the Challenges” on page 22.

Canadian Business Sustainability Challenges 2013                                                13

What corporate structures enable companies
to deliver on sustainability goals?
Building sustainability into an organization       can mean very different things to
is no easy task. Sustainability or                 different people. Employees have
                                                                                              “One of our key
Corporate Social Responsibility                    different opinions about how important     challenges is to effectively
(CSR) remains largely siloed in many               sustainability is and struggle to
companies, the responsibility of a                 understand how it applies to their
                                                                                              communicate the
single department or even a single                 roles: “In addition to educating and       company’s vision of
employee. Even when sustainability is              engaging senior executives, we are
more widely integrated into companies’             building sustainability into our product
                                                                                              sustainability such that
business units, communication remains              development,” said David Dougall           everyone, regardless of
a challenge: “One of our key challenges            of Research In Motion. “How do we
is to effectively communicate the                  engage our engineers in sustainability-
                                                                                              their role, understands
company’s vision of sustainability,” said          by-design and help them see how it         and embraces that vision.”
Jane Sadler Richards of LANXESS, “such             strengthens their work?”
                                                                                              JANe SAdLeR RiChARdS
that everyone, regardless of their role,                                                      Butyls Global Specialist,
understands and embraces that vision.”             Even if you reach every employee today     Sustainable development
John Coyne of Unilever Canada agreed:              with your organization’s sustainability    LANxeSS iNC.
“How do you reach the factory workers,             message, your work is not finished.
sales people and marketing people in               Succession and recruitment represent
a 100,000-person organization? It’s an             ongoing challenges to a company-
impressive logistical challenge.”                  wide commitment to sustainability:
                                                   “It’s difficult to maintain the vision
The quest to spread sustainability                 and the momentum for change as
throughout a company is further                    people retire or take new positions, or
complicated by the movement’s                      as we hire new employees,” said Jane
plethora of definitions. Sustainability            Sadler Richards.

Canadian Business Sustainability Challenges 2013                                                                          14
NBS conducted a comprehensive                      Sustainability is challenging for
study on Embedding Sustainability                  companies with a franchise model
in Organizational Culture in 2010.                 because the lines of authority are weaker
The research has been well received                between sustainability leaders and store
by many Canadian organizations                     owners, and opportunities for education
large and small, but the process of                are harder to consistently apply: “The
changing corporate culture does not                vast majority of our 4,000+ restaurants
happen overnight: “It’s difficult to               are owned and managed by franchisees,
move sustainability forward in a large             not corporate headquarters,” said Tim
organization,” agreed Karen Clarke-                Faveri of Tim Hortons. “Working with
Whistler of TD Bank. “It’s not hard to             individual restaurant owners to implement
have a great idea. It’s hard to execute on         sustainability initiatives is paramount.
that idea – especially in a big company.”          What are best practices for doing that?”

Canadian Business Sustainability Challenges 2013                                               15
  5       CHALLENGES

How can companies keep their long-term sustainability
agenda on track despite leadership changes?
CEO tenure is growing increasingly short.                                 because they are perceived as cost          “We often see companies
In 1979, the average tenure of a Fortune                                  centres. In this case, sustainability
500 CEO was eight years. In 2012, the                                     champions find themselves having to         that get new leadership at
average tenure is four years4. The high                                   make the business case repeatedly to        head office. As a result,
turnover of senior leaders dramatically                                   every new leader.
affects a company’s sustainability                                                                                    existing executives have to
program, whose projects often have                                        “In our consulting role, we often see       make the business case
payback periods of many years or                                          companies that get new leadership
even decades. And new leaders can                                         at head office. As a result, existing       for sustainability all over
significantly affect a company’s strategy.                                executives have to make the business        again to the new CEO,
Consider the case of Unilever CEO Paul                                    case for sustainability all over again to
Polman, who is a staunch supporter of                                     the new CEO,” said Matt McCulloch of        or a Canadian company
sustainability. Polman abolished quarterly                                the Pembina Institute. “Or a Canadian       may be a sustainability
financial reporting and told hedge funds                                  company may be a sustainability leader
they weren’t welcome as investors. He                                     domestically but struggle to extend their   leader domestically but
committed to “decoupling” Unilever’s                                      sustainability focus into their sister or   struggle to extend their
growth from its environmental footprint,                                  parent organizations in other countries.”
doubling the company’s revenue by                                                                                     sustainability focus into
2020 while simultaneously halving its                                     Regardless of whether a new leader          their sister or parent
environmental impact.                                                     supports or dismisses sustainability, his
                                                                          or her arrival disrupts an organization’s   organizations in other
New leaders that don’t embrace the                                        current sustainability agenda. What         countries.”
sustainability goals of previous leaders,                                 can companies do to ensure their
however, may choose to eliminate CSR                                      sustainability agenda persists despite      MATT MCCULLoCh
departments or senior sustainability jobs                                 leadership changes?                         director, Consulting Group
                                                                                                                      PeMBiNA iNSTiTUTe

4 Bansal, Tima. “Older CEOs Invest in the Future.” Network for Business Sustainability,
  Retrieved from Oct 1, 2012.

Canadian Business Sustainability Challenges 2013                                                                                                   16

How should companies navigate issues
regarding Aboriginal rights and entitlements?
Canadian companies lack clear                 ecosystems, we learn new things             “Working with First
direction regarding the responsibilities      about forest stewardship we
of companies or governments to                wouldn’t otherwise know.”                   Nations and Metis
Aboriginal communities. While legal                                                       communities that
precedents are being set in court             But many companies are left to
challenges, public policy does not            navigate the issue of Aboriginal            possess generations
necessarily align with those legal            rights and title alone. By building         of wisdom about local
decisions. Policy lags in establishing        a clearer understanding of the
a mutually-beneficial framework on            Aboriginal perspective of sustainability,   ecosystems, we learn
which companies and Aboriginal                companies can build relationships           new things about forest
groups can engage.                            with Aboriginal communities based
                                              on mutual respect and trust. Some           stewardship we wouldn’t
Many businesses experience very               organizations are adopting leading          otherwise know.”
positive interactions with Aboriginal         initiatives such as the Progressive
groups that produce benefits for              Aboriginal Relations program –              ChRiS MCdoNeLL
                                                                                          Manager, Aboriginal and
both parties. For example, in 2001            a voluntary assessment and                  environmental Relations
Tembec was the first Canadian public          certification program that helps            TeMBeC
company to commit to achieving                Canadian businesses build progressive
FSC certification for all its direct          relationships with First Nations and
managed forests. That certification           Aboriginal businesses, communities
involves ongoing consultations and            and people. Such relationships are
positive collaborations with local            not only likely to lead to positive
First Nations communities: “Forestry          engagement within the Aboriginal
is an applied science – you have to           community, they are also likely to
make decisions in the absence of full         reveal new approaches to sustainability
knowledge,” said Chris McDonell of            and stakeholder engagement outside
Tembec. “Working with First Nations           the Aboriginal community.
and Metis communities that possess
generations of wisdom about local

Canadian Business Sustainability Challenges 2013                                                                    17

How can Canadian organizations become
more innovative?
A 2012 report from the Conference                                     and re-imagine their business            “People look to us – the
Board of Canada ranked Canada 14th                                    models. The issue remains,
out of 17 countries for its capacity to                               however, that firms are caught           leaders in sustainability
innovate5. Canadian companies are not                                 between conflicting mandates to          – to identify the next
taking the risks required to generate                                 maintain the status quo and to do
innovations, and it’s not surprising.                                 something new – even as their staff      big thing. We invest
Large companies have investors that                                   and budgets shrink.                      time to determine what
demand quarterly earnings as well
as big brands that represent massive                                  “People look to us – the leaders in      that innovation frontier
investments of time and resources.                                    sustainability – to identify the next    for sustainability in our
That leaves little room for failure and                               big thing” said Debbie Baxter of
few slack resources for experimentation.                              Loyalty One. “At LoyaltyOne, we          company could be.”
In an era of razor-thin margins and                                   invest time to determine what that
                                                                                                               deBBie BAxTeR
just-in-time manufacturing, it’s hard to                              innovation frontier for sustainability   Chief Sustainability officer
justify investing in creative pursuits with                           in our company could be.”                LoyALTyoNe
unguaranteed paybacks.

NBS’s report on Innovating for
Sustainability reveals ways companies
can reduce their impact on the
environment, create positive social
change that’s also good for business,

5 Conference Board of Canada, “How Canada Performs: Innovation Report Card”
  Retrieved from Oct 10, 2012.

Canadian Business Sustainability Challenges 2013                                                                                              18

How can companies embed social license
to operate into their strategy?
Social license to operate refers to           For many business leaders, social         “The challenge for
community members’ tacit willingness          license to operate has changed in
to allow a company to operate in              recent years: “Maintaining a company’s    business leaders
their region. While the term originated       social license to operate used to mean    today is establishing
with the mining sector, social license        engaging stakeholders and consulting
is critical for nearly all businesses.        them on projects that affected them,”     sustainability as ‘the
Maintaining social license is a               said Brenda Goehring of BC Hydro.         way we do business.’
strategic imperative, so sustainability       “Increasingly, however, it means
managers wonder how they can                  generating shared benefits for both the   Sustainability can no
frame sustainability as a way to              company and its affected stakeholders.”   longer be just a ‘nice
manage risk and create efficiencies:
“The challenge for business leaders                                                     to do.’”
today is establishing sustainability as                                                 JohN PAGe
‘the way we do business’,” said John                                                    director, ethics, environment and
Page of TELUS. “Sustainability can                                                      Corporate Social Responsibility
no longer be just a ‘nice to do’.”

Canadian Business Sustainability Challenges 2013                                                                            19

How can business and society prepare
effectively for the impacts of climate change?
The physical impacts of climate change        is a recurrent theme in business    “Climate change is
will redefine entire industries, such as      conversations and is starting to
agri-food, tourism and insurance – not        overlap with other sustainability   a recurrent theme in
to mention the industries that rely on        issues, such as carbon policy,      business conversations
them. What will climate change mean           water quality and sustainable
for companies and for society? Climate        supply chains.”                     and is starting to overlap
change was one of the Leadership                                                  with other sustainability
Council’s first research topics. In           The conversation about climate
2009, NBS studied the risks and               change needs to broaden so          issues, such as carbon
opportunities associated with climate         people see the connection           policy, water quality and
change across major sectors and the           between their day-to-day actions
ways companies could adapt to it (see         and the broader issue. They need    sustainable supply chains.”
NBS’s Climate Change report). But             to understand how choices and
                                                                                  PeTeR MACCoNNAChie
despite widespread acceptance of the          actions today affect the future.    Senior Sustainability issues
reality of climate sciences, the broader                                          Management Specialist
public remains largely unengaged and                                              SUNCoR eNeRGy

apathetic about the issue.

“Climate change – global warming
caused by human-generated
greenhouse gases – is not an isolated
issue,” said Peter MacConnachie. “It

Canadian Business Sustainability Challenges 2013                                                                 20

How can companies respond to the proliferation of
voluntary and mandatory reporting requirements?
From global reporting standards to                 programs to reduce the impacts we           “[Reporting] requires a
industry-specific measures, companies are          do have.”
spending significant time and resources                                                        significant investment
reporting on their sustainability programs.        Many investors and analysts require         of human resources
This is leading to “reporting fatigue” on the      different data to assess companies’
part of organizations. Companies complete          environmental and/or social                 and that time could be
mandatory measurement and reporting for            responsibility. One analyst or index        more effectively used
regulatory bodies on Environmental Health          may focus on ethical business practices,
and Safety issues such as hazardous                another on diversity and yet another on     implementing programs
waste, permits, safety incidents and               environmental performance. Canadian         to reduce the impacts
spills. They may publish their own annual          companies want some kind of simplified
or semi-annual Social Responsibility,              or standardized reporting function          we do have.”
Corporate Responsibility or Sustainability         for sustainability. They want to help
                                                                                               BReNdA GoehRiNG
reports. And many large organizations              investors and analysts ask the right        Corporate Safety,
(and, increasingly, small organizations)           questions about sustainability metrics      health & environment
                                                                                               BC hydRo
report through international, voluntary            that are material. And they ultimately
sustainability standards such as the Global        want to spend more time pursuing
Reporting Initiative, Carbon Disclosure            sustainability activities than measuring
Project, Dow Jones Sustainability Index,           and reporting on them.
Bloomberg, SustainAlytics, FTSE4Good
and Asset4.                                        “We’ve issued eight annual sustainability
                                                   reports to date, but this year we want
“We’re maxed out, trying to report                 to do something different,” said Grete
on everything we do – whether it’s                 Bridgewater of Canadian Pacific. “We
required from a regulatory perspective or          want to understand what investors are
voluntary,” said Brenda Goehring of BC             looking for and deliver what they need.
Hydro. “It requires a significant investment       We’re eager to help educate them
of human resources and that time could             about the questions that are material
be more effectively used implementing              to our business.”

Canadian Business Sustainability Challenges 2013                                                                      21
addressing the challenges
How NBS Will Address the Challenges                               Finding New Ways to Connect
As in past years, the Leadership Council identified               Academia and Industry
the Sustainability Challenges that are most important             2013 marks an opportunity to change the way we do things.
for researchers to study. NBS focuses on two of the               “For the last five years, we have focused on conducting
top challenges every year. For 2013, the Leadership               the world’s most rigorous research on issues that matter
Council selected the second and third challenges to               to business,” said Bansal. “We have an opportunity now
research: Collaboration and Civic Engagement. (The first          to expand our work to include not only research but also
challenge – a lack of clear, effective Public Policy – is still   insights from practice.”
a major gap for Canadian companies, but in 2011 NBS
conducted a comprehensive review of all the academic              Starting with the 2013 Challenges, NBS is committed to
literature on the topic. See the Executive Report. The            building current practices from leading companies into
next step requires action by government.)                         its rigorous research findings. “It takes a few years for
                                                                  academic research to emerge on a given issue,” said Karen
NBS issues a call for proposals to find the best                  Clarke-Whistler of TD Bank. “And in that time, companies
research team in the world capable of addressing the              on the front lines have forged their own paths through trial
Collaboration issue. We will form a guidance committee            and error.”
consisting of Leadership Council members and academic
advisors to ensure the research ends up being both                “Looking in the rearview mirror isn’t going to give us the
scientifically rigorous and relevant to industry. We will         quantum leap forward we need,” agreed Debbie Baxter of
also convene academic and industry thought leaders                LoyaltyOne.
to address the issue of Civic engagement.
                                                                  NBS sees an opportunity to build innovative new models of
                                                                  collaboration between academia and industry. Over the next
                                                                  year, NBS will commit to conducting its backward-looking
                                                                  research more quickly and layering it with more current
                                                                  sources and practices. We will connect industry thought
                                                                  leaders with leading academics interested in solving the
                                                                  same problems. And we will convene peer-to-peer learning
                                                                  workshops in which industry leaders and academics can
                                                                  discuss current practices, in the context of the most recent
                                                                  research. “I like the idea of trying a new, creative model. We
                                                                  have great thinkers at the table,” said Grete Bridgewater.

Canadian Business Sustainability Challenges 2013                                                                            22
“The change in NBS’s research process is symptomatic      Going Forward: how Business Leaders Can
of the overall mood of business leaders today,” said      Address the 2013 Challenges
Professor Bansal. “They are tired of making incremental   • Raise awareness of these Challenges by sharing

steps forward and are hungry for major change. I’m          the report with peers and with members of your
excited about the possibilities of what academic and        professional associations and industry associations.
industry thought leaders can achieve together.”           • Embrace a mindset shift. Continue picking the “low-

                                                            hanging fruit” that remains in your organization to
Going Forward: how Researchers Can Address                  reduce your environmental impacts. But know that,
the 2013 Challenges                                         to become truly sustainable, companies of the future
• Research. Share these Challenges with colleagues          will aim not to minimize their harm on people and the
  in management and related disciplines (engineering,       environment but to create positive societal impact.
                                                          • Seek out credible resources to inform your decision-
  psychology, etc.). Investigate any of the current
  or past Challenges in your own research. Share            making and organizational planning. Build partnerships
  the Challenges with students looking for research         with academic experts and their institutions.
                                                          • Commit to taking risks and fostering innovation
  questions. Contact NBS if you are conducting
  research in the area of these Sustainability              in your organization.
                                                          • Seek out examples of other leaders, and tell their
  Challenges (
• education. Raise these Sustainability Challenges          stories and yours to employees, customers and
  in classroom discussions. Invite business leaders         peers so others can learn from them.
                                                          • Fund a research project through NBS.
  to speak to classes on how these Challenges affect
  their organizations and how they are addressing
  them. Consider building the 2013 and past
  Sustainability Challenges into curriculum design
  and sharing them with colleagues and administrators
  who can do the same.

Canadian Business Sustainability Challenges 2013                                                                 23
about the network for business sustainability
A Canadian non-profit, the Network for Business                      NBS is funded by the Social Sciences and Humanities
Sustainability produces authoritative resources                      Research Council of Canada, the Richard Ivey School
on important sustainability issues with the goal of                  of Business (at Western University), the Université du
changing management practice. We unite thousands                     Québec à Montréal, our Leadership Council, Industry
of researchers and business leaders worldwide who                    Association Council and SME (small and medium
believe passionately in research-based practice and                  enterprise) Council.
practice-based research.

This report was funded in part by the Social Sciences and Humanities Research Council of Canada

About NBS’s Leadership Council
NBS’s Leadership Council is a group of Canadian sustainability leaders representing diverse sectors. At an
annual meeting, these leaders identify their top priorities in business sustainability – the issues on which
their organizations need authoritative answers and reliable insights. Their sustainability priorities inform NBS
research projects.

Canadian Business Sustainability Challenges 2013                                                                              24
Thanks to Deloitte
This report was produced and distributed with the help of Deloitte. Deloitte has a strong and growing global
Sustainability practice, with more than 800 partners and professionals from more than 50 countries across the
globe. For more than a decade, Deloitte’s Sustainability team applies its unique integrated systems approach
across the areas of governance, workplace, workforce, supply chain, operations, products and information
technology to help organizations make the connection between sustainability and economic performance.
They draw on the extensive experience of their risk management, consulting, financial advisory, tax and audit
professionals to drive a client-centric approach to protecting and creating economic, environmental and social
value. Their approach is built on deep knowledge of industries and sectors, focused technical credentials, and
a broad complement of time-tested methods and capabilities.

About Deloitte (                                             Deloitte refers to one or more of Deloitte Touche
Deloitte, one of Canada’s leading professional services                      Tohmatsu Limited, a UK private company limited by
firms, provides audit, tax, consulting, and financial                        guarantee, and its network of member firms, each
advisory services. Deloitte LLP, an Ontario limited                          of which is a legally separate and independent entity.
liability partnership, is the Canadian member firm of                        Please see for a detailed
Deloitte Touche Tohmatsu Limited. Deloitte operates                          description of the legal structure of Deloitte Touche
in Quebec as Deloitte s.e.n.c.r.l., a Quebec limited                         Tohmatsu Limited and its member firms.
liability partnership.

The information contained herein is not intended to substitute for competent professional advice.

Canadian Business Sustainability Challenges 2013                                                                                      25
Appendix A: Past Challenges
Challenges from 2008 to 2012
NBS started identifying Canadian companies’ sustainability challenges in 2008. To date, our Leadership Council
has identified 43 Challenges; the Challenges have been mostly internally focused (72 per cent) (i.e. focused on their
organizations rather than on society), and the majority have focused on how to implement sustainability (63 per cent)
as opposed to how to define sustainability and its importance or how to measure it.

Since 2008, NBS has investigated the two (or three, in 2010) Challenges every year that the companies identified as
being most important and that represented questions academia could answer. These investigations spawned valuable
reports, webinars, workshops, presentations and planning exercises for business leaders and sustainability managers
worldwide. To date, NBS has researched the following issues.

2012                                                            2. How companies can build a durable, enduring corporate
1. How sustainability can drive innovation (and vice-versa)        culture of sustainability. Executive Report
   within companies. Executive Report                           3. How to promote and ensure sustainability within supply
2. How companies can mobilize citizens to take                     chains. Executive Report
   more sustainable actions – i.e. to create social change.
   Executive Report                                             2009
                                                                1. Building adaptation to climate change into business
2011                                                               strategy. Executive Report
1. The outcome-based government policies that effectively       2. Determining whether consumers consider social
   address sustainability issues.                                  or environmental attributes when making purchases.
   Executive Report                                                Executive Report
2. How individuals make decisions regarding social and
   environmental issues. Executive Report                       2008
                                                                1. Tools to help managers make the business case
2010                                                               for sustainability. Executive Report
1. How to measure and value a firm’s ecological impacts (e.g.   2. Best practices for community engagement.
   ecological footprint). Executive Report                         Executive Report

Canadian Business Sustainability Challenges 2013                                                                        26
Appendix B: Progress Report on 2012 Projects
In 2012, NBS conducted “systematic reviews” of the two most important Challenges: Innovating for Sustainability
and How Business Can Drive Social Change. Systematic reviews are comprehensive literature reviews that
synthesize the existing body of research. First popularized in evidenced-based medicine, systematic reviews
observe a rigorous methodology designed to eliminate researcher bias and promote transparency and replicability.

The final reports for the Innovation and Social Change systematic reviews are available in Fall 2012 and Winter
2013, respectively. They will be complemented by a series of executive reports, workshops, webinars, slide decks
and other resources for managers. NBS also continues to scour management journals for new research on each of
the past Challenges, layering these updates onto the systematic review findings and disseminating them bi-weekly
to our more than 3,000 subscribers.

Canadian Business Sustainability Challenges 2013                                                                   27
Network for Business Sustainability                           Réseau entreprise et développement durable
c/o Richard Ivey School of Business                           École des Sciences de la Gestion
Western University                                            Université du Québec à Montréal
1151 Richmond Street
London, Ontario, Canada N6A 3K7
                                                              1290, rue Saint-Denis
                                                              Montréal, Québec, Canada H2X 3J7
519-661-2111, x88980                                          514-987-3000, x7898                

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