Roundtable II: The Business Case for Pursuing Sustainability Strategies

On this panel:

• Björn Stigson — President, World Business Council for Sustainable Development
• Ahmet Dördüncü — CEO, Hacý Ömer Sabancý Holding A.S.
• Pierre L. Gauthier — President and CEO, ALSTOM U.S. Inc.
• S. Gopalakrishnan — Chief Executive Officer and Managing Director, Infosys Technologies Limited
• James H. Quigley — CEO, Deloitte Touche Tohmatsu

Björn Stigson: We're looking at an enormous growth story -- 50% more people by 2050. Most will live in developing countries -- about 85%. At the same time, this world will be urbanized. This means a tremendous demand for societal infrastructure. This drive for infrastructure means we'll focus on improving quality of live, which uses more resources and energy. Over the next few decades, the question will be if we have the capability to build a sustainable world -- where will we invest?

Pierre Gauthier:  We're pursuing sustainable strategies as a supplier of technology. Efficiency -- it's good for our customers, it's good for our products and we get a competitive edge. We also develop new products to solve our customers' issues or to become more sustainable.

Björn Stigson: Are you comfortable that we'll be able to create a sustainable energy solution?

Pierre Gauthier: We and our competitors always look to the future. People have worked for different extents to prepare for the upcoming situation. It's still too early on some of these technologies to find if they're economically and technologically viable. The big issue is the pseed of the change and how quickly the supply change can adapt.

S. Gopalakrishnan: We've reduced consumption across the board -- reducing use of resources reduces the cost and does good. We also need to create products and partner with our customers to osee how we can provide intelligence. How do your own employees feel about where they work? The new workforce generation is looking to work in a company seen as a good corporate citizen. Many of our initiatives are driven by the younger employees. It makes sense for us to attract the best and the brightest.

Björn Stigson: Do you see the business case as being different because you're in a developing country?

S. Gopalakrishnan: No, we're a global company and we operate globally. Our approach might be slightly different, but the business case is global.

Björn Stigson: You're a bridge between the developing world and the developed world.

Ahmet Dördüncü: Turkey is a growing country, and we're going to continue to grow. Our energy demand will be increasing by about 7 % every year. We need to invest in energy with a smart energy portfolio -- renewable energy is a big part of that. Sustainability has a broader meaning than just environmental effects -- it's the shareholder value, for example. We want to see profitability on a long-term basis. So the economical viability is a pillar, a low-carbon economy is another, and social responsibility is a third. We would like to have not just the market share, but the mindshare and the heartshare of our customers.

Björn Stigson: You have lots of huge customers who consume a lot of energy. Where is business on this issue?

James Quigley: You can think this doesn't apply to you if you don't produce industrial goods, but that's too narrow. We're committed to this. I went to a conference with CEOs from northern Europe, and they all said their customers were very interested in sustainable products. Figuring out how to associate sustainability with products is imoprtant. As you try for customer loyalty, being a good corporate citizen is essential. How is your brand perceived? Competing for talent: be a business young people want to work for by being socially responsible. 

Björn Stigson: The younger generation wants to know how sustainable a company is when they're job-hunting. 

James Quigley: How long has that been so? I think it's only a short period of time and we may be getting to a tipping point brought about by viral communication through social media. Young people are empowered with information and they want to act.

Björn Stigson: The World Business Council was started in 1991 with 50 leaders. We seem to be at a tipping point -- I'd say we've passed it. You all are the frontrunners -- are you the minority or the majority?

Pierre Gauthier: The whole industry recognizes this, because it's key to our future. We have to start early, but there's a wide variation from country to country. There's been a run at new power production for desalination plants. The whole world will need substantial amounts of more power in the near future. But it's possible to diminish or at least not increase emissions. With policy and technology, you can make these changes. We're seeing right now a lot of willingness across the board with sub-nationals -- California, northeastern states, some cities -- moving faster than countries themselves. There's a better understanding and a willingness to do whatever's possible.

Björn Stigson: Does the developing world understand this?

Ahmet Dördüncü: Yes, awareness is already there. NGOs are using their roles to foster ideasof sustainability. But there are times when companies are shortsighted, especially in an economic crisis. People stop thinking about long-term visionsand targets -- this is aconstraint on us. Whatwe need is an environment that's more foreseeable and less volatile to get companies looking in the right direction.

S. Gopalakrishnan: Large businesses understand this. But small, domestic-focused companies aren't focused in this. Awareness has to be built in the majority of us -- there are hundreds and thousands of small companies. It will take education and mayve some regulation.

Björn Stigson: Do you have a role in that?

S. Gopalakrishnan: Yes, in our interactoins we work with a lot of supplier companies. I think we're starting to have an influence.

Björn Stigson:  Shareholders would be hesitant to say that we're actually serious about this. Are we doing enough to tell this story?

James Quigley: We're on a journey, and we need to accept that. The direction we're moving is as important as where we are, and this is becoming pervasive in business dialogue because of social media -- it's empowering customers and employees. But not everyone is acting in a consistent way, because not everyone sees the business case the same way. This is why we need global standards and consistent transparency and accountability. Copenhagen will be a step forward. Implementing ambitions and expectations -- global standards will make a difference and move the business commnity forward more consistently. It's politically correct to say these words and then issue a corporate social responsibility report, but are we really taking action to create sustainability? We have a fine line to walk, because we need old-fashioned profits as part of sustainability. But business leaders are stepping up to the plate.

Björn Stigson: How do we define the borders of responsibility in a supply chain? What do you report and what responsibility do you have for your customers? We've talked about the positive aspects of the business case. What's the main barrier holding you back?

Ahmet Dördüncü: The classic answer would be the regularoty environment, but I don't want cheap excuses. We can influence anything. It's a corporation leadership problem. If we want to change something, we can.  Relying on regulatory excuses is wrong.

Björn Stigson: What do your customers say when they decide not to buy sustainably from you?

James Quigley: We're competing in global markets, and one reason this is inconsistent is because business leaders see the case for sustainability differently. Some think I can't afford not to act in a visible way, because my consumers and employees want it, but others think I can't afford to act. That's the challenge we're wrestling with right now, until we come to a consistent view of what it costs to have meaningful standards.

Pierre Gauthier: Some of our custormers are large energy consumers. They want to know if the rules apply to everyone. As long as everyone has the same rules to abide by, that works out.What are the clear rules for the future. Billions of dollars of investment, and nobody will commit until they know what the rules will be like in five or ten years.

S. Gopalakrishnan: These are global challenges and global action is required. It has to be based on national participation. We can agree on certain standards and norms and rules. Then we need to influence the policymakers to make sure that major countries make these regulations transparent. Unless that happens, you will not see a majority of comanies do this. We need national rules and regulations.

Björn Stigson: We've talked a lot about energy, but let's move to sustainability as it relates to water. For India, is water a bigger problem than energy?

S. Gopalakrishnan. Yes, those are some of the challenges we're faced with. How do you go forward in a coordinated manner? For 700 million people in India, getting access to water and education for their children is the number one priority. It's all related in a c lose loop. The government can focus on some of these issues -- policy, water, education, so climate change is a lower priority.

Ahmet Dördüncü: In Turkey, water shortage has many different impacts. Turkey is dependent on water as an energy source. From an energy point of view and a cultural point of view, water is important. When we have a water problem, it means our neighboring countries have a water problem as well, and that leads to conflict. So becoming sustainable is important. Waste water treatment is also important in the middle east

Björn Stigson: Many people don't understand how water affects renewable energy -- nuclear, solar, etc. Shell pumps more water than it pumps oil, and the need for water is increasing as we pump deeper. Business should see the risk aspect of this. Scarcity means that the government would give water to the population first and business second -- efficient use of water is a critical risk issue.

James Quigley: The regulatory frame is important. We live and compete in global markets, but the regulatory frame is always national. The ability to come together and create a global framework is a significant need for sustainability, but it's broader than that as well.

Ahmet Dördüncü: I"m a little more positive on this. We know the problems, and the world is aware of where we're heading if we don't do this. But that doesn't mean it is easy. Overcoming obstacles is difficult -- Copenhagen is an enormous opportunity. I want to believe that we're all smart people -- pretty much everythingis there, so why not proceed and do it?

S. Gopalakrishnan: Normally I'm very optimistic but in this case my concern is will we act quickly enough? Will ew cross into catastrophe? Weill we decide and afee on certain norms and standards before it becomes too late? That's where I have vconrens, because we have so manyt other priorities.

Pierre Gauthier: If you believe the scientific comiunity -- and we do- - failure is not an option. We have to step up to the plate and play a more important role. We willb e getitng involved very deeply in Copenhagen so there's some sort of an agreement., The worst thing that can happen is nothing.

James Qigley: I'm an optimist. I believe in the ingenuity of the human spirit -- necessity is the mother of invention.  We have to do lots of things -- I'm optimistic because there's growing awareness and its' becoming pervasive thatks to social media. As behavior changes, we'll start to liveour lives with sustainability as a princile, and we as infdividual consumers, businesses, policyt leaters, etc. have this realizatino tha twe need to act, and we're going to act.

Björn Stigson: Business cannot succeed in a society that fails. Governments cannot sort this out on their own -- we have to create a well-functioning partnership between governments and businesses. But we often don't have good interactions. I hear governments saying we can't succeed without business, and then have closed-door negotiations. If you want solutions, we have to come together. Is there sufficient interaction right now?

 Ahmet Dördüncü: This is not a problem of the private sector, it's a problem for all of us. We need to have a strong dialogue. We have the same experiences -- the government asks a lot of opinions, and theyt get informations, but afterwards things come out that aren't what you're telling them. There's no other way around it -- we have to work with government and convince them that what we think is good for society.

S. Gopalakrishnan: I have concerns. In a democracy, the priorities are set differently. They may not have the same priorities.

Pierre Gauthier: There's a big need for education. Knowledge is important -- you need to educate on the science and the possibilities and correct information that is not correct and being carried around. We have a very srtong role to play in making sure our elected officials know what's important.

James Quigley: It's important that we have a public-private partnership to move the needle.

Björn Stigson: Business is willing to play a part, but we need a strong partner.

Coming up: an exclusive Q & A session with Council on Competitiveness President Deborah Wince-Smith on Newsweek's green rankings, out this week.

— Sarah Spooner

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