THE THREE PILLARS OF SUSTAINABILITY AND YOUR INNOVATIVE GROWTH

Insights by Paola Fiore, 22 May 2012 - SDA Bocconi

The Bocconi ETHICA CLUB and ETICAMBIENTE

THE THREE PILLARS OF SUSTAINABILITY

Commonly, we recognize three Pillars of Sustainability: Society, Ecology and Economy. Although, there is also a fourth pillar to consider: Government.
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SOCIETAL SUSTAINABILITY

Societal Sustainability is concerned with the well being of current people, but also future generations. Though common reference to Societal Sustainability is the "seventh generation" stewardship, which requires that in all actions we consider the needs of the next seven generations, not just our own generations needs. It also includes the need to incorporate sustainable practices into cultural norms in order for the society to persist.

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ECOLOGICAL SUSTAINABILITY

Ecological sustainability is concerned with the health of the natural environment, the conservation of natural resources, and the preservation of ecosystem functions performed by individual members and the ecosystem as a whole. It requires that use of natural resources not exceed the capacity of an ecosystem to regenerate them, known as the carrying capacity.

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ECONOMIC SUSTAINABILITY (1/5)

Economic Sustainability uses the construct known as the Triple Bottom Line (TBL), or Three Ps (Prot, People, Planet) as opposed to the traditional "Bottom Line", which only concerns itself with monetary success. The Triple Bottom Line considers economic protability compared to environmental harm or to societal harm.

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ECONOMIC SUSTAINABILITY (2/5)

The TBL is an accounting framework that incorporates the three dimensions of performance: Social, Environmental and Economic (Sustainability Reporting). The TBL differs from other traditional reporting frameworks as it includes ecological (or environmental) and social measures that can be difcult to assign appropriate means of measurement.

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ECONOMIC SUSTAINABILITY (3/5)

Economic Measures: Economic variables ought to be variables that deal with the Bottom Line and the ow of money. It could look at income or expenditures, taxes, business climate factors, employment, and business diversity factors.

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ECONOMIC SUSTAINABILITY (4/5)

Environmental Measures: Environmental variables should represent measurements of natural resources and reect potential inuences to its viability. It could incorporate air and water quality, energy consumption, natural resources, solid and toxic waste and land use/land cover. Having long-range trends available for each of the environmental variables would help us identify the impacts a project or policy would have on the area.

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ECONOMIC SUSTAINABILITY (5/5)

Social Measures: Social variables refer to social dimensions of a community or region and could include measurements of education, equity and access to social resources, health and well-being, quality of life and social capital.

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GOVERNMENTAL SUSTAINABILITY

Governmental Sustainability primarily pushes for legislation that furthers the other three components of Sustainability, acting as a steward of common resources and the public well being for many generations, not only the present constituents.

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SUSTAINABILITY A STRATEGIC ISSUE (1/4)

Sustainability help us see relationships between issues and more accurately forecast what may occur in the future. Sustainability examines our world as a whole system, revealing threats and opportunities. It forces us to see relationships between social, economic and environmental trends.

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SUSTAINABILITY A STRATEGIC ISSUE (2/4)

Sustainability challenges us to make decisions that can improve the economy, the community and the environment. This challenge may seem far outside the scope of business responsibility. Why should business examine its impacts on such issues? ...In a global and connected world, what happens elsewhere can affect us...

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SUSTAINABILITY A STRATEGIC ISSUE (3/4)

1) 2) Why Sustainability is drawing so much attention? Transformative worldwide trends; Sustainability is a natural extension of other organizational changes; Natural resources are now a limiting factor; Environmental issues are becoming global;

3) 4)

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SUSTAINABILITY A STRATEGIC ISSUE (4/4)

5) 6) Health concerns are rising; Social, environmental and economic factors are creating instability; Energy supply is a signicant threat; These problems are uncovering new opportunities; and, Sustainability tends to produce multiple, unintended benets.

7) 8)

9)

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THE BENEFITS OF SUSTAINABILITY (1/2)

1) 2) 3) 4) 5) Here are some of the benets we should expect when we embrace Sustainability: Reduce energy, waste and costs; Differentiate ourself and our organization; Sidestep future laws and regulations; Create innovative new products or processes; Open new markets;

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THE BENEFITS OF SUSTAINABILITY (2/2)

6) 7) Attract and retain the best employees; Improve our companys image with stakeholders and the public; Reduce legal risk and insurance costs; Provide a higher quality of life and work.

8) 9)

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THE THREATS OF SUSTAINABILITY (1/2)

1) 2) Here are some of the threats we should expect if we dont embrace Sustainability: Liability for pollutants; Supply problems with raw materials and energy; Attacks on our companys image;

3)

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THE THREATS OF SUSTAINABILITY (2/2)

4) 5) 6) Legal risks; Bad-mouthing of our product; Being closed out of certain markets. There are risks in pursuing Sustainability, more easily manageable than those of non pursuing it: 1) Greenwashing, 2) Cannibalizing our own business (make obsolete core product/service), 3) Raising unrealistic expectations.

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A CASE STUDY OF

ENVIRONMENTAL SUSTAINABILITY ENVIRONMENTAL SUSTAINABILITY IN THE RAILWAY TECHNOLOGY: THE BOMBARDIER MODEL

Bombardier is among the top worlds manufacturers of planes and trains. It is evolving mobility worldwide to make easier and more sustainable for people to connect with one another. Bombardier is present in more than 60 countries, with 76 production and engineering sites; 70,000 employees, headquarter in Montral, Canada. Its shares are traded on the Toronto Stock Exchange (BBD); it is listed on the Dow Jones Sustainability World and North America Indexes.

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A CASE STUDY OF

ENVIRONMENTAL SUSTAINABILITY ENVIRONMENTAL SUSTAINABILITY IN THE RAILWAY TECHNOLOGY: THE BOMBARDIER MODEL

Bombardier created its new Corporate Strategy in 2009, called Our Way Forward; the strategy set ve strategic, business priorities: 1) Enhance Execution Discipline; 2) Improve Global Talent Management; 3) Active Risk Management; 4) More Local Roots; and 5) Greater CSR.

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A CASE STUDY OF

ENVIRONMENTAL SUSTAINABILITY ENVIRONMENTAL SUSTAINABILITY IN THE RAILWAY TECHNOLOGY: THE BOMBARDIER MODEL

I. II. III. Bombardiers approach to Corporate Governance aims to: Promoting ethical behaviour (Code of Ethics and Business Conduct); Strengthening its governance (Board of Directors elected every year); Improving Risk Management (Finance and Risk Management Committee; Director of Ethics and Compliance);

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A CASE STUDY OF

ENVIRONMENTAL SUSTAINABILITY ENVIRONMENTAL SUSTAINABILITY IN THE RAILWAY TECHNOLOGY: THE BOMBARDIER MODEL
IV. Moving forward CSR Governance [Strategic approach to CSR is an integral part of the Corporate Strategy Our Way Forward; new CSR governance structure including a more effective CSR Committee with broader expertise; initiatives to improve CSR performance in four key areas such as 1) Community Investment, 2) Stakeholder Engagement, 3) Employee Volunteering, 4) CSR Reporting & Communication; specic allocated resources to implement CSR approved initiatives].

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A CASE STUDY OF

ENVIRONMENTAL SUSTAINABILITY ENVIRONMENTAL SUSTAINABILITY IN THE RAILWAY TECHNOLOGY: THE BOMBARDIER MODEL

I. Bombardier created its own Product Responsibility Strategy: Making mass transit even more sustainable (launching the ECO4 suite of customizable solutions in September 2008; ECO4 technologies built on the pillars of energy, efciency, ecology and economy; reducing overall energy consumption by up to 50%, minimize CO2 emissions, improve total train performance and decrease operating costs);

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A CASE STUDY OF

ENVIRONMENTAL SUSTAINABILITY ENVIRONMENTAL SUSTAINABILITY IN THE RAILWAY TECHNOLOGY: THE BOMBARDIER MODEL
II. Designing with the Environment in mind [HSE Policy incorporated in guiding principle of designing products with minimal environmental impact; Product Responsibility Strategy included three cornerstones for advancing sustainable mobility:1) Design for Environment (DfE) Program, 2) Life Cycle Assessments (LCAs), and 3) Environmental Product Declarations (EPDs)...;

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A CASE STUDY OF

ENVIRONMENTAL SUSTAINABILITY ENVIRONMENTAL SUSTAINABILITY IN THE RAILWAY TECHNOLOGY: THE BOMBARDIER MODEL

II.

...; LCAs also guided in minimizing products environmental lifecycle impacts and form the basis of EPDs; EPDs summarized a products environmental impact, set a baseline for further product-related environmental improvements and enhanced environmental reporting];

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A CASE STUDY OF

ENVIRONMENTAL SUSTAINABILITY ENVIRONMENTAL SUSTAINABILITY IN THE RAILWAY TECHNOLOGY: THE BOMBARDIER MODEL
III. Tackling aviation emissions (effectively address business aviations climate change impact in a global industry-wide solution);

IV. Fuelling Environmentally Focused Innovations (developing greener technologies, aircraft, operations and aviation infrastructures); V. Expanding Carbon Offset Program (Carbon Offset Program that allow operators to offset aircraft emissions by funding projects worldwide to reduce an equal amount of CO2 emissions).

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A CASE STUDY OF

ENVIRONMENTAL SUSTAINABILITY ENVIRONMENTAL SUSTAINABILITY IN THE RAILWAY TECHNOLOGY: THE BOMBARDIER MODEL

I. Bombardier ne-tuned its own Sustainability Operations: Managing energy and carbon more effectively (launched a global energy and carbon assessment of operations + inventory of energy sources and GHG emissions at 85 sites; identied facilities with the greatest opportunities for energy-efciency improvements and GHG emission reductions; developed a more comprehensive Energy and Carbon Management Strategy - ECMS to help reach new targets);

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A CASE STUDY OF

ENVIRONMENTAL SUSTAINABILITY ENVIRONMENTAL SUSTAINABILITY IN THE RAILWAY TECHNOLOGY: THE BOMBARDIER MODEL

II.

Drawing Down Carbon Footprint (signed the Copenhagen Communiqu as a lead-up to the UN Climate change Conference for a global deal on Climate Change; reduced operations carbon footprint through energy-efciency programs, process modications and renewable energy sources);

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A CASE STUDY OF

ENVIRONMENTAL SUSTAINABILITY ENVIRONMENTAL SUSTAINABILITY IN THE RAILWAY TECHNOLOGY: THE BOMBARDIER MODEL
III. Energy Efciency and Process Modications (developed initiatives to meet companys global reduction objectives and targets; modications to processes enabled achieve sizeable reductions in GHG emissions and energy consumption);

IV. Renewable Energy Sources (used signicant renewable hydro-electricity in major manufacturing sites in Qubeq, Canada; more comprehensive understanding of sites green energy use worldwide);

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A CASE STUDY OF

ENVIRONMENTAL SUSTAINABILITY ENVIRONMENTAL SUSTAINABILITY IN THE RAILWAY TECHNOLOGY: THE BOMBARDIER MODEL
V. Improving HSE Data [enhanced accuracy and integrity of HSE data; used a leading HSE Information Management System to provide greater data quality, integrity and traceability for Sustainability Reporting purposes; added three new environmental indicators to monitor HSE performance such as 1) waste valorization index, 2) use of volatile organic compounds - VOCs, and 3) number of environmental incidents].

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A CASE STUDY OF

ENVIRONMENTAL SUSTAINABILITY ENVIRONMENTAL SUSTAINABILITY IN THE RAILWAY TECHNOLOGY: THE BOMBARDIER MODEL

I. Bombardier integrated Sustainability into its own Supply Chain: Encouraging High Ethical Standards (Supplier Code of Conduct; Supplier Evaluation and Approval Process; Compliance programs and external audits within the framework of the Association of the European Rail Industry - UNIFE to harmonize efforts in this area);

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A CASE STUDY OF

ENVIRONMENTAL SUSTAINABILITY ENVIRONMENTAL SUSTAINABILITY IN THE RAILWAY TECHNOLOGY: THE BOMBARDIER MODEL
II. Engaging Suppliers in Sustainable Design (involved suppliers in DfE and LCA processes to inuence supplier decisions and reduce companys products environmental lifecycle footprint; encouraged suppliers to select materials and processes that enhance companys products end-of-life recyclability; joint research and development activities with suppliers yield technologies to further improve companys products environmental performance);

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A CASE STUDY OF

ENVIRONMENTAL SUSTAINABILITY ENVIRONMENTAL SUSTAINABILITY IN THE RAILWAY TECHNOLOGY: THE BOMBARDIER MODEL
III. Improving Supply Chain Performance (implemented programs to systematically measure and manage supplier performance; improved productivity and quality, removed non-value activities, integrated processes and implemented lean techniques; programs included a rigorous selection process to verify compliance about supplier quality and qualications);

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A CASE STUDY OF

ENVIRONMENTAL SUSTAINABILITY ENVIRONMENTAL SUSTAINABILITY IN THE RAILWAY TECHNOLOGY: THE BOMBARDIER MODEL
IV. Communicating with Suppliers (Supplier Communication Plan to foster longterm strategic alliances with key suppliers and improved supply chain performance; supplier advisory and technical boards to facilitate collaboration on market strategies, technology roadmaps and business continuity; supplier forums to engage suppliers in discussions on key market issues, ensuring a common understanding of challenges and strategies; launched the Bombardier Suppliers Advisory Board in 2007).

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A CASE STUDY OF

ENVIRONMENTAL SUSTAINABILITY ENVIRONMENTAL SUSTAINABILITY IN THE RAILWAY TECHNOLOGY: THE BOMBARDIER MODEL

I. Bombardier promoted the Global Compacts 10 Principles: Encouraging High Ethical Standards (Human Rights, Labour Standards, Environment, Anti-Corruption);

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A CASE STUDY OF

ENVIRONMENTAL SUSTAINABILITY

THE BOMBARDIER MODEL: CONCLUSIONS

Bombardier created its own model for economic sustainability and consumption of products, pursuing the objectives of: 1) 2) 3) 4) Energy savings; Improved efciency; Achieving a reasonable economic value; and Protecting the environment.

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USEFUL LINK ON SUSTAINABILITY

2012 Global 100 Most Sustainable Companies: The Full List. The Global 100: World Leaders in Clean Capitalism: http://www.global100.org/ The Global 100 is the most extensive datadriven corporate sustainability assessment in existence, and inclusion is limited to a select group of the top 100 large-cap companies in the world. Launched in 2005, the annual Global 100 is announced each year during the World Economic Forum in Davos.
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THE THREE PILLARS OF SUSTAINABILITY AND YOUR INNOVATIVE GROWTH

Insights by Paola Fiore, 22 May 2012 - SDA Bocconi

The Bocconi ETHICA CLUB and ETICAMBIENTE