Good evening everyone
Thank you to Narelle Kennedy and the Australian Business Foundation who have
invited me here this evening and given me the opportunity to support and comment
on the very important piece of research.
This research is a substantive piece, which adds considerably to the current
Australian work on sustainability practice; it looks not just to the “why”, but very
importantly, to the “how” and “what” of successful sustainable development practice
in Australian companies.
I would like to congratulate the Australian Business Foundation for taking the
leadership that was required to fill this gap, in assisting their constituencies and the
broader business community to understand the fundamental nature of sustainable
development practice – which for me translates quite simply into sustainable
business practice through leadership.
Sustainable Development and Business Success - Reaching Beyond the
Rhetoric to Superior Performance differs considerably from most of the current
literature on sustainable business practice in that it resists the temptation to merely
report a list of individual projects or case studies that demonstrate outcomes – we
have all read them.
This study looks seriously at the processes that will lead companies to achieve
successful outcomes. It answers the questions that I love to ask: So what………?
What happened? How did it happen? How did you achieve it? What had to change?
I would like to acknowledge the work of Suzy Goldsmith and Professor Danny
Samson from the Foundation for Sustainable Economic Development at the
University of Melbourne.
It does achieve the very important task of unpacking the rhetoric of sustainability that
has led many Australian companies to think that:

• Sustainable Development is just too difficult to understand,
• I will have to hire a consultant to help me understand this new field of businessmanagement - too expensive!
• It’s probably going to cost me more money than the board and my shareholderswant me to spend with no quantifiable benefit.
• I’m going to need another whole department of techno-boffins!
• Why can’t my corporate affairs division pick this up?

This evening I would like to take just a few moments to look at some specific things
that stood out for me in this research – that I think will be particularly helpful to
companies no matter where they are on the journey to sustainability.
They are:

• Holistic approach – models that are very helpful for big picture diagnosis
• Stakeholder dialogue – essential building block to establish relevance andpriority.
• Motivation for and importance of sustainability orientation.

I would like to however challenge continued thinking on the importance of this third
point – my challenge goes not to the substance or merits of the point but rather the

emphasis that I now place on organisational culture as perhaps the single most
enabling piece of the jigsaw puzzle.
Finally I will close with some observations about GRI and TBL reporting.

Holistic approach
I think the research outlines several very useful models that clearly demonstrate the
complexity of sustainable development as business practices. Like the complex
conversations that companies must participate in with their stakeholders – the
responses required by companies is also extremely complex.
These models specifically address the issue of why companies can’t leave
sustainable development to their corporate affairs departments, but need to develop
deep embedded internal business processes to achieve success as opposed to deep
embedded communication processes.
This is not to say that your corporate affairs department can’t be the ‘home’ for
programmatic direction on sustainability issues, but delivery must be at the business
unit level where managers are accountable for the business transformation and
outcomes.
In particular the models that illustrate and discuss the sustainability orientation of an
organisation, and the link between SD practices to strategy are very important.
I would like to draw the following analogy that I think supports these models and
demonstrates the interdependence for mutual survival. Sustainability orientation is
the heart of the organisation and the strategy is the mind of the organisation.
This work supports for me what has been obvious about successful companies - that
the commitment by both the hearts and minds of an organisation is crucial to
success. In my experience – the many companies in Australia and internationally
having only one part of the organisation involved - the heart or the mind - just does
not lead to long-term success.
All too often we have seen where the mind of the organisation may have been
focused on a sustainable business practice – for example environmental
management – but the mind of the organisation was not connected.
An example of this is Enron. Enron had some of the best practices for a utilities
company in regard to ESD – however the heart of the company, as demonstrated by
their leadership, were not based in integrity or a principled approach to either
regulatory authorities or their shareholders.
Their hearts and in some cases parts of their minds were short term focused.
Sustainable business practice requires long term hearts and minds of an
organisation. A piecemeal approach can only lead to a short-term transformation.

Stakeholder Empowerment –
The discussion on stakeholder empowerment and breadth of vision in Chapter 3 is
particularly helpful.
This chapter discusses in a meaningful way the difference between the conversation
(which is merely an exchange of language and some ideas) and stakeholder
engagement, which shares the power, and influence between parties. As
sustainable development practices have evolved many companies have mistaken
stakeholder dialogue for stakeholder engagement.
To an extent this is illustrated by the example used on page 41, that in 2000 the
World Business Council for Sustainable Development had a “stakeholder salience”
screening approach to prioritising stakeholder concerns.
The extent of positive transformation a company might experience through
stakeholder engagement is no longer directly correlated to the power of the
stakeholder and urgency of a particular issue. I think it is fair to say that such
considerations for assessing stakeholder legitimacy are more about fire-fighting and
reactive processes than leadership and innovation.
There is evidence of the evolution from dialogue to engagement. In 2004 the
WBCSD released a report – Mobility 2030: Meeting the Challenges of Sustainability.
It’s the result of global true stakeholder relationships – not just transactional dialogue.
12 of the biggest global automotive and energy companies called for global cooperation
to limit the adverse social and environmental impact of motor vehicles.
Executive VP General Motors - Tom Gottschalk:
“The challenges to sustaining mobility are significant – but they can be met
over time provided society supports constructive approaches and solutions
and encourages real understanding and co-operation among stakeholders.”
Transformational ideas can come from places were we least expect them.
This year is the year of micro-finance. I can assure you that the idea for microfinance
did not come from financial services companies managing on a day-to-day
basis the many thousands of customer complaints about their services and products
– though financial services companies certainly do treat these as both urgent and
powerful. Micro-finance came from the understanding that current financial credit
models perpetuate poverty cycles and screen out meaningful participation by all
groups in society.
Companies need to allow voices to be heard and share the responsibility for finding
solutions.

• Motivation for and the importance of sustainability orientation.

The recognition that culture, strategy and practice are all equally important to the
development of sustainable development business practice is from my point of view a
very exciting light on the hill for companies who are yet to begin their sustainability
journey.
To some extent world wide sustainable business practice has developed from
individual component parts – some companies began through risk assessment, some
through altruism, some through innovation – however it is not until recently that the
whole picture has emerged. It has become obvious that while companies may have
begun the journey from a particular lens (risk) they have realised that it is just not
sustainable unless all three components are present.
For sustainable development as embedded business practice to last beyond the
employment tenure of the internal champions, or the current CEO or CFO, there
needs to be all three parts – culture, strategy and practice. Otherwise we are just
dealing with the flavour of the month. Altruism and voluntarism may be powerful and
legitimate motivators but on their own without lasting changes to business practice
they can lead to that other great “ism”– short-termism.
Let’s look at each one individually and think about if any one single element can
deliver the desired outcomes alone.
The best strategies in the world are just words on paper, some great ideas. What
really turns words and ideas to making a difference is executional excellence – some
of you may have read J.C Collins’ book Good to Great that looked at the history of
company performance over 30 years.
Sustainable development practices of themselves do not guarantee quality outcomes
or the integration into the broader business perspective. As businesses we often find
ourselves discussing “silo mentalities” in an organisation. These don’t allow
companies to tap the real potential of the organisation because of the lack of cooperation
and coordination - this is most commonly experienced as the “not-invented
here-syndrome”
There is no point in having a process or product model without a sustainable
workforce. No point in being ISO certified in anything if there is a culture that
tolerates bullying or management by positional power only.
The importance of culture is the sustainability piece that most interests me.
I would like to draw another analogy for you on this. Many of you may have seen
many presentations on the development and idea of the correlation between financial
performance and intangibles demonstrated by using the diagram of an iceberg.
Above the water line is the financial capital - the piece that we are all very familiar
with when we assess company performance. Below the water line are the intangibles
of stakeholder capital, organisational capital, human capital and eco value.
Similarly when we look at an organisations culture in this analogous way we can see
that above the water line is the climate of the organisation – the perceptions of what it
is like to work for this organisation – Are people paid well? Do they have good
working conditions? Are they satisfied?
However below the waterline lie the other 9/10ths of culture – that is - what is
expected or valued in the organisation. Does this organisation allow me to think for
myself – or am I expected just to follow orders from managers blindly? Are they task
orientated – focused on the bits and pieces – or do they encourage big picture
thinking?
In both instances what sits above the water line delivers short-term outcomes and
can be changed quickly – positively or negatively. What lies below the surface is
much harder to change and has long term implications for reliably predicting long
term sustainable business outcomes , including profit.
Lion Nathan is one great example of a company using cultural change to underpin
successful business outcomes. They used 9 key levers for sustainable success –
they are the same levers for sustainable development success – they are not rocket
science.

• Courageous Leadership
• Establish a leadership team of like-minded individuals
• Focus on the big issues
• Get some early wins (low lying fruit to send important signals)
• Be explicit on vision and values
• Walk the talk
• Performance management system that is measuring and rewarding the rightbehaviours not just short term profit.
• Celebrate success

You will recognise that they are the things that holistically engage the hearts and
minds of an organisation.
To finish I would like to quickly discuss GRI and TBL – these are not interchangeable
terms.
The Global Reporting Initiative is a template for disclosure of non - financial
performance - it is not a scorecard. The standard is in its infancy and will continue to
be developed using global multi stakeholder processes. It has been developed in
response to the recognition that there is an absolute need for credible, verifiable and
comparable indicators for assessing company performance and also the report
reliability.
In this way there is no difference between Financial Reporting and the GRI standard
– except that one has been around for 100 years and is legislated and the other is
voluntary in most countries. At the moment it is the non-financial performance
standard.
The Foundation's paper in its conclusions in Chapter 5: Implications for Practice – A
Way Forward - outlines the planning framework for “Building the House of
Sustainable Development.” I would like to suggest that there is one important piece
that I think companies should undertake before they decided exactly how big that
house is going to be.
This is one thing that the GRI can do to assist companies in the very first instance –
the pre planning stage.
The GRI standard in conjunction with a sector supplement – can help companies
identify where their current sustainability strengths and weaknesses may lie.
It can be usefully used as an initial tool to diagnose “what is our current position” or
“how much space do we need in this house”
My experience is that most companies are already probably engaged in 80% of
sustainability practices. The last 20% are the issues that may be stopping them
moving into a transformational innovative agenda – and keeping them in their current
‘business as usual agenda’
And it is interesting to consider - why companies don’t know that they are already
doing 80% of sustainability practice? That is because the development of
sustainable development management sometimes called CSR, was accompanied by
lots of unhelpful jargon that led to companies believing this required another whole
department to manage sustainability as an addition to normal business – instead of
“this is the way that we do business”.
Looking at the GRI indicators and assessing your current performance can guide you
to where you may need to develop capability for innovation or focus on cultural
aspects in some or all locations. There is no point in planning an entire new house
when what you might need is an extension to the existing one.

TBL
Call it what you like - Triple Bottom Line Reporting, non-financial reporting or
extended performance reporting the journey of reporting is as important as the
destination - that is the publication of a report.
TBL reports can be a window into the organisation on how the company can
reasonably be expected to behave and make balanced decisions. But it is absolutely
a journey between companies and all their stakeholders. Genuine stakeholder
dialogue with communities means that companies must respond to and report on the
issues that are relevant to both of them.
TBL isn’t it – but it is useful for two things:
1. As a transparent account of the sustainable business practices of the company
against a world business standard. Transparency and accountability being the
operative words.
2. A great place to start or continue the conversation with stakeholders about
improving company performance. Put simply, TBLs are powerful tools for change. If
as a company you are still wondering if the cost of reporting is worth it – then you are
probably just doing PR – my advice is don’t waste your money! –
Some people would add to this that TBL allows them to benchmark their performance
against competitors – but I believe that there are still substantial differences between
the application of definitions and the external auditing process that create some
weakness in this point.
I would like to close by saying I think this research Sustainable Development and
Business Success adds positively to the debate on corporate leadership and
sustainable business practices.
As Australian organisations we have the opportunity to choose leadership over
legislation – to date there has been far too much emphasis on the risk of legislation
being used to try and drive innovative business practices as a response. This can’t
work indefinitely.
We need to continue to debate, challenge and discuss the practices inside our
companies that are barriers to leadership and I am sure that this research will add to
that debate in a very constructive way.
There’s no doubt leadership is the smarter business decision.