There’s nothing like a natural disaster to bring to life the business need to anticipate and prepare for the future.

That’s what happened when Kathy Nieland, who leads PwC’s Sustainable Business Solutions practice, lived through the devastating hurricane in New Orleans six years ago.

The disaster happened while PwC was growing its corporate responsibility efforts, recognizing increasingly critical community and environmental issues, along with the business imperatives to help resolve them, both internally and as a client service.

“The hurricane had a profound effect,” says Nieland, also the partner in charge of PwC’s New Orleans’s practice. “There were so many systemic issues for so many cities, individuals and organizations that it became clear that sustainability thinking had to be cultivated as a strategic business issue.”

PwC’s internal efforts have grown significantly since that coincidental ‘aha’ moment -as has its sustainability client practice.

The firm’s services now include helping clients with six capabilities for sustainability metrics and reporting:

1. Researching stakeholder needs and macro trends to devise a strategy

2. Recognizing the need to integrate traditional financial and new sustainability metrics

3. Helping companies speed the sustainability reporting process through automation

4. Helping to integrate sustainability into the business

5. Translating environmental and social impact into financial and tax terms

6. Recognizing key trends for the future, including environmental P&L reporting and industries that may need special help

7. Strategy: Stakeholder Needs, Macro Trends

The stimulus for the firm’s sustainability voyage was its 10-yearscenario planning exercise on macro-trends, including: climate change; demographic population change and growth in places like China and Brazil; increasing resource scarcity and consequent price volatility; and US positioning in the global economy.

“The trends showed that as developing countries grow, US influence would be reduced over time, so PwC as a firm had to be able to respond to help clients in new areas, requiring different skills and background, including science, engineering and general understanding of issues like climate change, resource scarcity and related supply change issues,” Nieland says. These trends were gradually incorporated into PwC’s approach to help businesses devise a strategic approach to sustainability.

1. Integrating Traditional and New Metrics

Among the most significant accomplishments for the client practice has been designing the integration of sustainability metrics and reporting with more traditional financial reporting techniques–along with the integration of sustainability throughout companies’ often discretely functioning units.

The firm, known for its accounting, tax, financial audit and advisory and reporting services, approached the coming changes by extending its more traditional reporting services to the environmental and general sustainability area, eventually becoming a proponent of so-called integrated reporting, which allows stakeholders to evaluate the financial and non-financial aspects of business together. Reporting, of course, can take many forms (digital, print, several, one, and so on). The key is for the company to tell an ‘integrated story.’

Next week: learn how macro trends and the ‘integrated story’ helped take sustainability metrics and reporting to the next level with four more capabilities.

What’s a stock exchange? Easy: It’s a venue where equities in publicly held companies are traded, right?

Right–and wrong. NYSE Euronext, the company once known as the New York Stock Exchange, is much more. It’s a technology company, a data center, a derivatives clearing center, and a majority owner in an energy market, among other functions.

Oh, and it’s a socially responsible multinational, too, as it harnesses the “value of community” of leading companies from around the globe, as Michelle Greene puts it.

That role isn’t likely to change as the exchange operator explores the pros–and recently cons–of its current merger opportunity with Deutsche Borse AG, no matter the outcome.

Since Greene came on board just over a year ago as vice president and head of corporate responsibility, the company has been formalizing its role as a global business sustainability leader–into four internal and four external functions.

Why now? “At a time when companies around the world are focusing on responsibility and sustainability, the NYSE Euronext can be a sort of role model and convener,” Greene says of the company’s thinking, as it seeks to “lead by example” through its own actions.

Her job building the sustainability initiative has been a two-pronged effort, Greene says, focusing her attention on the exchange’s internal and external roles.

Internally there have been four main functions:

1. Identifying opportunities for initiatives on corporate responsibility (CR) and helping to launch and lead them.
2. Acting as a sounding board and advisor to internal staff on CR-related issues.
3. Working to ensure that everyone throughout the company knows what corporate social responsibility is and what might be done to act sustainabily, so as to “help people think through that lens about everything they do,” she says.
4. Tracking and reporting sustainability results throughout the company, primarily in its CR report.

Greene notes that NYSE Euronext recently became the first global exchange operator to become carbon neutral.

And while she has a small team, she insists that, indeed, “it should be small,” mainly because ultimately the goal is to “integrate corporate responsibility throughout the organization in its many different forms,” instead of making it the job of a single department.

Externally, given the prominence of the exchange, it has the opportunity to bring together companies from its roster of 4,000 listed issuers from 55 countries to both showcase best practices and to help them improve their sustainability performance in four ways by:

1. “Celebrating” the companies doing good work on corporate responsibility, through, for example, summit meetings on governance, environmental sustainability and financial literacy.
2. Helping those companies share their examples and experiences.
3. Bringing together leaders to discuss challenges and emerging CR issues.
4. Offering forums, trainings and tools for those looking to build CR capacity, especially in areas where the Exchange is a clear leader, such as financial literacy.

“The external role here is larger than elsewhere because we represent an international community of leading companies,” Greene points out. “Being part of this community has value,” she adds. She points out that 88 percent of companies in the 2010 Dow Jones Sustainability Index and 89 percent of those in the 2010 Carbon Disclosure Project Leadership Index are listed on the NYSE Euronext Exchanges in the US and Europe, including NYSE Euronext, which was included in both indices.

As for the next CR challenge for NYSE Euronext itself, Greene notes: “To do sustainability at any company, you have to closely align with broader corporate strategy. For example, at the Exchange, we realize sustainability is increasingly important to our companies, so, to continue to provide value in this area, we need to integrate sustainability into all we do.”

With COP 17 underway in South Africa, it’s an opportune time to look at a few recent US developments on climate change.

In Washington, DC, a coalition of civic leaders last Wednesday launched a climate ethics campaign, where the first woman to head the US Senate committee on environment and public works, Senator Barbara Boxer of California called for increased public pressure to revitalize climate change action, noting that “the cure for the problem is so good for everybody.”

Suffering Climate Effects

It’s notable that Boxer, the only Senator to speak at the event, open to Congress and the public alike, is a woman. It’s not news that women are disproportionately affected by climate change–though it’s hardly been front and center of US climate change discourse.

Women have been known for years to suffer more from the problems of food scarcity, water pollution, disease, conflict and displacement that can result from climate change and its effects, like natural disasters.

US Bill on Women, Climate

What is news, though, at least in the US, is that a member of Congress–Barbara Lee of California–introduced a bill on this topic last month. The bill recognizes what it calls ‘disparate’ effects of climate change on women and calls for efforts to empower women in the process of designing and evaluating strategies to mitigate climate change and its impact.

Especially in recent years, on the US policy front the climate change discourse has largely focused on the economic impact of climate change, how to involve business in mitigating–or even profiting by mitigating–its effects, as well as how to stimulate a carbon market, both to boost the economy and to reduce negative environmental impacts.

One noteworthy point about this new bill, is that, in the same policy arena, it very publicly recognizes the disproportionate effects of climate change on women–and also points out they may be part of the solution.

Women as a Socio-economic Antidote

Just as noteworthy: the bill makes an economic argument for engaging women more directly in efforts to solve the problem–namely by acknowledging both their relative economic vulnerability, while at the same time applauding their essential economic value and contributions.
The bill notes that women are “the linchpin of families and communities” and have a positive “multiplier effect…using their income and resources, when given the necessary tools, to increase the well being of their children and families, and thus play a critical role in reducing food insecurity, poverty and socio-economic effects of climate change.”

How Climate Impacts Women

How are women adversely and disproportionately affected by climate change? First, women are more vulnerable to climate-related disease epidemics, like malaria. They’re also, along with children, 14 times more likely to die during natural disasters, which are likely to become more frequent as the climate continues to change.

That’s true not just in the developing world but also in the US: Hurricane Katrina, for instance, displaced more than 80 percent of low-income single mothers.

Women as a Solution

And how can women help solve the problem of climate change, mitigate its effects and help society to prepare for and adapt to changes? One key way to boost solutions, as the bill notes, is by involving and including women more in policy making, strategy and planning on climate change–especially since, with the disproportionate effects they suffer, they have a vested interest in mitigation.

It will also be critical to better empower women economically so that they can take advantage of opportunities to avoid negative effects of climate change, while helping communities mitigate and adapt to climate change, the bill notes.

Shop, Manage, Change the Climate

Importantly, women around the globe account for some 80 percent of purchases, suggesting that–even by shopping–they have the potential to make a huge difference. Since women are also especially concerned about the health and welfare of their children, families and communities, they have the potential as consumers to make so-called socially responsible or green choices.

What’s more, once they gain the access to education that allows them to participate more fully in business, women can and do influence companies in a highly responsible fashion, including socially, environmentally and economically–as recognized in numerous studies.

Catalyst, the organization that tracks women in business, has long pointed out that, overall, companies with women on boards perform better than those without women.

Again, if women are more vulnerable to the negative effects of climate change, both in the US and elsewhere, they are likely to be more passionate about rallying to solve the problem. Maybe we have both an ethical and economic responsibility to help them do so.

Read Part I

By integrating the ‘sustainability’ argument into the larger financial case via metrics, FedEx’s Karen Ellis, trained as a chemical engineer, used a technique she had learned years earlier. When the company was struggling 2004 to put together meaningful metrics to report on sustainability, she led a team that created the analytical system tracking impacts of the Express division. “Championing the idea of sustainability metrics in the Express company back then was very challenging,” Ellis admits, mainly because so many “weren’t even exposed to environmental sustainability performance or tracking information in the same way.

And it didn’t hurt in the more recent case of buying the 777s that Ellis and her team already had a track record with the finance department based on helping the Global Vehicles department build the business case to buy 50 new hybrid electrical vehicles in 2008.

“Getting a finance person to accept the intangibles of pursuing hybrid electric vehicles into the fleet was a huge challenge,” she recalls of one of the first attempts in 2000 to persuade the company to buy such vehicles, which then cost 80 percent more than standard models. Her team managed to do it partly by working with Environmental Defense Fund to demonstrate the value of bringing hybrid technology to market in New York State, where available NYSERDA grant funding was used to offset some of the additional cost, as part of the state agency’s program to encourage clean technology–and clean air–in New York State.

“Anything we can do to reduce the cost of fuel really gets the attention of the finance department, Ellis adds. “So what my team and I did to persuade them, because we’re subjected to traditional ROI analysis, was to find the nontraditional financing to make the hybrid vehicle purchase possible.”

On the 2012 agenda for Ellis’s team of 17 people, responsible for environmental performance and carbon emission reductions for more than 40,000 vehicles, 687 airplanes and 2,000 facilities: tracking environmental performance across the company. That means working with teams to keep performance on track with goals like reducing aircraft emissions intensity and improving vehicle fuel efficiency–20 percent by 2020. To effect those goals, her team will help roll out 4,000 fuel-efficient sprinter vans and adding 24 electric vehicles to the fleet, bringing the total to 43.

Explains Ellis: “There’s no one single solution to help transportation become less oil dependent, so we have all kinds of vehicles, all-electric, hybrid-electric, fuel-efficient diesel, upgraded air fleets and continuously improving practices to make long and mid-term and short-term steps” to reduce CO2.

And now that the financial team ‘gets it’ and operations professionals are incorporating sustainability metrics into their business evaluations, what’s the biggest challenge? Says Ellis: “External expectations evolve. We’ve been consistent in setting metrics and strategy to what’s meaningful to our business and where we can influence change.

“That’s why we focus on being efficient in transportation; we consider but don’t change our strategy based on external preferences. We set our strategy, actions and initiatives in areas where we can effect meaningful, measurable change and take a leadership position in or outside the industry.”

Long before the word ‘sustainability’ entered the everyday lexicon at FedEx, the term ‘fuel consumption’ was front and center for the company’s top executives.

That’s because, as one of the biggest transportation companies in the world, FedEx’s fuel consumption was always a major cost to be decreased wherever possible–a priority for finance and operations professionals alike.

So when Karen Ellis, Managing Director of Corporate and International Environmental Programs at FedEx Corp.’s Express subsidiary, the world’s largest express transportation company providing 60 percent of the parent’s revenues, was brought in on a proposal to replace Boeing 727s with 757s, she leveraged fuel cost awareness to help explain the case in terms that made business sense.

In her role providing strategic leadership on environmental sustainability to experts who integrate such initiatives into their work, about five years ago Ellis and her team helped Air Operations Division professionals understand how to incorporate sustainability principles and practices into their regular business plan–partly by connecting the dots between emissions decreases and the fuel reduction priorities.

Put in familiar terms–an 18 percent decrease in fuel consumption and costs per carried pound–the benefits of adding more planes to the fleet (with the goal of upping the number of 777s to 50 by end of 2012) were easier to grasp. In a related effort, Fed Ex also replaced 727s with 757s, decreasing fuel consumption, emissions and costs by nearly 50 percent.

Finance experts understood the environmental benefits as part of the matrix business case, in which the new carriers could cut flight times by two hours by avoiding refueling stopovers.

Happily, the new 777s, which eliminate take-offs and landings, when emissions are highest, also reduce CO2 emissions intensity by 18 percent, bringing FedEx closer to its goal of 20 percent reduction by 2020. Another bonus: because the freighters reduce the flight from Asia by two hours, customers have more time in the business day to get shipments ready and out the door, allowing them to send even more stuff with less rush.

By integrating the ‘sustainability’ argument into the financial case via metrics, Ellis, trained as a chemical engineer, used a technique she had learned years earlier. When the company was struggling in 2004 to put together meaningful metrics to report on sustainability, she led a team that created the analytical system tracking impacts of the Express division. “Championing the idea of sustainability metrics in the Express company back then was very challenging,” Ellis admits, mainly because so many “weren’t even exposed to environmental sustainability performance or tracking information in the same way.

And it didn’t hurt in the more recent case of buying the 777s that Ellis and her team already had a track record with the finance department based on helping the Global Vehicles department build the business case to buy 50 new hybrid electrical vehicles in 2008.

Next week: How to persuade the finance folks–and what’s on the docket for next year