By Margaret Uttke
Leaders often struggle to understand which choices are best when it comes to investing in sustainability. One way to improve is to enable stronger business case development and associated analyses of both tangible and intangible benefits connected to these investments.
In response to this challenge, FEMSA Foundation and Antea Group founded the Monetization Working Group (MWG) in March 2014. This cross-sectoral group of industry, NGO and private-sector leaders focuses on enabling better, more sustainable business decisions.
Group participants are collaborating on the development of a business case capability development curriculum. To test and refine this curriculum, FEMSA Foundation, Antea Group and the Nature Conservancy (TNC) have partnered on a series of pilot workshops delivered to select teams working on Water Funds – a series of water conservation initiatives involving local watersheds throughout Mexico, Central and South America, collectively known as the Latin American Water Funds Partnership.
These Water Fund initiatives not only impact the sustainability of the watershed itself; they also impact the local and global communities through impassioned and informed stakeholder engagement. By involving stakeholders and creating a clear understanding of the problem, the Water Fund teams are able to develop scientifically-based solutions that aim to benefit all those concerned with the local watershed. The teams’ ability to articulate the value of those solutions, however, is a key issue; and it represents part of the broader challenge the MWG is working to address on a global scale.
With that context in mind, I sat down with Carlos Hurtado, manager of sustainable development at FEMSA Foundation; Hugo Contreras, Latin American water security director for the Nature Conservancy; and Tod Christenson, senior consultant with Antea Group, to get their perspectives on this project and their ultimate goal of accelerating better, more sustainable business decisions.
Margaret Uttke: What are some of the challenges you face in communicating the benefits of these Water Fund initiatives?
Carlos Hurtado: First, they’re hard to convey because they are usually loosely defined – things like brand reputation and community involvement. We have to go out and dissect these vague ideas to quantify the value – to make what seems intangible easier to understand.
Hugo Contreras: To add to that, I work with the scientists on these teams, who are very interested in writing something a guy like me will understand … but not in terms that are simple or actionable for stakeholders. We need to bridge that gap; that means we need the science behind our solution to be easily understood.
Part of the problem is that our stakeholders have nothing to compare performance of these Water Funds to except information that is based on perceptions, not hard fact. There is also a gap between the time you start acting and the time you see the results from conservation efforts. Benefits to these longer cycles can be hard to see when you are faced with short term issues.
MU: Given these challenges your teams face, what are your goals for this pilot?
CH: We’re seeking to increase the skill and capacity of the Water Fund teams — to better articulate the business case. But this project goes beyond our own organizations; we’re not alone in facing these challenges, and the workshop series is an opportunity for us to provide concrete examples and test broader concepts we’re developing through the Monetization Working Group.
Tod Christenson: As Carlos has indicated, leading into these workshops, we’ve developed a business curriculum to advance the business case development and delivery capabilities of these Water Fund teams as they work to engage various social, governmental and business stakeholders on specific watershed projects. Based on our discussions in the MWG, this includes several key components:
- Understanding the concept of shared business value
- Building and presenting an effective business case to targeted stakeholders
- Applying quantification and monetization principles to their existing investment
- Systematically monetizing benefit estimates and framing uncertainty
It’s really designed around the concept of creating change through collective action – and the way to ensure that is through the business case articulation.
HC: We think it’s important that participants will be able to apply content learning to their current Water Fund business case presentations utilized in stakeholder discussion today, better articulating how we may enrich these presentations for more effective engagement tomorrow; and practice the skill of monetizing the projects – in other words, deconstructing, quantifying and monetizing the business benefits to better communicate with stakeholders and spur effective collective action.
MU: What does success for this project look like five to 10 years down the road?
HC: First, we engage corporations and individuals – and by engage, I mean show them the reasons why it makes sense to act. Second, we will have convinced many cities that conservation is important and there is a cost and benefit they can internalize and communicate to their stakeholders.
TC: And we will have convinced those cities and other stakeholders of the tangible benefits to watershed conservation because TNC’s scientists and FEMSA’s sustainability leadership are able to clearly articulate the business case.
CH: For the Water Funds, I really want to see effective stakeholder engagement, meaning companies get involved not only because it’s good to do and they care about their city, but because it makes sense from a business perspective.
On a broader level, I would say sustainability is ingrained in the business conversation; we will start talking about sustainability and investments on every aspect — supply chain, operations, etc.
MC: So let’s talk about the broader issue we’re grappling with: Why monetize sustainability investment decision-making?
TC: There are a number of reasons why. For example, the failure to monetize represents a clear obstacle to business progress. In a 2013 study done by the UN Global Compact and Accenture, thirty-seven percent of CEOs said the lack of a clear link to business value was a critical factor in deterring faster action on sustainability.
CH: That’s the common challenge we all face, isn’t it? Trouble translating common knowledge concepts or intricate solutions to hard and clear choices. It’s a lot easier for high level executives to make the right choice when the value is clear.
TC: Carlos nailed it. Today’s sustainability investment options are extensive, ranging from relatively straightforward energy conservation projects to complex multi-year supply-chain initiatives. While doing any or all of these could yield significant benefits, leaders often struggle to determine which will generate the greatest, most enduring value.
We need to enable stronger business case development and associated analyses of both the tangible and intangible benefits connected to these investments. That will lead to better investment choices and results.
CH: But I don’t want people to think it’s just about putting numbers to our projects – there’s a real opportunity to create a substantive, actionable model that bridges this gap between the practitioners and decision-makers. If we can compare, meaning monetize, these initiative benefits and speak clearly to both public and private sector outlets, that would be tremendous for companies and society. And that’s the whole premise behind our broader efforts with the Monetization Working Group.
MU: Beyond the pilot project, how is the Monetization Working Group tackling the issue of articulating value and enabling better decision-making?
TC: This curriculum we’re developing and testing is part of the answer. After extensive review and collaboration, the MWG has embarked on this initiative to build a Sustainability Investment Business Case Development and Monetization Curriculum geared toward sustainability professionals and business decision-makers.
CH: The idea is that we will enhance capacity in making intangibles tangible by providing tools and skills to better quantify the benefits, thereby strengthening overall investment business decisions.
HC: To put it another way, Carlos: complexity turned into simplicity. This curriculum project will allow us to grasp a complex concept and translate it into simple information that will enable us to better describe how sustainability initiatives like the Water Funds benefit the environment, local communities and our business investors – true examples of shared value.
MU: Why should other organizations get involved in this global effort?
CH: This is an issue that keeps me up at night, and I know FEMSA’s not alone in this problem. Monetizing sustainability can be hard to define, but this initiative promises to generate real knowledge and tools to advance not only FEMSA’s work, but the sustainability sector as a whole.
HC: As an NGO, the Nature Conservancy has always looked for alternative ways of communicating conservation and engaging people. We don’t believe in confrontation, we believe in convincing. For us, having this toolkit is a perfect fit, as it will help to translate our initiatives in clear terms that make economic sense and encourage collective action.
TC: We’re still at the beginning of this journey, and this is an opportunity for cross-sectoral companies to shape the conversation together, through both the MWG discussions and contributing to the ongoing curriculum-building efforts.
Want to become engaged in the conversation? Feel free to reach out to Tod (firstname.lastname@example.org) or Carlos (email@example.com) to learn more about the Monetization Working Group’s journey.
About Our Interviewees:
Tod Christenson, Senior Consultant, Antea Group
A consultant to private industry for more than 29 years, Tod partners with clients to develop and implement fit-for-purpose and innovative solutions to drive sustainability across the entire value chain. Tod is one of the principal innovators of Antea Group’s Accounting for Sustainability – AA4S solution, and the Director of the Beverage Industry Environmental Roundtable, as well as the Healthcare Plastics Recycling Council.
Hugo Contreras, Latin America Water Security Director, The Nature Conservancy
Before joining The Nature Conservancy in 2014, Hugo was a business development and institutional relations director for Bal-Ondeo, Mexico´s leading private water utility. In his more than 10 years with the company, he designed and implemented a new business model for private operators to provide services to local water utilities, as well as developed the first comparative study of the performance of water companies in Mexico. He has also led the environment and good government practice at Thesis Consultores, served as Chief of Staff for the Underministry for Planning, and Director for Natural Resource Economics at the Ministry of Environment, Natural Resources and Fisheries in Mexico.
Carlos Hurtado Aguilar, Manager of Sustainable Development of Water Resources, FEMSA Foundation
Carlos has directed FEMSA Foundation’s water related programs since its creation in 2008. From 2005 to 2008 he coordinated strategic projects for the Presidency of Mexico, municipal governments, and international organizations such as the United Nations while working as a Senior Consultant at the Graduate School for Public Management of Tecnológico de Monterrey. Before that he was Senior Analyst in structured finance for subnational governments at Banorte.
Image credit: Shutterstock
Margaret Uttke is the Solutions Marketing Manager for Antea Group, an international environmental engineering and consulting firm. She currently serves as the Communications Director for the Monetization Working Group, as well as the Beverage Industry Environmental Roundtable. Margaret works with clients to develop sustainable solutions with a business first approach.