sustainable portfolio management (spm) monetization of...
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Sustainable Portfolio Management (SPM) Monetization of environmental impacts
Alain Wathelet
Solvay Confidential
LCM2017 – September 6th, 2017
Key decisions-making toolBetter Business because more Sustainable
Sustainable Portfolio Management SPM in a nutshell
AGENDA
Business Solutions
Solvay’s AmbitionSPM steering portfolio toward Business Solutions
SPM Reference Guide Integrate sustainability in business strategy
2
Solvay Confidential
LCM2017 – September 6th, 2017
SPM is Solvay proprietary approach to assess business sustainability risks and opportunities
4
Op
era
tio
ns
Vu
lne
rab
ilit
y
Market Alignment to sustainability
From a sustainability standpoint and a consumer
perspective, is our product used in selling
propositions that are part of the solutions or part of
the problems?
One PAC - Product-Application Combination
(e.g., 30 GF PA6.6 in Electric Protection Devices)
Sustainable Portfolio Management (SPM) map
1 € revenue cannot be
created at (too) high
environmental expense.
The lower the environmental
footprint, the lower the risk
of substitution by less
impacting solutions
Low Risk
High Risk
Problems Solutions
Solvay Confidential
LCM2017 – September 6th, 2017
SPM methodologyin a nutshell
5
Environmental footprint vs Value
The higher the environmental
footprint, the higher the risk of
substitution by less impacting
solutions
From a sustainability standpoint and a consumer
perspective, is our product used in selling propositions
part of the solutions or part of the problems?
Solutions
Challenges
Neutral
Solvay Confidential
LCM2017 – September 6th, 2017
Impact(kg CO2eq)
Shadow cost(€ / kg CO2eq)
Operations Vulnerability formula is based on monetized Ecoprofiles
Average
sales price(€)
Operations
vulnerability(%)
=xΣImpact(kg CO2eq)
Shadow cost(€ / kg CO2eq)
Environ. Impact(kg CO2eq)
Shadow cost(€ / kg CO2eq)
Global warming Global warming
….
Energy….
Energy
• LCA bound to cradle-
to-gate
• ISO 14040/44
standard
• Produced by Solvay
3E experts
• Estimation of the “cost for
the planet”, theoretical
• Science-based approach
(“polluter pays” principle)
• Defined by external
authoritative bodies
• CO2 shadow cost, e.g. =
75€ (≠ CO2 internal price)
• Also used to consolidate /
compare impacts
/
Monetized Ecoprofile
Ecoprofile
• 5-year rolling
average to smooth
the impact of
economic
fluctuations
6
Solvay Confidential
LCM2017 – September 6th, 2017
Step 1 : Impact Assessment
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Step 1: Impact Assessment
Material &
Emissions
Inventory (kg)
Impact
Equivalent
(Eq./kg)
Impact
(Equivalent)
• LCA « Cradle-to-Gate » - ISO 14040-44
• 19 indicators (Environmental and Energy) – Mid-points CML and CED
• Quality assessment
GWPBiogenic
Coal EnergyGaz Energy
WaterLand Use
Human ToxEcotox
Acidification Etc …
Solvay Confidential
LCM2017 – September 6th, 2017
Step 2 : Impact Valuation
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Step 2: Impact Valuation
Impact
(Equivalent)
Shadow Cost
(EUR/eq.)Impact Value
(EUR)
• Shadow Cost = « cost for the planet » (Polluter Pays), defined by
external authoritative bodies
• To prevent environmental or human toxicity damage (avoidance cost
route)
• To remediate the damage caused (repair cost route)
• Time Horizon >10 years
• For comparison of products / technologies
Solvay Confidential
LCM2017 – September 6th, 2017
Step 3 : Operation vulnerability
Step 3 : OperationVulnerability
Impact Value
(EUR)
Sales Value
(EUR)
Operation
Vulnerability
(%)
• Assess the financial risk of negative impacts (externalities)
• Comparison
monetized environmental footprint
VS
value added by our product / activity (proxied by the sale price)
• Lower OV High opportunity to displace of less
environmentally-friendly product (< 80 %)
• High OV High sustainability risk for the product (> 100 %)
9
Solvay Confidential
LCM2017 – September 6th, 2017
Zoom on Operations Vulnerability components
Operations Vulnerability by midpoints (or impacts)
Illustrative product with projection on Heat map
10
Solvay Confidential
LCM2017 – September 6th, 2017
MORE BUSINESS SOLUTIONS
Launch of a simple & digitalized SPM Guide
● Executive summary
for Business Leaders
● Detailed explanations for
Practitioners
● Presentation of SPM Fast
Track (simplification)
● 3 precise Business Cases
● Glossary and Q&A
http://www.solvay.com/en/binaries/Solvay-SPM-Guide-154709.pdf
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Solvay Confidential
LCM2017 – September 6th, 2017
Objectives on Business Solutions O
pe
rati
on
s
vu
lne
rab
ilit
y
Market alignment
43%
8%
33%
% Group sales
High Risk
Problems Solutions
Low Risk
Solutions
Challenges
Neutral
Solvay Solutions• Climate Change (28%)
• Resource Efficiency (17%)
• Safety & Prevention (14%)
• Very low environmental manufacturing
footprint (13%)
• Human Toxicity (7%)
• Environment Toxicity (4%)
Example: Composites
Reducing the weight of a passenger car by 1 kg
represents 10 kg CO2 eq. saved during its full life
time (Climate Change benefits)
50%
2016 2025
13
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