sustainabile business for a more sustainable future1
TRANSCRIPT
SUSTAINABLE BUSINESS DEVELOPMENT
Br ig i t a La j kov i cb r i g i t a . l a j k o v i c @ g m a i l . c o m
Aims and Objectives
1. Sustainability and Sustainable Development – definition vs a
matter of perspective
2. Why do we need to think and act in a more sustainable way
3. How to apply Sustainability in business
4. An example of a Sustainable Strategy
http://www.heypik.com/uploads/2/3/3/5/23350016/189470_orig.jpg
Delicious!!!!
How beautiful!!!
Perspectives…
PlanetEnvironmental Protection
PeopleCorporate Social Responsibility
(CSR)
ProfitGenerating continuous business
earnings
Environment
Society
Economy
Definition
beginnings in the 1970s with the “Club of Rome”
• 1960s-1970s corporate social responsibility, stakeholder management– Philanthropy, community engagement, supply chain standards
• 1987 – Bruntland Report: “Our Common Future”– "Sustainable development is development that meets the needs of
the present without compromising the ability of future generations to meet their own needs"
• 1994 John Elkington, Sustainability– “Triple Bottom Line”
• People – social dimension, social responsibility• Planet – environmental dimension• Profits – business
– Joins up sustainable development & CSR
Sustainability
Sustainability is a journey - a process; new criteria will expand and evolve over time as the new techniques
and technologies become available.
For the business enterprise, sustainable development means adopting business strategies and activities that meet the needs of the enterprise and its stakeholders today while protecting, sustaining and enhancing the human and natural resources that will be needed in the future. (Source: World Commission on Environment and Development)
Rising consumption of natural resources means that humans began "eating the
planet“
'Eyes bigger than planet'
The economic system, like all systems, is subject to the laws of thermodynamics,
which define the limit at which the Earth can successfully process energy and
wastes. (W. Edward Stead)
Currently it takes the biosphere about 18 months to produce what humanity
consumes in just 12 months. (NEF)
We only have ONE… and it doesn’t belong to us
Source: http://www.sciencemagpie.com/2012/10/02/geological-time-piece/
The age of Earth is about 4.5 billion years – on the
clock, 1 second equals approximately 52,000
years and one hour is 187.5 million years.
Source: http://www.saintjoe.edu/~dept14/environment/rogero/core5/celestial_compare.html
In nature, systems thinking examples include ecosystems in which various elements such as air, water, movement, plants, and animals work together to “survive” or
“perish”.
The world is not made of lifeless stuff but matter in
motion!
Foundation of economic thinking
“The end justifies the means” vs. “the means & process justify the end” vs. “the means & process justify the continuation of the process”
Neoclassical economics is focused on economic growth (GDP) and rests on the following set of assumptions: (by E. Roy Weintraub)
- People have rational preferences among outcomes that can be identified and associated with a value;
- Individuals maximize utility and firms maximize profits.
- People act independently on the basis of full and relevant information.
Criticism of Neoclassical Economics:"Given, a certain population, with various needs and powers of production, in possession of certain lands and other sources of material: required, the mode of employing their labour which will maximize the utility of their produce.” (by W.S. Jevons)
What is systems thinking?
• Ability to see things as a whole;
• Process of understanding how things, regarded as systems, influence one another within a whole;
• An approach to problem solving, by viewing "problems" as parts of an overall system, rather than isolating its parts, reacting to specific part, outcomes or events and potentially contributing to further development of unintended consequences;
• All parts of the system are interdependent – they cannot be independent;
• It focuses on cyclical rather than linear cause and effect;
• It proposes to view systems in a holistic manner.
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Global Warming ???
Deforestation
Loss of Natural Resources
Food Insecurity
Loss of Biodiversity
**Human encroachment and logging destroys forests
**Forests are home to over 70% of animals, plants and other organisms
**Billions of pollinator bees have lost their habitat
**30 million acres lost every year
**20% of global CO2 emissions are caused by deforestation
**Trees cool the atmosphere and store greenhouse gases
**Flooding and soil erosion result from
deforestation
**1.6 billion people living in poverty depend on forest for their food, fuel and livelihood
In organizations, systems consist of people, structures, and processes that work together to make an organization "healthy" or "unhealthy“.
⁺
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20th Century
* Problem solving
* Analysis
* Reductionism
* Individual learning
* Emphasis on teacher transmitting predetermined knowledge to the student
* Being competitive
* Closed and immediate cause and effect
* Rooted in subjects or disciplines
21st Century
* Problem appreciation and reframing
* Synthesis
* Whole system emphasis
* Team or group learning
* Learning through enquiry
* Competitive and collaborative
* Multiple influences through time and space
* Meta-learning
164* Meta learning was originally described by Donald B. Maudsley (1979) as ‘the process by which learners become aware of and increasingly in control of habits of perception, inquiry, learning, and growth that they have internalized’. ‘A theory of meta-learning and principles of facilitation an organismic perspective’, Donald B. Maudsley, 1979
Source: Ellen MacArthur Foundation, Towards the Circular Economy
ENERGY RETURN ON ENERGY INVESTED = Energy Produced / Energy Used
ENERGY EROEI COMMENTS
OIL What are the indirect costs?
- Finding 5 : 1 1200 : 1 in 1919 to 5:1 in 2007
- Extraction 11 – 18 : 1 100:1 in 1930s; 25:1 in 1990s ; 1:1 in next 20y
TAR SANDS 2 - 5 : 1 1:1 if full life cycle is taken into consideration
GAS 5 - 15 : 1 Similar to oil
COAL 5 - 12 : 1 CCS costs (carob capture sequestration)?
NUCLEAR 7 - 15 : 1 Waste disposal, decommissioning costs? Risks?
HYDROGEN 0.5 : 1 Very low
HYDRO 20 – 40 : 1 Difference in flow
ETHANOL 2 – 1 : 1 Wood, Corn
BIODIESEL 2 : 1 “Cars eating - people starving.” Food vs. Fuel
WIND 25 - 70 : 1 Many dependencies, technology in development
SOLAR 10 – 75 : 1 Many dependencies, technology in development
Multiple sources have been used to collet the above approximation of the EROEI
Observation: According to the International Energy Agency (IEA), cumulative worldwide investment in new fossil-fuel extraction and processing will total an estimated $22,87 trillion between 2012 and 2035.
Investment in renewables, hydropower, and nuclear energy will amount to only $7.32 trillion. In these years, investment in oil alone, at an estimated $10.32 trillion, is expected to exceed spending
on wind, solar, geothermal, biofuels, hydro, nuclear, and every other form of renewable energy combined. (Source: prof. Michael Klare)
Consumerism Examples of unhealthy economy:
- Increasing dependence on overseas energy;
- Declining self-sufficiency in food;
- Proliferation of "boomerang trade" — sending goods to foreign markets and receiving almost identical items back;
- Story of stuff (when consumption becomes wasteful, debt fuelled and unsatisfying and when it takes the biosphere about 18 months to produce what humanity consumes in just 12 months);
- Between 1970 and 2009 the number of consumer electronic gadgets in a typical UK household increased by eleven times (source: The Elephant in the Living Room);
- Debt based economy (by September 2008, debt averaged £9,740 per UK household excluding mortgages);
- Material wealth vs. scarcity of time.
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Potato exports 2004
UK to Germany: 1.5M tonnes Germany to UK: 1.5M tonnes
“Boomerang trade" examples
Source: NEF, UK interdependent report 2006
Gingerbread exports 2004
UK to Germany: 465 tonnesGermany to UK: 460 tonnes
Dairy goods exports 2004
UK to France: 10,200 tonnes of milk and cream France to UK: 9,900tonnes of dairy goods
How to define planetary boundaries – a fence, within we can have a safe operating space?
Staying within 9 planetary boundaries under an active stewardship!
Planet Earth is a complex, self-regulating system
4. Understanding Sustainability from Company’s Perspective; guidance towards developing a Sustainable Strategy.
What is Triple Bottom Line
Sustainable Lifecycle Management
Importance and Benefits of Circular Economy
How to integrate Sustainable Strategy
Introduction to Quantitative Measurements
Case Study and Exercise
In short – TWO aspects
Philosophical, ethical, values,
mission your intention
• Right livelihood
• Triple bottom line
• Natural Capitalism
• Five Capitals
• LOHAS – lifestyles of health and Sustainability
• Ethical enterprise, ethical products
Performance, technical, measurement, certifications your competence, trustworthiness
Performance, Reporting: • Full cost accounting & Triple bottom line• CSR – GRI standard reporting• Carbon Trust/Carbon Disclosure Project• Balanced Scorecards
Programs, Methodology: • ISO 14001 • Biomimicry• Cradle to Cradle
Certification - general:• Earth Right• Green Certificate• Green Mark• GreenSeal• Green Tourism
WELCOME TO THE
JUNGLE
* Shared knowledge
*Cooperative networks of people committed to achieve common goals (schools, hospitals, government, etc)
*Sense of community
*Quality of life
*Safety
*Housing , transportation
*Education, energy
*Social justice
*Environmental resources
*Health of ecosystems
*Biodiversity
*Public lands open space
*Clean air
*Clean water
*Zero waste, releases and spills
*Income
*Local, regional, global commerce
*Trading partners
*Customers
*Community economic affairs
*Innovation
*Capital Efficiency
*Risk Management
*Growth
*Shareholder’s return
Triple Bottom Line
Social Equity Environmental
IntegrityEconomic Capital
Considering the Full Life Cycle – LCM
Raw material acquisition and
processing
Manufacturing and distribution
Product use and packaging
After use / disposal
Conservation of natural resources Use of renewable resources; sustainable use of resources Use of recycled and recyclable materials Protection of natural habitats and endangered species Water conservation Energy conservation Waste minimization and pollution prevention, especially the use of toxics and release of toxics to air, water , land Transportation
Minimal use of materials Waste minimization and pollution prevention, especially the use of toxics and release of toxics to air, water and land By-product management Energy conservation Water conservation
Conservation of natural resources Energy efficiencyWater efficiency Consumer health and environmental safetyPackaging efficiency Packaging recycled content Packaging recycle rates
Recyclability; ease of reuse, remanufacture, and repair Waste management Durability Biodegradability/ compostability Safety when incinerated or landfilled
Source: Ellen MacArthur Foundation, Towards the Circular Economy..\..\..\Sustainability_Course_Videos\Circular_economy_client_to_customer.mp4
Sweden
Applying innovative WASTE TO ENERGY program and highly efficient recycling habits, the Scandinavian nation faces an interesting dilemma. They are running out of trash.
Highly efficient waste management and recycling programs - only 4% of the nation’s waste ends up in landfills. (in the U.S. over 50% of the waste produced by the households ends up in landfills)
Waste to energy factories provide electricity to a ¼ million homes and 20% of the entire country’s district heating.
Sweden is importing trash from the landfills of other EU countries. In fact, those countries are paying Sweden to do so.
Economic benefit Environmental benefit
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ManufacturingProcurement
Product Development Maintenance
Sales Delivery/
Distribution Customer Services
Engineering
Requirement for integrating sustainability into every area of value chain
Implementation of sustainability metrics
REACH or RoHScompliance
incorporated into product data
Implementation of energy management
system
OSHA increase and environmental compliance
Tracking of co2 emission
Increased awareness
of sustainability among end consumers
Increased complexity in regulations, standards,
policies
Increased scrutiny of resource management
Reporting of sustainability performance
Penalties for adverse effects
Increased demand ofsustainable
production and products
CollaborationInfo – sharing
Developing a sustainability strategy
• Business as usual is no longer an option;
• Re-evaluation of strategy, considering the real business case by focusing on what the business needs to survive and genuinely prosper;
• Setting up a multi-year, organization-wide goals - sustainable development requires long-term thinking;
• Multi-year goals coupled with annual targets and milestones that most effectively drive performance;
• Designated and dedicated goal leaders, who are supported by multi-disciplinary teams and manage each corporate sustainability goal.
Long-term Goals
Measurement, Monitoring
and Reporting
Stakeholder’s Involvement
Competitive Advantage/
Improved Performance
Developing a sustainability strategy
• Using methods to measure and report corporate sustainability performance.
• Robust, business-focused progress monitoring processes are critical.
• Sustainability leaders that employ robust processes to help set, monitor and track progress, with regular reporting to executive leadership, were more successful in making sustainability a top agenda item for their boards;
• An increasing number of companies tie executive compensation to sustainability goals.
Long-term Goals
Measurement, Monitoring
and Reporting
Stakeholder’s Involvement
Competitive Advantage/
Improved Performance
Actual Impact On a Vital CapitalWhat the Impact on the
Same Vital Capital Must BeIn Order to Be Sustainable
Sustainability Performance =
Source: http://www.sustainableorganizations.org/sustainability-quotient.html
Sample metrics
• Greenhouse gas emissions
• Water consumption
• Solid waste emissions
• Compostable waste emissions
Environmental bottom line Social bottom line Economic bottom line
• Child labour use
• Product or service safety
• Workplace safety conditions
• Employee compensation levels
• Fair trade practices
• Sustainable procurement levels
An ecological illustration:A geographical region produces 10 million gallons of freshwater per year, an ecological limit (denominator)Sustainability norms suggest that such limits not be exceededstill, humans in the region use 15 million gallons per year (numerator)
Actual Impact On a Vital CapitalWhat the Impact on the
Same Vital Capital Must BeIn Order to Be Sustainable
Sustainability Performance =
– 15/10 = 1.50 → anything greater than 1.0 is unsustainable
• Stakeholders should be involved in goal setting – goal setting brings most business value when it involves a broad group of stakeholders;
• Making the board and senior managers more aware and supporting them in developing resilient business strategies;
• Internal stakeholders will be responsible for achieving the goals and will be more aligned with them if involved in the process;
• Fully engaged external stakeholders help calibrate goals, may be more aware of socio-economic trends and can help improve corporate reputation;
• Analyses of legal or contractual considerations.
Long-term Goals
Measurement, Monitoring
and Reporting
Stakeholder’s Involvement
Competitive Advantage/
Improved Performance
Developing a sustainability strategy
´
• PricewaterhouseCoopers release (July 2013): firms are putting greater emphasis on efforts to drive financial savings and build a competitive advantage in the market by being more ecologically efficient and reducing their environmental impact.
• The survey results coincide with a PwC report that offers ideas for companies considering eco-efficiency strategies.
Long-term Goals
Measurement, Monitoring
and Reporting
Stakeholder’s Involvement
Competitive Advantage/
Improved Performance
Developing a sustainability strategy
´
The concept of “Developing a sustainable strategy” has been adopted and modified, using Sustainability Goals that Make an Impact Report as an indicator, from July 2013
Key criteria for successfully implementing sustainability
• It has to be integrated within the fabric of organization;
• It has to address the "triple bottom line" of sustainability: economic, social, and environmental performance;
• It includes performance metrics that can be clearly understood and communicated;
• It must add value and be integrated into the main value-adding systems of the organization;
• It has to be extensively supported by existing management tools and resources.
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REALITY: You can not justify the sustainability business case, within the conventional expectations of a business-as-usual mindset.
GENERAL OBSERVATION
Sustainability is either desired or tolerated;
It mostly depends on how it supports the conventional aims of the business:
• enhancing reputation,• supporting growth or• improving the bottom line.
Usual focus:
• eco-efficiency (short-term) savings;• modest levels of investment have to meet the usual criteria for return-
on-investment and payback.
Where do You stand?
Finite
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5. Introduction to Low Carbon, Resource efficient “Green
Economy”
Making Economy Green-er
The role of Local Economy
The concept of “Leaky Bucket”
GDP Dilemma of Unlimited Economic Growth
Transition to a low carbon resource efficient Green Economy
Importance of Local Economy
• Making the most of every peso that enters your local economy
• 'The problem is not necessarily that too little money flows into a neighbourhood. Rather it is what consumers, public services and businesses do with that money. Too often it
is spent on services with no local presence, and so immediately leaves the area.'
“The Government's National Strategy for
Neighbourhood “
Source: NEF
Day-care outside of the areaSalaries to people outside of the areaCatering companiesFar away takeawaysTaxesUtilitiesFurniture sourced from outsideLittle recycling carries out – compost, white goodsProfessional services – accountants, lawyersSchool meals, meals on wheels from
outside the area.
Money flows into an area in various forms: - inward investment, - grants, - welfare benefits, - salaries, - export earning - tourism- business investment - consumption
´
Irrigation
If money coming in goes right out, then the economy doesn’t benefit.
To keep money circulating in the local economy, you must create linkages that enable people to spend locally.
´
Meanwhile Ian receives £1000. To celebrate his birthday, he orders locally produced food and drinks for £350. He then asks the local plumber to un-block his drains (at a cost of £450). The remaining £200 goes towards his telephone bill and so leaves the local area. In total Ian has re-spent £800 in the localarea.
Nicola receives £1000 and £800 immediately leaves her housing estate: swallowed up by gas and electricity bills; mortgage repayments; food from a supermarket; and a new dress from a boutique in the city. The remaining £200 stays in the local area because: £150 pays her cleaner; £5 buys an apple from the farm next door; £15 goes into her credit union savings scheme; and £30 buys some groceries in the corner shop.
THE LOCAL MULTIPLIER EFFECT
20% of money stays locally
Enters Remains100 20
20 44 11 ….
Total 125
80% of money stays locally
Enters Remains100 80
80 6464 5151 4141 3333 ….
Total 500
'Money is round, and it rolls away.‘ Confucius
Let's go up in the world and follow £1000 on its journeyaround an area to see where it goes and what impact it makes.
The local multiplier effect
´
How to decouple environmental impacts and resource use from economic growth?
Exercise: Investigating Exponential Growth with a Piece of Paper
WHYScarcity of valuable resources
Environmental risks (including aggregation of impacts)
Threats to humans and ecosystem
33 Doublings of 1
Number of doublings
Bil
lion
s
-Rethink growth; (GNH vs GDP)-Paradigm shift – process of overcoming the linear/control/ command way of thinking in consumer’s goods industry;-Dematerialisation of resources circular economy, doing more with less (less water, less fossil fuels, less stuff); -Material efficiency (reuse, recycling, substitution),
-Increased energy efficiency;-Sustainable consumption and production, including green public procurement;-Increase in redundancy & resilience to deal with global changes;-Concept of sharing – co-operatives; -AND required changes in our habits and lifestyles (bottom up vs top down
solution).
How to start the process of decoupling?
Measuring progress with “HPI” - Happy Planet Index
The numbers within the diagram relate to the following headline indicators:1. Measure of environmental pressure per capita ,2. Measure of the percentage of the population flourishing ,3. Measure of economic performance – how well the economy is doing in terms of delivering sustainability and well-being for all (for economic half of the human systems sphere),4. Measure or set the measures of the other (“non-economic”) policy amenable drivers of well being for all (for the remaining human system),5. Measure of well being per unit of environmental pressure (the HPI).
Economic development is not strongly linked with the general happiness of its people, as long as they can meet their basic needs
Use of Limited
ecologicalResources (1)
Performance of other systems(4)
Economic performance(3)
Resources
Well-being for all (2)
Goals
Sustainable well-being (5)
Human SystemsFramework for measuring societal progress by NEF
20th Century
1. Problem solving
2. Analysis
3. Reductionism
4. Individual learning
5. Emphasis on teacher transmitting predetermined knowledge to the student
6. Being competitive
7. Closed and immediate cause and effect
8. Rooted in subjects or disciplines
21st Century
a. Learning through enquiry
b. Meta-learning
c. Problem appreciation and reframing
d. Competitive and collaborative
e. Whole system emphasis
f. Multiple influences through time and space
g. Synthesis
h. Team or group learning
Exercise; understanding the paradigm shift: make the connection
Adopted, based on: Ellen MacArthur Foundation, Towards the Circular Economy
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Brigita Lajkovic
Sources:
Books:
Donald B. Maudsley (1979) A theory of meta-learning and principles of facilitation an organismic perspective
Tim Jackson, (2009), Prosperity without Growth
Thomas L. Wheelen, J. David Hunger, (2012), Strategic Management and Business Policy Toward Global Sustainability
E. D. Beinhocker, (2006), The Origin of Wealth
J. Wible (2000) What is complexity
Rob Hopkins (2009) The Transition Handbook, Green Books
Michael Shuman (1998) Going Local, Free Press
Andrew Simms et al (2006) Clone Town Britain, New Economics Foundation
Donella H. Meadows, (2008), The Art of Systems Thinking
H. Daily, (2010), Ecological Economics
F. Capra (2008), Web of Life
E.F. Schumacher, (1976), Small is beautiful
M. Anielski, (2009), The economics of happiness
R. Heinberg, (2011), The end of growth
P. Hawkin, (1993), The Ecology of Commerce
Reports:
Food and Agriculture Organization of the United Nations (FAO) and UN-Water –Report, 2012
WWDR, 2012
Global Environment Outlook: environment for development (GEO-4), 2012
Human Development Report 2006
World Business Council For Sustainable Development WBCSD, 2011
Ellen MacArthur Foundation, Towards the Circular Economy, 2012
Energy Savings Trust (2011), ‘The Elephant in the Living Room: How Our Appliances and
Gadgets Are Trampling the Green Dream – An Update to The Rise of the Machines’.
NEF, UK interdependent report 2006
Laura Carlsen, Mexico after 10 years of NAFTA: The price of going to market, 2004
Brundtland Report about Sustainability, 1987
Eco-efficiency Indicators, ESCAP, UN, 2009
Ruth Potts, Andrew Simms, (2012), New Materialism
The Energy Mix, (2011), WBCSD Energy and Climate
Natural Solutions, (2012), NEF
Business strategies for sustainable development, International Institute for Sustainable Development
Global Trends in Renewable Energy Investment, (2012), UNEP
Sustainability Goals that Make an Impact, White Paper, (2013), CH2MHILL
Climate Change Starters Guidebook, (2011), UNEP
Websites:
Ellen Macarthur Foundation, http://www.ellenmacarthurfoundation.org
Transition network, www.transitionculture.org
New Economics Foundation, (NEF), www.pluggingtheleaks.org
Berkshares, www.berkshares.org
The Asset-Based Community Development Institute, (ABCD), www.abcdinstitute.org
Department of Economic and Social Affairs - UN, (ESA), http://esa.un.org/wpp/
The Blue Economy, www.theblueeconomy.org
Schumacher College, http://www.schumachercollege.org.uk/
New economic foundation, (NEF), http://www.neweconomics.org/
Independent UK, www.independent.co.uk
Organization for economic cooperation and development, (OECD), www.oecd.org
The World Bank, (WB), www.worldbank.org
The Economics of Ecosystems and Biodiversity (TEEB), www.teebweb.org
International Monetary Fund, (IMF), www.imf.org
Intergovernmental Panel on Climate Change (IPCC), http://www.ipcc.ch
Sustainable Organizations, http://www.sustainableorganizations.org
National Oceanic and Atmospheric Administration, (NOAA), www.noaa.gov
Econosystemics, Reframing Economics for Sustainability, http://econosystemics.com/
The Club of Rome, http://www.clubofrome.org