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10/21/2013 Working Green: Sustainability in an Efficiency-Focused World Antonio Luis Galvao Costa, CSCP Vice President Global Supply Chain, DiverseyCare Business Partner Sealed Air Antonio Galvao Vice President Global Supply Chain at Diversey, now part of Sealed Air Author of the "Working Green" department in APICS magazine since 2008. More than 22 years of experience encompassing planning, logistics, sourcing, manufacturing, engineering, customer service, product portfolio management, and marketing operations. Degree in production engineering and MBA from the Federal University of Rio de Janeiro in Brazil. Brazilian (born and raised in Rio), lived in 5 different countries, married, 2 kids and a tortoise. 1 10/21/2013 My biggest logistics challenge Agenda • • • • • • • Sustainability definitions Greenovate examples Common Pitfalls Drivers of change Path for a more sustainable operation Key takeaways Questions and Answers 2 10/21/2013 Definitions Sustainability is not only GREEN… Or maybe it is… “The problem in agreeing on the meaning of sustainability is not fundamentally about agreeing upon a precise definition, but about agreeing upon the values that would underlie any such definition.” Simon Dresner The Principles of Sustainable Development - 2002 3 10/21/2013 Definitions • Confusion remains • • Environmental ≠ Sustainability Profit a critical element “Meeting the needs of the present without compromising the ability of future generations to meet their own needs.” Our common future 1987 UN World Commission on Env & Development WCED (Brundtland report) Triple bottom line • Most definitions focus on protecting the triple bottom line – Human impact… – Environmental impact… – Financial impact… People Planet Profit • Sustainable development means balancing these interests for longlong-term success. 4 10/21/2013 Integrated Bottom line • A more operational, integrated equation Enhanced top-line growth Brand value, customer relationship, talent recruiting/retention Reduced Operational Costs Energy, water, waste, compliance, health, labor, liability Growth + Cost Savings = Integrated Bottom Line Relevance in recession: reducing waste (cost), improving results The evolution Economic Environmental 1 2 Employee engagement works as a catalyst through: •Visible leadership •Management support •Communication, communication, communication 5 10/21/2013 “Reducing carbon in the life cycle of our products will often mean reducing energy use. That results in greater efficiency and with the rising costs of energy, lower costs, making our business stronger and more competitive.” Mike Duke Walmart President and CEO Greenovate! Companies innovating to create a more sustainable world • Book by Dr. H. Patel , T. McNally and R. Jonash – Compilation of stories of how many of the world’s leading and emerging companies are addressing sustainability issues with profitable solutions that can spur even more innovation , growth and development. – Innovations that generate profit with environmental and social benefits. – Each story identifies the drivers, the barriers, the enablers, the impact and what’s next. – If new businesses are developed based on sustainable practices, the need to continue draining finite resources will be reduced. From Greenovate! Companies innovating to create a more sustainable world , April 2010 AMANHA, June 2010 article with Dr. Hitendra Patel 6 10/21/2013 Greenovate! Companies innovating to create a more sustainable world • What if we could recycle all residues from our industrial processes, transforming into raw materials or efficient fuels all the garbage that goes today into the thousands of landfills across the Globe? • What if we could improve all the agricultural and food producing related processes, making food accessible and cultivation sustainable? What if we reduced the generation of residues to never seen before levels? • What if we could fund new ways to create alternative energy, dramatically reducing our dependence of fossil fuels that are pollutant and expensive? Quiz 1 In 2011, world population reached 7 billion; in what year was it half that much? a) b) c) d) e) 1858 1908 1948 1968 1988 7 10/21/2013 The Sins of Greenwashing Terrachoice • Authors of “Six sins of green-washing – 2007”, “Seven sins of greenwashing – 2009” and “Sins of green-washing: Home and Family edition – 2010” • Green-wash – verb: the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service • Seven sins: hidden trade-off, no proof, vagueness, irrelevance, lesser of two evils, fibbing, worshipping false labels • From 2009 to 2010, the number of “greener” products has gone up by 73% • Proportion of sin-free products increasing from less than 1% in 2007 to approximately 2% in 2009 and almost 4.5% in 2010 http://sinsofgreenwashing.org Investment community is focusing on the potential growth and performance… •Companies in the 2012 CDLI and CPLI provide approximately double the average total return of the Global 500 between Jan 2005 and May 2011(2) •A third of the world’s invested capital calls for 67.4 Total return % (US$) from Jan 2006 to July 2012 corporate environmental data through Carbon disclosure project (1) (722 investors with $87 trillion in assets , from 655 and $78 trillion in 2011) •Heightened investor engagement ; Carbon action has seen more than five fold increase in investor signatories since 2011 (190 investors/18 trillion). Natural capital concept. 31.1 Global 500 CDLI 15.9 Total return % (US$) from Jan 2010 to July 2012 6.4 Global 500 CPLI •Growing awareness of water as a critical business issue (530 investors/$57 trillion) and forest risk commodities (184 investors/$13 trillion). (1) CDP Press report Feb 2013 (2) Carbon Disclosure Project 2012 – Global 500 report 8 10/21/2013 …but also paying attention to how the risks will be managed(1) •Physical • Dependency on resources, physical events and poor infrastructure and quality – Climate change like other business risks •Regulatory •Market based regulations i.e.: carbon taxes, tariffs, trading and permits and stringent requirements •Reputation •No green-wash. Brand value •Litigation •Due to increased legislation. Financial impact. Sustainability reporting and financial reporting combined. (1) KPMG – Climate changes your business Global Risks 2013, Eighth Edition – World Economic Forum, Risk response network Top Five Global Risks in Terms of Impact and Likelihood, 2007-2013 9 10/21/2013 2011 Economic Losses Related to Selected Natural Catastrophes Global Risks 2013, Eighth Edition – World Economic Forum, Risk response network Adapted from sigma natural catastrophe data base of Swiss Reinsurance Company Quiz 2 How much of the Earth’s water is undrinkable salt water? a) b) c) d) 97% 67% 87% 77% 10 10/21/2013 Water Business Strategy for 21st Century “American Industry has used the raw materials employed in its manufactured products with little regard for future supply. Forests have been felled in haste, mines stripped of their contents, the earth sucked dry of its treasures to provide necessities and luxuries for a lusty, growing nation. With supplies failing in one section, industry has abandoned its shafts and trekked on to a new source of supply. It was not until industry found itself embarrassed by actual shortages of raw materials that businessmen began to recognize the need for scientific research.” H.F. Johnson Jr. , 1936 “A sustainable enterprise is dependent on a sustainable environment. Management decisions that fail to reflect this put a company at grave, future risk.” Sam Johnson, 1975 11 10/21/2013 What legacy will we leave? “The Earth belongs in usufruct to the living… No generation can contract debts greater than may be paid during the course of its own existence.” – Thomas Jefferson, 1789 “Society...is a partnership in all science; a partnership in all art; a partnership in every virtue, and in all perfection. As the ends of such a partnership cannot be obtained in many generations, it becomes a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born.“ – Edmund Burke, 1790 “I fear citizens might become unmindful of what they have received from their ancestors or what is due to their posterity and therefore in the risk of leaving to those who come after them a ruin instead of an habitation” – Edmund Burke, 1790 "We have too long treated the natural world as an adversary rather than as a lifesustaining gift from the Almighty. If man has the genius to build, which he has, he must also have the ability and the responsibility to preserve.” - Gerald Ford, 1975 Quiz 3 Compared to the average person in India, the average American consumes how much more energy? a) b) c) d) 3x as much 7x as much 14x as much 21x as much 12 10/21/2013 Unbridled consumption presents consequences for our children… Current Demand = 1.50 x what Earth can sustain Population x Consumption > Planet Source: WWF Living Planet Report If the entire world consumed like Americans… 4 Planet Earths 13 10/21/2013 Global trends by 2050 •70% of people will live in urban areas •Population stress : 3Billion in 1955, 9 Billion in 2050 •Average income will increase 2.8x •Consumption could double, but food could triple •Emerging markets will dominate trade •And then there is carbon and climate change… Climate change •Atmospheric CO2 concentration has risen strongly since about 1850 •Rise entirely caused by humans and primarily due to burning of fossil fuels, with smaller contribution due to deforestation •Since 1900, global climate warmed by ~0.8oC •Temperatures in the past 10 years have been the highest since measurements records started in the 19th century and for many centuries before that. 1. Climate Change – State of the Science Prof. Stefan Rahmstorf – Potsdam Institute for Climate Impact Research http://www.pikpotsdam.de/~stefan 14 10/21/2013 Climate change •Further increase in CO2 concentration must lead to further rise in Global mean temperature. In different scenarios for 2100 this increase range could be from 2oC to 7oC above pre industrial values. •Last major Global warming was at the end of the last great Ice age (15,000 years ago). Warming of 5oC over a time span of 5,000 years •We could get a similar magnitude, over a fraction of this time and starting from a higher point 1. Climate Change – State of the Science Prof. Stefan Rahmstorf – Potsdam Institute for Climate Impact Research http://www.pikpotsdam.de/~stefan Impacts and risks •Sea level rise and loss of ice sheets – 20th century sea level increased 15-20 cm (0.5 to 0.65). Future rise by 2100 could exceed 1m (3.3ft). •Loss of ecosystems and species – Climate change and on-going global ocean acidification •Extreme events – droughts, forest fires, stronger hurricanes •Water and food supplies – Poorer and warmer countries can expect reduction in yields due to water shortages and weather extremes . Resource scarcity might drive riots and resource wars 1. Climate Change – State of the Science Prof. Stefan Rahmstorf – Potsdam Institute for Climate Impact Research http://www.pikpotsdam.de/~stefan Can we afford the risk? 15 10/21/2013 Possible Impact of Global Warming on Different Sectors Global Risks 2013, Eighth Edition – World Economic Forum, Risk response network Adapted from Shaping Climate-Resilience Development: A Framework for decision-making. 2009 Economics of Climate Adaptation Working Group. How can we initiate the path to a more sustainable and profitable operation? •Measurement •Direct •Indirect •Technology Where are resources and energy being used, where are they being wasted and generating unnecessary emissions? Carbon Footprint – Total amount of GHG (mainly CO2) emitted over the entire lifecycle of a product or service CO2 = WASTE 16 10/21/2013 What steps can corporations take to achieve energy efficiencies and costs savings? 1. Energy efficiency through technology improvements 2. Energy efficiency through management or behavioral changes 3. Increased use of low-carbon energy Adapted from “The 3% Solution – 2013” – Carbon Disclosure Project and WWF Collaboration – TAO WAO PAO How can we initiate the path to a more sustainable and profitable operation from a Supply Chain stand point? 17 10/21/2013 Greenovate! Companies innovating to create a more sustainable world • What if we could recycle all residues from our industrial processes, transforming into raw materials orand efficient fuels all the garbage that Patagonia Terracycle goes today into the thousands of landfills across the Globe? • What if we could improve all the agricultural and food producing related processes, making food accessible and cultivation sustainable? What if we reduced generation of residues to never seen before IKEA the Farmer schools, RainForest levels? Alliance • What if we could fund new ways to create alternative energy , dramatically reducing our dependence of fossil fuels that are pollutant and expensive?Energy innovations, Nanosolar Sustainability •Not a competing priority •Should be embedded in the strategy •Not as an add-on Strategic imperative short/long term plans •It is not about doing the right thing only… It is doing the SMART thing Sustainability enhances competitiveness and resilience of the supply chain 18 10/21/2013 Key takeaways •Waste is not good and should be eliminated •Supply Chains have a direct impact on the equation •Be part of the solution not the problem •It is not a threat but an opportunity •Sustainability needs to be at the core of the business •Extending the reach is essential – TAO WAO PAO •Sustainability is a major trend in business and continues to evolve It simply makes good business sense! “Preach the gospel at all times; use words if necessary.” St . Francis of Assisi (1181-1226) ??? “Preach the gospel – use actions and words always.” 19 10/21/2013 Survey www.tinyurl.com/kmd5lrs Questions? Antonio Galvao [email protected] Tel: +31(6)30-900-047 20