Download Global Corporations & Environmental Sustainability

Global Corporations
&
Environmental Sustainability
Will O’Brien
April 2010
Objectives
To increase understanding of:
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Definitions
Triple Bottom Line (TBL)
Business Impact on the Environment
Global Challenges re: Sustainability
Doing business in…..
 Australia
 China
 Europe
 Japan
 Integrating Sustainability into Business Models
 What are Global Corporations doing?
 Where to go for additional Information
Sustainable Development
Sustainable development seeks to meet the needs and aspirations of the
present without compromising the ability to meet those of the future. Far
from requiring the cessation of economic growth, it recognizes that the
problems of poverty and underdevelopment cannot be solved unless we
have a new era of growth in which the developing countries play a large
role and reap large benefits.
Our Common Future, 1987
The Brundtland Commission
(UN World Commission on Environment & Development)
Environmental Footprint
An environmental footprint is a measure of the amount of
resources consumed and the amount of pollution; e.g., green
house gas and waste created by an entity and by the firms that
serve the entity, usually summarized by the equivalent are of land
needed to assimilate these impacts.
Source: “Measuring Environmental Footprint: A Financial Services Industry Case Study”, 2008, UNC
Weyerhaeuser’s Environmental Footprint:
http://www.weyerhaeuser.com/Sustainability/Footprint
Triple Bottom Line
The triple bottom line (abbreviated as "TBL" or "3BL", and also known as "people,
planet, profit" or "the three pillars"[1]) captures an expanded spectrum of values
and criteria for measuring organizational (and societal) success: economic,
ecological and social. (Wikipedia)
Business Has Traditionally Assumed
an Infinite Capacity Planet
• Business principles based on assumption of infinite
natural resources and waste absorption capacity
• “The concept of multiple industries collaborating on a
‘whole systems’ approach, recycling each other’s
outputs into inputs is completely antithetical to the cult
of the individual and the pioneer myth that so deeply
characterizes American corporate culture.”*
• US antitrust legislation has not allowed “collaboration”
*Oliver Kellhammer, MBA Student, Bainbridge Graduate Institute
Industrial Pollution
Earth’s Systems
Complexity, Cycles & Interconnections
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A system is a collection of interdependent parts (with flows and stores)
enclosed within a defined boundary.
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The earth has four major systems
– Lithosphere – soil, rock
– Hydrosphere - water
– Biosphere – living organisms
– Atmosphere – air
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Human activity is disrupting
these systems in complex,
ways
Dave McKay, 2009
What is in a Landfill?
• 22 billion disposal diapers in
landfill/year
• 100 million cell phone put out of
service/year
• 2 million tons of e-products
disposed/year
• 63 million computers in the U.
S. became obsolete in 2005
• Circuit boards - lead &
cadmium
• Flat screen & switches mercury
80% of Toxic Wastes are from Electronics Products
• The electrical and electronic waste (WEEE) law, in 2005,
EU authorities introduce legislation for free take back of
waste goods by final owners and ensure that equipment
producers are responsible for financing the collection,
treatment, recovery and disposal of all waste.
– 30% of Fortune 500 companies’ business are in Europe
• Silicon Valley Toxics Coalition
– http://www.svtc.org/ecomaps/svtc_ecomaps/index.html
• Oregon Natural Step
• Zero-waste Coalition
• Green IT
CO2 CH4 NOx, others (CFCs, PFCs)
Global Business Challenges
• Recruiting, hiring, and developing talent around the world
• Acquisition and diversification strategies encompassing a global
outlook
• Business and market expansion opportunities worldwide
• Understanding international politics
• Environmental challenges that will vary greatly by country
• Managing global supply chains
• Communication across the organization in several different
languages
• Organizational change challenges in different cultures
• International law and exchange rates
• Risk management priorities in different parts of the world
Source: http://globalization.suite101.com/article.cfm/global_business_challenges
Government Trends
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Australia
China
European Union
Japan
Agenda 21
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Agenda 21 is a comprehensive plan of action to be taken globally, nationally and locally by
organizations of the United Nations System, Governments, and Major Groups in every area
in which human impacts on the environment.
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Agenda 21, the Rio Declaration on Environment and Development, and the Statement of
principles for the Sustainable Management of Forests were adopted by more than 178
Governments at the United Nations Conference on Environment and Development
(UNCED) held in Rio de Janerio, Brazil, 3 to 14 June 1992.
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The Commission on Sustainable Development (CSD) was created in December 1992 to
ensure effective follow-up of UNCED, to monitor and report on implementation of the
agreements at the local, national, regional and international levels. It was agreed that a five
year review of Earth Summit progress would be made in 1997 by the United Nations
General Assembly meeting in special session.
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The full implementation of Agenda 21, the Programme for Further Implementation of
Agenda 21 and the Commitments to the Rio principles, were strongly reaffirmed at the
World Summit on Sustainable Development (WSSD) held in Johannesburg, South Africa
from 26 August to 4 September 2002.
Source: www.un.org/esa/dsd/agenda21/
Australia
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Environmental and planning laws in Australia have undergone, and continue
to undergo, significant change.
There is new legislation at both the Federal and State levels in all
jurisdictions including laws which specifically respond to climate change.
This, combined with changes in the policies by regulatory authorities,
particularly in relation to enforcement, means that the extent to which that
legislation impacts on the day-today operation of businesses has
significantly increased.
Source: www.lexmundi.com/images/lexmundi/PDF/GuidesToDoingBusiness/Guide_Australia.pdf
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Australian consumers (in general) are more knowledgeable about
environmental sustainability
“How to spot greenwashing”
www.gogreeneraustralia.com/blog/index.php/2010/02/02/how-to-spot-greenwashing/
China & Environmental Challenges
China & Agenda 21
Leading Group of China's Agenda 21: After the UN Conference on Environment
and Development held in 1992, the Chinese Government began the process of
formulating China's Agenda 21. The Chinese Government decided to establish a
Leading Group and an affiliated office, under the direction of the State Planning
Commission (SPC) and the State Science and Technology Commission (SSTC), to
engage in the formulation of China's Agenda 21 and the associated Priority
Programme.
Completion: In March of 1994, China's Agenda 21 was finally completed, based
on China's specific national conditions and paying attention to population,
environment, and development, sets up a strategic goal of sustainable
development that can promote coordinated development of economy, society,
resources, and environment.
China's Agenda 21 can be categorized into four parts:
• Comprehensive strategy and policy of sustainable development
• Sustainable social development
• Sustainable economic development
• Rational utilization of resources and environmental protection
Europe 2020 Strategy
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…a clear pathway to an innovative, sustainable and competitive Europe.
should focus decision-makers’ attention on a manageable number of priority
issues consistent with the objective of achieving long-term growth in line
with the multi-faceted nature of sustainability.
To this end, the Europe 2020 Strategy should:
– aim to keep the overall cost of doing business in Europe at a globally competitive
level
– put in place an industrial policy supportive of innovation and private investment
– encourage entrepreneurship
– put more emphasis on fostering a culture of responsible risk-taking within a
smart, science-based regulatory framework implement the recommendations of
completed High Level Groups, for example the High Level Group on
Competitiveness, Energy and the Environment and the High Level Group on the
Competitiveness of the European Chemicals Industry.
Source: www.europeontrack.eu/_SiteNote/WWW/GetFile.aspx?uri=:/default/enus/media/Files/MainBloc/Vision%202025%20Quick%20Wins_ae8260f6-54f3-42ae-a298-508fdc00d477.pdf
EU Environmental Rules
EU companies have to meet certain environmental requirements, some of these include:
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Emissions Trading Scheme
The EU has established an Emissions Trading Scheme to reduce greenhouse gas
emissions. Firms in the energy, iron and steel, paper/board, and mineral industries
are required to monitor and report their CO emissions. They receive free "allowances"
(permits) from their national authorities entitling them to emit a given quantity of CO
or other greenhouse gas over a given period.
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Waste management
Companies must comply with legislation on avoiding, recycling and re-using waste.
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Eco-design of energy-using products
Energy efficiency aspects should be taken into account at an early stage in the
design phase of a product. The EU has passed laws requiring energy-using products,
especially those with high potential for energy saving, such as electrical and
electronic devices and heating equipment, to be designed to be more energyefficient.
Source: http://ec.europa.eu/youreurope/business/doing-business-responsibly/keeping-to-environmental-rules/index_en.htm
Energy Efficiency - UK
Energy Efficiency in UK
Japan
Check out : http://www.slideshare.net/Fred09/japan-environment-trends
Global Corporations are
Providing Leadership
Why is Business Part of the Solution?
• Business is focused on learning and change.
– Change can and does happen relatively quickly
• Business is a global institution.
– The challenges are fundamentally global in nature
• Business is the source of technological innovation.
– Technology is the proximate cause of environmental
impact
Dr. John Ehrenfeld, Director Emeritus, MIT Technology, Business and Environment Program
Sustainable Development for
Business
• Sustainable development for business 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” (International Institute for
Sustainable Development 1994: 4).
• Sustainable business has interdependent economic,
environmental, and social objectives (Triple Bottom Line)
• Long-term viability depends on integrating all three
objectives in decision-making
Areas of Opportunity
• Managing an environmentally responsible
enterprise:
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Integrating environmental sustainability into business models
Environmental management systems; e.g., ISO 14001
Greening the supply chain
Sustainability > Innovation & Entrepreneurship
Investment decisions
Change management – Fostering Sustainable Behavior
Energy management
Waste management
Reporting: internally and externally
Marketing
• Start…enrolling/aligning stakeholders…who are they?
Stakeholders
Engaging Stakeholders
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While executive support is a critical key component to business success, it
is not the only form of leadership present in an organization. Business
sustainability leaders understand the value in leveraging their internal
resources as well as their key business relationships.
Whether led by a sustainability executive or traditional management, the
pursuit of long-term business sustainability enables:
– Employees: Create incentives to lower costs, initiate process
improvements, and stimulate innovation.
– Customers: Establish expectations that are defining products and
service attributes.
– Suppliers: Align supply chain expectations to drive sustainable material
requirements and efficiencies.
– Local Community: Defined framework for initiatives carried out at the
local level through partnership with community groups, local
businesses, and governing bodies.
– Investors: By comprehensive and accurate reporting; e.g., CDP, DJSI.
– Others?
Source: http://news.socialyell.com/878/csr-advice/engaging-stakeholders-as-a-path-to-business-sustainabilit
Integrating Sustainability into
Business Models
Supply Chain Management
Environmental Management System
ISO 14000- 14001
http://www.innovating-canada.com/iso14000.htm
http://www.youtube.com/watch?v=uCjK3lQhPDc
Green Supply Chain Management
Environmental
Management
Supply Chain
Management
Green Supply Chain Management
“Wal-Mart to Assign Green Ratings”
http://online.wsj.com/article/SB124766892562645475.html
Green Supply Chain >
Carbon Labeling
Jan. 23, 2007 Tesco, the largest supermarket chain in Britain, has
announced that it will begin labeling all 70,000 products on its
shelves with the amount of carbon generated from the production,
transport and consumption of those items.
http://www.terrapass.com/blog/posts/british-superma
Sustainability Drives Innovation
Stages:
#1 Viewing compliance as an opportunity
#2 Making value chains sustainable
#3 Designing sustainable products and services
#4 Creating “next-practice “platforms
“ Why Sustainability is Now a Key Driver of Innovation”, Harvard Business Review, 2009
Sustainable Entrepreneurship
Businesses that are “Green”
– Solar, Wind, Hydro, Geo-Thermal
Power
– Recycling/Reprocessing
– Eco-Friendly Products
– Organic Agriculture
– “Green” Non-Profits
• e.g., Sustainable Methods Institute
Fostering Sustainable Behavior
• “Leading Change….” by John P. Kotter
• “Fostering Sustainable Behavior” by
Douglas McKenzie-Mohr:
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Set goals
Identify barriers
Plan and Implement
Evaluate
Revise and refine
Benefits of Sustainable Operations
The application of sustainable operations can result in
significant business benefits including:
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Greater operational efficiencies; e.g., eliminate wasteful practices
Cost reduction
Quality image
Positive publicity
Opportunities for new and growing markets >incremental revenue
Conservation of the environment
Respect from the local community
Staff loyalty
Global Environmental
Leadership Examples
Dow Jones Sustainability Indexes
Launched in 1999, the Dow Jones Sustainability Indexes are the first global indexes
tracking the financial performance of the leading sustainability-driven companies
worldwide.
The identification of sustainability leaders for the Dow Jones Sustainability Indexes is
based on the Corporate Sustainability Assessment of SAM Research.
A defined set of criteria and weightings is used to assess the opportunities and risks
deriving from economic, environmental and social developments for the eligible
companies.
A major source of information is the SAM questionnaire which is completed by
companies participating in the annual review.
The external assurance report by Deloitte ensures that the corporate sustainability
assessments are completed in accordance with the defined rules.
Based on SAM Research's corporate sustainability assessment companies are ranked
within their industry group and selected for the Dow Jones Sustainability Indexes, if
they are among the sustainability leaders in their field.
For a detailed description of this selection process you can download the guidebook for
the Dow Jones Sustainability World Indexes and the guidebook for the Dow Jones
STOXX Sustainability Indexes. www.sustainability-index.com/
Transforming Sustainability into Customer Value
Triple bottom line
Social policy
dialogue
Social responsibility
Products
Environmental
management
“Baseline
management”
ABB’s
organizational
structure
Local
1990
Environmental Product Declarations,
Life Cycle Assessments
Sites
Implementation of ISO 14001
Regional
1994
ABB’s first
Environmental
Report
Global
2000
ABB’s first
Sustainability
Report
Customer
centric
2002
ABB’s first triple
bottom line
Sustainability Report
Bayerische Motoren Werke AG,
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Sustainability is an integral part of BMW business principles and practices,
which has led to a confirmation of its leadership position in the automotive
industry. The company has been able to surpass its peers by exhibiting
unparallel commitment to environmental issues.
BMW strives to conserve environmental resources throughout its value
chain from production systems to materials used in-bound and out-bound
logistics, and recycling and disposal of used vehicles.
The company has implemented efficient environmental management
systems, and undertakes regular external and internal audits for its
operations as well as for its suppliers.
BMW has also included a package of multiple emission reduction measures
in large parts of the car fleet (called Efficient Dynamics) in order to meet the
challenges of global warming and fossil fuel reserves, which is illustrated by
25 percent decline in car fleet emissions in 2008 as compared with 1995
levels.
Along with various initiatives undertaken to achieve environmental
efficiency, the company also takes measures, such as 360 degree feedback
and benchmarking of brands against that of peers, to strengthen its brand
image and gain competitive advantage.
Source: DJSI World
Kingfisher
• Kingfisher Plc is a London-based international home improvement
retailer. The company's main retail brands run on the do-it-yourself
(DIY) concept and include products such as complete kitchens,
bathrooms and bedrooms.
• The company sets sustainability targets and regularly measures its
progress through a social and environmental management system
called 'STEPS'.
• Its "Future Homes" strategy for instance is designed to integrate
sustainability into commercial operations, bringing innovative
products to the market to help its customers adopt more sustainable
lifestyles.
• In Kingfisher's specialized DIY home improvements stores (e.g.
B&Q in the UK and Castorama in France) customers are
increasingly enticed to choose from a wide range of green products.
• In 2008 this accounted for 7% of total sales.
Source: DJSI World
Panasonic Electric Works
• Panasonic ‘s concentrated efforts to develop environment-friendly
operations has resulted in operational excellence, which is evident
from a sharp decline in greenhouse gas and dust emissions; and
reduced electricity, water and waste consumption.
• The concept of restoring bio-diversity is also adopted at a strategic
level in the company; e.g., the company constructed a 'Prosperous
Park' including biotope in a building premise in Osaka in March
2009.
• In the social dimension, the promotion of labor practices within the
organisation differentiates it from other companies. The company
has established 'Diversity Promotion Office', and has been awarded
Diversity Award Semi Grand prize.
Source: DJSI World
Starbucks
In 2004, with support from CH2M HILL, Starbucks voluntarily conducted an inventory of its
greenhouse gas emissions in an effort to understand and evaluate its contribution to climate
change. Using the WRI Greenhouse Gas Protocol, Starbucks limited the inventory to areas with
the biggest environmental impact: retail, coffee roasting, administration operations and its
distribution network. Based on the results, Starbucks committed to reducing emissions by:
• Purchasing renewable energy—annually, five percent of the energy needed by its North
America retail stores, generated by 11 large-scale windmills, and estimated to reduce CO2
emissions by two percent;
• Addressing the impact of its transportation operations—working with Business for Social
Responsibility’s (BSR) Clean Cargo Group on ocean transportation and using the Clean Cargo
tool
to engage freight vendors;
• Monitoring roasting plant operations— an environmental team at each of the company’s
four
roasting plants are creating measures for reducing emissions and conserving energy;
• Taking leadership and raising awareness—by encouraging others to take action.
• Setting a reduction target—in fiscal 2005, the company established a gas emissions
reduction target.
Sources: Starbucks http://www.starbucks.com/aboutus/beantocup.asp
http://www.greenatworkmag.com/gwsubaccess/05julaug/starbucks.html
The Unilever Group
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Unilever is one of the world's leading food producers, and household and
personal care product manufacturer. The company owns 270 manufacturing
plants across six continents. It employs around 174,000 people in more
than 100 countries worldwide.
The company has out-performed others in the environmental and economic
dimensions by strategically focusing on achieving a long-term sustainable
business model. This is reflected through a decline in the ecological
footprint of the company.
The company has initiated the Sustainable Agricultural Initiative (SAI) and
the Lead Agricultural Program to promote the adoption of a responsible
approach towards farming practices and has also published guidelines for
sustainable farming practices.
Unilever has developed the 'Greenhouse Gas Profiling Tool' in order to
assess the environmental impact of its new products. It also creates
nutritional awareness among consumers by labeling the nutritional value of
ingredients on packets.
Source: DJSI World
Examples of “Profitable Sustainability”
Wal-Mart
Sustainability Reporting
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Carbon Disclosure Project (CDP)
Dow Jones Sustainability Index (DJSI)
Global Reporting Initiative (GRI)
UN Global Compact – Communications on
Progress (COP)
Carbon Disclosure Project
The Carbon Disclosure Project is an independent not-for-profit
organization holding the largest database of primary corporate climate
change information in the world.
Thousands of organizations from across the world’s major economies
measure and disclose their greenhouse gas emissions and climate
change strategies through CDP. We put this information at the heart of
financial and policy decision-making.
http://en.wikipedia.org/wiki/Carbon_Disclosure_Project
www.cdproject.net/en-US/Pages/HomePage.aspx
Carbon Disclosure Project
Carbon Disclosure Project (CDP) results and reports
Find out how organizations and public sector bodies around
the world are responding to climate change by taking a look
at the individual corporate responses to CDP or by reading
our reports. Our reports provide detailed analysis of the
information supplied each year to CDP and indicate
important trends and developments.
Read our reports
Global Reporting Initiative (GRI)
The Global Reporting Initiative (GRI) has pioneered the
development of the world’s most widely used sustainability reporting
framework and is committed to its continuous improvement and
application worldwide. This framework sets out the principles and
indicators that organizations can use to measure and report their
economic, environmental, and social performance.
www.globalreporting.org/
2007 Global Reporting Initiative (GRI) Matrix
Additional Knowledge & Information
Information Sources
Books:
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Anderson (1998), Mid-Course Correction
Brown, Christopher Stephen. (2005). Sustainable Enterprise
Cunningham, William P. (2007), Environmental Science
Doppelt, Bob (2003) Leading Change Toward Sustainability
Elkington (1997), Cannibals with forks (The “Triple Bottom Line”)
Epstein, Marc (2008), Making Sustainability Work
Esty, Daniel C and Winston, Andrew S. (2006), Green to Gold
Galea, Chris (August 2004). Teaching Business Sustainability
Hawken, Paul (1999) Natural Capitalism
Hawken, Paul (1993), The Ecology of Capitalism.
Holiday et al, (2002), Walking the Talk
McDonough/Braungart (2002), Cradle to Cradle
Meadows, Donella H. (1992), Beyond the Limits
Savitz, Andrew W. & Weber, Karl (2006) Triple Bottom Line
Willard, Bob (2002), The Sustainability Advantage
Strategic Sustainability Consulting
http://www.sustainabilityconsulting.com/
Additional Knowledge & Information
• GSOM course – May 17th – July 1st :
“Greening the Corporation” (MGMT 5505)
• www.greenprof.org