jonathan scott, cips - green business · •increase in affluence ... source: smith, vm and...

The ‘Mechanics’

of Sustainability

©2016JonathanT.Scott/contact:[email protected]

An Introduction

www.efmd.org

Sustainability:the capacity to continue intothe long-term.


Focus:conservation,restoration,performance(dynamic, economic, progressive,profitableforall)

32% 32% 29%

7%

Market Potential

Work efficiency

Cost savings

Environment51% 32%

13%

4%

More money for employer

Job security

Control over work

Environment

MANAGERS EMPLOYEES

657 managers and employees in 8 different countries asked, ‘What is most important to you?’©2016JonathanT.Scott/contact:[email protected]

Population Growth• Increaseinaffluence• Increaseinlifespan

SurpriseUnanticipatedchangesin...• Accumulatingproblems• Innovation• Systems/Operations• Education/Training

Eco-System Decline Climate Change

Adaptedfrom:JohanRockstrom

Drivers of Change:

This is not

going away!


Purchase Costs

Operation Costs

Disposal Costs Future Costs

Populationgrowth

ClimatechangeEco-Systemdecline

Unanticipatedchanges


ProductionAnexampleof production and deficits:

BeforeWorldWarII

Today

1 calorieoffossilfuel(diesel,fertilizer,pesticide,equipment,transportation)

2.3 caloriesofprocessedfood

10 caloriesoffossilfuel(diesel,fertilizer,pesticide,equipment,transportation)

2.3 caloriesofprocessedfood

55 caloriesoffossilfuel(diesel,fertilizer,pesticide,equipment,transportation)

1 calorieofbeef

Source:Cooked byMichaelPollan (PenguinPress,NY,2013)©2016JonathanT.Scott/contact:[email protected]

Power plant loss60%-70%

Transmission line loss9%-10%

Motor losses10% Pipe losses

20%

Drivetrain & Throttle losses

35%

Fuel input 100%

Typical Industrial Pumping System

Pump losses25%

Understanding Sustainability: Lesson in Waste

Energy output 9%-10%©2013JonathanT.Scott/contact:[email protected]

Waste: not achieving 100% from purchases andinvestments.

¥£$€

¥£$€

¥£$€

¥£

$€

¥ £

$€

Also called: Non-ProductBusinesses make it, but can’t sell it!

JosephLing3M

Externalized costs


$1 billionLing’s ‘Pollution Prevention Pays’ program

Total savings after 30 years:

1-billionkilosofCO2emissionswereeliminatedintheprocess©2013JonathanT.Scott/contact:[email protected]

Nonna & SonsTyche,Poland

saves€28,800 peryearjustbyturningoffunneededlights

35ElementarySchools9MiddleSchools7HighSchools20otherschools

Escambia County, Florida

Saved: $9 million over3years

Behaviouralchanges:no capital investment

Basic waste elimination...


Doritos

Factory inCasa Grande, Arizona

Recently completed a large water recycling system designed to re-use up to 90% of the water used in the plant.

‘When water becomes scarce our ability to produce products is affected.’

‘We want to have technology developed and scaled so we don’t need tomove production to follow available water supplies.’

Annual savings: $60 millionThe company is also trying to get off the electricity grid by generating all its power from solar voltaics and cooking its chips with solar heat.

Too many products are over-packaged.

…told its 60,000 suppliers to reduce packaging by 5%.

20%ofitsgarbageispackagingwaste.

Result:- Solid waste reduced by 25%- Annual disposal costs reduced by $3.4 billion

The NEW Square Milk JugReducespackagingexpensesby20 cents perjug.

Allows50%moremilktobestoredincrates.

Increasescoolercapacityfrom80jugsto224.

Oneretailereliminated11,000 truckdeliveriesyearly.©2013JonathanT.Scott/contact:[email protected]

New laws are coming...

15% waste

New lawMaximum waste allowed: 6%

Average leakage: 20% - 30%

New LawMaximum leakage allowed: 6%


Waste Elimination on a macro-scale:

EnergyWaterRaw materialsLabour

Governments cannot afford to continuously build expensive power plants...

…particularly if up to 90% of the electricity these power plants generate is wasted because of inefficient systems.


Waste Elimination on a macro-scale:


When waste is eliminated, less resources are used,

which means more businesses can be brought into an area…

which creates more jobs…

which increases the tax base…

which can decrease tax rates.


Paper

Plastic

Electronics

New Laws (and Physical Waste)

etc...

No more land is available for landfill©2013JonathanT.Scott/contact:[email protected]

Zero Waste Factories• Since 2004, nothing used in this factory (which hasbuilt 1.7 million vehicles) has gone to landfill.

• Since 2004, there have been no job losses or layoffs.

• In 2016, the parent company (Fuji Heavy Industries) willinvest another $400-million into this factory,creating 900 additional jobs.

GM, Honda, and Volkswagen are now working to achieve ‘zero landfill’.

Anheuser-Busch and Xerox have ‘zero-landfill’ factories.

Smuckers and Colgate-Palmolive have stated they want the same.

How difficult is it to find waste and wasteful practices?

These6students foundover€15,000 ofwasteinthisbusinessin2hoursand45minutes.

X5=€ 75,000 X20=€ 300,000©2016JonathanT.Scott/contact:[email protected]

Thesestudentsshowedthisbusinesshowitcouldsave€236,113 annually.


ü Redundancies in paperwork and systems...

ü Over-buying...

ü Any form of system or operational inefficiency...

ü Not taking advantage of innovations and opportunities...

ü Law-Suits, Fraud...

ü Damages...

ü Wasted time...

ü Bad service…

ü Bad investments...

ü Poor customer relations...

ü Human error...

ü Wasted markets...

ü Wasted skills and labour...

Additional examples of waste (financial loss) in business environments include:

Waste:not achieving 100% ofpurchases andinvestments


From Saving MoneyTo Making Money


The next step:Resource-Life Extension

Manpower andEnergy Consumption

in Production Processes

Rawmaterials

+ + =Energy Manpower Basicmaterials

Converting raw materials into basic materials:

Converting basic materials into products:

+ =Manpower Energy Finishedproducts

Walter R. Stahel


+ =Manpower FinishedproductsEnergy

+=

Manpower and Energy Consumptionin Production Processes

Rawmaterials

+ + =Energy Manpower BasicmaterialsRawmaterials

+ + =Energy manpower Basicmaterials


Interface

Interface: Making new carpets fromold carpets since 1996.

• Profitsdoubled• Employmentdoubled• The company’s stock priceincreased 550%

Caterpillar

• Operates 3 remanufacturing plants in thesoutheast USA. (job creation)

• Equipment components are manufacturedonce and sold up to three times.

• The business model helps encouragecustomer loyalty.

Overafive-yearperiod:

- allcapitalexpensespaid

- 82% reductioningreenhousegasses

- 60% reductioninpetroleumuse

- 75% reductioninwateruse- theonlymajorcarpetcompanytogainmarketshareinthe2000-2003recession

Source:RayAnderson,TEDlecture(2009)

Overaten-yearperiod:Remanufacturing used engines vs.

manufacturing new engines:

•Lowereconomiccosts (30-53%),•Lowermaterialconsumption(26-90%),•Lowerwastegeneration (65-88%),•Lowerenergyconsumption(68-83%),•Loweremissions (50-88%)•73-78% less carbondioxide(CO2),•48-88% less CO,•72-85% less nitricoxide&nitricdioxide,•71-84% less sulphuroxide,•50-61%lessnon-methanehydrocarbonsemissions.Source:Smith,VMandKeolian,GA(2004)Thevalueofremanufacturedengines,lifecycleenvironmentalandeconomicperspectives,JournalofIndustrialEcology,8(1-2)193-222

Waste Elimination and Resource-Life Extension on a macro-scale:


Tokyo Metropolitan Government:

Municipal Environmental Protection Ordinance

• 15 different retailers• Consolidated deliveries

to 30 stores

Result:• Number of delivery trucks

on Tokyo roads reduced by 50%

• 4,000 tons of GHG’s eliminated

CooperativeNetworks


Lockheed Martin moveditsofficestoanewbuilding litbynatural lightand(alongwitha$500,000 reductioninelectricity)profitedfromthefollowing:

• A 1.67% increase in productivity.

• A decrease in absenteeism of15% (which usually hovered around 7%).

• Further investigation revealed that a 15% drop in a 7% absenteeism rate isequal to a 1% increase in productivity.

• The study concluded that a productivity increase of 2% amounted to$3 million of additional revenue every year.

Introducing more natural daylight into a buildingis an effective way to make it more energyefficient and less wasteful (cost savings).

Canitalsogeneratemoreresource value?(i.e.:Willitproducemorerevenue?)

More than 1,500 wave lengths in natural light

Thereduction in absenteeismpaidforthebuildinginlessthan1 year.

ü Repeat customers...

ü Employees that continuously create value...

ü Renewable energy...

ü Workplaces and systems that enable increases in productivity...

ü Products that facilitate continuous future revenues, not costs...

ü Systems that facilitate continuous future revenues, not future costs...

Additional examples of closed-loops in a business include:

Resource-Life Extension:Obtaining on-going value from

purchases and investments…


Reducing resource consumption and increasing profits by reusing and/or reselling currently used materials,

molecules and resources (i.e.: doing more with less)

To the Recycler?

…only AFTER waste elimination!If WalMart sent its waste to a recycler instead of eliminating it, the

company would not be saving $3.4 billion per year!


Remember theSustainability Mechanism rule:

Waste Elimination (waste prevention)

leading to the ultimate goal of

Resource-Life Extension (material re-use)


Do you recommend proceeding? No or Yes?

Many factory furnaces and boilers in Central and Eastern Europe

are inefficient – and the region is in need of more electricity.

Your company wants to invest in a plan that captures waste heat

from the inefficient furnaces of partners and converts it into

electricity to sell at a profit.


Your office building has a 20-year old air-conditioning system.

Installing a new, more efficient system will reduce electricity bills

by tens of thousands of dollars every year.

Do you recommend proceeding with the purchase?

No or Yes?


A Case Study...19,000 sq. meter office buildingLocation: ChicagoSituation: Needs upgrade (window

seals are leaking)

Improvements made:

- Super insulated windows

- Efficient light bulbs

- Deep day-lighting

- Efficient office equipment

The result:

- Heat load reduced by 85%

- a/c system replaced with a model:• 75% smaller• 4 times more efficient

Total cost: $200,000 • $200,000 cheaper

- Yearly energy bill reduced by 75%

Total savings: $220,000

If all office buildings in the USA did the same, the country couldsave $45 billion in energy costs every year. ©2016JonathanT.Scott/contact:[email protected]

Your company is interested in developing moulded and shaped

batteries for devices like smart-phones. The idea is to make

batteries bigger without increasing the size of the phone.

Do you recommend proceeding? No or Yes?


Massachusetts

Institute of

Technology

Power amplifiers can waste up to 65% of the electricity in a smart phone

Longer battery use


Work with your suppliers and your customers.

What will happen to your business if your suppliers or distributors (or customers) are hit hard because they are not thinking ahead?

Where are the weaknesses in your supply chains and

your customer-use chains?

Preparing for the future involves eliminating your waste and closing your loops...

Profiting from Sustainability:


Proctor & Gamble

...discovered during a rigorous product-lifecycle analysis that using P&Glaundry detergent generated thegreatest amount of waste and pollution.

Specifically, 85% of the energyneeded to wash clothes is used toheat the water in the washingmachine.

Cold water detergent!One of 7 new innovative products thathave generated over $2 billion in sales.

The result?

WasteElimination(WastePrevention)

Resource-LifeExtension

(Closed-LoopEconomicsCircularEconomy)

Sustainability =

Investors

HR professionals

Service providers…

Are you paying attention?

Doyouwanttoinvestyourmoneyinbusinessesthatarefullofwaste?

Doyouwanttohirepeoplethatknowhowtoeliminatewasteand optimizeresources?

MAIN PRINCIPLES...

Sustainability: the capacity to continue into the long-term.

1.

Convey your message in a way that the receiver understands.

2.

Sustainability application: waste elimination leading to resource-life extension.

3.

Involve suppliers, distributers and customers.4.

It’s all or nothing - there is no finish line.5.


Availablefree from:The European Foundation forManagementDevelopment

www.efmd.orgClickon:

Research

Clickon:TheSustainableBusiness


YouTubeEnter: cips andefmd

Clickon:Research

Clickon:TheSustainableBusiness


www.efmd.com

Clickon:Videos

QUESTIONS?

www.cipsfoundation.com


jonathan scott, cips - green business · •increase in affluence ... source: smith, vm and...

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