SustainabilityYour Business and Change

Professor Ken Peattie

Director, BRASS Research Centre

What Does “Sustainability” Mean ? Sustainable Development :

“Development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (Brundtland Report, 1987 “Our Common Future”)

It means developing societies, economies and companies that can be sustained in economic, social and environmental terms.

More than anything else, it means innovation.

How Many Habitable Planets Do We Know Of ?

How Many Planets Would We Need to Extend the British/Welsh Lifestyle to All ?

Add two more if we make that American ….

What Does it Mean for Business ?A concept of progress that companies, NGOs

and policy makers can agree upon;

An emphasis on concepts such as

• Equity (for example the rise in FairTrade);

• Futurity;

• Limits (social and environmental);

• Needs (particularly within poorer countries);

• Biodiversity (the richness of nature);

• Global environmental systems;

Opportunities as well as potential threats;

What Does it Mean for Business ?• A growing market for greener goods & services (e.g.

organic food, eco-tourism);• Supply-chain pressures from customers requiring

ISO 14001 or similar:• New social and environmental regulations;• New niche & cause related marketing opportunities;• New opportunities for partnerships;• A fresh set of business trends such as :

re-localisation, low-carbon systems, rising costs of waste disposal, increased social & environmental reporting requirements;

The Porter Hypothesis

In 1995 Porter and van der Linde proposed that contrary to popular belief, tougher environmental regulation benefited business because :

• Regulations create new markets for some firms (e.g. pollution abatement equipment);

• Pollution & waste represent inefficiencies that companies are motivated to address;

• The challenges involved encourage innovation;

Our Economy : unnatural, linear, inefficient, wasteful, polluting.

Take Make Waste

Only 6% of material in-flow ends up in products

Source: Hawken, Lovins, Natural Capitalism

Takes “natural capital” - structured valuable material, and processes it into unusable waste

Buy/Use

The Path to Sustainability

‘The goal ought not to be “less bad”, but “how good?”, or 100% sustainability. The way to 100% sustainability is innovation.’

Professor William McDonough,

University of Virginia, US

Making Progress: The ‘Four Steps’ Model

Source : Professor Martin Charter, Centre for Sustainable Design

Four Approaches: Arthur D. Little

“Top-liner”“Top-liner”Product / Service

InnovationProduct / Service

Innovation

“Bottom-liner”“Bottom-liner”

Process InnovationProcess Innovation

eco-efficiency drives down costs

eco-efficiency drives down costs

ExtrovertExtrovert

Business InnovationBusiness Innovation

TransformerTransformer

Organisational innovationOrganisational innovation

new products and services grow revenues and market

share

new products and services grow revenues and market

share

better strategy, staff alignment and learning

improves work performance

better strategy, staff alignment and learning

improves work performance

new partnerships secure license to operate, innovate, and grow

new partnerships secure license to operate, innovate, and grow

Innovation

Sustainable Innovation

Electrolux (Green Range)

- 16% of sales

- 28% of gross margins

Philips (Green Flagship Products)

- Bill of materials -5%

- Market share +2%

- Price premium +3%

Varian Medical Systems

- clean design approach reduced part count by 65 % and saved £162 k

Business Benefits from Sustainable Innovation

So What Will it All Mean ???

Ultimately - changes to the way we produce, consume, live and do business; the current situation is unsustainable.

Making progress will involve a range of changes, innovations and opportunities including :

Meeting Needs More Efficiently

VS.

Developing More Integrated Production Systems

Natural Sources of Inspiration

Changes for the Better

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