Transcript Slide 1

Slides for Chapter 5
Sustainability
The term ‘sustainability’ was defined by the UN’s
Brundtland Commission in 1987, as "development that
meets the needs of the present without compromising
the ability of future generations to meet their own needs
The triple bottom line of
21st century business
It is usually represented as a Venn diagram
with three overlapping circles. They are
labelled ‘Economic’, ‘Environment’ and
‘Social.’
Sustainability
Two things are undeniable: in the last fifty years the
human population of the Earth has more than doubled:
from 3.1 billion in 1961 to 6.8 billion. Secondly, each
of us in the developed - and developing - world (West
and East) is using up a great deal more in terms of raw
materials than we were in 1961.
Sad But True……..
1 billion people are illiterate; only 700 million
people have no access to a mobile phone signal but
1.3 billion have no access to clean water; and two
thirds of the world’s population live on less than $2
a day.
Population changes
The population (in China) is now 1.34 billion and it
is expected to be about the same in 2040. India,
meanwhile, will grow from 1.15 billion now to 1.52
billion by 2040. In the same period, Africa is
expected to double from 1 billion to 2 billion.
Tracking changes to
resources
The Living Planet Report (LPR), issued by the World-Wide
Fund for Nature (WWF) every two years, tracks the levels
of consumption of the human race and the impacts upon
our sole supplier of physical resources: the Earth.
(See http://panda.org/downloads/lpr2010.pdf).
Major Changes
In 1961 there were few, or no, central heating and air
conditioning systems, computers, automatic washing
machines and tumble driers, dishwashers, multi-car
households, colour television, personal electronics, mobile
phones, holidays and business travel involving extensive
flying, motorways, plastic packaging, and factors in general
over-consumption, such as junk food (in supermarkets or fast
food outlets), direct marketing and avaricious youth cultures.
Key Facts
•The average USA citizen consumes 43 times each year as much as
the average African.
•The average European cat has a larger environmental footprint in its
lifetime than the average citizen of Chad.
•Income, and thus expenditure, in developing countries is expected to
grow by 500% between 2010 and 2050.
•The Earth’s 6.9billion consumers speak 7000 languages (350 of
them ‘major’ languages; and fewer than 1% of Chinese speak
English).
Guidelines
The UN has issued Principles for Responsible Investment
(www.unpri.org) and there is a draft international standard
for Social Responsibility: ISO26000, issued in May 2010
(www.iso.org/iso/social_responsibility)
Externalities
In addressing the sustainability agenda it is important
to consider unintended consequences of operations
strategies. Economists call these ‘externalities’ –
things you think you can safely ignore in planning
your business. For example, some years back, lung
cancer due to smoking would have been an
externality for restaurant owners; now it is a
constraint and very much an operational issue.
Externalities
Before 2010, BP thought that the risk of not quite meeting
regulation could be considered an externality (i.e. the risk of a
fine, probably easily accommodated, if found out), and learned
an expensive lesson, in the Gulf of Mexico disaster, as a result:
it was not an externality.
Carbon leakage
For some western countries more than 30% of consumptionbased emissions are imported and hence not accounted for,
whilst for China 22.5% of its emissions are generated for the
production of goods for consumers elsewhere (Davis &
Caldeira, 2010) That is why this is called ‘carbon leakage’ carbon emissions slip through the measurement net and this
can introduce significant inequalities on countries’ rights to
carbon allowances
Standards
As the awareness of environmental management grew, the
ISO 14000 series emerged (formally BS7750), designed to
instil ‘best practice’ – again including supply chain
management, in an environmental management context. ISO
14000/01 was a success and is still very well respected. As
with ISO 9000/01, the environmental standard is focused on
how a product or service is produced rather than on the
product itself. ISO 19011 is a combined scheme for an
organisation that wishes to be accredited for both standards at
once.
An Example of the ‘Triple Bottom Line’
Population Growth
Forecast 2010- 2050
Year
2010
2050
billion
billion
Africa
1.00
2.00
Asia
4.10
5.20
Europe
0.73
0.69
USA/Canada
0.35
0.48
Latin America
0.58
0.73
World
6.76
Source:
UNDP 20109.10
Population growth forecasts –
graphical representation
Population growth forecasts –
graphical representation
Population growth in the past
Depletion in the Capacity Of Earth’s Resources and the Increase in Global Demand
Source: WWF Living Planet Report 2010
Depletion in the Capacity Of Earth’s Resources and the Increase in Global Demand
Source: WWF Living Planet Report 2010
Key Points
The combination of population growth and
increasing standards of living are leading to a
situation in which established ways of producing
products and services cannot be sustained at a
global level
Key Points
While the connections between this and climate
change may be the subject of debate, it is clear that
wasting resources is a part of the problem and this
is very much an operations strategy issue.