Transcript Greening Your Business

SUSTAINABILITY & MANAGEMENT
Will O’Brien
Executive-in-Residence, Clark University
Director, Worcester Sustainable Business Leader Program
Email: [email protected] | Cell: 978-793-1635
WILL O’BRIEN
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MBA, University of Albany
Juris Doctor, Suffolk University Law School
@40 years in Management and Consulting
Teaching since 2002
Executive-in-Residence, Clark University, GSOM
Lecturer, Johns Hopkins University
Director, Worcester Sustainable Business Leader Program
Research Interests:
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Business and Environmental Sustainability
Change Management & Leadership
Entrepreneurship
Project Management
Viet Nam
Websites: www.greenprof.org
www.sustainablebusinessleader.org/
FIVE FORCES DRIVING CORPORATE
SUSTAINABILITY MANAGEMENT
1.
Brand Competition
2.
Risk Disclosure
3.
Regulatory Compliance
4.
Innovation
5.
Good Business
THE SUSTAINABILITY IMPERATIVE
Megatrends force fundamental and persistent
shifts in how companies compete.
 Megatrends require businesses to adapt and
innovate or be swept aside.
 Examples of megatrends include:
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Electrification
Mass Production
Globalization
Quality Management
Information Technology
Firms must:
Rethink what they do
 Recast how they operate
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REFERENCE
Daniel Sitarz, (October 2008) Greening Your Business: The
Hands-on Guide to Creating a Successful and Sustainable
Business, Earthpress, Carbondale, IL ISBN-10: 1892949466
TABLE OF CONTENTS
1.
2.
3.
4.
5.
6.
7.
8.
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10.
11.
12.
Introduction
Business Strategy
Sustainability Planning
Fostering Sustainable Behavior
Energy Efficiency
Waste Management
Green IT
Green Supply Chain Management
Entrepreneurship & Innovation
Green Marketing
Conclusion
Additional Information
INTRODUCTION: FOUR BASIC PREMISES:
1.
Human civilization faces an array of profound
environmental problems that have already begun to
negatively affect the foundations of life on this planet.
2.
Business is the only force on earth with enough reach to
confront and correct the most serious environmental
problems that face humanity.
3.
Every single business in the world has both the ability
and the opportunity to thrive and prosper by becoming
more sustainable in every phase of its operations.
4.
Creating a green and sustainable business is a daunting
task, but the steps to doing so can be both
straightforward and understandable to anyone.
BUSINESS STRATEGY:
WHY GO GREEN?
Doing well by doing good
COST SAVINGS
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Why are we in business?
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How do we reduce our costs of running a business?
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The “myth” of the Environmental Premium
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“Going green” = “growing green” i.e. money!
EMPLOYEES
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Employees will be motivated
They will work harder
 They will be more productive
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Attract employees who want to work for you
Less turn over
 Better products & services
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Workplace becomes a safe, clean place
COMPETITIVE ADVANTAGE
By going green, you can…
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Operate more efficiently than competitors
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Offer products that are superior in quality
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Better cater to customer needs
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Lower health insurance premiums
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Gain the trust of investors
BUSINESS STRATEGY:
CALCULATING COST SAVINGS
The proof is in the numbers
PAYBACK ANALYSIS
# years required for improvement to pay for itself is
equal to:
Total initial cost of the improvement
First year cost savings produced by improvement
Example: We want to replace 100 old incandescent
bulbs with 100 new fluorescent bulbs
PAYBACK ANALYSIS
Incandescent Bulb
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1 incandescent bulb = 100
watts
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On 18 hours a day/260 days a
year
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Uses 468 kWh energy (100 x 18
x 260)
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10 cents per kWH = $47 a year
per bulb.
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Fluorescent Bulb
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For 100 bulbs, this is $470
annually.
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1 fluorescent bulb = 20 watts
On 18 hours a day/260 days a
year
Uses 94 kWH energy (20 x 18 x
260)
10 cents per kWh = $9.40 a
year per bulb.
For 100 bulbs, this is $94
annually.
PAYBACK ANALYSIS
100 new compact fluorescent bulbs @ $5 a bulb
costs $500.
 $470 - $94 = $376 first year cost savings
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Total initial cost of the improvement
First year cost savings produced by improvement
$500
$376
= 1.33 Years
Payback
RETURN ON INVESTMENT
Return on Investment (ROI) =
Net return*
Capital cost of investment
*Net Return =
Net annual savings x life of investment
RETURN ON INVESTMENT
Using the same example…
Assume 10 years of life for fluorescent bulbs
Net annual savings: $376
$376 x 10 = $3,260 net return
Recall that 100 fluorescent bulbs costs $500
RETURN ON INVESTMENT
Return on Investment =
Net return
Capital cost of investment
$3,260
$500
= 652% ROI
over 10
years
SUSTAINABILITY PLANNING:
HOW TO GREEN YOUR BUSINESS
A business’s guide to going green
SUSTAINABILITY PLANNING:
INTRODUCTION
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Every business should have a sustainability plan
Plan is the “go to” source for a company’s stance
on environmental issues
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Defines clear employee responsibilities
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Sets clear, measurable goals
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Details how to achieve goals
SUSTAINABILITY PLANNING: 5 STEPS
1.
Develop a Company Environmental Policy
Statement
2.
Determine Employee Responsibilities
3.
Prepare the Green Plan
4.
Implement your Green Plan
5.
Communicate Efforts
DEVELOP A COMPANY ENVIRONMENTAL
POLICY STATEMENT (VISION)
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Shows stakeholders that environmental issues are
important to your company
Keep it simple:
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No longer than one page.
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Make it clear and easy to read and understand, since it is
meant for everyone to see.
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It should be realistic, achievable and relevant to a
company’s activities and practices.
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It should have top-level support (i.e., endorsement from
managing director, president, chief executive or other).
VISION EXAMPLE
The University of New Hampshire (UNH) is nationally recognized as a
Sustainable Learning Community* -- a land grant, sea grant, and space grant
university that unites the spirit of discovery with the challenge of
sustainability across its Curriculum, Operations, Research and Engagement:
• Curriculum: Educating citizen-professionals to advance
sustainability in their civic and professional lives
• Operations: Embodying first principles and best practices of
sustainability
• Research: Serving society with scholarship that responds to the
most pressing issues of sustainability
• Engagement: Collaborating locally to globally with extension
and outreach
-- through four initiatives designed around four foundational systems of
sustainability – biodiversity, climate, food, and culture.
COMPANY EXAMPLE ENVIRONMENTAL
POLICY STATEMENT: WALMART
“At Walmart, we know that being an efficient and
profitable business and being a good steward of
the environment are goals that can work
together. Our broad environmental goals at
Walmart are simple and straightforward:
To be supplied 100 percent by renewable energy;
 To create zero waste;
 To sell products that sustain people and the
environment.”
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DETERMINE EMPLOYEE RESPONSIBILITIES
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Assign particular roles and responsibilities to attain company’s
environmental goals
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Clear definition = better employee accountability & support
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Some work that employees may be assigned to do:
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Collecting information for various environmental assessments of the
business, such as energy use, water use, waste disposal, etc.
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Preparation of various worksheets and process maps regarding your
business plan.
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Participating in training or education efforts to understand any new
policies.
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Implementation of any of the changes that your company environmental
plan requires.
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Communicating your new environmental commitment to customers and
the public.
PREPARE THE SUSTAINABILITY PLAN
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Choose which areas of your business you plan to
assess: i.e. energy, waste, water, green IT, etc.
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Carry out assessment/audit
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Review results of assessment
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Determine if action is necessary, and if it is, outline
the necessary steps to solve the problem/opportunity
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Compile all additional information/paperwork
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Set meaningful, manageable goals/targets
IMPLEMENT YOUR SUSTAINABILITY PLAN
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Follow the outline you created for each of your target
areas
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Focus on fostering sustainable behavior
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Monitor progress towards goals
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Document everything
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Gather employee feedback
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Review goals & employee accountability periodically
COMMUNICATE EFFORTS
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Share your successes!
Be open and honest about your failures, and
make suggestions about how you will fix or
improve upon them in the future.
Reap the rewards of a better public image: more
customers, more investors, and jealous
competitors.
FOSTERING SUSTAINABLE
BEHAVIOR: MAKING
SUSTAINABILITY THE BUSINESS
OF YOUR BUSINESS
Success is a business-wide effort
FOSTERING SUSTAINABLE BEHAVIOR
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Sustainable behavior can start off strong…and then
taper off.
Sustainable behavior only long lasting if:
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Employees motivated and involved
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Top management is on board
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It becomes a part of corporate culture, so that rules and
regulations are in place, i.e. environmental management
system
Want to create a culture of: “this is how we do things
here.”
FOSTERING SUSTAINABLE BEHAVIOR
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Motivating Employees:
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Build awareness of the company’s sustainable development
commitments and performance
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Incorporate sustainable development in performance
evaluation, compensation, personal development plans
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Create partnerships with NGOs and local communities
Motivating Top Management:
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Provide tangible, cost-benefit analysis of improvements
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Incorporate sustainable development in performance
evaluation, compensation, personal development plans!
FOSTERING SUSTAINABLE BEHAVIOR
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Environmental Management Systems (EMS): a
formal set of policies and plans that defines how
a company will evaluate, manage, and track its
overall environmental impacts.
The presence of an EMS can have a variety of
benefits, such as:
Improved environmental performance
 Better regulatory compliance
 Certification and recognition (IS0 140001)
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FOSTERING SUSTAINABLE BEHAVIOR
Five Key Elements in an EMS
Commitment
and policy
Review
Monitoring,
Evaluation
Planning
Implementation
& operation
FOSTERING SUSTAINABLE BEHAVIOR
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For more information, both documents are
available at http://www.greenprof.org/?cat=29
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“Leading Change......“ by J. P. Kotter, Harvard
Business School
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"Fostering Sustainable Behavior: Beyond Brochures"
by Douglas McKenzie-Mohr
ENERGY EFFICIENCY: HOW TO
REDUCE ENERGY COSTS
The sweetest of the low-hanging fruits
LET’S EXAMINE ONE COUNTRY
VIETNAM’S ENERGY USE
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Electricity counts for 35% of all energy demands.
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In 1998, industry accounted for 1/3 of final energy
use.
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In 2007, it accounted for 46 %.
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Electricity use by electrical appliances accounted for
39% of total electricity use in Vietnam in 2007.
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In 2009, Vietnam…
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Exported 535 million kWh.
Imported 3.85 billion kWh.
Vietnam’s consumers currently pay some US$14–15
billion per year for energy!
ENERGY USE IN VIETNAM
ENERGY EFFICIENCY
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Lighting is a critical component of every small
business and can be a source of immediate savings.
The Electric Power Research Institute estimates that
an aggressive drive to reduce energy costs can reduce
electricity use by up to 25 to 45%.
The quest for energy efficiency entails a careful look
at two main areas:
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Examine how your business uses energy and investigate
every possible way to reduce or eliminate that use of
purchased energy.
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Look closely at any possible way to replace that purchased
energy with renewable energy sources.
ENERGY EFFICIENCY: WHAT’S USING IT?
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Lighting is the biggest expense for retailers, at about
37% of total energy use.
Retail businesses spend nearly $20 billion on energy each
year.
 A 10% reduction in energy costs for the average retailer
can boost net profit margins by nearly 2% and sales per
square foot by $25.
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Office businesses attribute 16% of their energy use to
office equipment – more towards equipment to cool it.
It is estimate that 42% of all lodging energy is used
towards the heating of water, water which could
otherwise be heated by thermal solar systems rather
than electricity.
ENERGY EFFICIENCY: LIGHTING
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Highest returns are usually on lighting
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Always upgrade your lighting first
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Improved lighting = improved productivity
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Lighting also the easiest change to make:
Switch from incandescent to fluorescent bulbs
 Use timers/dimmers/motion sensors
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ENERGY EFFICIENCY: HVAC
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Heating, Ventilation and Air Conditioning
account for 40% of electricity used in commercial
buildings
Benefit from upgrades and building
improvements
But also benefit from cleaning.
Remove need for HVAC by using awnings,
shades, trees, etc.
ENERGY EFFICIENCY PLAN
1.
Conduct a comprehensive energy use
assessment of your business operations
2.
Create a strategy to eliminate problems
3.
Evaluate energy efficiency actions on an
economic basis
4.
Implement the plan
ADDITIONAL INFORMATION
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For additional information, read “Energy
Efficiency: Teaching Module” by the Aspen
Institute, available at
http://www.greenprof.org/?cat=31
WASTE MANAGEMENT:
REDUCING YOUR WASTERELATED COSTS
Waste is money
WASTE MANAGEMENT
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The current lifestyle that the developed world leads is
not sustainable.
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The average North American consumes 10 times as
much as the average person living in China.
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Across the globe, only 7% of materials consumed
actually become saleable products, 93% is waste.
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30 times as much as the person living in India.
99% becomes waste within six weeks.
Vietnam produces over 15 million tons of waste each
year.
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Urban areas produce 60% of this waste, but have only 24%
of Vietnam’s population!
WASTE MANAGEMENT
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Waste is money lost:
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Every single thing that your company disposes of,
from used packaging, to trimmings, to waste oil, to
smoke stack emissions, to plant effluents – were all
initially purchased.
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When purchased materials become waste, you are
throwing away money.
Waste is money gained:
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Turn waste from an expense item into an income
item
WASTE MANAGEMENT: PRIORITIES
Reduce
waste at the
source
Recycle as much
generated waste
as possible
Treat waste
Dispose of waste
Most
Preferred
Least
Preferred
WASTE MANAGEMENT: HOW TO REDUCE
WASTE AT THE SOURCE
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Are you are overproducing?
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Are you keeping unnecessary inventory?
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Are you controlling for product quality and
defects?
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Are you over-processing materials?
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Is there excessive waiting?
WASTE MANAGEMENT PLAN
1.
Conduct a comprehensive waste assessment of
your business operations
2.
Create a strategy to eliminate problems
3.
Evaluate waste management actions on an
economic basis
4.
Implement the plan
ADDITIONAL INFORMATION
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To read about a waste management business,
please go to http://www.greenprof.org/?cat=66
GREEN IT: REDUCING IT COSTS
A growing problem with easy solutions
GREEN IT: THE FACTS
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By 2008, over 1 billion computers have been put into
use around the world.
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A generation ago, a six person office might have used
600 watts of power.
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Due to rapid expansion in computer use in China, that
amount is expected to double by 2015.
Today, a similar size office has a connected load of over
7,000 watts of power.
According to a recent UN report, the amount of fossil
fuels necessary to manufacture one desktop computer
is over 500 pounds.
This is over ten times the weight of the computer itself.
 Many harmful chemicals, like lead, go into the computer.
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GREEN IT: THE BURDEN OF COMPUTERS
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Computers not designed to be biodegradable at
the end of their lifespan
A computer is used on average for 3 years before
it is replaced
In 10 years that’s 3 computers.
 That’s 3 billion computers being disposed of every 10
years worldwide, releasing lead, mercury, cadmium,
and chromium into the soil.
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Instead of buying new computers: focus on
upgrading computers!
GREEN IT: THE BURDEN OF BEHAVIOR
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Technology isn’t inherently bad; our behavior is.
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Changing behavior is very difficult.
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The changes we make, however, can be very
small:
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Turn computer off at the end of the day
Make double-sided copies
Use low-power management modes
Run data centers 4-8 degrees higher
Discourage screensaver use
Buy energy efficient electronics
Switch to laptops
GREEN IT CONSERVATION PLAN
1.
Conduct a comprehensive computer &
electronics of your business operations
2.
Inventory your current electronics and
computer equipment
3.
Create a strategy to eliminate problems
4.
Evaluate strategy on an economic basis
5.
Implement the plan
ADDITIONAL INFORMATION
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“Green IT and the Bottom Line”, KPMG’s story is
available at http://www.greenprof.org/?cat=37
GREEN SUPPLY CHAIN
MANAGEMENT: MAKING YOUR
SUPPLY CHAIN SUSTAINABLE
Because every business is also a customer
SUPPLY CHAIN
GREEN SUPPLY CHAIN MANAGEMENT
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Operating your business in a leaner, more efficient manner
can result in incredible cost savings.
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Spend less on inventory carrying costs
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Spend less on producing goods that spoil in storage because
of excess inventory, and thus turn into waste
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Spend less on resources you otherwise would only turn into
waste
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Spend less on getting rid of that waste
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Spend less on facility upkeep and maintenance by
downsizing due to efficiency
GREEN SUPPLY CHAIN MANAGEMENT
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These savings BEGIN and END with the supply
chain.
Supply chain is the span of operations that range
from harvesting the materials necessary for
making a product, to the final delivery of that
product into the customer’s hands.
Efficiency should be a target for the entire supply
chain.
Every business is both a supplier and a customer
GREEN SUPPLY CHAIN MANAGEMENT:
WALMART
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In 2008, Walmart began to rate their suppliers
based on their packaging.
Supplied scorecards to all its suppliers, assessing
the type of material used, the amount of
packaging, the amount of recycled content, and
other environmental factors.
Those suppliers with low scores were dropped.
If Walmart does it…so will everyone else. They
will have to.
GREEN SUPPLY CHAIN MANAGEMENT
PLAN
1.
First, examine what your supply chain actually consists of. W hat are
your suppliers and where do they come from?
2.
Develop an approach to purchasing with will incorporate your
environmental concerns, such as healthy lifecycles or low pollution.
3.
Identify the impacts of each product in your supply chain. You will need
to know:
1.
2.
3.
4.
5.
6.
7.
4.
Whether the product’s raw materials are produced in a sustainable manner.
Whether the product or material contains hazardous chemicals.
Whether the product or material is packaged in reusable/recyclable packing.
Whether and to what extend the product itself contains recycled content.
Whether the product or material is produced under verifiable fair labor standards.
Whether the product or material is traceable to its source with a barcode or other
label.
Whether and to what extent the product or material is produced with renewable
energy.
What measures if any have been taken to assure that the product will be reused,
recycled at the end of its product life.
Implement the actions that you have decided upon.
ADDITIONAL INFORMATION
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“Leading Brands Engaging Suppliers” and Case
Studies for:
Levi-Strauss
 Marks & Spencer
 Nike
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are available at
http://www.greenprof.org/?cat=42
ENTREPRENEURSHIP &
INNOVATION: DEVELOPING
GREEN PRODUCTS & SERVICES
Catering to your customers’ needs
ENTREPRENEURSHIP & INNOVATION
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Product and service design are the heart and soul of
the sustainable process.
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Is this product worth it?
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Green innovation: the biggest inspiration is nature!
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Example: natural packaging
Walnut shell
 Eggshell
 Banana peel
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ENTREPRENEURSHIP & INNOVATION: THE
10 BASIC RULES OF GREEN DESIGN
1.
Business operations should be designed to produce no waste.
2.
Businesses should be designed to be easily adaptable to all foreseeable innovations.
3.
Everything that enters a manufacturing process should leave as a usable product.
4.
Every bit of energy used in manufacturing should produce a material transformation.
5.
The absolute minimum of materials and energy should be used in all processes.
6.
The materials used should be the least toxic available.
7.
Industry should get most of its materials by recycling material already in use or disposed of,
rather than from raw materials.
8.
Every product should be designed so that it can either be reused itself or used to create other
useful products.
9.
Every business should be designed to improve the local habitat and species diversity and to
minimize any effects on natural resources.
10.
Close interactions should be developed between suppliers, customers, and competitors to
minimize packaging and maximize reuse and recycling.
ENTREPRENEURSHIP & INNOVATION: THE
GREEN DESIGN PROCESS
1.
Consider the Entire Life Cycle of the Product
2.
The Raw Material Stage
3.
The Manufacturing Stage
4.
The Distribution & Use Stage
5.
Providing Services Instead of Products
6.
The End of the Product’s Life
ENTREPRENEURSHIP & INNOVATION:
GREEN PRODUCT DESIGN PLAN
1.
Understand the life-cycles of both your current
products and any future products.
2.
Develop an approach to product design that will
incorporate sustainability and environmental
concerns into the design criteria.
3.
Identify the impacts of each product in your
business.
4.
Implement the design criteria that you have
decided upon for each product.
ADDITIONAL INFORMATION


“Why Sustainability is Now the Key Driver in
Innovation” by Ram Nidumolu, C.K. Prahalad,
and M.R. Rangaswami, Harvard Business
Review, September 2009
Article is available at
http://www.greenprof.org/?cat=35
GREEN MARKETING: RAISING
CONSUMER AWARENESS
Letting customers know you have what they want
GREEN MARKETING
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…is the marketing of products that are presumed
to be environmentally safe.
Customers see this “environmentally safe”
component as a benefit and adjust buying
preferences accordingly.
Effective Green Marketing requires an intrinsic
knowledge of your business!
Supply chain
 Inputs/Outputs
 Tangible environmental benefits

GREEN MARKETING IN VIETNAM

According to the Vietnamese Chamber of
Commerce and Industry…
“Most Vietnamese consumers have tended to
approach environment friendly brands through
products with natural ingredients, having no
chemical agents, especially health and beauty
products such as food, beverages,
pharmaceuticals, cosmetics, toys and resort
tourism.”

However, the shift towards green trade is slow.
GREEN MARKETING: AVOIDING
GREENWASHING

Greenwashing is the deceptive practice of using
green marketing to mislead consumers about
products that are not environmentally friendly.

Example: European McDonald’s changed their
packaging color from yellow & red to yellow & green.
ADDITIONAL INFORMATION


“New Rules of Green Marketing” by Jacqueline
A. Ottman, January 2011
Article available at
http://www.greenprof.org/?cat=47
CONCLUSION
Every end is a beginning
CONCLUSION
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

Our current way of life is unsustainable
Business has the power to influence our way of
life
There are many different ways for a business to
“go green”

Any business can do it

Any business can find an economic reason to do it
QUESTIONS?
ADAPTED FROM…


Sitarz, D. (2008), “Greening your business: The hands-on
guide to creating a successful and sustainable business”,
Carbondale, IL: EarthPress.
Additional information:
 CIA World Fact Book: Vietnam
 The World Bank: ASTAE
 Vietnam Environmental Monitor
 Vietnam Chamber of Commerce and Industry
 www.greenprof.org