SUSTAINABLE BUSINESS DEVELOPMENT

Br ig i t a La j kov i cb r i g i t a . l a j k o v i c @ g m a i l . c o m

Aims and Objectives

1. Sustainability and Sustainable Development – definition vs a

matter of perspective

2. Why do we need to think and act in a more sustainable way

3. How to apply Sustainability in business

4. An example of a Sustainable Strategy

http://www.heypik.com/uploads/2/3/3/5/23350016/189470_orig.jpg

Delicious!!!!

How beautiful!!!

Perspectives…

PlanetEnvironmental Protection

PeopleCorporate Social Responsibility

(CSR)

ProfitGenerating continuous business

earnings

Environment

Society

Economy

Definition

beginnings in the 1970s with the “Club of Rome”

• 1960s-1970s corporate social responsibility, stakeholder management– Philanthropy, community engagement, supply chain standards

• 1987 – Bruntland Report: “Our Common Future”– "Sustainable development is development that meets the needs of

the present without compromising the ability of future generations to meet their own needs"

• 1994 John Elkington, Sustainability– “Triple Bottom Line”

• People – social dimension, social responsibility• Planet – environmental dimension• Profits – business

– Joins up sustainable development & CSR

Sustainability

Sustainability is a journey - a process; new criteria will expand and evolve over time as the new techniques

and technologies become available.

For the business enterprise, sustainable development 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. (Source: World Commission on Environment and Development)

Rising consumption of natural resources means that humans began "eating the

planet“

'Eyes bigger than planet'

The economic system, like all systems, is subject to the laws of thermodynamics,

which define the limit at which the Earth can successfully process energy and

wastes. (W. Edward Stead)

Currently it takes the biosphere about 18 months to produce what humanity

consumes in just 12 months. (NEF)

We only have ONE… and it doesn’t belong to us

Source: http://www.sciencemagpie.com/2012/10/02/geological-time-piece/

The age of Earth is about 4.5 billion years – on the

clock, 1 second equals approximately 52,000

years and one hour is 187.5 million years.

Source: http://www.saintjoe.edu/~dept14/environment/rogero/core5/celestial_compare.html

In nature, systems thinking examples include ecosystems in which various elements such as air, water, movement, plants, and animals work together to “survive” or

“perish”.

The world is not made of lifeless stuff but matter in

motion!

Foundation of economic thinking

“The end justifies the means” vs. “the means & process justify the end” vs. “the means & process justify the continuation of the process”

Neoclassical economics is focused on economic growth (GDP) and rests on the following set of assumptions: (by E. Roy Weintraub)

- People have rational preferences among outcomes that can be identified and associated with a value;

- Individuals maximize utility and firms maximize profits.

- People act independently on the basis of full and relevant information.

Criticism of Neoclassical Economics:"Given, a certain population, with various needs and powers of production, in possession of certain lands and other sources of material: required, the mode of employing their labour which will maximize the utility of their produce.” (by W.S. Jevons)

What is systems thinking?

• Ability to see things as a whole;

• Process of understanding how things, regarded as systems, influence one another within a whole;

• An approach to problem solving, by viewing "problems" as parts of an overall system, rather than isolating its parts, reacting to specific part, outcomes or events and potentially contributing to further development of unintended consequences;

• All parts of the system are interdependent – they cannot be independent;

• It focuses on cyclical rather than linear cause and effect;

• It proposes to view systems in a holistic manner.

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Global Warming ???

Deforestation

Loss of Natural Resources

Food Insecurity

Loss of Biodiversity

**Human encroachment and logging destroys forests

**Forests are home to over 70% of animals, plants and other organisms

**Billions of pollinator bees have lost their habitat

**30 million acres lost every year

**20% of global CO2 emissions are caused by deforestation

**Trees cool the atmosphere and store greenhouse gases

**Flooding and soil erosion result from

deforestation

**1.6 billion people living in poverty depend on forest for their food, fuel and livelihood

In organizations, systems consist of people, structures, and processes that work together to make an organization "healthy" or "unhealthy“.

⁺

⁻

20th Century

* Problem solving

* Analysis

* Reductionism

* Individual learning

* Emphasis on teacher transmitting predetermined knowledge to the student

* Being competitive

* Closed and immediate cause and effect

* Rooted in subjects or disciplines

21st Century

* Problem appreciation and reframing

* Synthesis

* Whole system emphasis

* Team or group learning

* Learning through enquiry

* Competitive and collaborative

* Multiple influences through time and space

* Meta-learning

164* Meta learning was originally described by Donald B. Maudsley (1979) as ‘the process by which learners become aware of and increasingly in control of habits of perception, inquiry, learning, and growth that they have internalized’. ‘A theory of meta-learning and principles of facilitation an organismic perspective’, Donald B. Maudsley, 1979

Source: Ellen MacArthur Foundation, Towards the Circular Economy

ENERGY RETURN ON ENERGY INVESTED = Energy Produced / Energy Used

ENERGY EROEI COMMENTS

OIL What are the indirect costs?

- Finding 5 : 1 1200 : 1 in 1919 to 5:1 in 2007

- Extraction 11 – 18 : 1 100:1 in 1930s; 25:1 in 1990s ; 1:1 in next 20y

TAR SANDS 2 - 5 : 1 1:1 if full life cycle is taken into consideration

GAS 5 - 15 : 1 Similar to oil

COAL 5 - 12 : 1 CCS costs (carob capture sequestration)?

NUCLEAR 7 - 15 : 1 Waste disposal, decommissioning costs? Risks?

HYDROGEN 0.5 : 1 Very low

HYDRO 20 – 40 : 1 Difference in flow

ETHANOL 2 – 1 : 1 Wood, Corn

BIODIESEL 2 : 1 “Cars eating - people starving.” Food vs. Fuel

WIND 25 - 70 : 1 Many dependencies, technology in development

SOLAR 10 – 75 : 1 Many dependencies, technology in development

Multiple sources have been used to collet the above approximation of the EROEI

Observation: According to the International Energy Agency (IEA), cumulative worldwide investment in new fossil-fuel extraction and processing will total an estimated $22,87 trillion between 2012 and 2035.

Investment in renewables, hydropower, and nuclear energy will amount to only $7.32 trillion. In these years, investment in oil alone, at an estimated $10.32 trillion, is expected to exceed spending

on wind, solar, geothermal, biofuels, hydro, nuclear, and every other form of renewable energy combined. (Source: prof. Michael Klare)

Consumerism Examples of unhealthy economy:

- Increasing dependence on overseas energy;

- Declining self-sufficiency in food;

- Proliferation of "boomerang trade" — sending goods to foreign markets and receiving almost identical items back;

- Story of stuff (when consumption becomes wasteful, debt fuelled and unsatisfying and when it takes the biosphere about 18 months to produce what humanity consumes in just 12 months);

- Between 1970 and 2009 the number of consumer electronic gadgets in a typical UK household increased by eleven times (source: The Elephant in the Living Room);

- Debt based economy (by September 2008, debt averaged £9,740 per UK household excluding mortgages);

- Material wealth vs. scarcity of time.

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Potato exports 2004

UK to Germany: 1.5M tonnes Germany to UK: 1.5M tonnes

“Boomerang trade" examples

Source: NEF, UK interdependent report 2006

Gingerbread exports 2004

UK to Germany: 465 tonnesGermany to UK: 460 tonnes

Dairy goods exports 2004

UK to France: 10,200 tonnes of milk and cream France to UK: 9,900tonnes of dairy goods

How to define planetary boundaries – a fence, within we can have a safe operating space?

Staying within 9 planetary boundaries under an active stewardship!

Planet Earth is a complex, self-regulating system

4. Understanding Sustainability from Company’s Perspective; guidance towards developing a Sustainable Strategy.

What is Triple Bottom Line

Sustainable Lifecycle Management

Importance and Benefits of Circular Economy

How to integrate Sustainable Strategy

Introduction to Quantitative Measurements

Case Study and Exercise

In short – TWO aspects

Philosophical, ethical, values,

mission your intention

• Right livelihood

• Triple bottom line

• Natural Capitalism

• Five Capitals

• LOHAS – lifestyles of health and Sustainability

• Ethical enterprise, ethical products

Performance, technical, measurement, certifications your competence, trustworthiness

Performance, Reporting: • Full cost accounting & Triple bottom line• CSR – GRI standard reporting• Carbon Trust/Carbon Disclosure Project• Balanced Scorecards

Programs, Methodology: • ISO 14001 • Biomimicry• Cradle to Cradle

Certification - general:• Earth Right• Green Certificate• Green Mark• GreenSeal• Green Tourism

WELCOME TO THE

JUNGLE

* Shared knowledge

*Cooperative networks of people committed to achieve common goals (schools, hospitals, government, etc)

*Sense of community

*Quality of life

*Safety

*Housing , transportation

*Education, energy

*Social justice

*Environmental resources

*Health of ecosystems

*Biodiversity

*Public lands open space

*Clean air

*Clean water

*Zero waste, releases and spills

*Income

*Local, regional, global commerce

*Trading partners

*Customers

*Community economic affairs

*Innovation

*Capital Efficiency

*Risk Management

*Growth

*Shareholder’s return

Triple Bottom Line

Social Equity Environmental

IntegrityEconomic Capital

Considering the Full Life Cycle – LCM

Raw material acquisition and

processing

Manufacturing and distribution

Product use and packaging

After use / disposal

Conservation of natural resources Use of renewable resources; sustainable use of resources Use of recycled and recyclable materials Protection of natural habitats and endangered species Water conservation Energy conservation Waste minimization and pollution prevention, especially the use of toxics and release of toxics to air, water , land Transportation

Minimal use of materials Waste minimization and pollution prevention, especially the use of toxics and release of toxics to air, water and land By-product management Energy conservation Water conservation

Conservation of natural resources Energy efficiencyWater efficiency Consumer health and environmental safetyPackaging efficiency Packaging recycled content Packaging recycle rates

Recyclability; ease of reuse, remanufacture, and repair Waste management Durability Biodegradability/ compostability Safety when incinerated or landfilled

Source: Ellen MacArthur Foundation, Towards the Circular Economy..\..\..\Sustainability_Course_Videos\Circular_economy_client_to_customer.mp4

Sweden

Applying innovative WASTE TO ENERGY program and highly efficient recycling habits, the Scandinavian nation faces an interesting dilemma. They are running out of trash.

Highly efficient waste management and recycling programs - only 4% of the nation’s waste ends up in landfills. (in the U.S. over 50% of the waste produced by the households ends up in landfills)

Waste to energy factories provide electricity to a ¼ million homes and 20% of the entire country’s district heating.

Sweden is importing trash from the landfills of other EU countries. In fact, those countries are paying Sweden to do so.

Economic benefit Environmental benefit

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ManufacturingProcurement

Product Development Maintenance

Sales Delivery/

Distribution Customer Services

Engineering

Requirement for integrating sustainability into every area of value chain

Implementation of sustainability metrics

REACH or RoHScompliance

incorporated into product data

Implementation of energy management

system

OSHA increase and environmental compliance

Tracking of co2 emission

Increased awareness

of sustainability among end consumers

Increased complexity in regulations, standards,

policies

Increased scrutiny of resource management

Reporting of sustainability performance

Penalties for adverse effects

Increased demand ofsustainable

production and products

CollaborationInfo – sharing

Developing a sustainability strategy

• Business as usual is no longer an option;

• Re-evaluation of strategy, considering the real business case by focusing on what the business needs to survive and genuinely prosper;

• Setting up a multi-year, organization-wide goals - sustainable development requires long-term thinking;

• Multi-year goals coupled with annual targets and milestones that most effectively drive performance;

• Designated and dedicated goal leaders, who are supported by multi-disciplinary teams and manage each corporate sustainability goal.

Long-term Goals

Measurement, Monitoring

and Reporting

Stakeholder’s Involvement

Competitive Advantage/

Improved Performance

Developing a sustainability strategy

• Using methods to measure and report corporate sustainability performance.

• Robust, business-focused progress monitoring processes are critical.

• Sustainability leaders that employ robust processes to help set, monitor and track progress, with regular reporting to executive leadership, were more successful in making sustainability a top agenda item for their boards;

• An increasing number of companies tie executive compensation to sustainability goals.

Long-term Goals

Measurement, Monitoring

and Reporting

Stakeholder’s Involvement

Competitive Advantage/

Improved Performance

Actual Impact On a Vital CapitalWhat the Impact on the

Same Vital Capital Must BeIn Order to Be Sustainable

Sustainability Performance =

Source: http://www.sustainableorganizations.org/sustainability-quotient.html

Sample metrics

• Greenhouse gas emissions

• Water consumption

• Solid waste emissions

• Compostable waste emissions

Environmental bottom line Social bottom line Economic bottom line

• Child labour use

• Product or service safety

• Workplace safety conditions

• Employee compensation levels

• Fair trade practices

• Sustainable procurement levels

An ecological illustration:A geographical region produces 10 million gallons of freshwater per year, an ecological limit (denominator)Sustainability norms suggest that such limits not be exceededstill, humans in the region use 15 million gallons per year (numerator)

Actual Impact On a Vital CapitalWhat the Impact on the

Same Vital Capital Must BeIn Order to Be Sustainable

Sustainability Performance =

– 15/10 = 1.50 → anything greater than 1.0 is unsustainable

• Stakeholders should be involved in goal setting – goal setting brings most business value when it involves a broad group of stakeholders;

• Making the board and senior managers more aware and supporting them in developing resilient business strategies;

• Internal stakeholders will be responsible for achieving the goals and will be more aligned with them if involved in the process;

• Fully engaged external stakeholders help calibrate goals, may be more aware of socio-economic trends and can help improve corporate reputation;

• Analyses of legal or contractual considerations.

Long-term Goals

Measurement, Monitoring

and Reporting

Stakeholder’s Involvement

Competitive Advantage/

Improved Performance

Developing a sustainability strategy

´

• PricewaterhouseCoopers release (July 2013): firms are putting greater emphasis on efforts to drive financial savings and build a competitive advantage in the market by being more ecologically efficient and reducing their environmental impact.

• The survey results coincide with a PwC report that offers ideas for companies considering eco-efficiency strategies.

Long-term Goals

Measurement, Monitoring

and Reporting

Stakeholder’s Involvement

Competitive Advantage/

Improved Performance

Developing a sustainability strategy

´

The concept of “Developing a sustainable strategy” has been adopted and modified, using Sustainability Goals that Make an Impact Report as an indicator, from July 2013

Key criteria for successfully implementing sustainability

• It has to be integrated within the fabric of organization;

• It has to address the "triple bottom line" of sustainability: economic, social, and environmental performance;

• It includes performance metrics that can be clearly understood and communicated;

• It must add value and be integrated into the main value-adding systems of the organization;

• It has to be extensively supported by existing management tools and resources.

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REALITY: You can not justify the sustainability business case, within the conventional expectations of a business-as-usual mindset.

GENERAL OBSERVATION

Sustainability is either desired or tolerated;

It mostly depends on how it supports the conventional aims of the business:

• enhancing reputation,• supporting growth or• improving the bottom line.

Usual focus:

• eco-efficiency (short-term) savings;• modest levels of investment have to meet the usual criteria for return-

on-investment and payback.

Where do You stand?

Finite

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5. Introduction to Low Carbon, Resource efficient “Green

Economy”

Making Economy Green-er

The role of Local Economy

The concept of “Leaky Bucket”

GDP Dilemma of Unlimited Economic Growth

Transition to a low carbon resource efficient Green Economy

Importance of Local Economy

• Making the most of every peso that enters your local economy

• 'The problem is not necessarily that too little money flows into a neighbourhood. Rather it is what consumers, public services and businesses do with that money. Too often it

is spent on services with no local presence, and so immediately leaves the area.'

“The Government's National Strategy for

Neighbourhood “

Source: NEF

Day-care outside of the areaSalaries to people outside of the areaCatering companiesFar away takeawaysTaxesUtilitiesFurniture sourced from outsideLittle recycling carries out – compost, white goodsProfessional services – accountants, lawyersSchool meals, meals on wheels from

outside the area.

Money flows into an area in various forms: - inward investment, - grants, - welfare benefits, - salaries, - export earning - tourism- business investment - consumption

´

Irrigation

If money coming in goes right out, then the economy doesn’t benefit.

To keep money circulating in the local economy, you must create linkages that enable people to spend locally.

´

Meanwhile Ian receives £1000. To celebrate his birthday, he orders locally produced food and drinks for £350. He then asks the local plumber to un-block his drains (at a cost of £450). The remaining £200 goes towards his telephone bill and so leaves the local area. In total Ian has re-spent £800 in the localarea.

Nicola receives £1000 and £800 immediately leaves her housing estate: swallowed up by gas and electricity bills; mortgage repayments; food from a supermarket; and a new dress from a boutique in the city. The remaining £200 stays in the local area because: £150 pays her cleaner; £5 buys an apple from the farm next door; £15 goes into her credit union savings scheme; and £30 buys some groceries in the corner shop.

THE LOCAL MULTIPLIER EFFECT

20% of money stays locally

Enters Remains100 20

20 44 11 ….

Total 125

80% of money stays locally

Enters Remains100 80

80 6464 5151 4141 3333 ….

Total 500

'Money is round, and it rolls away.‘ Confucius

Let's go up in the world and follow £1000 on its journeyaround an area to see where it goes and what impact it makes.

The local multiplier effect

´

How to decouple environmental impacts and resource use from economic growth?

Exercise: Investigating Exponential Growth with a Piece of Paper

WHYScarcity of valuable resources

Environmental risks (including aggregation of impacts)

Threats to humans and ecosystem

33 Doublings of 1

Number of doublings

Bil

lion

s

-Rethink growth; (GNH vs GDP)-Paradigm shift – process of overcoming the linear/control/ command way of thinking in consumer’s goods industry;-Dematerialisation of resources circular economy, doing more with less (less water, less fossil fuels, less stuff); -Material efficiency (reuse, recycling, substitution),

-Increased energy efficiency;-Sustainable consumption and production, including green public procurement;-Increase in redundancy & resilience to deal with global changes;-Concept of sharing – co-operatives; -AND required changes in our habits and lifestyles (bottom up vs top down

solution).

How to start the process of decoupling?

Measuring progress with “HPI” - Happy Planet Index

The numbers within the diagram relate to the following headline indicators:1. Measure of environmental pressure per capita ,2. Measure of the percentage of the population flourishing ,3. Measure of economic performance – how well the economy is doing in terms of delivering sustainability and well-being for all (for economic half of the human systems sphere),4. Measure or set the measures of the other (“non-economic”) policy amenable drivers of well being for all (for the remaining human system),5. Measure of well being per unit of environmental pressure (the HPI).

Economic development is not strongly linked with the general happiness of its people, as long as they can meet their basic needs

Use of Limited

ecologicalResources (1)

Performance of other systems(4)

Economic performance(3)

Resources

Well-being for all (2)

Goals

Sustainable well-being (5)

Human SystemsFramework for measuring societal progress by NEF

20th Century

1. Problem solving

2. Analysis

3. Reductionism

4. Individual learning

5. Emphasis on teacher transmitting predetermined knowledge to the student

6. Being competitive

7. Closed and immediate cause and effect

8. Rooted in subjects or disciplines

21st Century

a. Learning through enquiry

b. Meta-learning

c. Problem appreciation and reframing

d. Competitive and collaborative

e. Whole system emphasis

f. Multiple influences through time and space

g. Synthesis

h. Team or group learning

Exercise; understanding the paradigm shift: make the connection

Adopted, based on: Ellen MacArthur Foundation, Towards the Circular Economy

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Brigita Lajkovic

brigita.lajkovic@gmail.com

Sources:

Books:

Donald B. Maudsley (1979) A theory of meta-learning and principles of facilitation an organismic perspective

Tim Jackson, (2009), Prosperity without Growth

Thomas L. Wheelen, J. David Hunger, (2012), Strategic Management and Business Policy Toward Global Sustainability

E. D. Beinhocker, (2006), The Origin of Wealth

J. Wible (2000) What is complexity

Rob Hopkins (2009) The Transition Handbook, Green Books

Michael Shuman (1998) Going Local, Free Press

Andrew Simms et al (2006) Clone Town Britain, New Economics Foundation

Donella H. Meadows, (2008), The Art of Systems Thinking

H. Daily, (2010), Ecological Economics

F. Capra (2008), Web of Life

E.F. Schumacher, (1976), Small is beautiful

M. Anielski, (2009), The economics of happiness

R. Heinberg, (2011), The end of growth

P. Hawkin, (1993), The Ecology of Commerce

Reports:

Food and Agriculture Organization of the United Nations (FAO) and UN-Water –Report, 2012

WWDR, 2012

Global Environment Outlook: environment for development (GEO-4), 2012

Human Development Report 2006

World Business Council For Sustainable Development WBCSD, 2011

Ellen MacArthur Foundation, Towards the Circular Economy, 2012

Energy Savings Trust (2011), ‘The Elephant in the Living Room: How Our Appliances and

Gadgets Are Trampling the Green Dream – An Update to The Rise of the Machines’.

NEF, UK interdependent report 2006

Laura Carlsen, Mexico after 10 years of NAFTA: The price of going to market, 2004

Brundtland Report about Sustainability, 1987

Eco-efficiency Indicators, ESCAP, UN, 2009

Ruth Potts, Andrew Simms, (2012), New Materialism

The Energy Mix, (2011), WBCSD Energy and Climate

Natural Solutions, (2012), NEF

Business strategies for sustainable development, International Institute for Sustainable Development

Global Trends in Renewable Energy Investment, (2012), UNEP

Sustainability Goals that Make an Impact, White Paper, (2013), CH2MHILL

Climate Change Starters Guidebook, (2011), UNEP

Websites:

Ellen Macarthur Foundation, http://www.ellenmacarthurfoundation.org

Transition network, www.transitionculture.org

New Economics Foundation, (NEF), www.pluggingtheleaks.org

Berkshares, www.berkshares.org

The Asset-Based Community Development Institute, (ABCD), www.abcdinstitute.org

Department of Economic and Social Affairs - UN, (ESA), http://esa.un.org/wpp/

The Blue Economy, www.theblueeconomy.org

Schumacher College, http://www.schumachercollege.org.uk/

New economic foundation, (NEF), http://www.neweconomics.org/

Independent UK, www.independent.co.uk

Organization for economic cooperation and development, (OECD), www.oecd.org

The World Bank, (WB), www.worldbank.org

The Economics of Ecosystems and Biodiversity (TEEB), www.teebweb.org

International Monetary Fund, (IMF), www.imf.org

Intergovernmental Panel on Climate Change (IPCC), http://www.ipcc.ch

Sustainable Organizations, http://www.sustainableorganizations.org

National Oceanic and Atmospheric Administration, (NOAA), www.noaa.gov

Econosystemics, Reframing Economics for Sustainability, http://econosystemics.com/

The Club of Rome, http://www.clubofrome.org