chapter 15 - sustainability and the natural environment

earths needed for world population to live equal to US lifestyle

-1.5 earths in 2007 (ecological footprint) -2.5 in 2050 if moderate business as usual -1 in 2050 if rapid reduction

reducing environmental impact

-1/3 goals of USLP -greenhouse gases --> halve greenhouse gas impact of products across life cycle by 2020 -water --> halve water associated with consumer use of their products by 2020 -waste --> halve the waste associated with the disposal of our products by 2020

improving health and well being

-1/3 goals of USLP -health and hygiene --> help > 1B ppl to prove hygiene habits/bring safe water to 500M -->helps reduce life threatening diseases -improving nutrition --> improve taste/nutrition of their products. by 2020, double proportion of portfolio that meets highest nutritional standards --> help ppl be healthy

enhancing livelihoods

-1/3 goals of USLP -sustainable sourcing --> by 2020 source 100% of agricultural raw materials sustainably -better livelihoods --> by 2020 engage with atlas 500k small farmers & 75k small distributors in supply network

carbon positive

-100% of energy across operations will come from renewable sources, enabling company, with partners, to generate more renewable energy than they need for their own operations and making the surplus available to the markets and communities

American Business Act on Climate

-Apple, Google, Walmart, etc. sign pledge to reduce emissions -time magazine: "the big freeze", "global warming survival guide"

Unilever

-CEO: Paul Polman -seeking the right shareholders instead of just responding to shareholders (banned quarterly earnings --> hedge funds leave) -sustainable living plan, carbon positive; about going zero waste -read in book fig 15-1 -3 major goals

sustainable living plan

-USLP -plan to halve the greenhouse gas impact of its deodorants, foods, detergents, between 2010 - 2020 -3 goals: -*improving health and well being* -*reducing environmental impact* -*enhancing livelihoods*

green consumers

-actual and potential customers of retail firms, usually in developed countries, who express preferences for products, services, and companies that are perceived to be more environment friendly -*sustainable apparel coalition* - companies that follow brand specific sustainability indices that consumers know about -consumers willing to pay more for green products -*cost and benefit analysis* of using green products - consumers question whether green actions will lead to green outcomes; question whether its worth paying a cost today for a benefit that won't occur until future; a catch somewhere; prefer others to bear the costs

clean water act

-aka federal water pollution control act -goal to achieve water quality consistent with protection of fish, shellfish, and wildfire and with safe conditions for human recreation in and on the water -eliminate discharges of pollutants into navigable waters -pollution permit system - maximum permissible discharge levels, timetables for pollution controls systems

emerging middle class

-article on canvas -middle class is growing --> moving to normal basket of goods

endangered species act

-assignes the responsibility of preventing harm to species considered endangered or threatened (likely to become endangered) -moving species to safe areas, prevention of endangering activities

Schukyll Expressway

-built expressway to get to places faster, worked well -expressway = common resource -at first smooth, then exits built, homes/companies built around exits -everyone builds in own self interest --> overwhelms the commons -tragedy of the commons

sustainability

-business that meets the needs of the present without compromising the ability of future generations to meet their own needs -creation of good quality of life for both current and future generations of humans/nonhumans by achieving a balance between economic prosperity, ecosystem viability, social justice -umbrella term -50% companies -25% corporate social responsibility

environmental protection agency

-created as independent agency to research illusion problems, aid state and local government environmental efforts, and administer many of the federal environmental laws -laws categorized into three areas - air, water, land

sustainable development

-development that meets the needs of the present without compromising the ability of future generations to meet their needs -the brundtland report "our common future" UN 1987 definition

green employees

-employees play major role in promoting environmentalism at work -assist mgmt in sustainable efforts -millennials want to work for orgs that are transparent about how they use their technology, resources, and taken to make positive social/environmental changes

SAS - part of their bus. model where they have products that help people assess how they're doing

-example of comprehensive approach to sustainability by a corporation - all initiatives done -company on sustainability -what are there initiatives -> solar farm (clean renewable energy), sheep naturally maintain grass, steel poles instead -regenerative elevators to power other equipment, leds, compart -drought resistant plants & reduced water -veggie scraps turned into compost -volunteers collect recyclables and educate others -recycle printer cart, batteries, laptops -new building with 1/3 recycled content -reducing travel emissions, replacing paper clips, mugs -***created product to help company merge

EAP

-excellent performance -academic integrity -professional behavior

SKF geothermal & light bulb

-geothermal heating/cooling -bearings manufacturer, supply metal pieces to equipment that has a rotating component (train, wheels, windmills) -> use tech and sustainability -innovation intensity and industrial policy

CERE'S Roadmap to Sustainability

-identifies key drivers that underscore the movement toward sustainability - presents risks and opportunities 1. competition for resources 2. climate change 3. economic globalization 4. connectivity and communication

Mckinsey resource revolution - from crisis to opportunity

-in 2005 energy production increased bc there was anticipation that the middle class was growing -natural gas and solar energy technology became more affordable and changed industries

McKinsey resource revolution

-increases in prices of resources bc of emerging middle class -natural gas and solar markets growing (fundamental technologies) -information technology and industrial technology -how do you get rescues to everyone -vid

SKF USA headquarters lansdale PA

-innovation and intensity and industrial policy (3 I's) -lead platinum designation for sustainability 1. innovation: geothermal heating, natural lighting, low flush toilets 2. intensity: decrease intensity of resource usage 3. industry: tax credos from government to encourage name and business to be sustainable

other business drivers for sustainability (all drivers fall out of the big 3)

-innovation/design -energy -water -gust regulation -government incentives -GHGs -public interest -government impact -operations -media -tactical

IPCC

-intergovernmental panel on climate change -UN -scientific, political, financial -1880 - 2012 plus 1.53F -carbon in atmosphere increasing

green investors

-investors interested in advancing social causes -want to put money where their environmental values are identifying and utilizing financial instruments that are associated with environmentally oriented companies

Kennametal's triple bottom line

-kennametal makes tools to cut metal that companies need to make their own products -improved building (lights) *people* -safety better, productivity increases, moral up, lower cost due to injuries, cleaner *profit* -cost savings, increase productivity, customer visits, public relations, maintenance costs less *planet* -decrease energy needed, less waste, decrease CO2

LEED

-leadership in energy and environmental design •*US green building council* -one world trade center -gold certified building -Starbucks is making all their buildings LEED certified

Penn State - tripple "L"

-learn -live -lead strategic sustainability plan 2012 -good stewardship = good business -5000+ students

sustainability reporting

-major driver in sustainability -go into integrated reporting - reporting financial, social, natural -*global reporting initiative (GRI)*: framework (set of standards to assess global sustainable practices) -*dow jones sustainability index*: use GRI standards -*sustainability accounting standards board (SASB)*: new set of accounting standards that take sustainability and social aspects into circle

circular approach

-make, use, return 1. raw materials (renewable) 2. design (easy to recycle/reuse) 3. production remanufacturing (how to be efficient w/ production aspects - water, energy, etc.) 4. distribution (locate things closer to customers) 5. consumption use, reuse, repair (be able to repair easily - not Apple) 6. collection (system to collect back to recycle) **residual waste** 7. recycling (government coming into place) 8. back to raw materials

green biz 2016 study

-more companies thinking circular economy is important

world climate change summit 2015

-pans climate 2015 ? -cop21pans -dec 2015 -30 countries agreed -result: limit to 2 degrees C, 5 year review, 100B/yr

smeal and sustainability

-penn state strategic plan and presidential campaign themes for 2016 -ensuring a sustainable future -video -world class in sustainability - careers, MBA case competition

point in corporate sustainability maturity curve

-phase 3 transformation 7% -phase 2 integration 45% -phase 1 compliance 48% -other 1%

big issues that drive sustainability (three big why's)

-population growth (biggest driver) -intensity resource usage rate -climate change +three lenses (scientific, political, economic) -can filter through different lenses, can apply to each on its own

wicked problems

-problems with characteristics such as interconnectedness, complexity, uncertainty, ambiguity, conflict and social constraints -smog, toxic waste, acid rain -every wicked problem a symptom of another problem -hard to fix bc solutions are seldom complete and final

land related legislation

-regional,state, local governments should have main responsibility for nontoxic waste management -*toxic substances control* - requires manufacturing and distribution businesses in the chemical industry to identify and chemicals that pose substantial risks of human/environment; chemical testing -*superfund* -CERCLA, effort to clean up more than 2k hazardous waste dumps and spills around the country; Emergency Planning and Community Right to Know Act (manu. comps have to report to fed annually all of their releases into the environment of more than 500 toxic chemicals

sustainability importance by organizational group

-senior management are all in on sustainability -amount of importance goes down as lower levels of groups

externality

-side effects or by products of actions that aren't intended and often disregarded

clean air act

-standards set and timetables for implementation are established -primary standards (health effects) and secondary standards (environmental effects) for variety of air pollutants -comps need to reduce their emissions to within the set standard or substantial fines -*emissions trading* (*cap and trade*) - intended to reduce a particular pollutant over an entire industrial region by treating all emission sources as if they were beneath one bubble; business can increase emissions of sulfur dioxide in one part of plant if it reduces its sulfur dioxide pollution by as much/more in another plant; businesses that reduce their emissions can trade these rights to other businesses that want to increase their emissions -part of Kyoto Protocol (international agreement that set legal binding targets/deadlines for cutting greenhouse emissions of industrialized countries -targets amended at Paris Climate Change Conference

population

-sustainability driver #1 -7 billion -exponential growth -providing goods and services for 9 billion people by 2043 (bottom line) -scientific -> measure, politically-> nations make agreements on how to manage population, economic -> base line

intensity resource use

-sustainability driver #2 -modern convenience exercise -basket of goods (CPI) - everyday usage/normal -reflects intensity of my resource use -can measure the resources needed to get you BoG -developing populations do and will increase the demand for resources. How can business assist in supplying greater utility with less resources (bottom line)

climate change

-sustainability driver #3 -climate framing - scientific, political, economic -global governments have concluded that the world must address GHG emissions and climate change (UN and IPCC) - agreement to add ress (?) this impacts global business leaders directly through incentives, regulation, and public pressure (bottom line)

linear approach

-take, make, waste 1. design 2. raw materials 3. production 4. use 5. disposal -how business has been running throughout history -environment is an externality -still being used by companies, beginning to go towards circular economy

circular economy

-term applied to the system that businesses use tor cycle -involves keeping resources and extracting value from them as long as possible and then covering and regenerating the resources and products at the end of each life cycle -alternative to take make dispose -produce, sell, consume, re use/repair, recycle

stewardship model

-the responsible management of resources -->mindset of management/business -responsibility: can you do the right thing -good stewardship = good business

tragedy of the commons

-when no one takes responsibility for adverse environmental effects -commons = place of land available to all -when commons is large enough to accommodate the needs of everyone, no problems occur -carrying capacity of commons becomes strained -constraints must be placed on the use of the commons (environment) bc in the absence of constraints, self interest is likely to lead individuals to behave in ways that won't sustain shared resources -about resources and economic development -each person gets direct benefit, but adds strain on commons that's spread to all -freedom of the commons --> population growth, intensity of resources -nations/people acting alone

Unilever video clip

-zero waste global footprint -sustainability core to strategy -USLP 2010 -all units trying to go to zero waste --> saves money, creates jobs -running consumer products on sustainability -environmental and ppl factors

2 sustainability consulting companies to compare; the business case

1. IBM 2. PWC

fundamental environmental issues that merit consideration

1. climate change 2. energy 3. water 4. biodiversity and land use 5. chemicals, toxics, heavy metals 6. air pollution 7. waste management 8. ozone layer depletion 9. oceans and fisheries 10. deforestation

PWC: sustainability maturity path

1. compliance mode 2. obligation (value protection) -expected to do; license to operate, reduce operations & risk 3. efficiency (value creation) -smart to do, operational, cost and value chain savings 4. leadership (increasing value) -innovation & growth, new business enhancements

how to change intensity equation

1. conservation 2. innovation

IBM structure of typical corporate journey

1. legal and compliance 2. values based regulation 3. efficiency 4. growth platform

two viewpoints on sustainability

1. shelter environment -earth video 2. use up environment -avatar video -business goes to Pandora to take resources/destroy environment

greenhouse gases (GHGs)

1. watervapor (H20) 2. CO2 3. methane (CH4) 4. nitrous oxide (no2) 5. ozone (03) 6. chlorothiroranans (CFCS)

energy

1/10 environmental issues -*energy inefficiency* - wasting of precious nonrenewable sources of energy (coal, oil, natural gas --> fossil fuels) -once fossil fuels are depleted, gone forever -must use very little through implementation of energy conservation practices. shift renewable energy sources -money flows into clean tech (funds that focus on renewable sources like hydropower, solar, wind)

chemicals, toxics, heavy metals

1/10 environmental issues -*toxic substances* - chemicals/compounds that may present unreasonable threat to human health/environment: human exposure to toxic substances can cause variety of health effects, including damage to nervous system, reproductive and developmental problems, cancer, genetic disorders -problems central to toxic substance issue 1. not always aware of the effects, LT of chemicals 2. toxic substances associated with industrial accidents

oceans and fisheries

1/10 environmental issues -*watershed* - area that drains to a common waterway, such as a stream, lake, estuary, wetland, aquifer, or ocean -sewage/waste dumped into marine waters -damage to coastal ecosystems -->shellfish bed closures, seafood related illness, reduced shoreline protection from floods and storms -fish not meeting human needs

deforestation

1/10 environmental issues -adds to soil erosion problems and major cause of greenhouse effect -felled trees can't absorb CO2, sometimes burned for land clearing/charcoal -moisture and nutrient ecosystem cycles can be damaged in deforesting activities --> affecting adjacent land and water ecosystems -key in global warming -deforestation accounts for 20% of global carbon emissions

climate change fundamental environmental issues

1/10 environmental issues -aka global warming, associated with the precipitation of greenhouse effects (the prevention of solar heat absorbed by our atmosphere from returning to space) -debated issues include evidence/rate of global warming, extent to which human activity contributes to it, resolutions/safe gaurds that might be put in place -environmental concerns #1 area of concern -*internal carbon tax* - tax on individual business units within company based on energy usage that goes into a common fund that invests in environmental sustainability projects, aka *carbon pricing*

air pollution

1/10 environmental issues -leads to acid rain, global warming, illness, smog, depletion of ozone layer, etc. -*acid rain* refers to mixture of wet and dry deposition from atmosphere containing higher than normal amounts of nitric, sulfuric acids -indoor air pollution comes from oil, gas, kerosene, coal, wood, tobacco, building materials, furnishing, paints, cleaning products, etc.

ozone depletion

1/10 environmental issues -oxygen related gas that is harmful to life near the earth's surface but is vital in the stratosphere in blocking dangerous ultraviolet radiation from the sun -ozone hold

water

1/10 environmental issues -problems in quality and quantity -municipal sewage, industrial wastes, urban runoff, agricultural runoff, atmospheric fallout, over harvesting, dam sedimentation, deforestation, overgrazing, over irrigation contribute to degradation of oceans/water -much worse in developing world -water bankruptcy - water shortages during at least one month every year -water supply is fixed

waste management

1/10 environmental issues -reduce, reuse, recycle is waste management mantra -reduce is best form of waste management because waste is never generated in first place -reuse is next best, reuse containers, products, repair -recycle - transforms what once might have been waste into a valuable resource; businesses can cut costs -circular economy

biodiversity and land use

1/10 environmental issues -variation of life forms inside the system, serves as indicator of ecosystem's health -wildlife and beneficial plants -land degradation - desertification, deforestation, overgrazing, salinization, alkalization, soil acidification -execs see biodiversity as an opportunity more than risk --> new products

climate change roadmap one

1/4 roadmap to sustainability -businesses must be prepared to not only respond to new policies and regulations regarding emissions but also take advantage of opportunities to profit from new technologies that reduce emissions or create solutions

competition for resources

1/4 roadmap to sustainability -demand for resources is growing more quickly than they can be replaced

connectivity and communications

1/4 roadmap to sustainability -stakeholders can monitor and react to sustainability efforts more quickly and effectively -reputations are more easily and quickly built and destroyed

economic globalization

1/4 roadmap to sustainability -wide disparities in social and environmental standards being risks as well as opportunities

triple bottom line

3 make up sustainability -profit (economic) -planet (environment) -people (social) -right thing to do and can drive revenues, savings, source of competitive advantage -john elkington = 1st author to use triple bottom line -chair of Volans, founder suitability, professor Cranfield School of Mgmt -"Cannibals with forks: the triple bottom line of 21st century business" 1997

sustainability business case data

leadership -mckinsey study - 76% CEO's sustainability perf key to long term growth operations -dupont past 1o years cut 213 in cases, GHG's down 75% customers -mckinsey study 87% consumers concerned about environmental impact of products bought (54% willing to pay premium for sustainability) investors -bloomberg study, since 2003 SRI mkt grown 22% annually now at 26.5 T; 15% of total SRI funds are outperforming DJIA

how companies can adapt to climate change

value chain risks -physical, prices, product external stakeholder risks -ratings, reputation, regulation

lighting & sustainability

•LED -6-8 watts -$7 ea, $210 for 30 bulbs -lasts 20 years •CFL (have mercury in them) -13-15 watts -$1 eac; $30 for 30 bulbs -10 years •Std -60 watts -.70c ea, $21 for 30 -life span 2 years

light bulbs and stakeholders

•example of something as simple as lighting having triple bottom line •individuals -cost/savings -replace -recycle •companies -bus makes change -mgmt enhance -savings -vendor •government -politics ->use -regulation -incentives •environment -energy savings -pollution decrease -lower carbon emission