Good to Green E-Book

John-David Phyper

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 592

Veröffentlichungsjahr: 2009

Beschreibung

The business world is undergoing dramatic change that is driven by tough new legislation, expanded market based incentives and increased consumer awareness of environmental issues (e.g., hazard ingredients in products, alternative energy, reduction in greenhouse gases). This is forcing companies to reassess the life cycle of their products and the efficiency of their supply chains. Environmental issues are becoming business critical. Good to Green provides the vital information, backed by case studies and examples, that gives progressive business leaders the strategic know-how to pro-actively manage environmental issues and realize the business benefits of going green.

Leseprobe

Table of Contents

Title Page

Copyright Page

Dedication

Table of Figures

List of Tables

PREFACE

Acknowledgements

Introduction

CHANGING CONCERNS

CHANGING MANAGEMENT OF ENVIRONMENTAL ISSUES

FOLLOW THE MONEY TRAIL

GUIDING PRINCIPLES

KEY WEBSITES

RELATED READING

CHAPTER ONE - EXECUTING A GREEN STRATEGIC PLAN

LEADERSHIP

REFERENCE POINTS

STRATEGIC VISION

SCANNING THE BUSINESS ENVIRONMENT

KEY MARKET INFLUENCERS

METHODOLOGY FOR RISK AND OPPORTUNITIES ASSESSMENT

PUTTING ALL THE PIECES TOGETHER

RECENT MISSTEPS?

CHAPTER 1 TAKE-AWAYS

CHAPTER TWO - (MIS)MANAGEMENT SYSTEMS

ENVIRONMENTAL MANAGEMENT SYSTEM SILOS

COMPLIANCE FRAMEWORK

OWNERSHIP, COLLABORATION AND COMMUNICATION

IT TO THE RESCUE?

CHAPTER 2 TAKE-AWAYS

CHAPTER THREE - “GREEN” OR JUST “GOOD” DESIGN

FUNDAMENTALS OF ECO-DESIGN

THE ROLE OF GOVERNMENT

ADAPT OR DIE

CHAPTER 3 TAKE-AWAYS

CHAPTER FOUR - GREEN MARKETING: MOVING GREEN PRODUCTS TO THE MAINSTREAM

WHAT IS REALLY HAPPENING? - Shift from Environmental Protest to Engagement

THE STATUS OF PUBLIC OPINION IN DIFFERENT REGIONS

WHAT IS GREEN MARKETING?

GREEN MARKETING CLAIMS

CHAPTER 4 TAKE-AWAYS

CHAPTER FIVE - SUPPLY CHAIN DRIVERS

SO WHAT? I JUST PAY A LITTLE FINE

COMMON PITFALLS

ROLE OF GOVERNMENT LEGISLATION/POLICIES

HOW ARE ORGANIZATIONS INFLUENCING SUPPLIERS?

EXAMPLES OF LOGISTICS OPTIMIZATION

CHAPTER 5 TAKE-AWAYS

NOTES

CHAPTER SIX - WHAT ARE THE ALTERNATIVES TO PETROLEUM?

CONSERVATION—YOU MEAN WE HAVE TO BEHAVE LIKE EUROPEANS?

BP

3M

IBM

ENERGY VALUE CHAIN

WHAT ARE THE ENERGY OPTIONS?

GOVERNMENT INFLUENCE OR MEDDLING

SHOW ME THE MONEY

CHAPTER 6 TAKE-AWAYS

CHAPTER SEVEN - EMISSIONS TRADING

THE BUSINESS CASE FOR ACTION ON CLIMATE CHANGE

EMISSIONS TRADING FOR DUMMIES

ABOUT CARBON MARKETS

THE FUTURE OF TRADING

CHAPTER 7 TAKE-AWAYS

CHAPTER EIGHT - MANAGING HUMAN RESOURCES TO NURTURE A CULTURE OF INNOVATION

A FRAMEWORK FOR DISCUSSION

EVOLUTION OF THE TALENT PROBLEM

SUSTAINABILITY AND HUMAN CAPITAL MANAGEMENT

TYPES OF WORKERS

HR PROCESSES ON THE SUPPLY CHAIN

INNOVATE OR DIE

INNOVATION’S RETURN ON INVESTMENT

CHAPTER 8 TAKE-AWAYS

CASE STUDY

CHAPTER NINE - ROAD MAP FOR THE FUTURE

TRENDS/FORECASTS

BUSINESS OPPORTUNITIES

CHAPTER 9 TAKE-AWAYS

AUTHORS’ COMMENTS

BIBLIOGRAPHY

APPENDIX A - EXAMPLES OF ECO-DESIGN AND GREEN PROCUREMENT LEGISLATION/POLICY

APPENDIX B

INDEX

Table of Figures

Figure I : Examples of Changing Environmental Concerns (in developed countries)

Figure II : Global Stats on Environmental Issues

Figure III : Changing Environmental Stewardship

Figure 1.1 : Level 5 Hierarchy

Figure 1.2 : Pathaway to Strategic Sustainability

Figure 1.3 : Tricky Balance of Government Intervention

Figure 2.1 : Robust Framework for Compliance

Figure 2.2 : PLM Interaction with Key Business Systems

Figure 3.1 : PLM Business Process Map

Figure 3.2 : Two Approaches to Product Design

Figure 3.3 : Key Requirements Related to PLM

Figure 3.4 : Sustainable Product Design - Automotive

Figure 3.5 : Sustainable Product Design - Printing Sector

Figure 4.1 : Green Marketing Grid

Figure 4.2 : Market Share of Selected Green Products (%)

Figure 4.3 : Price Premium on Selected Green Products

Figure 4.4 : Evolving Role of Green Products and Sustainable Lifestyles Marketing in Mainstream Companies’Strategy

Figure 5.1 : Supply Chain Environment Issues

Figure 5.2 : Decline of Cod Stocks

Figure 5.3 : Supply Chain Complexity

Figure 5.4 : EICC Supply Chain Management Framework

Figure 6.1 : Products Costs as a Function of Source

Figure 6.2 : U.S. Wind Resources

Figure 6.3 : Solar Intensity

Figure 6.4 : Subterranean Temperatures

Figure 6.5 : U.S. Renewable Portfolio Standards

Figure 7.1 : Environmental Policy Instrumensts

Figure 7.2 : Marginal Cost of Abatement

Figure 7.3 : Carbon Credit Flows Under the Kyoto Protocol

Figure 7.4 : Players and Institutions in the Carbon Market

Figure 8.1 : Human Capital Management Value Triangle

Figure 8.2 : Innovation Cash Curve

Figure 9.1 : Trajectory of Cost Curve

List of Tables

Table 1.1 :Example of Market Influences

Table 1.2 : Spikes in U.S. Crude Imports and Pump Prices*

Table 1.3 : Example of Business Risk and Opportunity Assessment for a Consumer Goods Company

Table 1.4 : Examples of Costs Associated with Environmental/Product Issues

Table 2.1 : Examples of Key Reporting Initiatives

Table 3.1 : Tools Used as Part of Eco-design Processes

Table 3.2 : Example of an Eco-design Checklist

Table 3.3 : Voluntary Initiatives and Partnerships Related to Eco-design

Table 3.4 : Types of Automobiles

Table 3.5 : History of Electric Vehicles

Table 3.6 : Examples of Environmental Demands Put On Consumer Products

Table 3.7 : Energy Innovations Related to Hardware, Software and Datacenter Design

Table 4.1 : 2007-2008 Worldwide Survey of Environmental Attitudes

Table 4.2 : New Green Marketing Paradigm

Table 5.1 : Samples of Green Procurement Websites

Table 6.1 : Comparison of Generation Costs (Excluding Transmission)

Table 6.2 : Alternative Renewable Energy Source

Table 6.3 : Cost of Wind Power Project (Excludes Transmission Costs)

Table 6.4 : Top Producers of Hydroelectric Energy (2007 data)

Table 6.5 : Alternative Energy Using Nonrenewable Resources

Table 6.6 : Top Producers of Nuclear Energy (2007 data)

Table 6.7 : Coal Reserves and Production (2007 data)

Table 6.8 : Cost Comparison of Different Energy Sources

Table 6.9 : Sources of Information on Government Legislation/Incentives Related to Alternative Energy

Table 7.1 : Climate Change-driven Risks and Opportunities

Table 7.2 : Regional Emissions Trading Mechanisms in North America

Table 7.4 : Factors Affecting the Price of Carbon

Table 8.1 : Evolution of Corporate Talent Management

Table 8.2 : Sustainability and Implications for Human Resource Processes

Table 8.3 : Human Resources Sustainability Competencies

Table 9.1 : Key Areas of Growth and Critical Hurdles

Table 9.2 : Examples of Areas of Growth in the North American Environmental Market

Table 9.3 : Myth vs. Reality for GHG Abatement

Table A.1 : Global Fuel Economy Requirements

Table A.2 : EU Packaging Waste Targets

Table A.3 : Examples of U.S. Government Green Procurement

Copyright © 2009 John-David Phyper and Paul MacLean

Care has been taken to trace ownership of copyright material contained in this book. The publishes will gladly receive any information that will enable them to rectify any reference or credit line in subsequent editions.

Library and Archives Canada Cataloguing in Publication Data

Phyper, John-David

Good to green : managing business risks and opportunities in the age of environmental awareness / John-David Phyper, Paul MacLean.

Includes index.

eISBN : 978-0-470-73697-5

1. Management—Environmental aspects. 2. Business—Environmental aspects. I. MacLean,

Paul II. Title.

HD30.255.P49 2009

658.4’083

C2008-907806-3

Production Credits

Interior design and typesetting: Natalia Burobina

Printer: Friesens

John Wiley & Sons Canada, Ltd.

6045 Freemont Blvd.

Mississauga, Ontario

L5R 4J3

FP

To my wife Christine, for her patience and understanding, and my beautiful daughters, Megan and Madison, for constantly reminding me of the important things in life.

John

To Mariela, for healthy doses of inspiration and support; to Ali and Alexa, for being who they are—and for indulging the old man; and to my friends and colleagues at ÉEM, for the steady stream of ideas and goodwill.

Paul

PREFACE

On a sunny day in the spring of 2008, several months before the cataclysmic economic events that will be remembered for decades, we discussed how corporate environmental management had evolved during our twenty years of working in the field, and what lay ahead. We reflected on the many hundreds of projects in which we helped companies to implement environmental management systems (EMSs), to understand sustainable development (SD) and to address corporate social responsibility (CSR) concerns.

Not surprisingly, we both commented that on the spectrum of environmental performance, there are a few key attributes that distinguish “good” companies from truly “green” companies. We noted that companies that demonstrate leadership through sustained action on global environmental challenges and achieve business success in the process also succeed in overcoming two problematic trends that continue to plague the rest of the pack.

The first is “cosmetic environmentalism” whereby companies focus on easy to do activities that provide an aesthetic fix, e.g., recycling program at Head Office or purchasing offsets for CEO travel, instead of digging deeper and developing a good understanding of their business “risks and opportunities” associated with environmental issues. Only by performing that latter can these issues be properly managed at a strategic, tactical and operational level.

The second issue: environmental management is typically fragmented in “silos” of activity—often focusing on SD initiatives, CSR reporting obligations or, more recently, climate change—contributing to further weakening of the approach. Activity in a particular silo may extend from the shop floor to upper management, but an absence of communication and exchange across key functions prevents companies from realizing the true value of management’s efforts.

This unfortunately common situation has often left a number of important questions unanswered. Among these are the following:

• Why are companies not assessing the impact of environmental issues on their business models?

• Who has overall responsibility for environmental issues at a company and do they have the authority to make real changes?

• Why do departments that own a business function (e.g., product management, manufacturing, procurement, logistics) not have full ownership/accountability for environmental issues pertinent to their activities?

• What obstacles are hindering companies’ shift from a “repair/refine” model for their products to a “redesign/rethink” approach that allows them to capitalize on business opportunities?

• Why are companies not proactively assessing what hazardous chemicals may be in their products and thus pose harm to company’s brand (not based upon scientific peer review, but the court of public opinion, with the Internet elevating awareness)?

• What is stopping companies from addressing the environmental/product issues associated with their complex web of suppliers, instead of allowing a “chain of uncertainty” to continue?

• What criteria are companies using to invest in clean technology initiatives? Many clean technologies require long-term subsidies to compete, lack scalability (i.e., declining costs over time) and are solutions to “side issues.”

• Why have so few companies automated compliance and risk management activities through their IT systems?

Our discussion led to the idea for this book, and for our choice of title, as Jim Collins (the author of Good to Great) also sought to identify distinctive traits of outstanding companies that may serve as guidance to others.

Our goal is to guide managers and executives in making informed business decisions on the management of risks and opportunities related to environmental issues. As IT is now business-critical for companies, we also discuss how environmental issues must be incorporated into IT systems to facilitate compliance and proper risk management. We deliberately avoid describing the impact of humans on the environment, nor do we discuss how to implement standard, well-known environmental programs such as the ISO 14001 EMS standard. There are plenty of good books on these topics.

As noted above, while we drafted the manuscript, dramatic economic and political events were unfolding, which had a profound effect on our writing. Most notable among these were the petroleum price spike (>$140 per barrel) and subsequent crash (<$40 per barrel), the failure of the financial system leading to global recession, and the election of a Democratic president in the United States who supports action to mitigate climate change and promote a green economy. Fortunately for us, they reinforced our basic premise that a shift has begun in which leading companies are starting to focus on business risk and opportunities related to environmental issues and in doing so, they

• assign ownership and accountability to the individuals/groups that manage key business functions and break down the EMS/SD/CSR silos

• redesign and rethink products to ensure the elimination of hazardous ingredients, optimization of energy efficiency and reduction of emissions, while boosting revenue

• seek out mismanagement (inefficiencies leading to elevated energy use, emissions, waste, etc.) in the supply chain to improve the bottom line and prevent environment impact of operations

• identify new business opportunities in both clean technology (clean water, renewable energy) as well as product life cycle management (PLM)

The above coincides with (and in many cases is driven by) a shift in discussion at the board and executive level to the monetary impact on brand, fiduciary duty, renewable energy strategy, cleantech business opportunity and financial reporting obligations related to climate change. No longer are environmental issues viewed exclusively as a cost of doing business but now are seen as opportunities for revenue generation and cost reduction, and in some cases are seen as a way to create new business models with less reliance on carbon energy sources and as a shift from owning things to a service economy. It is important, however, to realize that these changes do not happen overnight and that for real revolutionary change to occur, we need to invent alternative energies and products that strive to be sustainable, are superior to what they are replacing and have a trajectory that allows them to be cheaper within a short period of time.

John-David Phyper & Paul MacLean

Toronto/Montreal

February 2009

ACKNOWLEDGEMENTS

This book represents the efforts of more than the two authors. During its preparation, and even before, many others shared information, experience and opinions with the authors.

To ensure that the material contained in Good to Green has been prepared properly and is current, individuals active in each particular area reviewed draft versions of chapters. All of the following people freely gave of their time and ideas and the authors are indebted to each of them for their assistance.

Lino Casalino, Partner in the Advisory Services practice of PricewaterhouseCoopers LLP working in the Toronto office, where he is also the Retail and Consumer Advisory practice leader, directing Canada’s Supply Chain and Logistics practice. Lino is a member of PwC’s global supply chain team that has developed client solutions aimed at reducing cost and managing risk while achieving sustainability goals and objectives. He is a frequent speaker and specialist on the topic of “lean and green supply chain.”

Steve Christenson, Vice President of Regulatory Affairs at Ecolab, where he has co-chaired Ecolab’s global sustainability programs. Mr. Christenson has practiced law since 1988, working primarily on environmental, health and safety matters. Mr. Christenson previously practiced law at Dorsey & Whitney LLP in Minneapolis, Minnesota. He earned his law degree from the University of Iowa and is a member of the Minnesota bar.

Kevin J. Fay, P.E., Corporate Director, product and supply chain stewardship, for PPG Industries, Pittsburgh. Mr. Fay has over 30 years of international environment, health, safety and product stewardship experience in the coatings, chemicals, glass and fiberglass industries. He is past chairman of the Chlorine Institute board of directors, served on the American Chemistry Council Responsible Care committee and is a member of the Air & Waste Management Association.

Mike Harris, Advisory Services partner in the Toronto office of PricewaterhouseCoopers LLP who leads the Canadian Sustainable Business Solutions and Corporate Governance practices. Some 15 years ago, he pioneered PwC’s sustainability practice, developing one of the first publicly assured environmental reports in Canada.

Tom Heintzman brings a distinguished record of service to environmental causes along with proven executive leadership experience to his role as president of Bullfrog Power Inc. Tom co-founded Bullfrog Power in 2004. Prior to that, he spent more than 13 years in the private and NGO sectors, including with Zenon Environmental, where he led its global M&A initiatives as director of corporate development, and McKinsey & Company.

Jeffrey Hojlo is a research analyst at AMR who is responsible for research and analysis on trends and developments in product innovation and the product life cycle management (PLM) market. Jeff is a member of the Product Development Management Association (PDMA) and writes on topics such as global product development and launch, integrated product and process development, and the front end of innovation.

Chuck Holt is responsible for the administration of the investment funds at Investeco, which was Canada’s first environment sector fund manager. Prior to joining Investeco, Chuck practiced corporate/commercial law at a Toronto-based law firm, and before that he earned an LL.M. from the London School of Economics and an LL.B. from the University of Ottawa.

Colin Isaacs is an environmental and Sustainable Development management consultant with more than 25 years experience. He has been a municipal councilor, provincial politician, Executive Director of the advocacy group Pollution Probe, Chair of the Canadian Environment Industry Association, and, since 1989, CEO of CIAL Group. He is also publisher of the Gallon Environment Letter.

Robert Kendrick is Sun Chemical Corporation Director of Global Regulatory and Product Stewardship North America responsible for product safety. He is a member of both the National Association of Printing Ink Manufacturers and the Flexible Packaging Association Environmental Strategy Committee. He is actively engaged in the collection and analysis of regulatory details, economic data, sustainability metrics, manufacturing indicators and safety statistics. He has extensive experience specializing in IT solutions dedicated to product development and regulatory compliance for the pigment, printing ink, paint, plastics and coatings industries, responsible for the quality and oversight of automated compliance solutions for Sun Chemical Corporation.

David Lavoie, an independent business consultant, was previously Senior Vice President Marketing and Alliances for Atrion International Inc. David has over twenty-five years of marketing, communications and new business development experience as a senior executive in both private and public companies.

Joel Makower, for more than twenty years, has been a writer, speaker and strategist on corporate environmental practices, clean technology and green marketing; he has helped a wide range of companies align environmental responsibility. He is executive editor of GreenBiz.com and other websites, events and research services produced by Greener World Media, of which he is co-founder and chairman. His new book, Strategies for the Green Economy, distills his years of watching the green business scene and offers insights and inspiration for understanding and untangling the complexities and controversies of profiting in the growing green economy.

Susan McLean, Manager, Stakeholder Relations for Sustainable Development Technology Canada, was formerly Senior Manager, Business Development, Global Clean Technology at the Toronto Stock Exchange (TSX).

Ron Nielsen, P.Eng, PBAS, is Executive in Residence at the Dalhousie University Faculty of Management and Senior Associate of ÉEM inc. He is former Director of Sustainability and Strategic Partnerships at Rio Tinto Alcan in Montreal. Ron is a Fellow of Tomorrow’s Company, on the Board of the Canadian Water Network and Chair of the Canadian Advisory Committee to the ISO Sub-Committee on Climate Change.

Mickey North Rizza brings twenty-three years of global sourcing and supply chain management experience to her role as a research director in the supply management practice at AMR Research. Mickey is a key member of the supply chain team and works to communicate effective supply management strategies to AMR Research’s clients.

Dr. Ruud A. Overbeek is Global Director of the Health and Environmental Services Division of Intertek, a leading provider of quality and safety solutions serving a wide range of industries around the world. Due to his contributions in his field, Ruud was last year chosen as member of the HBA Advisory Board and is a well-known author of publications and articles concerning environmental compliance and effective compliance implementation strategies.

Geoff Parsons, Vice President in the PricewaterhouseCoopers Canadian Advisory Practice, specializes in the area of Operational Effectiveness and Performance Improvement within organizational supply chains. His recent focus has been on integrating cost effective initiatives with environmentally sustainable practices to deliver both lean and green supply chain business solutions to address the multifaceted challenges facing organizations today.

Ed Peelen, Professor of (Direct) Marketing at the Center for Marketing and Supply Chain Management at Nyenrode Business University, The Netherlands, has held the Stichting IDEA Chair in Event Marketing and Communication since 2007.

Mike Rose is Vice President, Business Development at DO2 Technologies. DO2 Technologies is the global leader in SaaS (software as a service) electronic invoicing and procure-to-pay solutions. Mike has held senior management positions in a number of organizations focused on business and electronic commerce in the mining, natural resource, manufacturing, energy and utilities industries in North America and internationally.

Diane Saxe is one of the world’s top twenty-five environmental lawyers, according to Euromoney’s Best of the Best, 2008. Diane Saxe’s law firm is the only Canadian environmental firm honored to be a member of the very prestigious International Network of Boutique Law Firms.

Rick Whittaker is Vice President Investments at Sustainable Development Technology Canada (SDTC). During his career in technology investment, Mr. Whittaker has led initiatives in product development and managed several advanced technology investment programs. He has initiated several patents on these technologies, which are in production today.

Errick (Skip) Willis, President and CEO of Carbon Capital Management and former Vice-President of ICF Consulting, is the Chairman of the Board of Directors of the Ontario Environmental Industry Association and he chairs the Technical Advisory Group on Climate Change for CEIA National. He has over twenty-five years of consulting experience in strategic planning, issues management, regulatory affairs, strategic communications and international market development. He has worked at the international level as an industry advisor to the Canadian delegation to the Montreal Protocol starting in 1992.

INTRODUCTION

The environment has finally been given a seat at the boardroom table. Even companies that were once notorious for their exploitation of the environment are joining the discussion, as they try to cope with the depth and speed of the upheaval environmental issues are having on their business. Some business leaders are coming to terms with this new reality through the following acts:

Humility—as they stand in front of shareholders at the annual general meeting and explain that the strategy of blissfully ignoring hazardous ingredients and the threat of climate change is hurting their profitability, and Generosity—as their companies pay significant fines to environmental regulatory agencies or settlements to plaintiffs in class-action lawsuits over product recalls, both of which could have been avoided by adopting more robust programs to protect the environment and by ensuring that products did not contain hazardous materials.

“And this little warning light flashes when the outside air becomes too polluted to breathe.”

Many companies are caught in a tidal wave of green issues—climate change, alternative energy, scarcity of resources (e.g., looming water shortages) and the explosion of information on the Internet (raising awareness of hazardous materials in consumer products, as well as corporate injustice anywhere in the world). This green wave will force companies to reassess how they do business, by re-evaluating the life cycle of their products and the effectiveness of their supply chains.

Discussion around boardrooms on environmental issues is no longer defined by words like “nice to do” and “early adopters.” Instead, one hears the terms “business critical,” “crossing the chasm” and “creating competitive advantage”—all giving rise to a new lexicon that is being used at the executive level to identify and exploit opportunities where others see threats.

This green wave will also create a “green rush” that will have a substantial impact on both the economy and environment in the long term. As with the gold rush of the late nineteenth century, some individuals will prosper significantly while others will not for a variety of reasons—inadequate market information, lack of business acumen, timing, access to capital and uncertainty in oil prices. However, unlike the original gold rush, this boom should actually improve environmental conditions, rather than degrade them further. Organizations that fail to consider environmental issues in their business model may find themselves victims of the inevitable bust that awaits those who miss out. The key drivers for change include

• increased public awareness of environmental issues (e.g., global warming, species extinctions, carcinogens, endocrine disruptors) has significantly impacted consumer spending and retention

• growth in the quantity, complexity and enforcement of legislation related to the protection of consumers, workers and the environment around the world

• an increase in the amount of market-based instruments put forward by governments around the globe to reduce emissions and promote alternative energy

• expansion of U.S. disclosure requirements to include environmental costs and liabilities under the Sarbanes-Oxley legislation

• forecasted water shortages in many parts of the globe

• the drive to reduce supply chain costs associated with environmental mismanagement (the Wal-Mart effect)

• increased environmental disclosure requirements from the investment and insurance communities and negative response (i.e., decreased valuation or increased premiums) if environmental, social and governance factors are neglected