![]()
Introduction
Preview of the bookāand the future
Embodied in the present is prescience of the future:
- ā· Volvo added environment to its core values of quality and safety and views it as an integral part of company strategy for competitive advantage. Changes were targeted at three areas of highest leverage: (1) product design based on reducing environmental impact over the entire product life-cycle; (2) business developmentāfor example, market access in Asia and a new company 'Volvo Mobility Systems' aimed at providing products and solutions for the design of safer and more environmentally benign transportation systems; and (3) tough procurement standards for suppliers regarding environmental management and materials. All of this has been supported by clear messages from the boardroom to the shop floor regarding the business relevance of environmental issues, and by extensive education of engineers, employees, suppliers, customers and stakeholders.
- ā· Sony, one of the world leaders in brand strength and innovative product development, has extended its world-class management and technological innovation to include environment, requiring that all Sony products incorporate environmental issues as part of product development, employing rigorous environmental management systems nearing 100% ISO 14001 or EMAS certification of manufacturing sites, and focusing R&D on technologies to reduce environmental impact.
- ā· Patagonia, a leading US designer and distributor of speciality outdoor clothing, has declared its fundamental purpose as 'inspiring and implementing solutions to the environmental crisis', backed by breakthrough commitments to using entirely organic cotton in products, contracting for 100% renewable (wind) energy in all 14 California facilities, developing core product lines with fleece fabric made from post-consumer recycled soda bottles, and phasing out all PVC in travel bags. Environmental performance has clearly become a critical element of Patagonia's definition of style.
- ā· Suncor, a Canadian energy company, has a stated goal to become a 'sustainable energy company'. This objective presents a significant challenge as we enter the carbon-constrained world of the 21st century. Suncor has stepped away from the pack within its sector, acknowledging the immense challenge of climate change and developing an action plan to aggressively address this issue. Additionally, Suncor has redefined stakeholder relations to such an extent that it has been able to vault ahead of the regulatory process and add significant value to the company.
- ā· Interface Flooring Systems, following the lead of Interface, Inc. CEO Ray Anderson to 'build the world's first sustainable and eventually restorative enterprise', has become the company leader in elimination and management of toxic substances, and follows a strategic approach to intensify government standards.
- ā· The Netherlands, in the third phase of its National Environment Policy Plan, focuses on 'absolute decoupling of economic growth and environmental pressure and on the sustainable use of natural resources'. To achieve this ambitious objective, it has forged new alliances with industry and is pursuing a sustainable industrial strategy at the national level. The wide array of integrated environmental planning, policies and programmes has produced tangible results toward the breakthrough goal of sustainability by 2010.
- ā· Henkel has merged traditional business values and ethics with an outstanding integrated management system in which quality, safety, health and environment are addressed simultaneously. For Henkel there are no niche or 'green' products; all products must be environmentally sound and the company has established the systems and product development processes required to meet this objective.
- ā· The Center for Technology Assessment (CTA), a government-funded think-tank institute, is working intensively with industry and other stakeholders to implement sustainable economic development policies and programmes at a regional level in Germany's highly industrialised Baden-WĆ¼rttemberg area, where total exports top US$70 billion.
These organisations, together with the others described in this book, are taking a radically different approach to environmental pressures inherent in traditional products and production processes. 'Sustainable development' is seen as central to strategic positioning and competitive advantageāa key component in future economic success and market value.
Sustainable development
Currently we are in the midst of a paradigm shift with respect to how society views the environmental, social and economic implications of participating and surviving in the modern world. The shift is away from an industrial model in which environmental activity is viewed as a cost, resources are viewed as a free good, and the social implications of industrial policy are an afterthought. Leading decision-makers and thought leaders in academia, industry, government and non-governmental organisations are now embracing a new model in which economic, environmental and social considerations are highly integrated. In this model, industrial environmental activity is viewed as an opportunity for cost reduction, product innovation and increased shareholder value; understanding the social implications of decision-making is seen as a platform for the long-term prosperity of organisations. Rather than being an add-on, the economic viability of a national economy or an organisation is predicated on understanding and integrating environmental and social considerations into core decision-making processes.
The term most often used to describe this shift, 'sustainable development', has its roots in Our Common Future, the 1987 report of the World Commission on Environment and Development (commonly known as the 'Brundtland Report'; WCED 1987), and in the 1992 United Nations Conference on Environment and Development (UNCED) held in Rio de Janeiro. Based on an unprecedented global consultation process, Our Common Future set out a vision for sustainable development that integrated economic, social and environmental concerns. The UNCED conference further translated this vision into a series of actions for governments around the world. At UNCED, governments made a formal commitment to develop and promote more sustainable forms of consumption and production.
The definition of sustainable development offered in Our Common Futureā development that 'meets the needs of the present without compromising the ability of future generations to meet their own needs' (WCED 1987)āhas become widely used globally.
Since 1987, sustainable development has emerged as a concept, and now a movement, disentangling economic growth or progress from material resource use. The prominent economist and author, Herman Daly, who spent six years at The World Bank, clarified the critical concept that our economic system is necessarily a subsystem of the ecosystem, and that we must substitute goals of 'growth' for those of 'development', where increase in human prosperity is achieved without overshooting the carrying capacity (resources and sinks) of the earth:
The demands of these (human, economic activities) on the containing ecosystem for regeneration of raw material 'inputs' and absorption of waste 'outputs' must be kept at ecologically sustainable levels as a condition of sustainable development. This change in vision involves replacing the economic norm of quantitative expansion (growth) with that of qualitative improvement (development) as the path of the future progresses . . . 'Growth' is an increase in size through material accretion while 'development' is the realization of fuller and greater potentialāso sustainable development is progressive social betterment without growing beyond ecological carrying capacity
(Daly 1996).
Box 1: Strategic industry responses to sustainability
- ā· Waste elimination and reduction: zero waste
- ā· Reduction of toxic dispersion: zero emissions
- ā· Enhanced resource productivity: Factor 4, Factor 10
- ā· Clean production: processes, technologies, products
- ā· Increased energy efficiency
- ā· Closed loops: re-use, remanufacturing, recycling
- ā· Design for X: design for recyclability, disassembly, environment added to design for manufacturability and assembly, serviceability, repairability
- ā· Extended product durability,functionality,flexibility
- ā· Dematerialisation: shift from product to service or information
- ā· Product stewardship: taking environmental responsibility for products throughout the life-cycle
- ā· Transparency: environmental and social corporate reporting, and performance measurement
- ā· Ethical production: human rights, workplace conditions and practices, safety, living wages
Partly in response toābut in many cases ahead ofāgovernments, industry has also taken up the mantle of sustainability. Individual companies, and organisations such as the World Business Council for Sustainable Development, have been developing a number of industrial responses to the need to move toward more sustainable production. Some of these responses are outlined in Box 1.
This governmental and industrial shift toward a sustainability paradigm is taking place on a planet that is, in the minds of many leading thinkers and decision-makers, already reaching ecological limits in critical areas such as food production, fresh-water supply, ozone layer depletion and climate change. The challenge, for industry, governments and individuals, will be to ensure that continued economic development and social wellbeing are compatible with ecological support systems. Mapping the Journey is an exploration of this challenge, documenting how organisations that have made a commitment to move toward sustainability are progressing.
Sustainability as a central strategic issue
- ā· What critical insights can guide managers and governments as they make strategic decisions to position for the emerging economy?
- ā· What will be the business context of the next decade?
- ā· What innovations in business design and technology will redefine the future competitive landscape?
- ā· What shifts in market demand will drive new requirements and expectations for winning customer loyalty?
- ā· How can corporate policies and strategies be translated and implemented in multinational companies with very diverse product lines?
- ā· What competences and practices from leading global companies and governments could inform our business strategies and practices?
- ā· What is the key to achieving sustainable competitive advantage and value?
- ā· By what measure should we determine success?
The principles of sustainabilityāperspectives and processes for redesigning our industrial system and practices and our social culture and metabolism (industrial throughput) to achieve sustainable developmentāoffer critical insights for developing the answers to these strategic questions. The organisations in this book are using sustainability in forming strategic plans to:
- ā· Position for the new economy
- ā· Anticipate critical elements of the emerging business context
- ā· Meet shifting customer requirements
- ā· Build customer loyalty and brand
- ā· Stimulate innovations in business design and technology
- ā· Develop new competences
- ā· Achieve competitive advantage,
- ā· Increase value
- ā· Redefine measures of corporate, community, and national success
There is a fundamental shift occurring in mainstream business, moving environmental and social sustainability into the forefront of strategic planning and positioning.
For the past many decades, these so-called 'corporate responsibility' pressures have been largely viewed as a thorn in the side of management: an additional cost to be endured. Consequently, these issues have often been shunted to environment and public affairs departments, far from the core strategic decision-making and product and service development of the company. With the exception of a few niche 'green' product manufacturers, corporate response to environmental pressures has largely been constrained to compliance with legislative requirements in production sites and promoting paper recycling in office facilities. On a parallel st...
