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Content by THE BUZZ BUSINESS
As the 46th annual meeting
of the World Economic
Forum gets under way in
Davos, participants are facing up
to some of the most challenging
economic and social conditions
in a generation. The dramatic
slowdown in the global economy,
combined with widespread
political unrest and with existential
concerns about the environment,
is for many delegates compelling
evidence that the growth model of
recent years has been exhausted.
The task at hand now is to develop
a new way ahead, a new model that
harnesses the power of technology
and innovation to deliver global
economic growth that is both more
inclusive and more sustainable.
“The new technology age, if
we shape it and contribute to it
in a responsive and responsible
way, can catalyze a new cultural
improve the quality of life in the
world’s fast-growing cities. Giant
mining multinationals, faced with a
continued downturn in commodity
prices, are transforming into
long-term partners for national
and regional development. In
the financial services sector,
telecommunications companies,
banks and exchanges are
developing new ways of accessing
the unbanked and mobilizing
capital for sustainable investments.
Meanwhile, policymakers are
working hard to ensure that new
regional trade and investment
agreements raise the bar for
environmental protection and
employee rights worldwide.
Just as coal and steam powered
the first industrial revolution, it is
communications technology that
is fueling today’s transformation.
Networking giant Cisco estimates
that IoE, the networked connection
of people, processes, data and
things, represents an opportunity
to generate $19 trillion of value
in the private and public sectors.
Chris White, the company’s
senior vice president of IoE, says
that partnerships between both
sides will be the key to unlocking
this value. “Digitalization and
technology are not just issues
for technocrats,” he says. “They
should be on everyone’s agenda.
Companies and public-sector
organizations need to think about
forming new partnerships to drive
transformation forward.”
As the WEF begins, a consensus
is already emerging among
participants: The time for action
is now. Technological and social
change is happening so quickly that
today’s mechanisms for governance
and growth are already looking
outdated. “My main worry is that
people aren’t taking advantage of
the opportunities of innovation
fast enough,” White says. “We need
to look at what we can today and
accelerate what we are doing, if we
are to successfully transform our
businesses, cities, countries and
our entire society.”
renaissance that will enable us
to feel a part of something much
larger than ourselves—a true
global civilization,” Klaus Schwab,
founder and executive chairman
of the WEF, said last year.
The theme of this year’s event
is Mastering the Fourth Industrial
Revolution. The technologies
needed to deliver a new economic
growth model are essentially
ready, ranging from the Internet of
Everything (IoE) and digital money
to alternative fuels, 3-D printing,
nanotechnology, robotics and even
artificial intelligence. The challenge
now is to use these innovations
to transform today’s systems of
production and consumption,
while at the same time delivering
growth that creates employment,
increases social inclusion and
rewards investment.
As this report illustrates, some of
the world’s leading businesses are
already rising to this challenge in a
variety of industries. Manufacturers
of cars and trucks are not only
evolving toward alternative fuels
but also using Internet technologies
to position themselves as providers
of integrated mobility services,
working with governments to
GLOBAL LEADERS IN SUSTAINABLE INNOVATION
Innovation is the most important and only sustainable source of economic growth for companies and countries.” Klaus Schwab, Founder and Executive Chairman, WEF
People need to realize not only that the paradigm has changed, but that they have to do something about it.” Chris White, Senior Vice President of IoE, Cisco
Content by THE BUZZ BUSINESS
3
It has been a year of unprece-
dented change in the world’s
automotive industry. Increasing
public concern over car emissions,
combined with advances in
technologies for batteries and
alternative fuels, has led to a
rapid growth in the market for
low-emission vehicles. At the
same time, car manufacturers and
governments have been radically
rethinking today’s model of
car ownership and are working
toward a more sustainable vision
of urban mobility.
Some of the world’s most
sophisticated economies are
pioneering the revolution. In
Norway last year, over one-fifth of
new car sales were electric vehicles
(EVs). Cities across Germany are
providing parking privileges for
shared vehicles. In the run-up
to the Olympic Games of 2020,
Japan will spend over $300 million
on infrastructure for hydrogen-
powered cars. In all three countries,
carmakers are partnering closely
with governments to ensure that
the infrastructure and incentives
are in place to support the transition
to a new generation of vehicles and
a new model of mobility.
“Governments understand that
in the early stages they need to
prime the pump with incentives
for consumers in order to grow
the electric vehicle market,” says
Thierry Bolloré, chief competitive
officer of Groupe Renault, which
in 2015 sold its 280,000th EV,
will in cities and suburbs, with
ideally one recharging point per
10 EVs on the roads.
At the top end of the EV market
in Europe, the star performer is
BMW’s i3 model. In Germany, one
in every four EVs sold in the last
two years has been a BMW i3, and
the model is the third most popular
EV in the world. With the i3,
BMW is also pioneering innovative
services that are designed to make
urban driving more sustainable.
In September, the company’s
DriveNow car-sharing service put
a fleet of 400 i3s into service in the
Danish capital of Copenhagen. By
reducing the numbers of cars on
the roads, and ideally replacing
them with EVs, car-sharing
schemes such as DriveNow can
both improve urban mobility and
reduce pollution. Carl Friedrich
Eckhardt, head of BMW’s Center
of Urban Mobility Competence in
Munich, estimates that 50,000 car-
sharing vehicles could do the job of
500,000 individually owned cars
in the German capital, reducing
traffic and freeing up city parking
space for new uses by city dwellers.
BMW set up the center in early
2015, specifically to help create
a sustainable model for urban
mobility and improve the quality
of life in cities.
At the Renault-Nissan Alliance,
Bolloré says that new engine
technologies, regulations and
software connectivity are now
steering the automotive industry
toward a radically different
business model, in which car
manufacturers sell sustainable
mobility services rather than just
cars. “Mobility is going to become
something very different to what
it is today,” he forecasts. “In the
future, people won’t necessarily
only be buying cars from us—they
will be buying mobility services.”
These services are already
available in some markets. In
Copenhagen, BMW has now
linked the electric i3’s navigation
software to the city’s public
transport system, so that it
informs drivers in real time on
the best way to complete their
trip and on the intermodal
connections they can make. “The
system can tell you when there is
congestion and can recommend
alternatives with public transit,”
Eckhardt says. “A whole new
world of urban driving is possible
when you link up cars and
public transport. Our vision is
to export our car-sharing ideas
and mobility services to as many
cities as possible and at an ever
greater scale.”
accounting for half of all EVs
on the roads. “At the same time,
governments worldwide are setting
increasingly stringent standards
for emissions. As a result, the EV
market may be still small, but it’s
growing very fast, by around 50%
in 2015. It’s only going to go in
one direction—and before long
the market will be so large that
incentives won’t be needed.”
At the COP21 climate
conference in Paris, the Renault-
Nissan Alliance provided a fleet
of 200 electric cars of various
types and sizes, the largest electric
vehicle fleet ever assembled.
The Alliance is currently focused
on improving the distance that
EVs can travel before needing to
recharge, hence eliminating the
so-called ‘range anxiety’ of EV
drivers. “We believe that by no
later than 2020, our EVs will have
double the range they have today,”
Bolloré says. “We want range
anxiety to disappear completely.”
The key to increasing the
range of zero emission cars lies
in improving the performance
of their batteries, but without
increasing the weight of the
vehicles. The Alliance is
currently developing new battery
technologies with its suppliers
that will not only increase the
range of its EVs, but will also
make recharging the battery a
much quicker process. At the
same time, public authorities are
increasing their investments in
charging points. By 2020, E.U.
Member States will have to have
built enough infrastructure to
ensure that EVs can circulate at
Thierry Bolloré, CCO, Groupe Renault, with France’s most popular EV, the Renault Zoe
SUSTAINABLE MOBILITY: IS THE FUTURE ELECTRIC?
DriveNow: BMW’s car-sharing service
We are investing billions of euros to offer the widest range of EVs in the market.”Thierry Bolloré, CCO, Groupe Renault
PROJECT DIRECTION: SIAN GODDARDINTERVIEWS: SIAN GODDARD WRITING: MARK BERESFORD
EDITING: CARMEN MOURAILLUSTRATIONS: VASAVA DESIGN: ANTONIO CAPARRÓS
Produced by for
MOBILITY
Content by THE BUZZ BUSINESSContent by THE BUZZ BUSINESS
In the development of
sustainable urban transport,
partnerships between vehicle
manufacturers, energy suppliers,
academia and local authorities
are playing a fundamental role.
Thanks to cooperation across
industry, research institutions
and the public sector under the
ElectriCity initiative in Sweden,
last year the city of Gothenburg
began operating its very first
route for electric bus-
es, supplied by the
Volvo Group. For
city residents,
the transforma-
tion of Line
55 has re-
sulted in less
noise, lower emissions, and
state-of-the-art bus stops and
vehicles. For Volvo, the city is
serving as a testing ground for
its sustainable transport initi-
atives. “We created ElectriCity
because we want to focus
not just on the buses but on
the total transport solution.
We might make the cleanest
buses, but to respond to the
public transport challenge ef-
fectively we need partners,”
Volvo Group’s chief sustaina-
bility officer Niklas Gustafsson
says. In the capital, Stockholm,
Volvo is also partnering
with electricity supplier
Vattenfall to provide
rapid charging
points for its bus-
es. “There is great
potential to make
energy savings by
working together on sustainable
transport projects,” Vattenfall
president and CEO Magnus
Hall says.
65
IS THE HYDROGEN FUEL CELL THETURNING POINT?
Electric cars are not the only
alternative to the internal
combustion engine that are under
development. In 2015, Japanese
car giant Toyota began selling in
Europe and California its Mirai
automobile, a futuristic vehicle
that uses a hydrogen fuel cell for
power and emits only water vapor
from the tailpipe as a byproduct.
The launch of Mirai forms part
of Toyota’s long-term strategy of
CNH INDUSTRIAL TRAILBLAZES IN INNOVATION
While the high-performance
road vehicles of global
brands such as Nissan, Renault
and Toyota may be the most visible
face of the fuels revolution, it is
in the world of agricultural and
industrial equipment that change
is taking place at the fastest rate.
“The lion’s share of our capital
spending is now going toward
improving the environmental
performance of our engines
the Israeli government.
As with the EVs and
hydrogen fuel cell
markets, Tobin
says that the en-
gine technology
is now ready; what
is needed is for governments and
energy companies to fund the fuel
stations and infrastructure required.
The company is also investing
in the development of biomethane
as a fuel. Biomethane is produced
from biogas, which is created
naturally when bacteria break down
organic matter and animal waste.
According to CNH Industrial, a
vehicle powered by biomethane
produces CO2 emissions
that are comparable
to those of an electric
vehicle fueled using
energy produced from
renewable sources. The
company’s Iveco Bus brand
already manufactures a range
of vehicles that run on natural
gas and can also be fueled using
biomethane. For farmers, there is an
additional incentive: With the right
refining equipment in place, farms
should be able to produce their own
biomethane from organic waste
and then use it as a fuel to power
their tractors and other agricultural
equipment—in other words,
become energy-independent farms.
“In a way, we are going full circle
from having horse-drawn carts
back to vehicles which are fueled
by biomass,” Tobin says. “A large
farm could theoretically have the
ability to supply all of its own fuel
through biogas, biomethane and
renewables.”
and developing technologies
for alternative propulsion and
precision farming,” says Richard
Tobin, chief executive officer of
CNH Industrial, the sector leader
in the Dow Jones Sustainability
World and Europe indices, which
owns brands such as New Holland
Agriculture, Case IH and Iveco.
For heavy-duty trucks that oper-
ate in these segments, electrification
is not a feasible option; the weight of
the batteries needed to power them
would make them impractical.
Instead, manufacturers are devel-
oping engines that run on natural
gas as a low-polluting alternative to
diesel. To date, CNH Industrial has
already produced around 14,000
commercial vehicles powered by ei-
ther compressed natural gas (CNG)
or liquefied natural gas (LNG),
ranging from light-duty vans to
medium-and heavy-duty trucks. In
July last year, the company deliv-
ered Israel’s first-ever natural gas ve-
hicle, as part of its partnership with
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It is set to be a critical year for
the world’s commercial aviation
sector. By the end of 2016, the
International Civil Aviation
Organization (ICAO), a UN
agency, will endorse a global
standard for CO2 that all new
aircraft will have to meet.
This year,
the ICAO
will also
approve the
industry’s first worldwide
carbon-offsetting scheme. “All of
the new regulatory frameworks
are going towards reducing
emissions and potentially
imposing higher costs for
emitting carbon,” Julie Felgar,
head of environmental strategy
at Boeing Commercial Airplanes,
says. “The aviation industry has
to respond to that reality.” In
the long term, by investing in
new aircraft technologies, better
fuel efficiency and enhanced
in-flight operating procedures,
the sector aspires to cut its net
CO2 emissions to half of its 2005
levels by 2050. Meanwhile,
the focus on environmental
issues is also reducing aircraft
noise; the
new C Series
model from
Bombardier,
coming into
service this year, is the quietest
in its class. “Nearly the
same things that contribute
to reducing aircraft emissions
also reduce noise,” says
Bruce Parry, the company’s
head of sustainability, product
development engineering. “It
is one of the advantages of
developing a completely new,
clean-sheet design.”
VOLVO’S ElEctricity GREENER SKIES
Toyota is a global player with the financial capability to invest in researching different types of energy.” Jacques Pieraerts, VP Communication, External and Environmental Affairs, Toyota Motor Europe
As an industry leader, we are obligated to be at the front of the sustainability curve. Our clients expect it.” Richard Tobin, CEO, CNH Industrial
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MINING IS A LONG-TERM
BUSINESS
019751_Glencore_Time_Magazine_Advert.indd 1 27/11/2015 12:51
Toyota has put together a broad
coalition of partners from
the public and private sectors,
who all share a common interest
in building what the
company calls the
hydrogen society.
In Europe,
Toyota launched
the Mirai in the German
city of Hamburg, which is already
home to four hydrogen refueling
stations and which produces
hydrogen using wind power. In
California, the state government
is investing $200 million to
build a network of over 100
stations. Toyota itself has also
released thousands of its fuel cell
patents free of charge to speed
up adoption of the technology.
“With global population growth
as fast as it is and with increasing
demands for mobility and energy,
we cannot continue with business
as usual,” Pieraerts says. “It is time
for revolution, not evolution.”
vehicles, and you can refuel very
quickly,” says Jacques Pieraerts,
vice president of communication,
external and environmental
affairs at Toyota Motor Europe.
While Toyota believes that there
will be a place in the market for
EVs, especially for short trips and
for urban car-sharing schemes,
it thinks fuel cell vehicles will
be more appropriate for longer
journeys. By 2020, the company
aims to be selling 30,000 Mirais a
year, up from 2,000 in 2016.
One challenge that hydrogen
fuel cell vehicles face in common
with EVs is the still limited
scope of public infrastructure for
alternative fuels and recharging.
To respond to this challenge,
eliminating nearly all petrol and
diesel engines from its output
by 2050. It is the latest result
of a long-standing commitment
to sustainability that saw the
company launch the Prius,
the first mass-produced
hybrid, back in 1997.
In Toyota’s latest world
first, the Mirai, the engine
combines hydrogen with oxygen
to produce electricity. As the
technology does not rely on
a battery, it avoids the range
anxiety problems faced by
today’s generation of EVs; in
effect, the hydrogen itself serves
as an energy storage device.
Furthermore, the time taken
to refuel with hydrogen is only
three to five minutes, comparable
with conventional cars, whereas
many EVs still require overnight
charging. “With the Mirai,
drivers have autonomy of
around 500 kilometers, which
is still a challenge for electric Richard Tobin, CEO, CNH Industrial
7
Content by THE BUZZ BUSINESS
MONEY MAKES THE WORLD GO ROUND
Credit Suisse supports financial education for girls
M-Pesa mobile services connect the unbanked masses to the global economy
into protecting these hot spots,”
Buholzer says.
Alongside the global banks,
newer players in the financial sector
are delivering innovative financing
mechanisms for environmental
investments. The Sydney-based
company Carbon Trade Exchange
(CTX) has launched a series of
carbon platforms around the world,
enabling market participants to
trade their carbon credits and
other environmental commodities.
By joining the CTX Voluntary
Carbon Market, businesses can
access hundreds of carbon projects
globally to offset their emissions
and become carbon-neutral. “A
large proportion of trading in the
global carbon market is still being
done over the counter or by direct
intermediaries,” CTX founder and
executive chairman Wayne Sharpe
says. “A carbon exchange is a much
more efficient way of distributing
funds to climate projects where
the need is greatest. Participating
in an exchange is one of the easiest
ways for a company to support
green growth and sustainable
development.”
Over the course of the last
18 months, concern has
been mounting about the
potential of financial technology
(fintech) to disrupt the business
models of existing lenders and
create new risks and uncertainties
for today’s banks. At the same time,
however, pioneering companies
are embracing these technologies
and developing innovative ways
of mobilizing capital, and helping
to make the financial system
greener, more sustainable and more
inclusive.
In recent years, mobile money
services have been leading the
drive to increase financial inclusion,
especially in sub-Saharan Africa.
Last year, a report from the World
Bank found that between 2011
and 2014, the proportion of adults
with a financial services account
increased from 51% to 62%, a
trend driven above all by mobile
money accounts in Africa. “Access
to financial services can serve as a
bridge out of poverty. We have set
a hugely ambitious goal—universal
financial access by 2020—and now
is now examining the potential for
adding new financial capabilities
to M-Pesa, such as international
money transfer, insurance services,
and government payments.
Meanwhile, long-established
financial institutions are also
working hard to support financial
inclusion and to increase
their funding of socially and
environmentally positive projects.
Banking giant Credit Suisse was an
early leader in the development of
microfinance and impact investing.
It is now looking closely at how it
can better mobilize private capital
to protect conservation hot spots
around the world. “Our best
contribution is in applying classic
banking services to respond to the
great global challenges of today,”
René Buholzer, the bank’s global
head of sustainability, says.
Public funds and charitable
donations by themselves will not
provide enough money to protect
valuable areas of conservation,
the bank believes. Working with
the World Wide Fund for Nature
(WWF) and consultancy McKinsey,
Credit Suisse has published a
research report, based on which the
bank has developed a new product
that enables private investors to
allocate their capital to conserving
vulnerable ecosystems, while also
generating a financial return. “It
is our responsibility as a bank to
help bring more private money
we have evidence that we’re making
major progress,” World Bank Group
President Jim Yong Kim has said.
In many African countries, more
people now use a mobile money
account than a bank account.
Many of them will be customers
of Vodafone’s pioneering M-Pesa
service, which after launching
in Kenya back in 2007 has now
spread to almost a dozen countries.
Wherever they are, any customer
with an M-Pesa account can use
their mobile phone to transfer funds
to other users and non-users and to
pay their bills, all for the cost of a
tiny transaction fee. According to
the World Bank, the affordability of
the service has been key in opening
the door to formal financial services
for Africa’s poor. In Kenya, around
40% of all cash transactions are
now carried out via M-Pesa.
“In the developing world, there is
no real easy access to the traditional
banking services and they tend to
be expensive for poorer people,”
says Michael Joseph, one of the
founders of the M-Pesa service and
now Vodafone’s director of mobile
money. “M-Pesa has brought some
basic financial services to people for
the first time and it has had a huge
impact on their lives.”
As well as serving as a medium
for transactions, M-Pesa also
enables poorer people, especially
women looking after their families,
to save, earn interest and borrow
against those savings, very often for
the first time in their lives. Vodafone
C
M
Y
CM
MY
CY
CMY
K
It is only by pursuing a responsible and forward-looking approach to business that we can achieve long-term success.” René Buholzer, Global Head of Sustainability, Credit Suisse
It is exhilarating to change people’s lives for the better and make their lives easier.” Michael Joseph, Director of Mobile Money, Vodafone
FINANCE & TRADE7
PH
OTO
: Pla
n In
tern
atio
nal
Content by THE BUZZ BUSINESS
SUPPORTING SUSTAINABLE TRADE
In Davos this year, politicians
and policymakers are debating
the next stage in the integration
of international trade, with giant
regional free trade agreements
set to transform global flows of
goods and services. At the same
time, the world’s consumers
are increasingly willing to pay
a premium for products made
to the highest standards of
sustainability. Few countries
are as well positioned to benefit
from these two trends as Italy,
where the business community’s
commitment to high-quality
exports has long been a source of
national pride.
“Italy is one of the E.U.’s lead-
ing countries in ensuring the
sustainability of its products
and of its entire supply chain,”
Deputy Minister
for Economic
A SAFE BET IN EUROPE
At the same time as it increases
its global exports, Italy is
also attracting ever higher levels
of foreign investment, especially
from companies in developing
countries that are looking to
secure a foothold in more stable
economies. One of the core topics
of discussion in Davos this year
has been the turmoil in the world’s
largest emerging markets. To help
investors from these countries and
others set up and run businesses
in Italy, the government of Prime
Minister Matteo Renzi has carried
out a wide-ranging series of legal
and tax reforms. As a result, in
AT Kearney’s FDI Confidence
Index 2015, Italy increased its
position to 12th overall, a rise of
eight places. In 2014, the country
experienced the highest growth
rate among European countries
for inward greenfield FDI projects.
“Thanks to the reforms, there is
now a greatly improved working
environment in Italy for investors,”
says Riccardo Monti, president of
the Italian Trade Agency (ITA).
“Italy has significant competitive
advantages for manufacturing and
exporting high-end products such
as pharmaceuticals and industrial
equipment. We are seeing a lot
of interest from investors in
developing countries, who want
to invest in Italy as a more secure
platform for growth.”
Renzi’s government has identi-
fied 50 measures to enhance the
country’s economic competitive-
ness and has so far approved
over 75% of them, includ-
ing removing obstacles
to hiring, new rules on
dismissals and intro-
ducing generous tax
credits for R&D.
As part of the
reform process,
Development Carlo Calenda says.
“There is now a fantastic oppor-
tunity for Italian companies, as
emerging markets such as China
switch to consumption-led growth
and towards more sustainable
models of development.”
The increase in exports is
currently powering the Italian
economic recovery. In the first
10 months of 2015, Italian
exports to countries outside the
European Union rose by 3.7%.
That performance reflects not only
the strength of foreign economies,
but also a targeted campaign by
Italy’s governments and businesses
to focus on expanding its market
share in those countries where
trade barriers are coming down
fastest. “Because of the high level
of tariff and non-tariff barriers in
countries in the Mercosur bloc, in
South America we have switched
our focus to more open markets,
such as the members of the Pacific
Alliance like Chile and Colombia,”
Calenda explains.
The export performance
of the country is increasingly
geared to the ongoing wave of
new free trade deals. Following
last year’s landmark Trans-Pacific
Partnership agreement, all eyes are
now on the proposed Transatlantic
Trade and Investment Partnership
(TTIP) between the E.U. and U.S.,
which will lead to the creation of a
de facto free trade area representing
63% of world trade. Participating
countries will be committed to the
values of sustainability and quality
for which Italian products are cel-
ebrated worldwide. “When Europe
and the U.S. come together to set
very high standards for entering
the market, standards will in-
evitably go up worldwide,”
Calenda says. “This will be
a very positive develop-
ment both for Italy and
for sustainable devel-
opment in general.”
the ITA has set up a new Foreign
Investment Department and has
stepped up promotion activities
internationally. The agency is
opening nine foreign investment
desks worldwide in strategic
markets including Istanbul,
London, Dubai, Singapore and
Shanghai. “We see a very positive
outlook for our economy driven
by strong exports and continued
growth in FDI. In recent years
foreign investors have been
drawn to developing markets,
but now they are now looking
for more security,” Monti says.
“They can come to Italy, enjoy
all of the advantages of an
advanced economy and still access
800 million people within a three-
hour flight.”
9
IMPROVINGTHE PRESENTBUILDINGTHE FUTURECNH Industrial is a global leader in the capital goods sector that, through its various businesses, designs, produces and sells agricultural and construction equipment, trucks, commercial vehicles, buses and specialty vehicles in addition to a broad portfolio of powertrain applications. Present in all major markets worldwide, CNH Industrial is focused on expanding its presence in high-growth markets, including through joint ventures.
Sustainability is an integral part of CNH Industrial’s DNA. It characterizes the company at every level, from the products it designs and produces, to the suppliers and components it uses, the facilities and local communities in which it operates and its 69,000 employees. Sustainable business is the key to building the future and as the Industry Leader in the Dow Jones Sustainability Index for the last fi ve years, CNH Industrial is playing its small part.
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ITALY ASSERTS GLOBAL LEADERSHIP
This year, the government will complete the implementation of what we consider the most comprehensive structural reforms in any European country, making Italy an even more attractive place for business.” Riccardo Monti, President of the Italian Trade Agency
The world’s consumers are willing to pay higher prices for the sustainability and quality of Made in Italy products.” Carlo Calenda,Deputy Minister for Economic Development
FINANCE & TRADE
Content by THE BUZZ BUSINESSContent by THE BUZZ BUSINESS
CYPRUS: STABLE FINANCE, STABLE GROWTH
As the world’s policymakers
continue to grapple with
the consequences of the global
financial crisis, the remarkable
recovery of the island economy
of Cyprus has become a point
of reference in the debate. The
turnaround in the country’s
fortunes provides compelling
evidence that a rapid and radical
restructuring of the financial
sector, combined with other
reforms, can enable a country to
grow its way out of austerity and
back to stability and prosperity.
“Cyprus had to get back on
its feet quickly after the bailout
of 2013 to survive,” says John
Hourican, chief executive officer
of the Bank of Cyprus, the coun-
try’s largest bank. “The govern-
ment listened to the financial and
business community, maintained
the support of the
Cypriot people, and
acted swiftly to get the
country out of danger.
There’s not the same
sense of urgency in
some larger European
countries, which could
learn a lot from how
Cyprus is fixing its
economy.”
In March 2013,
following the bursting
of a bubble in credit and
housing, Cyprus became the
fifth European Union member
state to receive a bailout from
the E.U. and the International
share the same conviction that
change is the only way forward to
create sustainable development.”
Since Cyprus signed up to the
bailout program, the rapid pace
of reform has helped to eliminate
the country’s fiscal deficit, restore
the banking sector to health and
attract record levels of foreign
investment. Cyprus re-accessed
international capital markets
in 2014 and abolished its last
remaining capital controls last
year. Unemployment is heading
down, and the
economy returned
to growth in 2015
after three years of
recession.
The restoration
of confidence in
the banking system
has played a critical
part in steering
the economy back
on to a track of
sustained growth. “We
have seen an increase in deposits
month upon month since the
lifting of capital controls, because
people are now confident that the
bank and the country are on the
road to repair,” Hourican says.
Meanwhile, the Bank of Cyprus
has sold most of its international
operations and is normalizing
its funding arrangements. “We
have repatriated surplus liquidity
and capital outside Cyprus and
we are shrinking to strength in
our home market,” Hourican
says. Stronger balance sheets and
Monetary Fund. The government
was signed up to an ambitious
program of economic reform and
recapitalized the banking system,
in return for financial support
of €10 billion from the IMF and
European partners.
“The President, the government
and senior levels of management
in the banking system in Cyprus
were all very well lined up
together,” Hourican says. “We
were in a worse position than
Greece, with a broken banking
system and with customers
unable to access their deposits.
But in Cyprus there was more
determination from policymakers
in all areas of the economy to
resolve the crisis. We had a simple
mantra, which was to get it done.”
At the island’s third-
largest bank, Hellenic Bank,
Chairwoman Irena Georgiadou
says the key to the country’s
turnaround has been the
willingness of policymakers and
financial institutions to think the
unthinkable and to open a new
chapter in the island’s economic
development. “We wouldn’t have
been able to achieve what we have
done simply by going on with
business as usual,” she says. “At
Hellenic Bank, the pace of change
has been continuous. We have
altered our practices in nearly
all our business areas, and we
have brought in completely new
shareholders, management and
board of directors. The leadership
of Cyprus and of the banks all
MINING BREAKS NEW GROUND
For one of the world’s oldest
industries, it has been a
transformational shift in
culture. In the face of an extended
slump in prices for metals and
minerals, the largest mining
companies are maintaining their
investments in support of the
communities affected by their
operations. These multinationals
recognize that their ability to develop
new projects and create long-term
value for shareholders now depends
as much on the consent of local
communities as it does on a return to
high prices in commodity markets.
“Whatever we do as an industry,
we have to think very carefully
where and how we invest,” says
Mark Cutifani, chief executive
officer of Anglo American. “As
much as we think about the actual
investment in our capacity, we also
have to think about that investment
in terms of communities.”
As chairman of the International
Council on Mining & Metals
(ICMM) from 2013 to 2015,
Cutifani has played a leading role in
steering miners toward a stronger
focus on long-term development
issues. In Western countries,
mining has historically been a
major contributor to economic
development, not only in providing
fuels and metals to industry, but
also in bringing road, rail and social
services to once impoverished
regions as a byproduct. Today,
in some of the remotest corners
of the world, miners are once
again catalysts for rapid social
It’s a groundbreaking approach
that is slowly winning the sup-
port of other companies in the in-
dustry. In 2014, mining giant Rio
Tinto contributed to around 2,200
socioeconomic programs across
40 countries, making communi-
ty contributions of $270 million
worldwide. “The truth is that you
can achieve shareholder returns
and growth while at the same time
making community contributions,”
chief executive officer Sam Walsh
says. “Good sustainable develop-
ment is good for business as well.”
“Mining companies do not
have a choice,” Keith Slack, global
program manager of Oxfam
America’s extractive industries
team, says. “Their continued
ability to get access to resources
depends on their having positive
and constructive relationships
with local communities. The more
progressive international mining
companies now understand this.”
and economic development. This
time, however, the environmental
and social needs of the countries
and the communities where they
invest are of paramount strategic
concern to mining multinationals.
“The key is that, as an industry, we
have learned about the potential
negative consequences of mine
development,” Cutifani says. “We
are now working hard to accentuate
the positive role that we can play,
and to make sure that mining plays
an integral part in the development
of an entire community, not only to
the benefit of a lucky few.”
To help achieve this ambition,
Anglo American has worked
with the Kellogg Innovation
Network of the Kellogg School
of Management at Northwestern
University on the Development
Partner Framework for mining
companies. Cutifani says the
framework aims to fundamentally
change the extractive business
model of the mining industry, and
to help miners become integrated
and proactive development
partners. “When miners go into a
community, they should start by
asking the locals what they want
for their children in the next 20 to
30 years and how they can help
them achieve those objectives,”
he explains. “That is very different
from a technical conversation
with a group of mine engineers.
We have to change the nature of
the conversation, from this very
different starting premise.”
11
higher deposits are setting the
stage for financial institutions to
step up their lending activities;
the island’s banks are now
focused on reducing the amount
of non-performing loans and on
putting their capital to work in
the wider economy. The Bank of
Cyprus in particular is looking
to finance new businesses and
entrepreneurs, and last year it
set up its IDEA Programme for
supporting innovative startups.
“It is our responsibility as a bank
to contribute to changing the
country’s economy for the next
generation,” Hourican says.
At Hellenic Bank, Georgiadou
says the institution is now the
largest source of finance for new
projects in sectors that are strategic
to the country’s economic future,
such as energy, education and
health. As the country looks toward
building a prosperous, sustainable
future, it is the consensus that
has been forged between bankers,
policymakers and the ordinary
people of Cyprus that may be the
island’s greatest asset, she says.
“Everyone is working together and
is committed to making Cyprus a
place where people want to come to
live, work and invest.”
Stable foundations for growth signal calm waters ahead for Cyprus
We are very focused on implementing change and on investing in the future.” Irena Georgiadou, Chairwoman, Hellenic Bank
We have to provide the conditions for the next generation to show us how to think differently.” John Hourican,CEO, Bank of Cyprus
As miners, we need to make sure that what we do makes a positive difference to the people affected by our operations and helps them maintain a meaningful existence.” Mark Cutifani, CEO, Anglo American
12
Left: John Hourican, CEO, Bank of Cyprus Right: Irena Georgiadou, Chairwoman, Hellenic Bank
From left: Sam Walsh, CEO, Rio Tinto; Michael Fahrbach, Global Head of Sustainability, Glencore; Mark Cutifani, CEO, Anglo American; Elaine Dorward-King, Executive VP Sustainability and External Relations,
Newmont; Brent Bergeron, Executive VP Corporate Affairs and Sustainability, Goldcorp
FINANCE & TRADE MINING
Content by THE BUZZ BUSINESSContent by THE BUZZ BUSINESS
MEETING THE ENERGY CHALLENGE
For WEF participants
gathering in the glittering
conference halls of Davos, it
may be hard to imagine, but over
1 billion people around the world
still do not have access to electric
light. At night, one in seven of
the population relies on highly
polluting kerosene lamps and
wood fires to provide the light they
need for reading, working and even
for basic healthcare. Improving
access to light for this forgotten
billion has become a rallying cry
ports for charging cell phones,
which have become critical
enablers of rural development.
Philips is currently working
with governments and NGOs
to implement the technology,
with the goal of ending
light poverty by 2030.
“If the relevant
stakeholders work
with us, we can
achieve this, but
we can’t do it on our
own,” Rondolat says.
That’s a recurring
message from industry
leaders at Davos.
Policymakers need to
work more closely with
the private sector to
support investments that
are economically viable
as well as environmentally
and socially sustainable. “The world
knows that it needs more energy
but less carbon. It’s a complex
problem,” says Charlotte Wolff-
Bye, vice president of sustainability
at Norway’s Statoil. “We need
an orderly transition that will
incentivize the right investment
in low carbon and the
right innovation.”
Statoil is a member
of the Oil and Gas
Climate Initiative
(OGCI), which the
industry established
following the WEF
meeting of 2014 to
make the case for low-
carbon energy solutions.
“The industry is leading
the way, but we need
more political will
and support,” Wolff-Bye
says. “Davos can play a
critical part in enabling the
dialogue that we need to catalyze
real industrial action.”
for leaders in sustainable energy
innovation.
“We want to tell the world
not only that something needs
to be done, but that something
can be done,” says Eric Rondolat,
chief executive officer of Philips
Lighting, which sponsored the
UN International Year of Light in
2015. “The technological solution
to this problem now exists—solar
LED lanterns—and it is a solution
which also makes economic sense.”
Whereas families in Africa
and elsewhere today can spend
upwards of $50 a year on buying
kerosene and wood for their fires,
a basic solar LED lamp represents
a one-off investment of $20. Solar
LEDs provide more powerful light
than candles and fires, they are
safer, and they do not produce the
smoke that condemns millions of
people each year to an early death.
Some models also contain USB
The sector’s focus on investing
in community relations is not
confined to the developing world.
Before beginning to develop its new
Éléonore gold mine in northern
Quebec, Canada, Goldcorp
worked hard to win the support
of the Cree Nation of Wemindji,
an indigenous community in the
region. The company only began
constructing the mine—which
started producing last year—
once it had signed a landmark
partnership agreement with the
Cree. That agreement has ensured
that the mine has had a very
positive impact on employment
rates in the Cree community;
Goldcorp invested in building a
Cree training center, and partly as
a result over one in five of the mine’s
employees are now Aboriginal.
“We believe that if you do not
have communities involved and
supportive of the project, then you
basically do not have a project,”
Brent Bergeron, the company’s
executive vice president for
corporate affairs and sustainability
says. “If your dialogue with
communities starts off on the right
foot, then you have the ability
to develop a relationship that is
open, transparent and based on
trust. The community knows that
they are involved in the project
with you, that they are a partner,
and they feel a sense of ownership
as well.”
Bergeron says that even before
acquiring the Éléonore project
from an exploration company over
10 years ago, Goldcorp was careful
procurement. “From the beginning
we have sought to engage with
the local people and consult
with them about the impacts
and opportunities of our mining
operations,” Elaine Dorward-
King, Newmont’s executive vice
president of sustainability and
external relations, says. Around a
quarter of the project’s permanent
employees now come from the
surrounding community.
In Suriname, as well as
prioritizing dialogue with the
local communities, Newmont
is also committed to ensuring
transparent relations with the
national government, which in
2014 acquired a 25% stake in
the Merian project. Worldwide,
the company is actively involved
with the efforts of the Extractive
Industries Transparency Initiative
(EITI) to improve governance in
resource-rich countries, and it
already publicly discloses its global
tax and royalty payments. “One
of the reasons why transparent
royalty and tax payments are so
critical to the mining industry
is that it is the only way for
local people to feel that they’re
fully sharing in the economic
opportunity,” Dorward-King says.
“There needs to be transparent
governance structures in place if
our investments are to create real
long-term value for people.”
Given the downturn in
commodity prices, the resurgence
in resource nationalism and the
rise in environmental concerns,
these haven’t been the easiest
times for miners to create that
value. Nevertheless, by embracing
the values of sustainability and
transparency, leading companies
in the sector have been able to
create more resilient business
models that can stand up to
the stresses of today’s difficult
conditions. “As a company we are
always looking to make a profit,
but we also understand that in
order for this to be sustainable,
we have to bring something
lasting to the communities where
we work,” says Michael Fahrbach,
global head of sustainability at
Glencore. “We know that we
need to partner if we are to turn
the economic opportunities of
mining into realities.”
Signaling its commitment
to sustainable development,
Glencore joined the ICMM in
mid-2014 and later that year
launched a pilot project to help
it measure just how much value
its investments create for society.
The aim of this social value
model is to develop a consistent
approach across Glencore’s
global operations. With numbers
from this scorecard in hand, the
company’s management can make
a compelling case to stakeholders
and outsiders, securing the social
licenses to operate Glencore’s
various extractive businesses. Over
the course of 2016, Glencore will
roll out the new model across all its
operations. “We already invest in
building schools and hospitals for
local communities, but that’s not
the whole story,” Fahrbach says.
“We also want to show how our
everyday mining operations create
jobs, develop infrastructure and
educate people. It is important for
mining companies to continuously
inform people of their progress
and to show them that they will
continue to manage sustainability
for the benefit of all. Sustainability
is one area where Glencore will
not be cutting back.”
to survey the state of community
relations ahead of closing the deal.
The company has deliberately
chosen not to invest in other
projects where relationships with
local communities were more
problematic. “Our view is that if
we are going to work together on
traditional lands and are going to
be partners, we have to establish
this trust and genuine partnership
before we can move forward,”
Bergeron says.
In countries without the long
mining heritage of jurisdictions
such as Canada, the world’s leading
miners are now introducing these
best practices in community
relations and in transparency.
In Suriname, the smallest
independent country in South
America, gold miner Newmont
is ensuring that its $1 billion
Merian gold project will generate
sustainable economic and social
benefits for local communities and
for the wider population. Ahead of
starting the production this year,
the company signed an agreement
with the Paramacca community
that includes the creation of a
development fund and terms
for local employment and
For Anglo American, sustainable mining means caring for communities
Goldcorp’s Marlin mine is creating new opportunities in Guatemala
We need to provide energy for 9 billion people by 2050 and this needs to be clean, sustainable energy with very low carbon emissions.” Charlotte Wolff-Bye, VP Sustainability, Statoil
Our new scorecard for social value creation enables us to demonstrate our contribution to a community.” Michael Fahrbach,Global Head of Sustainability, Glencore
13
Ranked as the Dow Jones Sustainability Index’s overall leader in mining in 2015
Creating value and improving lives through sustainable and responsible mining
newmont.com | beyondthemine.comPlease follow us on
ENERGY 14MINING
Our mines create social and economic benefits in the communities where we live and work. Thousands of jobs, local purchasing, responsible operations, and programs that help create healthy, vibrant and engaged communities – just a few of the ways we’re working together to create sustainable value for generations to come.
WE DO MORE THAN OPERATE GOLD MINES
TSX:G NYSE:GGcsr.goldcorp.com
Content by THE BUZZ BUSINESS Content by THE BUZZ BUSINESS
IMAGE: 1. Bjørn Haugland, Executive Vice President and Chief Sustainability Officer, DNV GL Group • 2. Ada Colau, Mayor of Barcelona • 3. Wayne Sharpe, Executive Chairman and Founder, Carbon Trade Exchange • 4. Nick Henry, CEO, Climate Action • 5. Michael Gill, Executive Director, Air Transport Action Group (ATAG) • 6. Niels B. Christiansen, CEO, Danfoss • 7. Amar Hanspal, Senior Vice President, Autodesk • 8. Magnus Hall, President and CEO, Vattenfall • 9. Dean A. Scarborough, Chairman and CEO, Avery Dennison • 10. Julie Felgar, Managing Director Environmental Strategy and Integration, Boeing Commercial Airplanes • 11. Frédéric Eychenne, New Energies Program Manager, Airbus • 12. Christopher Lorence, General Manager, Engineering Technologies, GE Aviation • 13. Amr Salem, Global Managing Director, Smart Cities IoE, Cisco Systems • 14. Mark Elliott, Division President, MasterCard South Africa
THE Q&A
A: We are in a process of rethinking politics and society after the years of the consumerist model, when resources seemed
unlimited and the profits of large corporations and banks were seen as an indication of general economic growth. We are now changing these mantras. This will take time, even decades. Our focus on citizenship is giving a renewed meaning to the word democracy. People need to be at the center of the institutions’ focus in social and economic matters. A speculative economy is an anti-economy. Economy comes from the Greek and it
means the good management of a household’s resources. Q: What policies are you
undertaking in Barcelona to
change the economic model?
A: Barcelona is a very rich city with plenty of resources, but these resources have been managed terribly. We want to manage these resources for the general interest. For example, in the housing sector politicians claimed that the private market would be more efficient, but we have seen that without a set of restraints, profit-seeking was able to take the upper hand over basic human rights. As a result, Spain is the European country where the highest numbers of people are evicted and where homes are most unaffordable to ordinary people. We believe that this is anti-economic. A home is
Q: Why do you think the people
of Europe are turning toward
more progressive politics?
A: Because the things that used to work are not working anymore. Worldwide, but especially in Spain, we have gone through a traumatic learning process. It’s not just an economic crisis; there is a political crisis underlying the economic one. We want to move away from the model in which the few were deciding for the many, with oligarchical interests taking priority over the general interest. The bubble years in Spain were based on a model of unlimited growth, never-ending resources and unchecked, short-term speculation. The Spanish miracle proved to be a mirage.Q: What is Barcelona proposing
as an alternative to the neo-
liberal model?
ADA COLAU, Mayor of Barcelona
What people are asking for is real democracy.”
a basic necessity in people’s lives. Housing needs to be treated as a fundamental right and not as a consumer good, which is what happened for decades here. We want to prioritize the social function of housing over its speculative function.
15
Q&ATHE
1
7
6
8 9 10 11
12 13 14
2 3 4 5
can have a big impact on emissions.
We use Building Information
Modeling to describe a building as
completely as possible, so we can
compute in real time the energy
footprint of a building.
Q: How can technologies improve
a building’s performance?
A: We can deliver energy efficiency
improvements of 30-40% while also
making people more comfortable.
When you swipe your card as you
enter the building, the building
will know that you need to get to a
certain floor and it will turn on the
lights and air conditioning to your
preference before you arrive.
Q: What impact will 3-D printing
have on building design and
construction?
A: We’re still using processes from
the industrial revolution. With the
new technology, some of the shapes
and materials in buildings are being
replaced by 3-D printed façades,
connections and joints.
Q: How important is sustainable
design to Autodesk?
A: We are a software company,
and we figure out what we can do
through our digital tools to enable
people to make better decisions.
Anything that we can do to reduce
the carbon footprint of buildings
AMAR HANSPAL, Senior Vice President, Autodesk
MULTINATIONALS ARE USING TECHNOLOGICAL INNOVATIONS TO CHAMPION SUSTAINABLE DEVELOPMENT
Q: How can policymakers use
smart city technologies to
improve urban sustainability?
A: The smart city is about people,
not technology. Policymakers need
to understand the priorities of the
citizens in the city and create a
plan that includes the ecosystem
they need to be successful. There
must be a cultural change, not just
a technology fix. More computers
will not make it happen.
Q: What are the key areas for
action?
A: Currently we are focusing
on the environment, on
transportation, city security,
and energy. For example, 50% of
the energy consumed in cities is
in street lights. We are enabling
a movement toward smart LED
lights, which can generate a huge
saving, freeing up city budgets to
Q: How important is urban
development to sustainable
development in general?
A: It is critical. People live in cities,
not in countries. They tend to
relate to the city they are living in
much more than to their country.
We engage and interact with our
home town every day. Cities are
definitely the main drivers of the
world’s sustainability agenda. In
the future, they will be able to
consume less energy, to create
efficiencies and generate new jobs.
AMR SALEM, Global Managing Director, Smart Cities IoE, Cisco Systems
We have to change the way that people live and behave in cities.”
3-D printing is revolutionizing the kind of products that people can create.”
spend elsewhere. In the transport
area, we are helping cities become
more efficient in collecting parking
fees, while making it easier for
drivers to find a parking space.
City governments are using
technology to address the specific
priorities for which the people
elected them. Urban residents
want to live in a safe environment
where they benefit from good city
services. Whether in environment,
transport or safety, technology will
play a key role.
A: Every digital device has the
potential to be a payments device,
but if we simply digitize the tools
without extending them to those
outside the system, we risk having
the “Internet of Everything”
without the “Inclusion of
Everyone”.
Q: What is MasterCard’s role in
driving the adoption of mobile
money services?
A: We can connect a complicated
web of players who operate with
different rules and technologies.
Together, we can drive ubiquity,
safety, and utility—the triple key
to success in mobile payments.
Our challenge is ensuring that
mobile payments and financial
services are at least as convenient
and interoperable as cash.
Q: How can mobile communica-
tions technology improve finan-
cial inclusion in Africa?
A: Bricks and mortar infrastruc-
ture costs render traditional
banking models too uneconomi-
cal to reach low-income or rural
populations. Done right, mobile
money can bring the banked
world to the unbanked in ways
that are useful in their daily lives.
Q: What are the socioeconomic
benefits of mobile money?
MARK ELLIOTT, Division President, MasterCard South Africa
For many users it is the first time they have had access to the banking system.”
16Q&A TECHNOLOGY
Content by THE BUZZ BUSINESS Content by THE BUZZ BUSINESS
80% on a gallon for gallon basis
compared to petroleum jet fuel.
The level of emissions reduction
is staggering.
Q: How are airlines preparing
for biofuels?
A: Aviation biofuel is not a science
Strategy and Sustainability
encourages its readers to filter
out the noise and make those
choices in a hard-nosed and clear-
eyed way. Professor Rosenberg’s
nuanced and fact-based point of
view recognizes the complexity of
the issues at hand and the strategic
choices businesses must make.
He blends the work of some of
the leading academic thinkers in
the field with practical examples
from a variety of business sectors
experiment—it is real and it is a
genuine alternative to fossil fuel.
Three types of aviation biofuel have
been approved so far. Approved
biofuel is blended directly with
petroleum jet fuel and used in
airplanes. Biofuel is safe and has
been used in as many as 2,000
flights already. Aviation biofuel
can safely power any commercial
airplane flying today. Biofuel is
happening much faster than other
alternative energy sources.
and geographies and offers a
framework with which senior
management might engage with
the topic.
Mike Rosenberg is an Assistant
Professor at IESE Business School.
Professor Rosenberg joined the
faculty at IESE after working for
more than 15 years as a management
consultant for companies such as
Arthur D. Little, A.T. Kearney and
Heidrich & Struggles working in
Europe, North America, and Asia.
Q: What technology has the
greatest potential to make
aviation more sustainable?
A: Sustainable aviation biofuel is
by far the most disruptive thing
that can happen to help us achieve
our environmental goals. When
it’s produced under optimum
conditions—reducing net CO2
emissions while meeting other
socioeconomic and green crite-
ria—sustainable aviation biofuel
reduces CO2 emissions by 50 to
Business and environmental sus-
tainability are not natural bedfel-
lows. Business is about making
money; sustainability is about
protecting the planet. Sustainabil-
ity often requires significant short
term costs to secure a sometimes
uncertain long-term benefit.
And yet engaging with the
issue isn’t optional—all businesses
must have a strategy to deal with
sustainability and, like any strategy,
this involves making choices.
JULIE FELGAR, Managing Director Environmental Strategy and Integration, Boeing Commercial Airplanes
THE AVIATION INDUSTRY IS DEVELOPING A WIDE-REACHING STRATEGY FOR CUTTING EMISSIONS
the global Market-Based Measure
(MBM) for emissions.
Q: How is the industry pro-
gressing toward the MBM?
A: The current round of
negotiations on the MBM are an
outflow from the Assembly of
the International Civil Aviation
Organization (ICAO) in 2013.
Governments agreed to work on
the development of a framework to
be adopted at the 2016 Assembly.
The most notable aspect of the
political discussions is that those
who were previously dragging their
feet are now totally supportive. We
have seen a broad consensus to
move forward with the discussions
in a productive manner. We are
happy with the direction that the
debate is moving; the fundamentals
and the building blocks look solid.
Q: How is the aviation industry
responding to climate change?
A: In 2008, the industry adopted
a four-pillar strategy aimed at
reducing CO2 emissions. The first
three pillars are new technology,
improved engine performance and
sustainable and alternative fuels.
There will also be a number of efforts
made to improve the operational
measures; we would like to fly more
efficiently and make better use of
infrastructure both on the ground
and in the air. The fourth pillar is
MICHAEL GILL, Executive Director, Air Transport Action Group (ATAG)
Boeing is looking for opportunities regionally and globally to expand the biofuel supply.”
Our role is to unite industry and bring together all sides to reach an agreement.”
Q: When will the MBM be in
place, and what will it entail?
A: The scheme will be put into place
from 2020 onwards. This will be the
first time that a global MBM will ever
have been agreed and implemented
by governments for any sector.
Q: What is ATAG’s role in coor-
dination?
A: Very little can be achieved
without cross-sector commitment
from all sides. Our role is to bring
together all sides to reach an
agreement.
18Q&A AVIATION
THE AVIATION SECTOR IS FOCUSED ON BIOFUELS, RECYCLING, AND FUEL EFFICIENCY
Q&A AVIATION17
new technology. Low fuel prices
won’t always stay that way. Beyond
fuel prices, our customers are also
focused on other operating costs,
such as lower maintenance costs
and emission taxes. So the current
fuel price reductions haven’t
changed our focus on fuel efficiency
and investing in new technology to
benefit our customers.
Q: What is the potential of the
Industrial Internet to improve
engine performance?
A: We already get a tremendous
amount of data from our engines.
This data can enable us to better
predict durability problems and
make fuel burn savings. We know
how to do this. Now we just need
to work on the education process
so that our customers can better
understand the benefits that this
data can provide. The Industrial
Internet helps us do less testing,
use data for optimization and in-
novate manufacturing.
Q: How will the fall in the oil
price affect aviation’s approach
to sustainability?
A: The oil price reduction isn’t a
major concern to our business.
Aviation is a long horizon business
in terms of the development of
CHRISTOPHER LORENCE, General Manager, Engineering Technologies, GE Aviation
emissions. We cut CO2 emissions
by more than 40% compared to
a regular flight. This was not a
test flight, but a commercial flight
with passengers.
Q: How are you working to
increase the supply of biofuels?
A: We have projects in many parts
of the world. In Europe, we are
participating with KLM in the
ITAKA initiative, using camelina
oil from Spain. I am certain that
we will achieve the EU target
of 2 million tons of sustainable
biofuels being used in civil
aviation by 2020.
Q: Is the aviation community
coming together to create cleaner
skies and a more sustainable
industry?
A: If you want to talk about
objectives, you have to work
together as an extended team
Q: How do your ‘Perfect Flights’
minimize CO2 emissions?
A: When we carry out a Perfect
Flight with airlines, we integrate
all our best practices to reduce
the CO2 footprint. For example,
with Air Canada we used a 50%
sustainable aviation fuel blend
made with used cooking oil.
We used different procedures
for engine washing and
cleaning and for taxiing on the
ground. Streamlined air traffic
management also helped reduce
FRÉDÉRIC EYCHENNE, New Energies Program Manager, Airbus
In five to fifteen years we may be using very different fuels.”
The aviation industry needs to come together to create more fuel efficient aircraft.”
within the aviation community. It
is not just the airlines that need
to act but also the politicians
and the investors. We need to
promote sustainable aviation, not
only its technical aspects.
We need to define a shared vision
with shared objectives. If we do
that, we will be able to fill the
gaps we have to face together and
we will provide solutions, new
services, etc. If we work together,
it is easier to share the objectives
and the challenges.
Declaration (EPD). Our all-new C
Series aircraft will be issued with
an EPD when they enter service,
which will be an industry first.
Q: How will the EPD increase the
competitiveness of the C Series?
A: Part of the reason we are
pursuing the EPD was because
our train division does it too.
This is an overall objective we
have, producing EPDs for all
new products that we make as an
organization. The other reason is
because we recognize there is much
more environmental focus than
there has ever been before. The
best way to communicate this is in
a transparent way. The EPD allows
us to do that. All the information in
it will be externally verified.
Q: How do environmental con-
siderations influence your design
and manufacturing processes?
A: We look at design,
manufacturing, supply chain,
maintenance and operation,
and end-of-life all from an
environmental perspective.
Life-cycle analysis helps you
understand the environmental
impact of a product much better.
It is what provides the information
for the Environmental Product
BRUCE PARRY, Head of Sustainability, Product Development Engineering, Bombardier
As an aircraft producer we need to extend our responsibilities by looking at end-of-life solutions.”
A BUZZ RECOMMENDED READ: by Professor Mike RosenbergStrategy and Sustainability
Content by THE BUZZ BUSINESS Content by THE BUZZ BUSINESS
more emphasis on renewable
energy and storage capabilities.
Q: How important is government
support to renewable energy
investments?
A: For the foreseeable future, with
wholesale prices as low as they are
today and even with costs coming
people can relate to a wind turbine
in a way that they can’t relate to
efficiency. But the reality is that
investment in energy efficiency
can have a much shorter payback
time and be more predictable than
investment in renewables.
Q: What impact has the global
slowdown had on demand for
energy efficiency?
A: Although it has not been
positive, the slowdown has
increased people’s focus on energy
down considerably, political and
monetary support for the industry
will be crucial.
Q: What are you doing to reduce
the cost of wind power?
A: We are working very closely
with turbine suppliers on the next
generation of turbines. It’s a major
focus of our R&D. There is also a
lot that public authorities can do to
improve the efficiency of tenders
and auctions and to de-risk the
whole operation.
efficiency, because they can achieve
relatively safe and secure financial
savings.
Q: What interest are you seeing
in district heating, and why?
A: We are working with the city of
Anshan in northern China to use
surplus heat from a steel plant for
district heating. This will reduce
the need for coal fires, which are
highly polluting. The air will be
cleaner as a result, and the city
won’t need to buy so much coal.
Q: How are you preparing for the
evolution of the electricity system?
A: In the future, there will be
distributed production, with
consumers becoming producers.
We already buy back electricity
from our consumers with solar
panels, when they have excess
capacity. To make the whole system
efficient, there will need to be an
intelligent grid system that also
includes possibilities for energy
storage. In our R&D we are putting
Q: How important is energy
efficiency to sustainable devel-
opment?
A: Historically the industry has not
been very successful in marketing
energy efficiency. It has been
easier to market renewable energy;
MAGNUS HALL, President and CEO, Vattenfall
NIELS B. CHRISTIANSEN, CEO, Danfoss
ENERGY EFFICIENCY AND RENEWABLE ENERGY ARE LEADING THE WAY TO DECARBONIZATION
of risk and risk management,
sustainability is also being
discussed as an opportunity—
people are looking at sustainability
as a driver of opportunities.
Q: Is sustainability mainly an
issue for big companies?
A: The small and medium sized
companies are probably the next
wave. The big companies have a
role to play here as well because
they can make requirements
down their supply chain. We are
already seeing the start of this.
The smaller companies also need
to be inspired and to be equipped
with the knowledge and tools to
start moving.
Q: How is the relationship
between sustainability and
innovation evolving?
A: It is becoming stronger all
the time. Sustainability is fueling
Q: What were the main findings
of your report on corporate
sustainability for the U.N.
Global Compact?
A: We were honored to take on the
job of assessing the impact of the
U.N. Global Compact since it was
founded in 2000. Our main finding
was that a lot has happened, but
far from enough. Sustainability has
moved from the corner office of
the corporate responsibility officer
to the boardroom. As well as
being discussed in the perspective
BJØRN HAUGLAND, Executive Vice President and Chief Sustainability Officer, DNV GL Group
Sustainability is the foundation for running any energy business.”
Companies are now developing a more mature view of their role in society.”
Urbanization will require innovative, energy-efficient infrastructure.”
the priorities of our research
and innovation agenda. Another
aspect is that increasingly we
have to work on these innovation
challenges together, with our
customers and with other
partners. Many of the challenges
of sustainability cross over
different sectors. It is important
to bring different sectors together,
such as the oil and gas sector with
offshore wind. These challenges
cannot be solved by one company
alone.
their brand or provide information
about the types of clothes or the
origins of the clothes. We offer
them recycled labels made from
recycled water and soda bottles.
Q: What other innovations have
you introduced?
A: In the U.S., there is an issue
with polyester bottle recycling; if
Q: How important is private sec-
tor innovation to fight climate
change?
A: We believe that businesses are
crucial in combating climate change
through innovative technologies
and finance. We launched Climate
Action because we were frustrated
that governments and businesses
were not working together. Unless
business participates and can deliv-
er on the technologies, we are not
going to achieve our climate targets.
they use pressure sensitive labels
it is very difficult to separate
them from the plastic flakes.
The only use then is to down-
cycle the products, making park
benches and things like that.
Our CleanFlake™ technology
makes sure that the labels and
adhesives on PET bottles cleanly
separate from the plastic during
the recycling process. That means
the PET can then be used to make
bottles again.
Q: Where is more action needed?
A: We need more finance. That is
crucial because without finance we
will not hit the target of holding
warming below 2°C. We have
approximately 20% of the finance
in place for meeting that target, so
there is a huge gap.
Q: What are you doing to develop
a more sustainable paper supply?
A: Our goal in 2025 is to have 70%
of our paper sourcing FSC certified,
which is the highest standard of pa-
per certification. We have made a
lot of progress in the last few years.
In Europe, 66% of the paper that
we supply is already FSC certified.
Q: How do you help apparel com-
panies become more sustainable?
A: Our role in the packaging area
is to help apparel brands enhance
Q: Who are the members of
Climate Action?
A: Climate Action was established
in 2007 to facilitate partnerships
between business, government
policy makers, multinational
organizations, and NGOs. Our
aim is to accelerate international
sustainable development and
advance the green economy.
We have a unique contractual
partnership with the United Nations
Environmental Partnership.
DEAN A. SCARBOROUGH, Chairman and CEO, Avery Dennison
NICK HENRY, CEO, Climate Action
THE PRIVATE SECTOR IS DRIVING SUSTAINABLE INNOVATION IN TECHNOLOGY AND FINANCE
transitioned from CERs into the
voluntary market.
Q: How are you building your
market share?
A: A very large portion of the
global carbon market is still
carried out over-the-counter or
by direct intermediaries. We are
building an infrastructure that
makes us massively superior so
we can grow our market share.
The security and complexity
needed for a global exchange
solution is not easy to build,
but we already have contractual
relationships with more than a
dozen registries.
We want to engage with all the
brokers in the market. We want
to provide the global scale and
capacity needed to address
the climate change problem.
Q: What trends are you seeing
in carbon markets?
A: In the last few years, the
regulated and voluntary markets
have been affected by an
oversupply of carbon credits.
Prices have tumbled and it’s very
difficult to make an economically
viable project for Certified
Emissions Reduction (CERs).
Oversupply in the U.N. regulated
market has caused some price
declines in the voluntary
market because companies have
WAYNE SHARPE, Executive Chairman and Founder, Carbon Trade Exchange (CTX)
We are using materials science to make more sustainable products.”
There is no excuse not to act. You don’t have to wait for the government to tell you what to do.”
The private sector needs to understand that green business is also profitable business.”
Exchange technology is the only
way to achieve that.
Q: What are your key target
markets?
A: In the last year we have
predominantly targeted and
focused on developing the
U.S. market. We have built
our platform for the California
carbon market and our
platform in New York is live
and operational. Now we want
to raise money to re-enter the
European market.
20Q&A SUSTAINABLE INNOVATIONQ&A ENERGY19
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