Green Business1

GREEN BUSINESS

AN OVERVIEW

©Future Think LLC | New York, NY | All Rights Reserved2

“Green” is perhaps one of the biggest trends to hit the modern marketplace. • Wal-Mart is going Green.•Yahoo has it own green section. • The 2008 Olympics set the new gold standard for sustainable events. • Politician uses green agenda in their campaign. Everywhere we turn, we’re hear some message or story relating to Green and the environment.


What does it mean?

Green today means so many different things to different people. Marketing and PR departments have responded to the changing marketplace by giving everything from consumer products to automobiles a green makeover.But at the end of the day, sustainability hasn’t become a true business strategy for many organizations.


• Bank of America: This banking company reduced their paper usage by about 32% from the year 2000 through 2005. This was done even though they experienced a 24% growth in customers. The company works hard to be green as they run an internal recycling program that recycles about 30,000 tons of paper a year which saves about 200,000 of our earth's trees. They also reward their employees with a $3,000 bonus if they purchase a hybrid vehicle.


• Anheuser-Busch- Budweiser: This top selling beer company has decided to trim about an eighth of an inch from each beer can to save about 21 million pounds of metal per year. The best thing about this product transformation is that it does not reduce the amount of beer per can by any means.

• Starbucks Coffee: This popular coffee company decided to switch to recycled paper for its coffee cup sleeves which saves about 78,000 trees in one year.


Why companies go green?

• Competition – Pressure from peer within the same industry

• Consumer demand– Company practices is a reflection of consumer

demand• Environmental efficiency

– More and more realized that environmental efficiency help to save cost

• To show their commitment• Pressure from the stakeholder


What is green business?

• Green practices is part of CSR• Jones defines Green Business:

– Organization that behaves in a manner that takes into account the long term effects of its activities on the natural environment and does not attempt to externalize the costs of those activities to other stakeholders or environment itself.

– Example: Range from managing renewable resources, minimizing the amount of packaging, to recycling

Is it mandatory?

• Most of the effort are voluntary• Malaysia, in term of the rules and

regulations is comprehensive• The problem is on the

implementation

Benefit of green business

• Financial savings• Meeting customer and stakeholder

expectations• Company image• Creating new market

Risk of not addressing sustainability issues

• Being closed for future market• Attacks of company image• Damage the people and the

environment

Potential barriers

• Perceived costs• Ignorance• Lack of interest• Practicality in implementation


The Future of Green Business Strategy

The three Trends We’ll Explore:1 | Certifiably Green

Green standards and certifications will change the competitive landscape of industries and the players within them.

2 | The Greenest LinkIt’s not just about what you make anymore—but about how (and where) you make it.

3 | The Green Seeds of InnovationThe desire to go Green forces companies to reinvent products, services, and business models in ways we’ve never seen before.


1 | Certifiably Green

When it comes to the wide (and often amorphous) world of Green; metrics, standards, and certifications can help to clear the haze and set minimum expectations.Organizations across industries are increasingly coming under scrutiny for the practice of “greenwashing” as environmental activist and consumer groups try to decode and validate various environmental claims.

The next wave of change will be to embrace certifications, measurable standards and ‘reporting systems’, all supported by full disclosures.

Companies will have a choice to help set the standards or merely respond to them.


1 | Certifiably Green: Where We Are

Today, many organizations’ environmental strategies revolve around marketing campaigns and repackaging offerings to tout Green claims. Consumers are generally confused about what’s what, as companies toss around the word “Green” with little agreement as to what it really means.Though many certifications exist today—many environmentalists complain that they are not robust enough to create lasting change.



The Three Trends We’ll Explore:1 | Certifiably Green





2 | The Greenest Link

Green is moving from the Marketing Department to the Operations Department as companies start to analyze and optimize each piece of their value chain with an eye toward sustainability.Being Green isn’t just about new labels and materials. It’s about minimizing environmental impact across an offering’s entire lifecycle—from development to disposal and beyond.


2 | The Greenest Link: Where We Are

LCA (Lifecycle Analysis) and comprehensive value-chain assessments are beginning to gain prominence today as organizations seek to shrink their overall environmental footprints in meaningful ways. There’s both a consumer push and an increasingly strong economic case for doing so.


Life Cycle Assessment

• LCA attempts to measure the total environmental effects of a product “from cradle to grave”

• Can be use a tool of environmental policy akin to cost-benefit or risk assessment

• LCA are also used by companies in the design phase in the product development.- It helps to identify costly clean up and compliance problems before production start


Steps in LCA

• Laying out the scope and defining the goals of the study, the boundary of study need to be define.

• Produce the inventory – energy, raw material and environmental emissions of the product, process or activity are quantified

• Impact assessment – attempts to translate the inventory data into effects on human health, ecological health and resource depletion

• Improvement analysis – recommendations are made based on the results of inventory and impact stages

Case study• Founded in 1927, Volvo is a multinational vehicle

manufacturer with production facilities in 25 countries, 74,000 employees, and sales in more than 100 markets. Volvo Group's sales totalled 130 billion SEK in 2000. Volvo's car making division was sold to Ford in 1999.

• Volvo's stated aim is 'to contribute actively to the development of efficient, safe, environmentally compatible and economically competitive transport systems for goods and passenger traffic'.

• To this end, life-cycle assessment (LCA) plays a central role in product development activities. Volvo says it is intensifying its 'preventive environmental activities' in order to ensure that the total environmental impact of its products is minimized.

• The average Volvo vehicle has a lifespan of 19 years, and LCA means paying attention to environmentally safe recycling and disposal techniques 20 years into the future.

http://vcc.volvocars.se/index.asp

Alternative tools for business organization

• By-product synergy and industrial ecology • Cleaner production • Design for environment • Eco-efficiency • Energy efficiency • Environmentally-conscious manufacturing • The four Rs • Green procurement • Performance contracting • Pollution prevention • Zero-emission processes Source: http://www.bsdglobal.com/tools/bt.asp

Systems and standards

• Environmental management systems • ISO 14001 • EMAS • EH&S program• Life-cycle assessment • Total cost assessment • Total quality environmental management • Natural Step • Value-driven approaches

http://www.bsdglobal.com/tools/systems_ems.asp

http://www.bsdglobal.com/tools/systems_iso.asp

http://www.bsdglobal.com/tools/systems_emas.asp

http://www.bsdglobal.com/tools/systems_ehs.asp

http://www.bsdglobal.com/tools/systems_lca.asp

http://www.bsdglobal.com/tools/systems_tca.asp

http://www.bsdglobal.com/tools/systems_tqem.asp

http://www.bsdglobal.com/tools/systems_nat_step.asp

http://www.bsdglobal.com/tools/systems_vda.asp


Where We’re Headed

Over the next few years, organizations are going to realize compelling economic reasons for going Green. Some will find that Green means lower-costs in terms of raw materials and energy; others will realize increased profits and demand due to new contracts with other institutions who require Green suppliers and vendors. CSR (Corporate Social Responsibility) reporting will grow increasingly robust and detailed as organizations seek to communicate the level of Green they’ve accomplished to their customers, partners, and shareholders.



The three Trends We’ll Explore:1 | Certifiably Green





3 | The Green Seeds of Innovation

Innovative companies are using Green as a platform for creating value around new product concepts, service strategies, and business models that represent disruptive change in the marketplace. For some companies where innovation once seemed illusive and ambiguous, environmental responsibility has become a goal around which new ideas are brought to life.It’s called “Green Hat” thinking—the type of idea generation and innovation that comes out of a singular focus on reducing one’s environmental impact as much as possible.


We’re beginning to see a new sort of industrial revolution today wherein many organizations are spending tremendous resources on trying to reinvent the processes, systems, products, and businesses we’ve grown comfortable with over the past century. Some companies start small—Whole Foods banning plastic shopping bags, for example; while other companies have their sights on much bigger things—such as Honda’s development of hydrogen-powered-zero-emissions vehicles.

3 | The Green Seeds of Innovation: Where We Are


GE: EcomaginationEcomagination is designed to meet demand for more energy efficient products and drive sustainable growth. It reflects GE’s commitment to invest in innovative solutions to environmental challenges, and helps GE develop and deliver valuable, environmentally-focused products while helping protect and grow the bottom line. Ecomagination focuses on the development of renewable energy sources, water purification initiatives, carbon capture and sequestration systems, and alternative transportation systems.

3 | The Green Seeds of Innovation: A Case in Point


3 | The Green Seeds of Innovation: A Case in Point

GE: EcomaginationIn 2007, GE invested more than $1 billion on cleaner technology R&D, moving the company closer to its goal of investing $1.5 billion annually in Ecomagination R&D initiatives by 2010. In 2007, GE achieved approximately 15% growth in Ecomagination revenues over 2006, from $12 billion to $14 billion. Due to the program’s overwhelming success over the past few years, GE forecasts it will surpass $20 billion by 2009 and is consequently raising the annual Ecomagination revenue goal to $25 billion by 2010.


The Last Word

Wherever you sit, you have an opportunity to be a leader in the race toward sustainability. The only question is—how fast are you willing to get there?

Alternative tools for business organization

• By-product synergy and industrial ecology • Cleaner production • Design for environment • Eco-efficiency • Energy efficiency • Environmentally-conscious manufacturing • The four Rs • Green procurement • Performance contracting • Pollution prevention • Zero-emission processes Source: http://www.bsdglobal.com/tools/bt.asp

By-product synergy and industrial ecology

• The principle underlying by-product synergy is that one industry's waste stream can be used by another as a primary resource. It is a simple idea, but one which has enormous potential for reducing waste volumes and toxic emissions to air and water, as well as cutting operating costs.

• By-product synergy is the principle which underpins the concept of 'industrial ecology' - a holistic view of industry in which organizations exchange energy and material between one another, rather than operating as isolated units

Case study• One of the best-known examples

of industrial ecology can be found in Kalundborg, a small industrial zone 120km west of Copenhagen in Denmark. Over time, this unplanned industrial park has evolved from a single power station into a cluster of companies that rely on each other for material inputs.

• Treated wastewater from the Statoil Refinery is used as cooling water by the Asnaes power station. Meanwhile Statoil and Novo Nordisk purchase 'waste' process steam from the power station for their operations. Surplus heat from the power station is used for warming homes in the surrounding area, as well as in a local fish

Cleaner Production

• The United Nations Environment Program (UNEP) introduced the concept of cleaner production in 1989.

• The concept of cleaner production questions the need for a particular product, and looks at other ways to satisfy the demand. The eventual goal of clean production is to achieve a 'closed loop' operation in which all excess materials are recycled back into the process.

• Cleaner production activities include measures such as pollution prevention, source reduction, waste minimization and eco-efficiency. They involve better management and housekeeping, substitution of toxic and hazardous materials, process modifications, and reuse of waste products. At its heart, the concept is about the prevention, rather than the control, of pollution.

Case study

• Hilados y Tiejidos Garib) is a Chilean textile mill producing dyed yarn and fabric made of polyester and rayon. It produces more than 1,000 tonnes a year of dyed material and a similar quantity of non-dyed, finished fabric.

• The production process requires several changes of water, and the use of dye, bleach and other chemicals. The company identified several 'cleaner production' opportunities, in relation to the improvements in the use of water and energy, and the amount of suspended solids in the effluent stream.

• Hitega used three techniques to improve the plant's water management: recycling the softened water used to cool the dye bath; recycling the water supply for the air conditioners in the spinning and weaving rooms; and improving softener regeneration and service.

• To become more energy-efficient, Hitega developed a maintenance plan for leaking steam traps. Screens were installed in dye room drains to reduce the amount of suspended solids in effluent.The resulting environmental benefits of these initiatives were water, energy and chemical conservation, and reduced emissions and effluent-borne solids.

• Most of the measures adopted had payback periods of two years or less. The recycling of dye cooling water, for example, cost $750 but delivered a saving of $400 a year.

Eco-efficiency

• The term 'eco-efficiency' was coined by the World Business Council for Sustainable Development (WBCSD) in its 1992 publication 'Changing Course'. It is based on the concept of creating more goods and services while using fewer resources and creating less waste and pollution.

• Eco-efficiency is achieved through the delivery of ' ...competitively priced goods and services that satisfy human needs and bring quality of life while progressively reducing environmental impacts of goods and resource intensity throughout the entire life-cycle to a level at least in line with the Earth's estimated carrying capacity'.

• This concept describes a vision for the production of economically valuable goods and services while reducing the ecological impacts of production. In other words eco-efficiency means producing more with less.

Case studyTo achieve sustainable growth,Dupont focuses on improved productivity to drive down

costs, waste production, and energy demand. It has three corestrategies: • Using its knowledge to

reduce consumption of raw materials and energy;

• Integrating chemistry, biology and technology to create products with greater societal value and lower environmental impact;

• Engaging stakeholders.

The 4Rs - reduction, reuse, recycling and recovery

• Businesses are being forced to change the way they manage waste - moving away from the waste treatment approach and towards waste prevention.

• A number of waste prevention techniques are available, and they are commonly summarized as the so-called 4Rs: reduction, reuse, recycling and recovery.

• Reduction, reuse and recycling are known in the industry as the 3Rs. Companies sometimes focus only on the first three in resolving waste management problems. In more innovative companies, 4Rs solutions often emerge as a result of industry benchmarking or technological breakthroughs.

The 4Rs - reduction, reuse, recycling and recovery

• Empirical evidence suggests that by practising waste prevention, reusing products, recycling, and making environmentally conscious purchases, businesses can cut costs and increase profits. Cost savings take the form of:– Lower waste disposal costs; – Lower waste treatment costs; – Lower energy costs; – Savings on materials and supplies; – A reduction in regulatory compliance costs; – Lower storage costs; – Cost recovery through the sale of recyclable materials; – Cost recovery through sales of 4Rs technologies.

Case study• Burges salmon is a firm of lawyers based in the city of Bristol, which employs around

430 people. It was actively involved in the development of the 'Bristol Greener Office Project' (BGOP), which was launched in 1997 to demonstrate environmental good practice among companies of all sizes.

• Since embarking on the BGOP, Burges Salmon has demonstrated substantial improvements in the way it uses, and disposes of, resources. The first area identified for action by the firm was the highly visible issue of paper consumption. A number of simple housekeeping practices were introduced, including:– Double-sided photocopying; – Replacing memos with e-mails; – Relying on electronic rather than print versions of large documents; – Re-using envelopes for internal mail.

• These simple steps collectively led to substantial cost savings. Over the same period, the company's per capita paper costs fell from �70 to �54. Only part of this improvement could be attributed to economies of scale resulting from a growth in the number of staff.

• On the disposal side, the company has achieved a paper recycling rate of almost 100%, through the introduction of recycling bins. In the first two years of the project, the company estimates that it recycled nearly 25 tonnes of paper, equivalent to 10 cubic metres of landfill.

• Besides paper, Burges Salmon also recycles cardboard, newspapers, magazines, toner cartridges, drink cans and bottles. However, it has come up against practical difficulties with some of these materials, including the need for space in which to store separated waste until the volume is large enough for a collection to be made.

Green procurement

• The section of the site is modeled on a toolkit developed by the Manitoba Green Procurement Network (MGPN).

• Environmentally responsible or 'green' procurement is the selection of products and services that minimize environmental impacts.

• It requires a company or organization to carry out an assessment of the environmental consequences of a product at all the various stages of its lifecycle. This means considering the costs of securing raw materials, and manufacturing, transporting, storing, handling, using and disposing of the product.

• Rooted in the principle of pollution prevention

Challenges to green procurement

• Price: There is a perception that green products are more expensive than conventional alternatives.

• Lack of corporate commitment: For an organization to implement a green procurement programme, it must have commitment from all levels, including senior management and purchasing agents. A policy statement outlining the corporate commitment to green procurement can help.

• Insufficient knowledge: Many organizations are unfamiliar with the concept of green procurement or with the options available to them. For an organization to participate, it must have an understanding of concepts, vocabulary and terms.

• Availability: Frequently, local distributors do not stock green products, or else they stock only small quantities. This can lead to delays in obtaining the product. Increasing market demand will help to overcome this obstacle.

• No acceptable alternative: Another barrier to green purchasing can be simply a lack of acceptable alternatives to the present product. For example, a few years ago in the furniture manufacturing industry, the use of water-based finishes as an alternative to solvent-based ones was impeded by the fact that water-based finishes presented technical difficulties which were costly to overcome, and were of lower quality. Growing demand for will stimulate the development of new and better 'green' products.

• Purchasing habits: 'We've always done it this way' can be a difficult mentality to overcome. There may also be existing relationships between purchasers and suppliers that make it difficult to switch to alternatives.

Case study

• In September 2000, Ikea launched The Ikea way on purchasing home furnishing products, a three-page 'code of conduct' for its 2,000 suppliers, focusing on working conditions and environmental impacts.

• They also work with Greenpeace

Zero-emission processes

The 'Zero Emissions Research Initiative' (ZERI), developed at the United Nations University in Tokyo, has as its goal 'zero global emissions, zero water waste, zero solid waste, and zero waste in the air'. This can be done by using nature as a model for process and product design, and by increasing resource productivity through industrial 'clustering'.

• The concept of zero emissions has been developed into a methodology that can be applied to any industry sector.

Case study• Ebara, the first company to incorporate the

'zero emissions research initiative' (ZERI) concept, is a Japanese engineering firm with expertise in fluid control systems, environmental engineering and precision machinery.

• An electron-beam flue gas treatment system developed by Ebara eliminates pollution by simultaneously removing sulphur dioxide and nitrogen oxides. This process produces a marketable by-product which can be used as an agricultural fertilizer.

• Another of Ebara's products converts industrial and municipal waste into useful chemicals such as ammonia, methane, hydrogen and gasoline. The fluidized-bed gasification combustion and ash melting system allows valuable metals, including iron, copper and aluminum, to be extracted for recycling. In addition, heat from the system can be used for power generation.

• The 'Zero Emission Centre' contains plants for water purification, sewage and night-soil treatment, and for electricity generation. It has been created to serve as a model for zero emission communities.

Systems and standards

• Environmental management systems • ISO 14001 • EMAS • EH&S programmes • Life-cycle assessment • Reporting • Total cost assessment • Total quality environmental management • Natural Step • Value-driven approaches

Environmental management systems (EMSs)

• An EMS is a management tool which can help a business increase its awareness of, and its control over, environmental impacts. It is designed to be flexible enough to be applicable to any size of company and to any industry sector.

• Key requirements of an EMS include:– The commitment must include senior management: in

some jurisdictions, this has important legal implications; – Legal and other requirements must be addressed; – Interested parties' concerns must be reflected in the

development of objectives and targets; and – A commitment must be made to continuous

improvement.

Environmental management systems (EMSs)

• There is no fixed approach to establishing an EMS, but the framework set out beside is one example.

EMAS

• The European Union's Eco-Management and Audit Scheme (EMAS), which became effective in 1995, is a voluntary programme which enables organizations within the EU and the European Economic Area to seek certification for their environmental management

• Registration under EMAS is on a site-by-site basis, rather than covering entire organizations. Originally EMAS was confined to industrial operations, but as part of a wide-ranging revision of the regulation, adopted in March 2001, all sectors of economic activity are now included.

• Other amendments embraced by 'EMAS II' include:– The integration of ISO 14001 as the environmental management system

required by EMAS, to make it easier for companies to make the transition from ISO to EMAS (in general, EMAS is more stringent than ISO 14001);

– The creation of an EMAS logo; – Greater participation of employees in the implementation of EMAS; – A greater emphasis given to environmental reporting; – More consideration of 'indirect' environmental impacts - for example

those associated with investment policies, procurement and planning

Documents

Green Business1