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New Commitments Yield New Markets. Sustainable Enterprise Summit March 17, 2004. In the past 20 years: Economic outputup 75% Energy useup 40% Meat consumptionup 70% Auto productionup 45% Paper useup 90% Advertisingup 100% World populationup 35%. Meanwhile: - PowerPoint PPT Presentation
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New Commitments Yield New Markets
Sustainable Enterprise Summit
March 17, 2004
A sense of where we are
In the past 20 years:
Economic output up 75%Energy use up 40%Meat consumption up 70%Auto production up 45%Paper use up 90%Advertising up 100%
World population up 35%
Meanwhile:
75% of marine fisheries are fished to capacity or overfished; 5% in 1960
Water supplies per person dropped by a third between 1970 and 1990
A Nevada-sized area of forest is lost every year
Roughly half of the people in the world live on less than $2 a day
Premise of this Panel
• Unprecedented growth of demand for natural resources
• Rapidly accelerated pressure on natural systems• More people competing for their fair share
• Something has to give• Somebody has to lead
• There are real business opportunities and advantages for those who commit to lead the way
Panelists
• Madeleine Jacobs, Head of Sustainable Development, ABN AMRO
• Thomas Jorling, Vice President, Environmental Affairs, International Paper
• Sofie Beckham, Forestry Manager, IKEA Trading Americas
Questions
• What are the business motivations that persuaded your corporation to make these commitments?
• What have been the most significant challenges, obstacles, or impediments to putting these commitments into practice?
• What do you think the future of sustainability commitments will be in your industry?
Format
• All three will address the first two questions– Discussion
• All three will speak about the future– Discussion
7
Thomas JorlingVice President
Environmental Affairs
New CommitmentsYield New Markets
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• mandatory / regulatory • VOC, NOX, SO2
• voluntary / external • CCX, EPA-climate leaders
• voluntary internal • endangered species banking, wetlands mitigation banking
THREE DRIVERS OF COMMITMENTS
9
• To learn and gain experiences with the emerging techniques that offer the promise of cost-effective pollution control beyond current standards - these include VOC, NOX, SO2 and perhaps soon - CO2
• To participate at the earliest possible stages of the development of these mechanisms to help influence the shape and content to assure practicality and feasibility
• To test the reality of ‘markets’ in natural resources (i.e. endangered species, conservation easements, wetlands mitigation)
• As a natural resource/forest land based industry these ‘markets’ not only offer environmental achievement but also ways of unlocking value from assets
WHY MOVE TO “CAP AND TRADE” AND OTHER MARKET MECHANISMS
10
CHALLENGES / OBSTACLES TO THESE EMERGING MECHANISMS
• Exploring and testing the new while spending is still being driven by the old – i.e. capital spending is dominated by EPA rules, no discretion not to spend – compliance required – even though high cost – little benefit
• Maintaining existing environmental infrastructure both O&M and capital – sucks up resources – at a time when global competitiveness is keen
• Conflicting public policy and law – many EPA requirements result in more greenhouse gas emissions with no comparative assessment that such result is worth the environmental benefit from the requirement
• Rules that require incremental reductions across all systems at high cost – lock in old technology and discourage new technology
WRI Sustainable Enterprise SummitWashington, March 17, 2004
Madeleine JacobsHead of Sustainable Development
ABN AMRO
New Commitments Yield New Markets
for Financial Institutions
Our Sustainability Learning Curve
Value Creation
Loss
Avoidance
Value
Destruction
Innocence
Wake-U
p
Call
Case S
pecif ic D
efence
Proactive
External
Dialogue
Deve lop ing Inte rnal
Standards
Freeport
APP
Dialog with FOE
Forestry dialog
Mining policy
O&G policy
Equator Principles
Com
mon
Sector
Base line
SD business Strategy
Pursuing
th e B
usiness Case
The Equator Principles
Voluntary declaration among leading group of Project Finance Banks
Establishes a common framework for commercial Banks Will provide loans only to borrowers complying withEnvironmental & Social standards and processes Based on IFC/World Bank guidelines/policies With 20 Banks adopting, a de facto industry standard
The SD Business Rationale for Financial Institutions
Our LT success is linked to core competencies that underpin our role as a Bank:
Trust
Client Satisfaction
Risk Management
Employee Satisfaction & Attraction
Challenges in the implementation of commitments
Building the Business Case
Translating SD into a focused business strategy
Making dilemmas tangible/enabling people at the front
Compliance
Dealing with emerging markets clients with standards still lagging
© Inter IKEA Systems B. V. 2000
Sofie Beckham, IKEA Trading Americas March 17, 2004
Social & Environmental Responsibility in a
Competitive Marketplace
WRI SummitNew Commitments Yield New Markets
© Inter IKEA Systems B. V. 2000
Sofie Beckham, IKEA Trading Americas March 17, 2004
Question 1: IKEA Business Motivations
DRIVERS
•The IKEA vision- “Create a better everyday life for the many people.”
•Past challenges/milestones- IKEA must be proactive towards social and environmental issues to ensure our long-term future.
•External groups- NGO’s and other external groups have increased our awareness of important issues.
© Inter IKEA Systems B. V. 2000
Sofie Beckham, IKEA Trading Americas March 17, 2004
ADVANTAGES
•Raw material security- IKEA must be proactive to have supply!
•Eco-efficiencies- Efficient raw material use has a positive effect on costs.
•Marketplace differentiation- Consumer awareness of social and environmental issues is growing.
Question 1: IKEA Business Motivations
© Inter IKEA Systems B. V. 2000
Sofie Beckham, IKEA Trading Americas March 17, 2004
Question 2: Challenges, obstacles and impediments
Communication-Internal/external
Resources-New competencies and tools needed
Varying global conditions-Different countries, different conditions
Questions and Answers
Final Question
What do you think the future of sustainability commitments will be in your industry?
© Inter IKEA Systems B. V. 2000
Sofie Beckham, IKEA Trading Americas March 17, 2004
Question 3: Future of Sustainability Commitments
Stores
Products & Materials
Transport & Warehousing
Suppliers
ForestryGood Housekeeping
Deepening commitmentsPartnerships will increaseSystems thinking/New tools
© Inter IKEA Systems B. V. 2000
Sofie Beckham, IKEA Trading Americas March 17, 2004
Question 3: Future of Sustainability Commitments
Product recovery
Product tracing
Consumption
© Inter IKEA Systems B. V. 2000
Sofie Beckham, IKEA Trading Americas March 17, 2004
We have only just begun, we still have a long way to go!!!
25
THE FUTURE
• Likely to be an extended period of policy gridlock and impasse until inefficiencies build to an inescapable need to change
That need will result from (or produce) a convergence between:
– Development of systems and processes (including those based on markets) that are coherent, cost-effective and efficient
– Examples of results from innovation pilot demonstrations involving governments and NGOs
– Rapid development of transforming technology, especially in climate / environment friendly energy production, water cleaning, etc.
– Growing spirit of partnership rather than adversarial relations among stakeholders
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Some of this will be driven by what appears to be a unifying concept – sustainability.
Sustainability recognizes that environmental, economic and social welfare conditions all have to be addressed if 9 billion people can satisfy their basic aspirations for a decent quality of life without degrading the life supporting biosphere.
New Roles and Opportunities for the Financial Sector
We are entering an era where we rebalance priorities of the 90s- toward governance and people/planet
A more active role for Banks as part of society, working towards balanced solutions jointly with public sector and industry clients
SD will become a critical internal success factor for Banks
New markets and products: SRI funds, sell and buy side research (focus on governance & people/planet)
Brownfield lending, Renewable Energy funding, Emissions trading
Corporate Finance and Project Finance Advisory
Questions and Answers
Thank You