Pursuit of Sustainability the Role of Business John

Pursuit of Sustainability: the Role of Business John W. Vann, Ph. D. Associate Professor of Marketing Green Initiatives Coordinator Ball State University March 24, 2003

Sustainability is about long-term survival of humanity. That survival should also involve an acceptable quality of life. Native Americans talk about living today for the Seventh Generation.

“Future generations are unlikely to condone our lack of prudent concern for the integrity of the natural world that supports all life. ” Rachel Carson, Silent Spring

Systems Elements and Linkages 1 Disruption of linkage 2 Mimicry of element 3 Element destruction Waste 2 1 Natural system Waste Human/technical system X 3

We live interdependently with nature and rely on its natural capital for ecosystem services and ecosystem goods.

Natural Capital Ecosystem Goods • Seafood • Biomass fuels • Wild Game • Natural fibers • Forage • Pharmaceuticals • Timber • Industrial products Source: http: //esa. sdsc. edu/daily. pdf

Natural Capital Ecosystem Services • purification of air and water • mitigation of droughts and floods • generation and preservation of soils and renewal of their fertility • detoxification and decomposition of wastes • pollination of crops and natural vegetation • dispersal of seeds • cycling and movement of nutrients. . . Source: http: //essp. monterey. edu/esse/ecoservintro. htmlabd http: //esa. sdsc. edu/daily. pdf

Sustainability Addresses a Three-Part System and the Triple Bottom Line Environmental System Energy & Other Resources Economic System Social System Environmental outcomes Economic outcomes Social outcomes Triple Bottom Line of sustainability reporting

Sustainability Requirements 1. Functioning systems providing outcomes necessary for human life 2. Energy and other resources to run the systems

The Natural Step • Developed by Dr. Karl-Henrick Robert in Sweden. • Four systems conditions guide the choice of activities to scrutinize. • Adopted by global corporations, universities, and other institutions.

The Natural Step -- Systems Condition 1 No net accumulation at the Earth’s surface of materials extracted from the Earth’s crust. (Most harmful when the materials are rare at the surface. ) Examples: Mercury, Nitrogen, Carbon Dioxide Note that this is a rate problem! Source: http: //www. naturalstep. org/

The Natural Step -- Systems Condition 2 No net accumulation of human-made synthetics at the Earth’s surface. Examples: DDT, PCBs, freon, antibiotics, the primary ingredient in Scotch. Guard, and atrazine Note that this is also a rate problem! (Depends on rates of production and absorption/reuse by nature or human technical systems. ) Source: http: //www. naturalstep. org/

The Natural Step -- Systems Condition 3 No mechanical damage to ecosystems nor overharvesting of systems’ output. Examples: Clearing natural habitat for construction; harvesting timber, fish, or water resources faster than they regenerate (Yet another rate problem!) Source: http: //www. naturalstep. org/

The Natural Step -- Systems Condition 4 Fair and efficient use of resources and systems’ outputs. Examples: Wasting fossil fuels, consuming 25% of the world’s energy resources when you are 4% of the world’s population. Source: http: //www. naturalstep. org/

Ideal Sustainable System A = replenishable or renewable, rate of use no greater than rate of generation B* = usable in another round of production D Natural System A A C D Technical System B B C C* = food for natural systems, rate of assimilation at least as great as rate of production D* = internally recycled D Technical System * Waste equals food John Vann, 2001 Based on elements of The Natural Step and writings of William Mc. Donough

Sustainability Requires: The use of cyclical processes and resource use that maintain the integrity of technical and biological nutrients. Non-toxic resources, processes, and residues. No damage to environmental, economic, and social systems. The use of renewable resources and sources of energy. Equity

We can create an identity (Erhlich): Impact/Area = Impact/Area x Population/Population x Consumption/Consumption Let: I = Impact A = Area P = Population C = Consumption I/A = I/A x P/P x C/C Rearranging terms: I/A = P/A x C/P x I/C

P A T I/A = P/A x C/P x I/C Population density is the Population factor Consumption/person is the Affluence factor Impact/Consumption is the Technology factor Three avenues for influence I/A = P x A x T Factor 4/Factor 10

Life Cycle Framework for Impact Assessment Energy and other resources Raw materials acquisition Energy and other resources Transportation and storage at various stages Manufacturing Energy and other resources Final disposition Use or consumption Impacts on the Environmental, Economic, and Social Systems, framed within the four systems conditions of The Natural Step

Benefits of the Life-Cycle Perspective 1. Systems perspective illustrates that actions taken at one stage in the life cycle may have implications for other stages. 2. Illuminates points for interventions in the life cycle to increase sustainability 3. Supports the concepts of: • extended product (or producer) responsibility • supply chain management for sustainability, and • design for the environment that anticipates the stages in the life cycle where design changes would have positive benefits

Viewing Activities within an Input-Output Framework Raw materials Energy Labor Capital INPUTS RECYCLING Manufacturing Assembling Packaging Transporting Storing PROCESSES Products Services Wastes By-products OUTPUTS RECYCLING Use CONSUMPTION Storage Disposal ENVIRONMENT

Choose inputs wisely-- can their source be depleted? What effect will they have if introduced to the land, air, or water? INPUTS They should: • be abundant in nature • be non-toxic • be useable by natural cycles or another technical cycle • be non-synthetic • be generated at a rate equal to or greater than the harvest rate • be renewable • be harvested in a way that is neutral or restorative its effects • follow the precautionary principle • be from recycled materials when possible

Processes have upstream and downstream as well as immediate effects They should: • be efficient in the use of energy and materials • facilitate recycling PROCESSES • facilitate remanufacturing • facilitate the use of benign inputs • facilitate durability and repair • minimize negative outputs-- maximize source reduction • facilitate safety in the use of products or services resulting from the processes

Outputs are affected by design decisions in the choice of inputs and processes as well as existing systems for controlling negative outputs OUTPUTS In addition to providing needed products and services, outputs should: • introduce no rare nor toxic materials from the earth’s crust into the air, land, or water • introduce no synthetics into the air, land, or water • generate materials that provide feedstock for natural or technical systems (i. e, be recyclable) • Follow the precautionary principle

Business Approaches to Sustainability Eco-efficiency Design for the environment (Dfe) Environmental Management Systems (EMS) Triple bottom line reporting Indices of Performance Partnerships NGO’s, Government Consortia ex. GEMI Environmentally Preferable Purchasing (EPP)

Eco-Efficiency -- reduction in energy and resources used and pollution produced in generating products and services. Maximize Product or Service Value Environmental Influence Minimize Environmental Influence Product or Service Value Source: http: //www. wbcsd. org/newscenter/reports/2000/Measuring. EE. pdf

Eco-Efficiency Indicators Value • • • Quantity Net Sales Net Profit/Earnings/Income Environmental Influence • Energy Consumption • Material Consumption • Water Consumption • Ozone Depleting Substance (ODS) • Greenhouse Gas (GHG) Emissions • Acidification Emissions to Air • Total Waste

“A company wanting to become eco-efficient should strive to: • reduce the material intensity of its goods and services • reduce the energy intensity of its goods and services • reduce the dispersion of any toxic materials • enhance the recyclability of its materials • maximize the sustainable use of renewable resources • extend the durability of its products • increase the service intensity of its goods and services” Source: http: //www. wbcsd. org/projects/pr_ecoefficiency. htm http: //www. wbcsd. org/images/ecoeffic_quote. gif

Design for the Environment (Dfe) Three general goals for Dfe in pursuit of a sustainable future: • Reduce or minimize the use of non-renewable resources • Manage renewable resources to insure sustainability; and • Reduce, with the ultimate goal of eliminating, toxic and otherwise harmful emissions to the environment, including emissions contributing to global warming. Source: http: //www. ce. cmu. edu/Green. Design/gdedintro. html

Dfe Strategies 1. New Concept Development (e. g. , dematerialization) 2. Physical Optimization (longevity and performance) 3. Optimize Material Use 4. Optimize Production Techniques 5. Optimize Distribution System 6. Reduce Impact During Use 7. Optimize End-of-Life Systems Source: http: //www. nrc. ca/dfe/ehome. html

Environmental Management Systems • World-wide: ISO 14001 • European Union: EMAS (Eco-Management and Audit Scheme) • United Kingdom: BS 7750 EMS Standard All EMS’s Provide frameworks for: • setting objectives • planning • monitoring • recording • and reporting an organization’s activities and performance to minimize negative impacts on the environment.

Measuring and Reporting Triple-Bottom-Line Performance Financial reporting follows the Generally Accepted Accounting Principles which are established by the Financial Accounting Standards Board. Recent efforts of the Global Reporting Initiative have established guidelines for reporting performance in the Triple Bottom Line. http: //www. tomorrow-web. com http: //www. globalreporting. org/GRIGuidelines/Reporters. htm

GHG (Green House Gas) Protocol Initiative/ Standards for Reporting Launched in May 1999 by the World Business Council for Sustainable Development and the World Resources Institute. Purpose is to develop a “common standard for company reporting on greenhouse gas emissions” Includes: “A proposed set of international GHG accounting standards; covering GHG accounting principles, inventory boundaries; corporate baselines; and inventory reporting. ” Source http: //www. ghgprotocol. org/

EPA Program for Voluntary Reporting of Greenhouse Gases “Provides background, reporting forms, guidance, and explanation on the reporting of greenhouse gases such as carbon dioxide, methane, and nitrous oxide. Established by the Energy Policy Act of 1992. This is a voluntary rather than a regulatory program. ” Source: http: //www. eia. doe. gov/oiaf/1605/background. html http: //www. tomorrow-web. com

Indices of Triple Bottom Line Performance FTSE 4 Good “”companies that have passed the selection criteria with regards to environmental sustainability, relationships with stakeholders and supporting human rights. Source: http: //www. ftse 4 good. com/frm_indexp 1. asp Dow Jones Sustainability Group Indexes “The DJSI consists of the top 10 per cent of companies in 68 industry groups in 21 countries seen as leaders in sustainable development. ” Source: http: //www. wbcsd. org/projects/wssd/business-case. pdf

Energy Star Program Energy Star is a voluntary partnership among the U. S. EPA, the U. S. Department of Energy, manufacturers, local utilities, and retailers. “Products labeled with the Energy Star logo are significantly more energy efficient than standard products. ” Source: http: //energystar. gov/ Waste. Wise Program Waste. Wise is a free, voluntary, EPA program through which organizations eliminate costly municipal solid waste, benefiting their bottom line and the environment. The focus is on preserving resources and preventing waste. http: //www. epa. gov/epaoswer/non-hw/reduce/wstewise/

Partnerships The Alliance for Environmental Innovation – A Project of the Environmental Defense Fund and the Pew Charitable Trusts Natural Resources Defense Council Cleaner Manufacturing European Partners for the Environment United Nations Division for Sustainable Development -- Partnerships for Sustainable Development The Greening of Industry Network

Consortia Global Environment Management Initiative (GEMI) World Business Council for Sustainable Development (WBCSD) Society for Organizational Learning (So. L) The Alliance to Save Energy (ASE ) Business for Social Responsibility (BSR)

Environmentally Preferable Purchasing Sustainable Purchasing Options • Re-use -- furniture, computer monitors. • Buy remanufactured -- Furniture, photocopiers, computers, pumps, motors. • Maximize recycled content -- carpet, structural steel, copier/printer paper, toilet paper and towels, oil, other fluids and lubricants. • Buy products designed for disassembly. • Buy products designed for recycling.

Sustainable Purchasing Options (continued) • Buy products for which there is a recycling infrastructure in place -- Carpet, batteries. • Lease instead of buying -- ties manufacturer to the product for remanufacturing or recycling (e. g. , carpeting) • Use Eco-labels (e. g. , Energy Star, Forest Stewardship Council, Marine Stewardship Council)

Success Stories 3 M's Pollution Prevention Pays (3 P) program focuses on source reduction – in products and manufacturing processes – rather than removing it after it has been created (end-of-the-pipe solutions). Worldwide since 1975 771, 000 tons of pollutants prevented $810 million saved Source: http: //www. 3 m. com/profile/envt/3 p. html

“Interface, Inc. leases carpeting rather than selling it. Since they own the carpeting, they recover it and recycle the fibers. ” Source: http: //www. interfaceinc. com/us/Services/Leasing/ “In March of 2001, electronics semiconductor manufacturer Rikoh achieved zero waste to the landfill at four of its facilities. ” Source: The Green Business Letter, April 2001

EPA Waste. Wise Partner Achievements in the Beverage Industry “In 1997, the Coca-Cola Company reducing corrugated usage by more than 120 million pounds by using approximately 36 million reusable plastic slip sheets. “In 1996, Pepsi-Cola continued to lightweight aluminum cans, conserving nearly 11 million pounds of aluminum. Source: http: //www. epa. gov/epaoswer/non-hw/reduce/wstewise/id-bev. htm

Electrolux’s European Factory Environmental Performance during 1998 Compared to 1990 • “energy consumption reduced by more than 30% • emissions of carbon dioxide reduced by more than 20% • water consumption reduced by more than 50% no use of: Cr, Cd, Pb or Zn in production processes” Source: ttp: //www. electrolux. com/node 1001. asp

IBM’s Performance over the Past 10 Years “reduced hazardous waste by 72% and air emissions by 97% worldwide” Source: http: //www. ibm. com/ibm/environment/news/decadpg 1. pdf “increased the non-hazardous waste recycling rate at global manufacturing sites from 30% to 78%” Source: http: //www. ibm. com/ibm/environment/news/decadpg 1. pdf

Redesigned Sony Europe TV • “No hazardous materials • halogen-free • no antimony trioxide • no PVC • 52 per cent fewer plastics • less total material overall • easily disassembled (only nine screws)-recyclability increased to 99 per cent • costs 30 percent less to produce • assembled much faster” Source: http: //www. nrc. ca/dfe/ehome/dfestra 2/dfestra 2. html

Xerox In 2001: • diverted 167 million pounds of waste from landfills through remanufacturing and parts reuse. • enabled energy savings of more than 49 million therms (nearly 1. 5 million megawatt hours) through the reuse of parts and the sale of ENERGY STAR® products • worldwide, recycled 90 percent of non-hazardous solid waste from their factories. http: //www. xerox. com//downloads/usa/en/e/ehs_pr_2002. pdf

“Imagine if we lived as if there were a tomorrow and that we would still be here. ” William Mc. Donough, “Investing In Places”

“Environmentalists make terrible neighbors but great ancestors. ” David R. Brower, Former Sierra Club Director

Options Restore Redesign Refuse (use substitute) Reduce Reuse Recycle (Close the loop) Adapted from Ray Anderson, Interface, Inc.