Responsible Business

International Intensive Week20.-25.3.2011 Lahti

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What is responsible business?

”Behaviour of businesses over and above legal requirements”

”Voluntarily and strategically managing the interconnected economic, environmental and social impacts of business activities”

Balancing the interests of different stakeholders

Must be integrated in corporate every day actions

CR does NOT mean charitable donations or philanthropy

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The Future of Environmental Management

1970 2020

More from More and better More but different more from less and in another way

INDUSTRIALISM INFORMATIONALISM LOGIC OF ACTION

industrial network awareness MODEL OF SOCIETY

Society society society

Markku Wilenius 2009

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Development of Corporate Environmental Management1. Production oriented

- in industrialised countries largely achieved level

2. Product oriented - current focus

3. Need oriented - future focus

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1. Production Oriented CEM

based on technological improvements of the production

primary goal to meet legal requirements produce more from more Tools: environmental management

systems

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2. Product Oriented CEM based on life cycle thinking primary goal to increase the eco-

competitivness of the product focus to the product development product safety produce more from less Tools: life cycle assessments and

environmental labels

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3. Need Oriented CEM

based on changing consumption patterns and infrastructure

primary goal to act in a sustainable way focus to global satisfaction of needs

instead of material welfare factor x effect significant impacts in all parts of society produce something different in a

different way

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factor 10 (Schmidt – Bleek 1994)= in oder to reach sustainable development, we have to halve the resource consumption globally

which means need for ten-fold resource effectiveness in industrialised countries

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POLLUTION PREVENTION HIERACHY

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New

prior

ities

Trad

itio

nal p

rior

itie

s

Esty & Winston 2009. Green to Gold.

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1. TRADITIONAL PRIORITIESProduct Recovery Options (EU)

Reuse Repair

RemanufacturingParts and components

MaterialsEnergy

10

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2. NEW PRIORITIESRe-design

- e.g. cradle to cradleRe-imagine

Replacing products by services New kinds of ownership What else??? Blue Ocean Strategies

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Striving for Change energy efficiency

- energy- materials

dematerialisation- product recovery

- services

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Value Development Value

0 €Supplier Transport Producer Transp. Retailer Transp. Customer Retailer

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EXAMPLE OF A REVERSE LOGISTICS CHAIN / NETWORK

Acquisition of end-of-life products

Transport / warehousing

Inspection & SelectionTransport / warehousing

ReprocessingTransport / warehousing

Marketing = creating secondary markets

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Disposal

AnotherCompany

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End-of-life product non-accessible

Reprocessing not technically or economically feasible

No market demand

for secondaryoutput

Productdetorioration

Product demandand use &re-distrib.

End-of-lifeproduct

collection

Reprocessing ofsecondary

materials orproducts

Inspection &separation

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CHALLENGES

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Customer based

Customer awarenessCustomer behaviour

TrendsAttitudes

Product based

Quality Materials

Actors requiredCannibalizationProduct safety

Network design

ProfitabilityChanges in demand

Uncertainties in supplyTime delays = loss of value

Producer´s responsibility

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To be considered Time sensitiveness Costs of transport and warehousing Inspection and repair – human work Customer behaviour Cannibalisation Pricing Etc.

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From Products to Services one way to produce something different

in a different way is to replace a product with a service which meets the same need

three options:1. product-oriented services2. use-oriented services3. need-oriented services

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1. Product – oriented services

services adding value to physical products (e.g. maintenance, recycling)

benefit for the buyer? benefit for the seller / producer? benefit for the environment?

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2. Use – oriented services customer pays for using the product, not

for the product itself (e.g. renting, leasing, sharing)

benefits for the customer: ? risk: careless use because not owned by

the customer private customers vs. B2B

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Use – oriented services motivate the company to:- minimise the energy and material consumed by optimising their use, because payment is based on the unit of service, not on unit of consumed resources- to reuse collected components from disposed products because of cost savings

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- to extend the product life span through higher reliability, maintenance, repair etc. because it can postpone disposal costs and the costs of new product manufacture- to extend the material life through recycling etc. because it reduces landfilling and saves waste management costs

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3. Need – Oriented Services product is replaced by a service benefit for the customer: ? benefit for the provider: ? benefit for the environment: ?