© 2010 IMD International. Not to be used or reproduced without permission.

Scaling up product and process innovation around climate change in SMEs

Dr. Aileen Ionescu-Somers, Director, Center for Corporate Sustainability Management, IMD

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Population

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Dreaming With BRICs: The Path to 2050 (Goldman Sachs)

0

10000

20000

30000

40000

50000

2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

$USbn

China

US

Japan

Germany

UK

France

Italy

India

EU-4

World GDP growth

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The Living Planet Index

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Human Ecological Footprint

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Ecological credit and debt 1961

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Ecological credit and debt 2005

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Development constraints: We need, but don’t have, 2.3 planets

Move to single planet consumption scenario and meet human needs within ecological limits of the planet

Increase agricultural output to feed increasing number of people, without increasing land or water used

Halt deforestation and increasing yields from planted forests

Significant moves towards halving carbon emissions worldwide (relative to 2005)

Shift to low-carbon energy systems

Shift to improved demand side energy efficiency

Increased access to low-carbon mobility

Develop radically more eco-efficient solutions, lifestyles and behaviour everywhere

Bring the Base of the Pyramid into the economic equation

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Business will see a radically new landscape emerge as a result of these shifts, resulting in:

Opportunistic business strategy: Discussions around resource constraints will move to economic ones related to sharing of opportunity and costs

Seeking solutions to local and global challenges: Move to growth and progress based on balancing renewable resources and recycling non-renewable resources.

Change in framework conditions: Shifts in regulation, consumer preferences, pricing of inputs and measurement of profit and loss

Partnerships and coalitions: Need for multi-stakeholder collaboration, systemic thinking and co-innovation

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To Value Creation

Sustainability

Transparency

Doing more good

Changes to the core business

NGOs as partners

Cost of doing business

Supply/value chain focusHelping companies figure out what to do

From Risk ManagementCorporate Social

ResponsibilityPublic Relations

Doing less harm

Changes around the edges

NGOs as threats

Philanthropy

Internal corporate focus

Telling companies what they can’t do

Business response is changing

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‘State’ of developmental sustainability, environmental protection and corporate social responsibility on the corporate agenda

“Step changes” in the last three years:

RISK OPPORTUNITY

DENIAL RECOGNITION

SIDELINES MAINSTREAM

SELLING THE GETTING THINGS

BUSINESS CASE DONE

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Businesses/NGOs aiming for “Smart Zone”

“Smart Zone”

Req

uire

men

ts

Time

Threat toShareholder

Value

Public acceptance curve

Law / compliance curve

Maximise Shareholder

Value

Non-profitable area

Illegal area

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WWF: Business as agents of change

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Current Roundtables/Dialogues/Certification

Schemes supported by WWF

Aquaculture

Dialogues

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Climate Change challenges for companies

A new

real

ity?

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Global CO2 concentrations are not natural

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On track to + 6°C

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Projected impacts of climate change

1°C 2°C 5°C4°C3°C

Sea level rise threatens major cities

Falling crop yields in many areas, particularly developing regions

FoodFood

WaterWater

EcosystemsEcosystems

Risk of Abrupt and Risk of Abrupt and Major Irreversible Major Irreversible ChangesChanges

Global temperature change (relative to pre-industrial)0°C

Falling yields in many developed regions

Rising number of species face extinction

Increasing risk of dangerous feedbacks and abrupt, large-scale shifts in the climate system

Significant decreases in water availability in many areas, including Mediterranean and Southern Africa

Small mountain glaciers disappear – water supplies threatened in several areas

Extensive Damage to Coral Reefs

Extreme Extreme Weather Weather EventsEvents

Rising intensity of storms, forest fires, droughts, flooding and heat waves

Possible rising yields in some high latitude regions

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Record Heat

Record Ice Melt

Record Coral Bleaching

Record Hurricane season

Record Droughts

To stay below 2 degrees C warming over pre-industrial levels:

Global GHG emissions (+3% per annum 2005) will have to peak

and decline in next 10 to 15 years

Global GHG emissions have to be reduced by at least 80% below

1990 levels by 2050 -

By 2050, this translates into ~100% GHG reductions for

industrialised countries including the EU

By 2050, this translates into ~60%GHG reductions for

developing countries compared to today

WWF position on context and urgency

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What’s the solution? – a level playing field - an enabling environment?

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10

EFFECTIVENESS OF LOBBYING

How would you rate the effectiveness of lobbying of the following organisations?

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But companies can also be more ambitious

A further shift to natural gas

Nuclear power Renewables Bio-products Carbon capture and storage

Mass transportation

Road transport Buildings Low energy appliances

Doing things differently

Energy conservation and efficiency

Emission reduction

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http://cleaneconomy.panda.org/csvideo/index.html 

WWF Climate Savers

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2009: CSM case studies on climate change product and process innovation by WWF Climate Savers

Johnson & JohnsonTetra PakNovo NordiskXanterra Parks & ResortsFairmount HotelsElopakNokia Siemens NetworksSonyHewlett PackardSagawa Transportation

Consult them at: www.letthecleaneconomybegin.org

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The universe of climate change partnerships

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WWF Climate Savers: Potential strategic options

New markets

Existing markets

Existing products New products

CS (US/Europe)

sectors

Emerging markets Supply Chain

Zero C02

Markets

Products

Bottom left-hand quadrant (outlined) = current area of influence

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Thank you: Any questions?

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Brief descriptions of some Climate Savers cases

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CSM’s case series on WWF Climate Savers Innovations

IMD-2-0146: WHAT DOES IT TAKE TO GET PROJECTS OFF THE GROUND? JOHNSON & JOHNSON’S CAPITAL RELIEF FUNDING FOR CO2 REDUCTION PROJECTS

Johnson & Johnson’s capital relief funding for CO2 reduction projects have attracted the interest of managers in many companies in different industries, eager to learn how the corporation have eliminated budgeting barriers and allowed 61 climate friendly energy projects to take off in less than 4 years.

IMD-2-0147: BREAKING DOWN ALIGNMENT BARRIERS: TETRA PAK PULLS TOGETHER ALLIES TO REACH CLIMATE GOALS

Tetra Pak efforts to align market companies, manufacturing sites and suppliers with its climate goals required significant organizational change. By empowering shop floor teams to initiate and explore new approaches to energy efficiency along the supply chain, the company created a structure that allows organic innovation to take place.

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CSM’s case series on WWF Climate Savers Innovations

IMD-2-0148: DEVELOPING AN INNOVATIVE BUSINESS MODEL:NOVO NORDISK AND DONG ENERGY DRIVING THE MARKET FOR RENEWABLE ENERGY IN DENMARK

Novo Nordisk’s search for cost-effective solutions to reduce CO2 emissions drove the development of a new business model which expanded the commercial basis of renewable energy in Denmark.

IMD-2-0149: REMOVING BARRIERS TO INNOVATION: XANTERRA PARKS AND RESORTS GAINING SCALE IN ON-SITE SOLAR POWER GENERATION

Xanterra Parks & Resorts’ focused strategy of bringing on-site renewable energy generation to the next level required not only significant dedicated resources, but also singular efforts to break down skeptical mindsets and risk-related barriers to innovation. By active learning from an almost terminated project, the company was able to build one of the largest privately-owned solar photovoltaic systems in the US.

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CSM’s case series on WWF’s Climate Savers innovations

IMD-2-0150: FAIRMONT HOTELS & RESORTS STRETCHING THE TARGETS FOR CLIMATE ACTION AT LANDMARK HOTELS

The Fairmont Hotels & Resorts case focuses on actions taken by Fairmont during the full restoration of The Savoy in London and the building of the new Fairmont Pittsburgh in the United States. It shows the feasibility of stretching targets for lowering CO2 emissions from hotel operations.

IMD-2-0151: REACHING A TURNING POINT WITH NO TURNING BACK: HOW ELOPAK ROLLS OUT CO2 REDUCTION INITIATIVES

Elopak committed to reduce its CO2 emissions by 15% within a tight time frame of 3 years. This ambitious target pushed the company to adopt an innovative roll out approach, including active participation of Elopak’s CEO in efforts to build internal buy in, incorporation of a carbon strategy as part of the marketing mix and integration of climate targets into normal management cycle and reporting systems.

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CSM’s case series on WWF Climate Savers Innovations

IMD-2-0152: DEVELOPING IT SOLUTIONS FOR REDUCING TRAVEL-RELATED CO2 EMISSIONS: THE HEWLETT-PACKARD’S HALO

HP’s search for IT solutions to reduce travel-related CO2 emissions has driven the development of innovative telepresence collaboration solutions. By developing solutions that create a lifelike virtual meeting experience the company is contributing to the removal of technological and mindset barriers to the substitution of business travelling by virtual collaboration.

IMD-2-0153: LAFARGE’S C-C-TOOL: SUPPORTING CO2 MITIGATION DECISION MAKING THROUGH IMPROVEMENT MONITORING, ANALYSIS AND SIMULATION

By improving internal CO2 data management and putting in place a user-friendly tool for monitoring, analysis and simulation of mitigation alternatives, Lafarge facilitated decision-making processes and strengthened the autonomy of operational managers in implementing CO2 reduction projects.

And others……..

IMD-2-0154 – Sony

IMD-2-0155 –Nokia Siemens Networks