Scaling up product and process innovation around climate change in SMEs

1. Scaling up product and process innovation around climate change in SMEs Dr. Aileen Ionescu-Somers, Director, Center for Corporate Sustainability Management, IMD

2. Population

3. 50000 China US 40000 Japan 30000 Germany $USbn UK 20000 France 10000 Italy 0 India 2025 2035 2045 2015 2020 2030 2040 2050 2000 2010 2005 EU-4 World GDP growth Dreaming With BRICs: The Path to 2050 (Goldman Sachs)

4. The Living Planet Index

5. Human Ecological Footprint

6. Ecological credit and debt 1961

7. Ecological credit and debt 2005

8. 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

9. 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

10. Business response is changing From Risk Management To Value Creation Sustainability Corporate Social Responsibility Public Relations Transparency Doing less harm Doing more good Changes around the edges Changes to the core business NGOs as threats NGOs as partners Philanthropy Cost of doing business Internal corporate focus Supply/value chain focus Telling companies what they can’t do Helping companies figure out what to do

11. ‘State’ of developmental sustainability, environmental protection and corporate social responsibility on the corporate agenda “Step changes” in the last three years: RISKOPPORTUNITY DENIALRECOGNITION SIDELINESMAINSTREAM SELLING THE GETTING THINGS BUSINESS CASE DONE

12. Businesses/NGOs aiming for “Smart Zone” Non-profitable area “Smart Zone” Public acceptance curve Maximise Shareholder Value Requirements Law / compliance curve Threat to Shareholder Value Illegal area Time

13. WWF: Business as agents of change

14. Current Roundtables/Dialogues/Certification Schemes supported by WWF Aquaculture Dialogues

15. Climate Change challenges for companies A new reality?

16. Global CO2 concentrations are not natural

17. On track to + 6°C 17

18. Projected impacts of climate change Global temperature change (relative to pre-industrial) 0°C 1°C 2°C 3°C 4°C 5°C Food Falling crop yields in many areas, particularly developing regions Falling yields in many developed regions Possible rising yields in some high latitude regions Water Significant decreases in water availability in many areas, including Mediterranean and Southern Africa Small mountain glaciers disappear – water supplies threatened in several areas Sea level rise threatens major cities Ecosystems Extensive Damage to Coral Reefs Rising number of species face extinction Extreme Weather Events Rising intensity of storms, forest fires, droughts, flooding and heat waves Risk of Abrupt and Major Irreversible Changes Increasing risk of dangerous feedbacks and abrupt, large-scale shifts in the climate system

19. WWF position on context and urgency • 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 Record Heat Record Ice Melt Record Coral Bleaching Record Hurricane season Record Droughts

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

22. EFFECTIVENESS OF LOBBYING How would you rate the effectiveness of lobbying of the following organisations? 10

23. Emission reduction A further shift to natural gas Nuclear power Renewables Bio-products Carbon capture and storage Energy conservation and efficiency Mass transportation Road transport Buildings Low energy appliances Doing things differently But companies can also be more ambitious

24. WWF Climate Savers http://cleaneconomy.panda.org/csvideo/index.html

25. 2009: CSM case studies on climate change product and process innovation by WWF Climate Savers Johnson & Johnson Tetra Pak Novo Nordisk Xanterra Parks & Resorts Fairmount Hotels Elopak Nokia Siemens Networks Sony Hewlett Packard Sagawa Transportation Consult them at: www.letthecleaneconomybegin.org

26. The universe of climate change partnerships

27. WWF Climate Savers: Potential strategic options Bottom left-hand quadrant (outlined) = current area of influence New markets Emerging markets Supply Chain Markets sectors Zero C02 CS (US/Europe) Existing markets Existing products New products Products

28. Thank you: Any questions?

29. Brief descriptions of some Climate Savers cases

30. 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.

31. 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.

32. 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.

33. 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’ssearch 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