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Material Efficiency and the work of the Wuppertal Institute

Material Efficiency and the work of the Wuppertal Institute. Presentation by: Dr.-Ing. Holger Wallbaum. Wuppertal Institute. Wuppertal Institute. Business Research. Activities. Regions/ Industry Sectors. Information Systems. Product Chains. Management Concepts. Companies. Networks/

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Material Efficiency and the work of the Wuppertal Institute

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  1. Material Efficiency and the work of the Wuppertal Institute Presentation by: Dr.-Ing. Holger Wallbaum

  2. Wuppertal Institute Wuppertal Institute Business Research Activities Regions/ Industry Sectors Information Systems Product Chains Management Concepts Companies Networks/ Information Platforms Information Transfer/ Finance

  3. Wuppertal Institute Status quo 1 Strength/weakness 2 Measures 3 • Successful Business Projects e-textile The Efficient Entrepreneur SAFE -Sustainability Assessment For Enterprises

  4. triple innova Assess Create Communicate “Innovation Management Consulting and Sustainability Research“ Companies Value Chains Scope Activities Industry Sectors Communities and regional governments

  5. triple innova Assess Create Communicate • Internal and External • Sustainability Trainings • Sustainability Mindset Communicator • Stakeholder Engagement and Dialogues • Supply Chain Communicator • Company and Sectoral Sustainability Reports • Network Building • Organisational and technical Solutions • Cleaner Production and Eco-Efficient Navigator • Eco-Design and Product Service System Navigator • Environmental Management Navigator • Corporate Social Respon-sibility Navigator • Sustainable Product Chain Navigator • RegioFit • Risks and Opportunities • COMPASS • Hot Spot Finder • Stakeholder Opinion Assessment • Value Creator Radar • Company and Sectoral Benchmark • Sustainability Indicator Sets • Specific Indicators (e.g. Material flows)

  6. Wuppertal Institute/triple innovaBusiness projects Albrecht Schmidt "COMPASS enabled our operating companies, which are multinational consumer goods producers, to better locate environmental performance improvement options along our product chains from an eco-efficiency and stakeholders' viewpoint. We used COMPASS to develop eco-efficiency indicators and to get an impression of our companies' global ecological footprint."

  7. SCP: Economic challenges Spotlight on global systems of production and consumption Global systems of P&C Resource Extraction Producers Retailers Consumers End-of-life managers

  8. SCP: Economic challenges Spotlight on global systems of production and consumption Supply chain of a mobile phone A supply chain of 400-2000 contacts 5-20 2nd and 3rd tier suppliers 80-100 1st tier suppliers 200-500 components 2-20 component ingridients Potentially 400-10000 parts Source: Panasonic Mobile Communications & Centre for Environmental Strategy

  9. SCP: Economic challenges Disparities along global value chains First World ~ 20% of the ecological rucksack ~ 80% of economic value added Resource Extraction Producers Retailers Consumers End-of-life managers Third World ~ 80% of the ecological rucksack ~ 20% of economic value added

  10. SCP: Ecological challenges Increasing evidence for burden shifting Global systems of production and consumption lead to growing natural resource extraction from the third world… European Union EU 15

  11. Current Trends and Stakeholder Expectations Increasing total material requirement for economic growth Eco-Efficiency - a European topic? USA: High material requirements, but significant progress Japan: Economic success, high Resource-Efficiency EU15: Highly efficient, but stagnation

  12. SCP: Economic challenges Economic Development - The basis of development Economic Development • Qualitative improvement of the economic subsystem of society that is concerned with the production, consumption and distribution of goods and services to meet human needs www.cadi.ph/glossary_of_terms.htm) reducing poverty quality of life increased per capita income No. of poor in China dropped from 200 million in 1981 to 28 million in 2002Worldbank (2004). China’s 8-7 National Poverty Reduction Program World-wide standard of living unmatched in history e.g. South Korea from 883$ in 1960 to 6578$ in 1990 Barro, Sala-i-Martín (1995). Economic Growth, p. 3.

  13. SCP: Social challenges Increasing purchasing power in the third world The share of worldwide consumer classes CC (>7000 USD yearly nominal income) will raise from 1,7bn to 2bn in 2015 especially in transition countries large backlog demand: Source: Bentley 2003: Leading consumer classes in countries, 2002

  14. SCP: A triple challengeManagement of change: Management of transitions & innovations • What type of governance we need for SPC? • What type of stakeholder networks and partnerships are required? • What kind of new business processes are needed? • What kind of capabilities are needed? Transition Management MACRO META communication MESO communication MICRO Innovation Management

  15. Challenges aheadNo. 1: Different regions, different issues 1 • Different regions, different issuesIntegrating varying mind sets and specific regional issues into analysis is still a major challenge. • The user tips the balance • Systematic priority identification • Institutions make the difference • Mainstreaming – a matter of value

  16. No. 1: Different regions, different issuesSpotlight on global systems of production and consumption Global systems of P&C Resource Extraction Producers Retailers Consumers End-of-life managers

  17. No. 1: Different regions, different issuesGrowing stakeholder activism … Growing stakeholder activism… Government, international org. Eco-taxes, Emission trading Pension funds Public Procurement investing workplace rights Financial institutions Business lending codes of conduct ranking NGOs, unions image campaigns verification, audits fair trade reporting Households, business clients

  18. No. 1: Different regions, different issuesGrowing stakeholder activism … Map of Human Rights Risks • Depicts human rights violations and operating companies around the world • Sector specific maps, incl. ICT • Issues, e.g. in Asia: • Torture • 'Disappearances' • Extra-judicial killing • Harassment of human rights defenders • Arbitrary arrest and detention • Source: www.humanrightsrisk.com

  19. No. 4: Institutions and Capabilities make the differenceThe European Union - a stakeholder formulating demands … product-chain focus from output to input focus from macro to micro internal & external aspects detailed risk data Sust. Res. Use Strategy Emission Trading Integrated Prod. Pol. Energy Tax EU CSR Forum EUP Directive others… Chemicals Directive

  20. Current Trends and Stakeholder Expectations Sustainability Screening in the Financial Sector Dow Jones Sustainability Index: Criteria

  21. No. 1: Different regions, different issuesGrowing number of Standards, Principles and Guidelines Standards, Principles and Guidelines OECD Guidelines for Multinationals Global Sullivan Principles EU CSR / IPP Paper UN Global Compact GRI WBCSD Reporting Guidelines others ISO 14000 & 9000, EMAS, SA 8000, National Standards

  22. Challenges aheadNo. 2: The user tips the balance 2 • Different regions, different issues • The user tips the balanceConsumers play an increasingly decisive role with respect to life-cycle wide impacts and opportunities. • Systematic priority identification • Institutions make the difference • Mainstreaming – a matter of value

  23. No. 2: The user tips the balance Addressing both sides of the coin … …WHAT ARE THE OPPORTUNITIES FOR CHANGE ON THE DEMAND SIDE? Supply Demand TO SUPPLY DIFFERENT SERVICES WITH BETTER SUSTAINABILITY PERFORMANCE,…

  24. No. 2: The user tips the balance Results of a case study on digital music Increasing relevance of consumer behaviour Physical retailing Online shopping Digital distribution 100 100 100 Share on total material intensity (%) 50 50 50 0 0 0 Producer Retailer Consumer Producer Retailer Consumer Producer Retailer Consumer

  25. No. 2: The user tips the balance Addressing both sides of the coin … Sustainability Reduction of environmental impact per unit of products and services Efficiency Rebound effect: Efficiency gains are outweighed by growing demand Sufficiency To reach sustainability a combination of efficiency and sufficiency is needed

  26. Challenges aheadNo. 3: Systematic priority identification 3 • Different regions, different issues • The user tips the balance • Systematic priority identification Are our efforts directed towards the most significant sources of risks and opportunities? • Institutions make the difference • Mainstreaming – a matter of value

  27. No. 3: Systematic priority identification Understanding supply chain and use-phase issues Impacts and Opportunities among consumer products high Environmental & Social Impact low Natural Resources Manufacturing sites Product distribution Transportation Consumers Value Chain

  28. No. 3: Systematic priority identification Understanding supply chain and use-phase issues Current Management Effort Focus of current management effort high Management Response only ad hoc and sporadic management low Natural Resources Manufacturing sites Product distribution Transportation Consumers Value Chain

  29. No. 3: Systematic priority identification Understanding supply chain and use-phase issues Mismatch between the two • SMEs‘ needs • sectors‘ role • regional issues • life styles • norms and values • TBL innovations high Policy, performance and reputation opportunities Environmental and social impacts 80% of overall efforts focus on 20% of the total risk low Natural Resources Manufacturing sites Product distribution Transportation Consumers Value Chain

  30. No. 3: Systematic priority identification Understanding the global backpack of a MNC abiotic materials • 15 million tonnes (non-renewable materials) e.g. fossil fuels, fertilisers • equivalent to the amount needed to produce 833 thousand big cars land used • 5 million hectares; • close to the area of Switzerland soil lost • 100 million tonnesdue to erosion; • equivalent to 3 million loaded trucks biotic materials • 38 million tonnes (renewable materials) e.g. animal fodder, harvest residues • equivalent to the amount needed to produce 20 billion pairs of jeans Going beyond the case study level…

  31. No. 3: Systematic priority identification Company-wide assessments …the global environmental footprint of a company direct material input abiotic materials biotic materials soil erosion

  32. Challenges aheadNo. 4: Institutions and Capabilities make the difference • Different regions, different issues • Systematic priority identification • The user tips the balance • Institutions and Capabilities makes the differenceThere is often too much focus on impacts … not on capabilities. • Mainstreaming – a matter of value 4

  33. No. 4: Institutions and Capabilities make the difference New business models to drive sustainable production and consumption Resources Economic Resources Natural Resources Human Resources Social Resources System of Innovation TBL impacts & values Consumer demands Culture Environmental Implications Values • Resource use • Waste generation • Land-use… Routines EconomicImplications • Net Sales • Market shares in different geographies • ROC … Products/ Services Social Implications • Health and safety • Employment • Training and Education • Human rights • Cultural value preservation • Quality of life enhancement… Tacit Knowledge Source: Wuppertal Institute

  34. No. 4: Institutions and Capabilities make the difference Formal and Informal Institutions Norms of Behaviour Codes of conduct Partnerships Shared values Trust Judicial rules Political framework Economic rules Binding contracts Formal Institutions Informal Institutions Written regulations Customs & Traditions Source: North, 1990

  35. Federal material efficiency program

  36. Challenges aheadNo. 5: Mainstreaming – a matter of value! • Systematic identification of priorities • SMEs – the real giants • The user tips the balance • Different regions, different issues • Mainstreaming – a matter of value! To mobilise a critical mass of producers it is crucial to shift the focus from impacts to values 5

  37. No. 5: Mainstreaming – a matter of value! From an impact to a value perspective Impacts Value drivers • Environment as example: • Material • Energy • Water • Air • Area • Biodiversity • etc. • Reputation, Image • Access to qualified workers • Employee motivation • Product quality • Transparency • Trust/ loyalty of customers, suppliers, public, etc. Company success

  38. No. 5: Mainstreaming – a matter of value! The wide angel of success … Environment Employee-satisfaction Value Driver Knowledge/Know-how Umfeld/Umwelt Brand and image Fixed assets Trad. company value Extended companyvalue Current Assets Investors/ Lenders Clients Employees Stakeholder Partners Society Source: adopted from PricewaterhouseCoopers

  39. No.5: Live the change & create value Getting the TBL to the workplace - customised training packages Business Units √: relevant issue x: irrelevant issue

  40. Current Trends and Stakeholder Expectations Eco-Efficiency – A path to sustainability Eco-Efficiency and beyond 1. Moving Eco-Efficiency to the policy level From micro to macro – Eco-Efficiency is entering the policy making arena 2. Approaching Life-Cycle Thinking Most environmental impacts are up- and down the product chain – Affected by each business decision 3. Social issues and the triple bottom line Eco-Efficiency as one part of a common framework for triple bottom line management

  41. Towards Sustainable Business Opportunities ahead! Joint efforts Global value chain Innovation Manager Challenges on the road A matter of lifestyles We use – you produce? Value creation needed! Set priorities The right framework

  42. Thank you very much for your attention! Holger Wallbaum holger.wallbaum@triple-innova.de tel ++49 (0) 202 - 4299510 fax ++49 (0) 202 - 4299505 www.wupperinst.org www.triple-innova.de

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