Environment, Innovation, and Business Strategies

1. Environment, Innovation, and Business Strategies Ian Miles Nov 2000

2. The Bramble Bush 1 There was a man in our town, and he was wonderous wise; he jumped into a bramble bush, and pricked out both his eyes! Male Urbanised Scientific “wisdom” Rash action Raw nature Blinded

3. The Bramble Bush 2 And when he saw what he had done, with all his might and main he jumped right in the bramble bush and scratched them on again! Late and contradictory realisarion? Much effort required Resolve the problem by using the same tools

4. Pressure on Resources (ecosystems more than exhaustion) Pollution and Waste - health and QOL Styles of Production Styles of Consumption Hard to change LEVELS of production, consumption Scope for changing METHODS of production, consumption New technologies in products and processes Why Clean Technology?

5. Clean and Cleaner:Technology for Sustainability • GOOD HOUSEKEEPING • CLEAN-UP / END OF PIPE • CLEANER / PROCESS IMPROVEMENT • INTEGRATED SOLUTIONS

6. Clean and Cleaner: ; • GOOD HOUSEKEEPING • CLEAN-UP / END OF PIPE • CLEANER / Proc. Imp. • INTEGRATED SOLUTIONS • Optimise existing process; adjust machines, rmaintain them; regulate use of materials • remove pollutants from discharge; clean and filter, washing systems; remove dust and grease • adjust process to reduce input requirements and/or discharges; recycle wastes • change use of raw materials, consumables

7. Environmental Concerns ; Population explosion - GROWTH as problem • Very long historry of concerns about air and water quality - laws in UK 500 years ago; during industrialisation, “traditional pressure groups” with interests in nature conservation, wilderness, parks, access to country, etc • Pesticides, agrochemicals - SILENT SRING - pollution as widespread but local ecological hazard • 1960s • 1970s • 1980s • 1990s GROWTH as problematic; splitting of green concerns • Institutionalisation (EPA, DoE 1970) - UNCED Stockholm 1972); LIMITS TO GROWTH 1972; new pressure groups; but economic crises, oil shock, neoconservativism GLOBAL problems, associated with (numerous) specific practices, pollutants • Acid rain; Chernobyl; 1985 Antarctic survey -> Ozone holes; Climate Change (IPCC 88); Green parties grow New problems recognised - BSE and other health threats; pseudoestrogens, etc - and much controversy • UN Rio Conf 92 -> “Sustainable development”. Style of growth; biodiversity, habitats...

8. Environmental Concerns ; • Env concerns are VERY diverse, and evolving • Patterns of emphasis is changing • Misleading to suggest that concern is merely product of affluence • 1960s • 1970s • 1980s • 1990s

9. POLLUTION OF: air land water organisms POLLUTION BY: gases liquids particulates chemicals heat radiation noise DEPLETION OF: raw materials arable land energy resources biological resources nature/wilderness CONSEQUENCES: local and global problems impacting biosphere, ecosystems, human welfare, economies Environment as Externality, as Commodity Environment NOT regarded as value in itself

10. Innovation Research Innovation studies are Not greatly connected yet with new environmental economics; nor into related policy discourse e.g. on eco-taxes Some key concepts for analysis of clean(er) technology are TECHNOLOGICAL : • INNOVATIONS • TRAJECTORIES • REGIMES • REVOLUTIONS

11. Tech-Fix? Panacea? • … • Substantial change is liable to involve shift on many of these dimensions; considerable time to consolidate. Most innovations incremental within established paradigms. • Technological revolutions can induce paradigm shift. Can greening? • Only part of solution? • Tech development not so easy to shape - “technology paradigms” • UNEVEN INFLUENCE from SPECIFIC actors: • stocks of acquired knowledge drawn upon (inc. meta-knowledge) • inbuilt occupational structures, professional qualifications • company accounting, reporting practices • contexts of technology use: physical arrangements, supply chains, regulations, infrastructures

12. Drivers for Clean(er) Technological Choices PRESSURES: • regulatory • tax regimes • consumer • community • other stakeholders; management philosophies Source: based on Alan Irwin & Paul Hooper, 1992, “Clean Technology, Successful Innovation & the greening of industry” Business Strategy and The Environment COMMERCIAL CALCULATION: • improving production processes • saving materials • saving energy • reducing costs for waste disposal/treatment • new market opportunities (product & process)

13. Prospects for Clean(er) Technologies INNOVATIVE SUPPLY: • Technological opportunities • Market and social demand • Appropiability Source: Rene Kemp et al INNOVATIVE DIFFUSION: • Price and quality of products • Knowledge & information • Risk and uncertainty

14. But are incremental changes enough - even lots of them? • Creating a new trajectory? • Will enough practice accumulate to form new routines? • New generic technologies?

15. Change in Trajectory • Innovations continue to improve in specific performance features: this is a reinforcing feature • In this case, reduced use of resources, less pollution & waste • Less liable to be offset by change in demand and by subsequent innovations

16. Technological Trajectories Selection Environment: Demand, Regulations, Institutions Individual firm: accumulated knowledge, corridor, path dependent R&D Decisions Technological Regime

17. How is change in Technological Regime toward Cleaner Technologies happening - if it is?How can it be further facilitated?

18. “Clean” Technology • One-off, discrete changes versus continual change along trajectory • Responses to specific pressures rather than embodiments of new criteria • R&D following established lines and methods rather than being substantially reoriented

19. ? Lamp Posts and Keys Technological Development driven by regimes, paradigms - even when solutions to problems sought, these may be developed withi the perspective of such opportunities - thus IT, biotech, etc.

20. Change organisational structures of R&D Change methods and practices of R&D Changing Technological Regimes • Change Knowledge Base used in Product and Process Development

21. Industrial Evolution OSTRICHES CHICKEN LICKENS PALE GREEN HORNETS BRIGHT GREEN HORNETS ROBIN HOODS GREEN GIANTS

22. Industrial Evolution 1 OSTRICHES Hostile to environmental concerns, activists Keen to argue, contest Declines to take action (might be “scientificaly correct”, but at odds with public/regulatory perceptions) CHICKEN LICKENS PALE GREEN HORNETS BRIGHT GREEN HORNETS ROBIN HOODS GREEN GIANTS

23. Industrial Evolution 2 OSTRICHES CHICKEN LICKENS Reactive, regulatory response (sometimes, market-driven response) resulting in minor technical changes; environment seen as threatening, compliance dominates

24. Industrial Evolution 3 OSTRICHES CHICKEN LICKENS PALE GREEN HORNETS Reactive, but environment seen as offering some opportunities, not just as a cost. Compliance dominates, but more foresight involved.

25. Industrial Evolution 4 OSTRICHES More attention to underlying technologies, seeing these as providing competitive opportunities. CHICKEN LICKENS PALE GREEN HORNETS BRIGHT GREEN HORNETS

26. Industrial Evolution 5 OSTRICHES New technological directions actively sought, seen as providing radical alternatives to existing product lines, possibly completely new businesses. CHICKEN LICKENS PALE GREEN HORNETS BRIGHT GREEN HORNETS ROBIN HOODS

27. Industrial Evolution 6 Cleaner technological regimes promoted. Firms products challenge other product systems or industrial sectors, providing similar final functionality but avoiding major processes causing environmental damage (e.g. nonCFC / CFC substitute refrigeration, telecomms instead of business travel). OSTRICHES CHICKEN LICKENS PALE GREEN HORNETS BRIGHT GREEN HORNETS ROBIN HOODS GREEN GIANTS

28. Where does the impetus come from? • Compliance still dominates. • Litigation important, esp USA. • In few sectors, new customer concerns, markets. • Saving costs - esp. energy. • Technological opportunities - esp. biotech and IT.

29. Changing Technological Trajectories • Variety of Firm-specific procedures and routines - e.g. ban use of Hg, institute choice algorithms around mass, radiation, etc. • Contested applications of bioscience. • Energy conservation, CHP, and clean energy production systems very generic. • “Social technology” - env. management?

30. Environmental Management • Much analysis of policies and views - case studies, surveys • Innovations frequently mentioned… but... • Little attention to R&D in EM guides • Little theorisation of innovation processes

31. Structure For Env Policy Mechanisms to review, monitor env perf. Incentives, controls to encourage env ach. Guidelines, tools for env investments Methods, tools for env decision-making Guidelines for comm. with stakeholders source: Sandra Rothenberg, James Maxwell, Alfred Marcus 1992, “Issues in the Implementation of Proactive Environmental Strategies” Business Strategy & the Environment vol 1 pt 4 Environmental Management: Programmatic Choices

32. Structure For Env Policy Mechanisms to review, monitor env perf. Incentives, controls to encourage env ach. Guidelines, tools for env investments Methods, tools for env decision-making Guidelines for comm. with stakeholders To internalise & meet regulatory and PROACTIVE environment goals. Should allocate env. Responsibility, specify flows of information (int. & ext.), offer guidelines on meeting goals Environmental Management: Programmatic Choices

33. Structure For Env Policy Mechanisms to review, monitor env perf. Incentives, controls to encourage env ach. Guidelines, tools for env investments Methods, tools for env decision-making Guidelines for comm. with stakeholders Close monitoring may well be required to avert potentially severe consequences. Main methods are liab;le to be direct reporting of env activity, env auditing Environmental Management: Programmatic Choices

34. Environmental Audits Moves toward national & international auditing standards - e.g. BS7750 Courses running, curricula developed Software for decision support re compliance International Chamber of Commerce/ Environment Protection Agency list of essential elements source: A Zich, 1991, “Keeping Tabs on Risky Business” Tomorrow vol 1 no 2 pp 24-29 • Full Management Commitment • Audit Team: Objectivity, Competence • Defined & Systematic Procedures • Documented & Written Reportage • Quality Maintenance of Auditing System • Active Implementation & Follow Up

35. Structure For Env Policy Mechanisms to review, monitor env perf. Incentives, controls to encourage env ach. Guidelines, tools for env investments Methods, tools for env decision-making Guidelines for comm. with stakeholders Programmes to motivate staff, ensure understanding; performance evaluations; recognise & reward innovations; emphasise commitment, encourage action. Environmental Management: Programmatic Choices

36. Structure For Env Policy Mechanisms to review, monitor env perf. Incentives, controls to encourage env ach. Guidelines, tools for env investments Methods, tools for env decision-making Guidelines for comm. with stakeholders Traditional accounting methods may even fail to identify short-term financial paybacks, let alone long-term savings and avoided costs; new tools for financial evaluation may be needed Environmental Management: Programmatic Choices

37. Structure For Env Policy Mechanisms to review, monitor env perf. Incentives, controls to encourage env ach. Guidelines, tools for env investments Methods, tools for env decision-making Guidelines for comm. with stakeholders Tools to evaluate env impacts of decision making about production and products ( & R&D!); to record company activities & risks. Guidance for employees, decision support for managers confronting uncertainty Environmental Management: Programmatic Choices

38. Structure For Env Policy Mechanisms to review, monitor env perf. Incentives, controls to encourage env ach. Guidelines, tools for env investments Methods, tools for env decision-making Guidelines for comm. with stakeholders To internalise & Aimed at gaining external (and internal) support. Methods may include participation in env debates and fora, financial support of env activities in communities, etc Environmental Management: Programmatic Choices

39. Changing Trajectories • Changing Knowledge Base • Changing Decision Criteria • New Perceptions liable to follow, with environment moving from constraint to opportunity

40. … and will it be enough? • World population and economic growth: how can everybody have decent living standards? • Can improving QOL be decoupled from increasing material consumption? • Oops! Politics...