cscp, unep, wbcsd, wi, inwent, ueap me life cycle management navigator: 4_pr_cft 1 the life cycle...

Life Cycle Management Navigator: 4_PR_CFT 1 CSCP, UNEP, WBCSD, WI, InWEnt, UEAP ME

The Life Cycle Management NavigatorKnowing Market Demands

Training Session 4


Knowing Market DemandsMajor Trends

Outline

Competitive pressure in global markets

Increasing costs for waste, engergy & materials

Supply chain pressure

1

2

3

Stakeholder pressure4


Knowing Market Demands Trends

Trend

Competitive Pressure in Global Markets

• Global Product Chains

• Regional Competitiveness

• Global Opinion Leaders

1


Competitive Pressure in Global MarketsGlobal Product Chains

Trends

Global systems of P&C

• Globalisation of product chains• Increasing competitive pressure • Global stakeholders on the watch

End-of-lifemanagers

ConsumersRetailersProducersResource Extraction


Competitive Pressure in Global MarketsRegional Competitiveness

Example

Case-study of textile industry in Wuppertal

• 4% of total industrial production

• Minor business branch (Employees < 3.000)

around 1870 2001

• about 70% of revenues of industrial production

• One of the most important textile regions in Europe

Source: Chambers of Commerce Wuppertal-Solingen-Remscheid

• Today: Most production in Asia, textile industry in Wuppertal only a minor business branch

• Structural change is a major challenge for SMEs


Competitive Pressure in Global Markets Global Opinion Leaders

Trends

From stakeholder challenges...

Stakeholders

Manage your global supply chains!

Take responsibility for your product

applications!

…to business opportunities

Least Cost Supply Performance ContractingProduct-Service Systems

Open new markets

New business models

Reputation reward Higher quality

Trustful relationships

Greening the Supply Chain

End-of-lifemanagers

ConsumersRetailersProducersResource Extraction


Competitive Pressure in Global Markets Global Opinion Leaders - NGOs

Example

Source: IBLF, 2002, Business & Human Rights: A Geography of Corporate Risk

• depicts human rights violations and operating companies around the world

• sector specific maps, incl. ICT

Map of Human Rights Risks

• Torture• „Disappearances“• Extra-judicial killing• Harassment of human right

defenders• Arbitrary arrest and detention

For example: Asia

International Business Leaders Forum


Competitive Pressure in Global Markets Global Opinion Leaders - Financial Benchmarks

Example

Dow Jones Global Index2,500 largest companies 60 DJSI Industry Groups

34 countries

Component SelectionTop 10% of companies in terms of

sustainability in each industry group;

20% target market cap coverage in each industry group

DJSI World317 Components

60 DJSI industry groups22 countries

Dow Jones Sustainability Index (DJSI)


Competitive Pressure in Global Markets Global Opinion Leaders - Financial Benchmarks

Example

Weightings for the DJSI

Dow Jones Sustainability Index (DJSI)


Competitive Pressure in Global Markets Global Opinion Leaders - Int’l Initiatives

Example

The Life Cycle Initiative

• Objective: To put Life Cycle Thinking in effective practice

• Initiated by UNEP & Society for Environmental Toxicology and Chemistry (SETAC)



Example

Human Rights• Principle 1: Businesses should support and respect the protection of internationally proclaimed

human rights• Principle 2: make sure that they are not complicit in human rights abuses.

Labour Standards• Principle 3: Businesses should uphold the freedom of association and the effective recognition

of the right to collective bargaining;• Principle 4: the elimination of all forms of forced and compulsory labour;• Principle 5: the effective abolition of child labour;• Principle 6: the elimination of discrimination in respect of employment and occupation.

Environment• Principle 7: Businesses should support a precautionary approach to environmental challenges;• Principle 8: undertake initiatives to promote greater environmental responsibility; • Principle 9: encourage the development and diffusion of environmentally friendly technologies

Anti-Corruption• Principle 10: Businesses should work against all forms of corruption, including extortion and

bribery.



Example

The Marrakech Process

• Refers to the international effort to develop 10 Year Framework Programmes on Sustainable Consumption and Production

• Lead by UNEP and UN-DESA

• In cooperation with national governments, private sector, and civil society

Marrakech Process Activities

held at international, regional and national

levels

Expert Meetings & Roundtables

developed at international, regional

and national levels

SCP Frameworks & Strategies

led by governments with focus on specific

SCP issues

Marrakech Task Forces

engages development agencies into SCP

activities

Cooperation Dialogue

Framework

Implementation

business to engage with implementation at regional development level (ICC/WBCSD)

Business/Industry

to integrate NGO’s activities into the

Marrakech Process

NGO Platform



Trend

Increasing Costs for Waste,Energy & Materials

2


Increasing Costs for Waste, Energy & Materials

Trends

Rising costs for waste-treatment and disposal, energy supply, raw-materials etc. increasingly influence the bottom line.

Overall costs

time

Why?



Example

23% of total costs51% of total costsMaterial flow causes 21% on top

Material- and energy costs Personnel costs

Factor2-3 : 1

0%

30%

60%

material energy

others Depreciationrent

Cost elements as % of total costs*

personell

Source: Dr. Hartmut Fischer, 2003, ADL

* Fe

de

ral S

tatistica

l Office

, Co

st S

tructu

re o

f Ma

nu

factu

ring

In

du

stries, 1

99

9



Example

Saving 1 kg raw materials at the beginnig of the life-cycle reduces the ecological rucksack by 1 t.

Saving 1 kg raw materials at the beginnig of the life-cycle reduces the ecological rucksack by 1 t.

Material consumption is linked to costs

Source: Wuppertal Institute

$

a) costs

raw materialacquisition

pre-production

production recycling/deposite

use

kg

ecological rucksack

b) cumulated masses

c) perceivedmasses



Example

Waste Treatment

• Waste dumps and open landfills are a threat to human health as well as to the environment.

• Increasing awareness of proper landfill practices among decision makers.

• Introduction of standards/guidelines/regulations in Africa, Asia, Latin America, Caribbean.

Examples:

South Africa passed minimum requirements on landfills – existing dumps have to comply or close.

China developed a comprehensive set of policies on household waste, defining detailed criteria.

Examples:

South Africa passed minimum requirements on landfills – existing dumps have to comply or close.

China developed a comprehensive set of policies on household waste, defining detailed criteria.



Example

Cost implications of those measures:

• Disposal fees for municipal waste currently average US$ 10/ton throughout the regions, ranging from US$ 1.3 to 18.

• Increasing standards and enforcement will inevitably increase the costs.

Examples:

China is taking World Bank loans of US$ 269 million to invest in the solid waste sector. These expenses will increase tipping fees.

Expenditure in waste management in Mexico increased from 130 million US$ in 1990 to 275 million in 1994.

Examples:

China is taking World Bank loans of US$ 269 million to invest in the solid waste sector. These expenses will increase tipping fees.

Expenditure in waste management in Mexico increased from 130 million US$ in 1990 to 275 million in 1994.

Source: World Bank



Trends

Eco-efficiency

• Strategy to reduce costs

• By World Business Council on Sustainable Development

Source: WBCSD, 2006, Eco-efficiency Learning Modul

“Doing more with less impact”



Trend

Supply Chain Pressure

3


Supply Chain PressureUpstream and Downstream Pressure

Trends

high

lowEnv

ironm

enta

l and

soc

ial i

mpa

cts

Value Chain

Natural Resources

TransportationManufacturing

sitesProduct

distributionConsumersNatural

ResourcesTransportation

Manufacturing sites

Product distribution

Consumers

Impacts and Opportunities among consumer products



Trends

Value Chain

Natural Resources

Transportation

high

low

Man

agem

ent R

espo

nse Focus of current

management effort

only ad hoc and sporadic management

Manufacturing sites


Consumers

Current Management Effort



Trends

Manufacturing sites


Consumers

high

lowEnv

ironm

enta

l and

soc

ial i

mpa

cts

Policy, performance and reputation opportunities

80% of overall efforts focus on

20% of the total risk

Value Chain

Natural Resources


sitesProduct

distributionConsumers

Mismatch between Impact of Products and Management Efforts



Trends

Manufacturing sites


Consumers

high

lowEnv

ironm

enta

l and

soc

ial i

mpa

cts

Policy, performance and reputation opportunities

80% of overall efforts focus on

20% of the total risk

• life styles• norms and

values

• SMEs‘ performance & reporting

• sectors‘ role• regional

issues

Value Chain

Natural Resources


sitesProduct

distributionConsumers


Supply Chain PressureProduct Chain Interdependencies

Trends

Producer operating in a market with high(er) environmental requirements

Interdependenciesin the

Supply Chain

Supplier


Supply Chain Pressure Greening the Supply Chain

Trends

• A new quality of competition – networks of companies, led by a multinational, form “virtual cooperations” or partnerships along the value chain.

• Large companies include environmental issues when evaluating their suppliers, in order to

- comply with regulations;

- minimise their financial risk (liability);

- reduce costs.

Formal requirements

like certified environmental management systems (e.g. ISO 14001) are more and more common.

Formal requirements

like certified environmental management systems (e.g. ISO 14001) are more and more common.


Supply Chain Pressure Procurement Policies of Corporations

Example

Royal Philips Electronics

Considers suppliers’ commitment to adhere to the Supplier Declaration on Sustainability (i.e. ”Declaration”) as an important factor in its decision to enter or remain in a business relationship.


Supply Chain Pressure Procurement Policies of Corporations

Example

Source: CSCP, Retailer‘s CalendarUNEP, 2007, Life Cycle Management - A Business Guide to Sustainabilitywww.ikea-group.ikea.com

Significance of supplier depends directly on the scale of environmental and social impacts.

High level of impact

High possibility for • Cost reduction, • Waste minimization, • Reduction of downtime,• Decreasing risks of interruption,• Enhancing product and process safety, etc.

IWAY auditors screen its 1,600 suppliers in compliance with the company code of conduct. This allows IKEA to locate a geographical focus for performance improvements.

IKEA developed IWAY criteria on these issues

“The IKEA Way on Purchasing Home Furnishing Products” (IWAY)


Supply Chain Pressure Greening the Supply Chain

Example

Companies “greening” their supply chain

• Goal: to green the supply chain.

• Environmental performance criteria extend beyond company-owned facilities.

• Seek partnership with ecologically-responsible suppliers.

• Offer assistance to suppliers through own Environmental Action Team.

• Increasing importance of environmental audits due to corporate liabilities.



Trend

Stakeholder Pressure

4


Stakeholder Pressure Trends

Community

FinancialInstitutions

Public Authorities

Customer

Media

Employees

NGO’s

Shareholder


Stakeholder Pressure Opportunity or Threat?

Trends

Opportunities Threats

Stakeholder involving decision making Greenwashing

CredibilityDistrust

Value creationValue limitation


Stakeholder Pressure Public Authorities

Trends

• Increasing regulation and authority pressure are observed all over the world.

• Traditional regulatory instruments (command & control) cover more and more sectors / environmental issues.

Consequence 1: Trend towards flexible and efficient regulation, providing strong incentives to reduce pollution (e.g. fees or pollution charges).

Consequence 1: Trend towards flexible and efficient regulation, providing strong incentives to reduce pollution (e.g. fees or pollution charges).

BUT: Often problem with enforcementBUT: Often problem with enforcement

Consequence 2: Legislation moves towards emission prevention instead of end-of-pipe (e.g. Mexican Env. Law encourages the development of programmes to prevent, control, abate pollution).

Consequence 2: Legislation moves towards emission prevention instead of end-of-pipe (e.g. Mexican Env. Law encourages the development of programmes to prevent, control, abate pollution).


Stakeholder Pressure Public Authorities

Example

Laguna Lake Development Authority, Philippines

• Problem: Laguna Lake high in organic pollutants

• Authority identified 5 industry sectors as prime source.

• Implementation of pollution charge for those sectors

a. Fixed charge per discharge volume;

b. Charge per unit emission that meets standard (low);

c. Charge per unit emission above standard (high).

• Result:

After 2 years reduction of biological oxygen demand (BOD) by 88 %

Increase of resources for monitoring and enforcement due to fixed charge

• Result:

After 2 years reduction of biological oxygen demand (BOD) by 88 %

Increase of resources for monitoring and enforcement due to fixed charge

Source: World Bank


Stakeholder Pressure Environmental Policy Approaches

Trends

ResourceExtraction

Production

ConsumptionWaste

Management:

- Collection- Recovery- Recycling

- Incineration- Landfilling

Naturalresources

Basic materials

products

Industrial wastes

MCW

Recovery, recycling

Miningoverburden

etc.

Wasteland illed,emis ions

1

44

2

1

2

3

4

Technical standards, landfill & pollution taxes

Sustainable Consumption & Production Action Plans (incl. raw material taxes)

Source: Adapted from Wuppertal Institute

Integrated Pollution Prevention Control (IPPC)

Producers responsibility, recycling quotas

4

3


Stakeholder Pressure Policy - Extended Producer‘s Responsibility

Trends

• Strategy to close the loop of material use.

• Extend the (financial) responsibility of

producers across the life cycle - in particular

to the stage of disposal.

• Model example: Take-back systems.

Aim: to encourage environmental improvements in the entire product life cycle

Aim: to encourage environmental improvements in the entire product life cycle

What is Extended Producer‘s Responsibility (EPR)?



Example

EPR Systems in Europe

• EU: EPR integrated in the Directive on End-of-Life Vehicles and the proposal Directive on Waste Electrical and Electronic Equipment

• Sweden: Packaging, Newsprint, Tyres, Cars, Batteries

• Germany: Take-back obligation for transport & sales packaging.

“EPR should be extended to further areas of Community and Member State legislation whenever the integration of environmental concerns into the product design can be usefully achieved in this way.”

“EPR should be extended to further areas of Community and Member State legislation whenever the integration of environmental concerns into the product design can be usefully achieved in this way.”

Source: EU



Trends

Aim Prevention, reuse, recycling and recovery of electrical and electronic products, e.g. light bulbs, mobile phones, medical devices

Approach 1. Life-cycle thinking

2. Producer responsibility (design, production and disposal phase)

3. Consumer involvement (access to information and treatment facilities)

Concrete Measures

4 kg on average per inhabitant per year WEEE from private households, e.g. Ireland gathered 6.8 kg in 2005/2006

Business implications

• Producers must finance take-back systems since 2006 for products sold after August 2005

• Awareness and commitment of consumers is key to success• Strong agreements between state and economic operators,

difficult to implementSource: EU

Waste of electrical and electronic equipment (WEEE)


Stakeholder Pressure Policy - Corporate Social Responsibility (CSR)

Trends

Corporate Social Responsibility

Internal Dimension External Dimension

• Human Resources

• Management

• Health and Safety

• Adaption to Change

• Environmental Management

• Local Communities

• Product Chain Partners

• Human Rights

• Global environmental concerns

Green Paper

“Promoting a European Framework for CSR” (July 2001)

– Broaden the dialogue on CSR– by supporting companies to manage CSR more efficiently


Stakeholder Pressure Policy - Corporate Social Responsibility

Trends

European Multistakeholder Forum on CSR

2002 20062004

Demands on SMEs via MNCs

Promote innovation, transparency and convergence of CSR

Founding of the CSR forum

CSR at the global level: What role for the EU?

New Communication on Corporate Social Responsibility: Making Europe a pole of excellence on CSR

Common understanding of CSR among European stakeholders for competitiveness

2007


Stakeholder Pressure Policy - Sustainable Consumption and Production

Trends

Sustainable consumption and production ... gives consumers the opportunity to consume products and services that meet their needs in an efficient and effective way, while minimizing the negative environmental, social and economic impact. The ultimate goal of sustainable consumption is to improve quality of life for all consumers in our and future generations, while minimizing associated environmental impacts. Source: Sustainable Consumption

in Asia, A Guidance Manual, UNEP, 2005.


Stakeholder Pressure Policy - SCP Action Plans

Example

EU SCP Action Plan

Towards a Green Paper • Background Document released• Consultation process ongoing

Communication• In 2008• Based on consultation

Timeline

Leveraging Innovation

Better Products

Leaner And Cleaner Production

Smarter Consumption

Global Markets

Dynamic Performance Requirements, Sustainability Labels, Eco-Design Instruments, Standardisation

Lead Market Initiative, Networking Of Innovation Stakeholders

Resource Efficiency Targets, Eco-Innovation and Environmental Technologies, Review of EMAS, SMEs

Retailer agreements, Market-Based Instruments, VAT rates, EU Eco-Label, Advertisement, Green Procurement

“Exploiting first mover advantages and leveling the playing field worldwide for sustainable technologies and products”

“...Build on, bring together, and improve coherence of existing

policies...”


Stakeholder Pressure Community

Trends

The local community living next to the company is of high importance, since

• the company’s workforce is likely to be recruited among residents;

• it is exposed to the operations’ social and environmental impacts;

• it might push authorities to more strictly monitor the operations and enforce existing regulations;

• it could start a campaign against the company.



Example

IKPP – Indonesian pulp producer

• 1984:Operation start with old technology.

• Early 90s: Local community + NGOs claimed severe health damage from mill’s emissions.

• Mid 90s:Expansion of business need to access bond markets. BUT concern about long-term liability for pollution damage.

Indonesia’s national pollution control agency (BAPEDAL) mediated agreement between IKPP and community.

Source: World Bank



Example

IKPP – Indonesian pulp producer

IKPP made investments in environmenal technology

Business is running profitably and outperformed the Indonesian Stock Index.

Business is running profitably and outperformed the Indonesian Stock Index.

Source: World Bank


Stakeholder Pressure Financial Market

Trends

Banks, Insurance companies and Investors are increasingly interested in a companies environmental performance.

High pollution intensity signals

• inefficient production processes;

• potential financial losses from regulatory penalties;

• potential losses from liability settlements;

• potential losses through accidents;

• risk that financial markets revalue a firm in reponse to bad news (accident, NGO campaign, etc.).

High pollution intensity signals

• inefficient production processes;

• potential financial losses from regulatory penalties;

• potential losses from liability settlements;

• potential losses through accidents;

• risk that financial markets revalue a firm in reponse to bad news (accident, NGO campaign, etc.).

cscp, unep, wbcsd, wi, inwent, ueap me life cycle management navigator: 4_pr_cft 1 the life cycle...

Documents