The Green Industry Platform: knowledge sharing

Alex MacGillivrayVienna, May 2012

Green industry Platform: key features

multi-stakeholder frameworkFocus on factories: from candy and cookware to toys and trainersPromote measurable progressScale up the approachRaise policy profile for ‘green industrial revolution’functions:Existing dataWeb-based portal: policies, technologies, developmentsExchange best practice, lessons learned

Overview: a critical 2012-15 opportunity Are existing activities delivering at scale?Three hopeful trends in green industryA major challenge: knowledge networking:

focus on knowledgeable industrialists; Access good practice in fast-growth countries; incentivize exchange

Are existing initiatives at scale?

Source: The Emissions Gap Report 2, UNEP et al., 2011

Industrial emissions still rising

CO2 e

miss

ions

(Pg

C y-1

)

CO2 em

issions (Pg CO

2 y-1)Growth rate

1990-19991 % per year

Growth rate2000-2009

2.5 % per year

Time (y)

Source: Friedlingstein et al. 2010, Nature Geoscience; Gregg Marland, Thomas Boden-CDIAC 2010

“Under current policies we estimate energy use and CO2 emissions will increase by a third by 2020, and almost double by 2050. This would probably send global temperatures at least 6C higher within this century."

Maria van der Hoeven, International Energy Agency

Emissions intensity declining at -1.7% a year When global growth exceeds this, emissions rise.

Massive opportunities not widely shared

Sources: Playmobil factory refit; “Sizing the Clean Economy: A National and Regional Green Jobs Assessment“, http://www.brookings.edu/reports/2011/0713_clean_economy.aspx ; http://uk.reuters.com/article/2012/04/24/uk-britain-renewables-report-idUKBRE83N0DF20120424

“Next industrial revolution” (Nick Stern) “Climate economy” US$2-3 trillion in 2020 (HSBC, CCI ) UK renewables sector to be worth GB£24bn by 2020 (Innovas 2012) Over 25% of US “clean economy” jobs are in manufacturing (Brookings/Batelle 2011)What share for fast growing countries? Eg CIVETS

Biggest players in key sectors now moving

Sources: http://www.pakistantalk.com/forums/economy/3212-pakistan-would-certainly-good-area-terms-renewable-energy.htmlhttp://www.youtube.com/watch?v=cePztAIzmDkhttp://www.hitachi.com/New/cnews/100406.html

“We have the largest portfolio of green technologies in the world.”

Peter Loscher, CEO, Siemens

“Green is green... We can make money by solving some of the world’s toughest environmental problems.”

Jeff Immelt, CEO, GE

“We plan to make all Hitachi Group products into Eco-products by fiscal 2025...This should steadily lead to business opportunities around the world.”

Hiroaki Nakanishi, President, Hitachi

1. Racing for greenest portfolios

Source: CB analysis of company sustainability & annual reports

Hitachi, GE, Philips, Siemens all growing their green portfolios rapidlyGrowth in sales penetration & product ranges, partnerships, patents & R&D Green sales sustained through 2009Differences in definitions, scope & metrics but consistency in trajectory

2. Engaging the supply chain

Sources: https://www.cdproject.net/CDPResults/CDP-2011-Supply-Chain-Report.pdf; http://insights.wri.org/news/2012/04/4-step-plan-cutting-value-chain-emissions

Walmart’s goal to eliminate 20 million tons of GHG emissions from its supply chain by 2015The majority of Fortune 500 companies now have some form of carbon reduction target In October 2011, the GHG Protocol (WRI & WBCSD) release Corporate Value Chain (Scope 3) StandardIn 30 companies, scope 3 = c. 80% of emissionsSAP; SC Johnson also engaging value chain

3. Setting meaningful targets

Sources: http://www.mars.com/global/about-mars/principles-in-action-summary.aspx; http://www.guardian.co.uk/sustainable-business/blog/green-house-gas-emissions-targets-reporting?CMP=twt_gu;

"Company target setting is motivated by market forces, not scientific requirements.” Carbon Chasm report 2009 (CDP &BT) "You've got to bridge the gap between what you're committing to, and what the science suggests needs to be committed to. This has become a very strong hallmark of our sustainability programme.” Kevin Rabinovitch, MarsBT, EMC, Novo also setting science-based targetsNo guidance for ‘normal’ companies

But ... most businesses are not engaged

Sources: 2011 CB analysis of Carbon Disclosure Project database https://www.cdproject.net/en-US/Results/Pages/Responses.aspx

Carbon disclosure rates of 40-65% of largest businesses in Europe, USA, Japan, Korea, Brazil, South AfricaLow disclosure in India, China Low disclosure outside G500 and outside G20 (0-25%) This is disclosure, not even emissions reductionMany fast growing, high-emitting companies not influenced by US & European investorsFew incentives for them to engage

New interest in green industrial strategy

Sources: UNIDO Industrial Development reports; IEA CO2 emissions highlights, various years

Industrial policy back on the agendaAside from S Korea, few countries show clear direction towards green industrial competitivenessImplementation is a major challenge, particularly during austerityOpportunity, as many countries are revisiting their industrial strategies

1. Focus on knowledgeable industrialists in industry ‘ecosystem’

Source: adapted from Networks for Prosperity, UNIDO/Leuven 2011

Dozens of playersRivalries do arise on occasionKnowledge asymmetries & transaction costsMany theoretical & pilot projects, but...Good practice sometimes hard to find – often resides in individuals or hidden teamsChambers of Industry

Green Industry 'ecosystem'

Ministries of finance /

economy / industry /

commerce/ planning

Business associations:

confederations, chambers (sectoral,

geographic), trades unions, entrepreneur

clubs

Investors: stock exchanges, investment

agencies, banks, international cooperation

Micro & small enterprise support /

training agencies / supply chain

initiatives /clusters

Research collaborators: universities /

business schools /

research & technological organizations

(RTOs)/cleaner production centres /

consultancies

Business infrastructure:

quality, standards &

certification / ICT, logistics &customs /

statistics agencies

Citizen & consumer lobbies:

ombudsmen, supreme audit

authorities, NGOs

Policy initiatives: one stop shops,

development plans,

competitiveness & productivity

councils

2. Share the new green industry know-how Victory Ching Luh green factory, JakartaBuilt to service Nike contract‘Triangular’ learning: Taipei-Jakarta-OregonVictory starting to network with local footwear competitors on green issues eg waste managementOther green industry networks: lingerie, Sri Lanka; green construction, Mexico; China ‘low carbon zones’, Costa Rica medical devices

Source: author interviews, March 2012

3. Incentivize knowledge sharing

Source: http://tietkiemnangluong.com.vn/en/activity-news/gas-tunnel-kiln-revitalizes-bat-trang-ceramic-village-31003-7854.htmlCopyright 2009 National Energy Efficiency Programme - Ministry of Industry and Trade

UNIDO & partners have expertise in effective knowledge networks Most portals not heavily used and few industrialists want them / have time. Pull not push.Not platform but Incentives are key for knowledge sharing:

Eg global Green Industry / Factory / Manufacturing AwardPeer-to-peer mentoring; study visits Innovation crowd-sourcingNeutral brokers to maintain commercial confidentiality among local competitors

One of 100 new gas tunnel kilns in Bat Trang Ceramic Village, Vietnam. Kilns improve workplace air quality, save energy bills within 2 years, reduce emissions & enhance quality for this ceramics cluster

Many thanks!Looking forward to helping build the Green

Industry Platform ... andSee you in Rio!