Tag Archives: UN

“COP-Out”- The Durban Climate Talks and the Tragedy of the Climate Commons. Will Business Innovation Save the World?

15 Dec

Feeling a bit like the holidays for sure.  And I feel like humanity just got “scrooged”.   A year ago, I wrote about the COP16 U.N. Climate Conference in Mexico City and how governments were playing “kick the can” with climate policy. I noted that there was “some progress on establishing more robust means to appropriate and distribute micro-finance funds to support development of technologies in developing countries that lack the dollars themselves to manage their own greenhouse gas footprints.”  I also noted that many companies, rather than countries were taking unilateral initiatives to reach deep into their supply chain to develop innovative, new products that are less impacting to the environment and that can help developing-nations likely to be hit hard by global warming.

Based on what has (or has not) transpired at the recently wrapped up COP17/CMP5 in Durban the past two weeks, I am left feeling that global consensus on this issue, while not completely out of the question, is getting closer.  But the incremental, baby step pace of progress is (according to most climate scientists) insufficient to avert seemingly unstoppable rise in year over year average global temperatures.  It’s not the science that appears in question, rather it appears that there appears to be ongoing hesitancy to bear accountability and resolute responsibility on the part of those who carry or deny the mantle of developed nation status (hint: United States, China, India).  Despite the last minute efforts of the 194 nations in attendance and working past the official end of the conference, hopes for a meaningful and comprehensive global agreement appeared to be faltering.

As an example, the recent article in the Guardian stated that “The EU has found it hard to push through its “roadmap” that would establish an overarching, legal agreement committing all countries to emission cuts”.    So, the EU got what it wanted.  Also, according to an African delegate, “The US has what it wants. There is no guarantee that the new agreement will legally bind governments to cut emissions.”  The U.S. indeed got what it wanted. China and India continue to maintain they are still too undeveloped on the whole to be accountable in the same manner as western, industrialized nations and also claims they are implementing what they have already pledged to do at prior UN conferences.  Um…show me.

The one big victory I did hear that came out of the past two weeks was on an agreement on establishing a $100 billion/year climate fund to help developing countries address climate change.  But before we celebrate that breakthrough, there’s a small outstanding issue …there is no clear mechanism for how that money will be raised. In the recent words of GOP candidate Gov. Rick Perry… “Oops”.  In addition, rich countries would be allowed to offset their emissions by making payments to poor countries which protected their forests.  Is this a bilateral effort or are poorer counties expected to bear 100% of the burden of making that happen.  What is thought to be enough isn’t.  Tim Gore, policy adviser for Oxfam, stated “Governments must really get to grips with the climate crisis.”  That’s an understatement if I ever heard one.  Gore summed up his take on the winners, losers and likely impact on the poorer nations here.

So, while COP17 by most measures succeeded where prior UN gatherings failed, the agreements on which progress will be measured (using the 2015 and 2020 yardsticks established at Durban) may not be swift enough to stem the slow bleed that climate change is bringing on around the world.

Supply Chain Sector Gets Some Attention

Going into the climate conference, two key supply chain sectors, aviation and shipping, were targeted for discussion. According to the Civil Air Services Navigation Organization, “After a number of days of tough negotiations on aviation, there was still no decision on some of the key aspects of Common But Differentiated Responsibilities (CBDR) and how they relate to aviation and shipping, and the ability for countries negotiation under the UNFCCC to tell negotiators at ICAO what to do.

In the final agreed Durban Platform text on aviation, there was a brief placeholder text:  “International aviation and maritime transport Agrees to continue its consideration of issues related to addressing emissions from international aviation and maritime transport;”

Basically, there was no agreement was reached …end of story.  That being said, I have written countless posts on the administrative and technological advances underway by large intermodal shippers and transporters and the aviation industry to quell fuel use and has been exploring how to develop sustainable aviation biofuels, including in developing countries to meet the Climate Fund goals established in Durban.  Aviation and transportation stakeholders have concluded that “agreement amongst nearly all countries [is] that [International Civil Aviation Organization] ICAO is the most appropriate place to deal with aviation emissions. The industry will continue to engage with ICAO to ensure that an ambitious work program can deliver an outcome on aviation emissions by the next ICAO Assembly in 2013”.

Moving past Durban

The Huffington Post summarized the main outcome of COP17, the so-called “Durban Platform”, including the “establishment and empowerment of an “Ad Hoc Working Group” to develop a new protocol and to “complete its work … no later than 2015 in order … [for the new protocol] … to come into effect and be implemented from 2020.” The new protocol is to be a “legal instrument or an agreed outcome with legal force” with this critical stipulation: “applicable to all Parties.” Nowhere in this agreement do the words “common but differentiated appear.” (Full details in this draft document: “Establishment of an Ad Hoc Working Group on the Durban Platform for Enhanced Action.”)”

Writer and author Marc Gunther summed up the positive and negative spins on the Durban conference, and suggested that perhaps the evolution of climate negotiations will transcend universal treaties, relying more on regional, collaborative agreements and technological advances as the primary means of progress.  Gunther nails the takeaways by suggesting that “First, those companies that worry about climate change need to bring their voices more forcefully to the policy arena; they can’t assume that governments are on the right track. Second, companies ought to prepare for climate change–when they site new facilities, for example–because it’s unavoidable.”

The Durban Platforms emphasis on more dialogue, more planning and lack of clear immediate is tragic.  Not for the planet.  No sane person can look me in the eye and say with a straight face that seven billion people, with all their wants and needs, have not affected the global ecosystem.  But despite all the perversities and ravages that we’ve inflicted on Earth, the planet will survive.  But for us, the larger mass of humanity, we hold our own fate in our hands …and we are blowing it.  Why?  Because there are nations (the EU, United States, China and India among them) that cannot…or will not…move past their “self interest”.  They are just kicking the can down the road.

The Tragedy of the Commons

In 1968, ecologist Garrett Harding published “The Tragedy of the Commons in the journal Science. I was introduced to Hardin’s theory many times during my undergraduate and graduate environmental law studies. His highly controversial and criticized theory presented a hypothetical situation involving herders sharing a common parcel of land, on which they are each entitled to let their cows graze. Hardin theorized that it was in each herder’s “self interest” to put more cows onto the land, even if the quality of the common is damaged for all (through overgrazing). The herder receives all of the benefits from an additional cow, while the damage to the common is shared by the entire group. Further if all herders make the same choice, the common will be depleted or even destroyed, to the detriment of all.  Systems ecologists called this an exceedance of “carrying capacity” resulting in other tragedies likie overfishing, depletion of forest resources, water supplies and arable land.   And while the acts of an individual or one corporation may singularly have little impact, the cumulative effect can be overwhelming and often leave irreversible impacts.

Hardin’s theories have been widely criticized from an economic point of view.  Political scientist Elinor Ostrom, the first woman to win the Nobel Prize for Economics (2009), showed that the “Tragedy of the Commons” (its overuse and destruction) doesn’t happen, at least when all the people who share the commons can get together and talk about it.   Ostrom found that, when there are no internal or external forces preventing the “commoners” from a free, open and robust discussion of how they should agree to govern and limit their use of it so it doesn’t get overgrazed and thus ruined for all, then the commons goes on thriving.

And that, dear friends and readers is the tragedy of the Climate Conference in Durban…the political process and governmental self interest appeared once again come up short, co-opting the outcomes “to the detriment of all”. As noted in a National Public Radio broadcast in 2009, “Every nation wants to act in its own interest but that may not be the same as the global interest.”

Innovation, Technology and a Collective Conscience

I believe now, as I believed and wrote about during COP16 in Mexico City and after COP15 in “Nope”nhagen that governments were putting off today what we can technologically achieve now. What happened?  Has humanity lost its mojo…or is something else going on?

In a fascinating article by venture capitalist Roland Van Der Meer, Holding Off the Tragedy of the Commons, he describes some of the underlying factors that he believes have contributed to the global decline in natural resources, and lack of environmental stewardship…and it comes down to innovation.

Both governments and corporations are institutions that exist for the reason of self promulgation, actualization, and advancement (to further itself, to continue to exist, to not change). The methodologies that they deploy and back is their best practice, it is what they believe, what they will hold on to and how they will exist and thrive. And this is the failure point. It is not meant to change. Its very survival depends upon the lack of change.

What is missing is a catalyst for change. Why change? Because what worked best 100, 50,  20 or even 10 years ago is no longer the best methodology or practice.

The institution is good at doing what it was designed to do and it stubbornly holds on to that design at the expense of its own destruction or the method it protects. Change is needed.

The incumbent companies and regulations are stuck in a process and framework which prevents and disincentivizes change. They even go further to lock out or block change because it would lead to their own destruction…. it is our collective resources that are at stake. We need to be open and create the new enterprises that will create, invent and adapt in the basic resources areas.

I believe, as do organizations like the Responding to Climate Change (RTCC) that the private sector can “pick up the slack” in tackling climate change where government agreements have (up to this point) failed.   However, to effectively incentivize innovative technologies, the private sector must continue to be a part of the larger policy debate.  There is a way out of the mess we have made and one of my personal life influencers, Amory Lovins, has a plan.  In his new book, Reinventing Fire- Bold Business Solutions for the New Energy Era offers “actionable solutions for four energy-intensive sectors of the economy: transportation, buildings, industry, and electricity”. The Rocky Mountain Institutes Lovins states “business can become more competitive, profitable, and resilient by leading the transformation from fossil fuels to efficiency and renewables. This transition will build a stronger economy, a more secure nation, and a healthier environment.” Imagine if this approach can be applied at a global level, with a combination of government/business and monitored, measurable multi-national collaboration and a collective common conscience. What have we got to lose?

When it comes to real action on climate change, the upside of heretical innovation is huge…and the downside unthinkable.

With a Change in Workplace Comes Reflections on Society, Sustainability and a Balanced World

30 Nov

Source: http://www.flickr.com/photos/tsa1/5543988340/

You may have noticed that this space has been “dark” of late.  Why, since I’ve been gone and the world has spun round and round: the Occupy Wall Street launched (and perhaps corporate social responsibility entered the public eye), Kim Kardashian got married AND divorced, Libya fell, the St. Louis Cardinals won the World Series,  the debt ceiling crisis…well that’s still with us.   No, I didn’t disappear into the abyss after my Africa trip in August.  No, I didn’t burn out or give up.  Instead, I’ve moved forward a notch in the journey.

I’ve always maintained to family, friends and colleagues that “change is good”, and that it continues to drive us to continually improve on a personal and professional scale.  As I announced in early October to 800 of my closest personal friends and colleagues on LinkedIn, I recently started a full time position as Associate Director- Environment, Health & Safety (EHS) for Elan Pharmaceuticals, Inc. in South San Francisco, CA.    A long time client of mine, Elan is at the forefront of neuroscience based biotechnology.  Elan’s work includes research and development activities for neurodegenerative diseases, such as Alzheimer’s disease and Parkinson’s disease and autoimmune diseases, including multiple sclerosis.   I am proud to be aligned with a company that is focused on tackling some of the most troubling and challenging diseases of the mind and body, some of which have affected members of my own family.

With my days (and occasional evenings) fully committed with Elan, I’ll be placing ValueStream Performance Advisors on hiatus. Despite the change in venue, my enthusiasm and passion for heretical thinking, innovation, systems-based management and organizational sustainability, remains the same.  I’m happy with what ValueStream was able to accomplish through from 2009-2011 along with my many collaborators and clients

However, while my social media presence may change in the months and years ahead, I will nonetheless continue to be an ardent advocate for organizational sustainability, and proactive EHS compliance and management (which Elan has graciously endorsed as well).  I am truly appreciative of all of the support you, as readers have given me and continue to value the business relationships that we’ve established. To date, over 90,000 (!!!) visits have been made to this site to learn, share, argue and discuss key ideas and issues focused around sustainability.

Managing Change and Life’s Risky Balance

Like my change in workplace, you will also see some changes in the look and content of this site as well, starting with the banner photo.  This was a shot of the iconic acacia trees that I took while on a mini-safari this past summer in the Spioenkop Nature Reserve in the Drakensberg, KwaZulu Natal, South Africa.  Riding on horseback among the roaming wildlife (among them rhinos, giraffe, zebras and hartebeests) I was reminded of how critical it is that we all take a moment to reflect on the nature of humankind, how far we have come in a relatively short period of time on this planet, and how easily we have drifted away from lifes precious balance.    Not far from the ancient cave dwellings of the aboriginal San people, I realized how out of step humanity is with what’s around them, and what a ruinous course we may be on.  We are perhaps the species most at risk.  I also noted in my related post following that South Africa trip discussing environmental, health and safety, that ” companies must take care of basic HSE issues and lay a firm foundational framework for continual improvement first before they can progress along the sustainability journey.  …Regarding sustainability, it makes little sense force feeding a business approach that has little immediate bearing on managing organizations immediate risks.”  This is one of many reasons why I elected to refocus my career work on managing basic EHS issues to assure that a solid foundation is in place to support systematic sustainability efforts.

We are at a critical juncture on this fragile planet of ours.  We all have a moral imperative to passionately recast our “lot” in a much larger, infinitely complex global ecological system.  As Gregory Reggio so eloquently and powerfully captured in his epic 1982 film, “Koyaanisqatsi”, we live in a world…a life, out of balance.  How ironic that the United Nations COP17/CMP7 International Climate Conference has convened this week in  Durban, South Africa, to discuss  the most critical “out of balance” issue of our lifetime, climate change. …just a few short hours away from where the banner shot on this page was taken.

Humanity has the combined technical capability to use science, politics,  innovative technology and cultural awareness  to reshape the global natural, social and economic environment  to a point of balance and equity.   Do we have the collective wisdom to use that knowledge to achieve and maintain that balance?    I think we do, but like the sustainability journey we are on together,  it’ll take many steps and the political will to get there.

Please take a moment to add my new email to your contact list. I’ll retain dmeyer@valuestreamadvisors.com  address as a general professional networking address, or you can reach me here or at Elan — my new contact details are pasted below. And of course, you can still find me on Twitter and my commentary on Sustainable Business Forum, Sustainable Plant, Kinaxis Supply Chain Expert Community, and other media sites.

All the Best!

Dave R. Meyer, Associate Director- Environment, Health & Safety

Elan Pharmaceuticals Inc.

800 Gateway Blvd., South San Francisco, CA 94080

Direct: +1 650.877.7624

Email: david.meyer@elan.com

Sir Bransons Climate Challenge to Sea Cargo Shippers- Carbon Accounting Successes & New Tools

7 Dec

In prior posts I have discussed the importance of transportation and logistics as critical elements in anchoring a sustainable supply chain (see separate posts here and here).  Last week I discussed the key linkages between supply chain sustainability and climate change.   No comes a bit of encouraging news from the Cancun Climate Summit (COP16), still in progress through this week.  A free internet database was announced over the weekend, the focus of which will list the energy efficiency of almost every ocean-going vessel, in a scheme designed to reduce shipping emissions by nearly 25%.  This effort is important not only because it recognizes shipping and transport as a backbone” of commerce, but because of the value of transparency in enhancing supply chain efficiencies.

“By eco-labelling clean and dirty ships, we hope to change the mindset in shipping and begin making gigaton-scale reductions in emissions,” said Peter Boyd, director of Carbon War Room.  The Carbon War Room was a co-founded by Sir Richard Branson.  Using publicly available data on the engine size and CO2 emissions of nearly 60,000 ships, exporters and importers, as well as holidaymakers on cruises, will be able to choose between ships that run on cleaner fuels and have other technologies designed to reduce environmental “loads”.

The initiative, called Shippingefficiency.org, rates ships on a scale from A to G in a similar fashion to ratings given to fridges or washing machines. According to the site, the Energy Efficiency Design Index (EEDI) ratings for an individual ship are calculated by assessing the values for that ship to overall average values for all ships of that type (e.g. bulk carriers) and to other ships of a similar size within this type. It will “allow supermarkets, oil and mining companies, food importers, retailers and manufacturers” to specify that their goods are sent from point to point by the least polluting ships.

The “Dirt” on Sea Shipping…

The shipping industry has been challenged for decades to find ways to efficiently deliver the majority of goods from point of manufacture to point of use.   Ocean transport carries more than 90 percent of the world’s traded goods and contributes between 3 percent and 4 percent of global emissions.  Shipping has been slow to address carbon emissions, choosing to focus on containment and control of other critical pollutants such as sulfur dioxide (SOx) and nitrogen oxides (NOx)[1]. According to the International Maritime Organization (IMO), the UN body that governs shipping, the industry has an opportunity to make substantial money by reducing the first 250 million tons of its CO2e.[2]

Shipping has a number of inherent institutional issues that hamper demand for widely available fuel-efficient technologies.  For instance, the worlds shipping fleet has been driven for years by engines designed to burn the cheapest, dirtiest “bunker” fuel, passing on the cost. Nearly 15% of the world’s ships account for about half of all the industry emissions.  In addition, most shipping lines traditionally pass on most of the fuel costs to charterers, providing few incentives to build more efficient ships (often referred to as the “landlord and tenant scenario”).  In addition, shipyards worldwide always charge an often cost prohibitive premium to operators for new designs and technologies

Also, its shipping-attributed pollution can pose serious human and environmental health risks.  For instance, particulate matter emissions from ships have been reported to contribute to an estimated 60,000 premature deaths annually (with most deaths occurring near coastlines in Europe, East Asia, and South Asia), as reported in a 2007 study published in Environmental Science & Technology.

…and What the Industry is Doing About It

Mr. Branson’s announcement in Cancun adds another initiative to the increased attention being paid to the transport industry in managing pollutants, including greenhouse gas emissions. As I recently noted in a recent post on shipping and logistics, Inbound Logistics Magazine earlier this year released its Top 50 Green Partners listing earlier this year.  Eight of the companies and organizations listed were ocean carriers.  These appear to be true leaders in implementing improved operational practices designed to lower the environmental impact of their operations.

Also, back in the early 2000’s, the Business for Social Responsibility (BSR) launched the Clean Cargo Working Group (CCWG). The group consists of over 60% of the leading multinational manufacturers (shippers) and freight carriers and forwarders (carriers).  The group is dedicated to” integrating environmentally and socially responsible business principles into transportation management”.  Unlike the new EEDI rating, the CCWG methodology is the only existing standardized approach to calculate CO2 emissions for ocean going container vessels. The data is put in the form of emissions factors to enable shippers and liners calculate carbon emissions in a consistent manner.  This allows trade routes to be compared. In addition, the CCWG annually benchmarks member lines’ environmental performance, further increasing focus and reducing environmental footprint.

Other collaborative efforts that cover other transport modes include EPA’s SmartWay Transportation Partnership, Ecological Transport Information Tool, and the GreenShip Project.  Each of these and other transportation-focused groups have made strides in developing tools and methods for different parts of the sector.

Case Studies

Reducing emissions is technically feasible using current technology, and, in the case of efficiency measures to reduce fuel consumption, can contribute cost savings that make it economically attractive with appropriate financing of upfront costs. Of those emission reductions, the first approximate 25% of reductions could be achieved “profitability”, according to the IMO GHG Study.

Big Players Getting it Done: At a transportation conference convened this past summer by the U.S. Department of Transportation, Federal Highway Administration, Lee Kindberg of Maersk Lines (one of the top 50 Green Partners reported by Inbound Logistics) reported that “… vessels are becoming more energy efficient and reducing emission. This is due to technologies, operations, the speeds we operate at, and the vessel sizes as there definitely are economies of scale. …Since 2002 [Maersk] reduced our CO2 emissions per container per kilometer by 20% and set a goal of an additional reduction of 25% by 2020.  In addition Kindberg indicated that the company was switching to a distillate fuel instead of the heavy fuel oil, resulting in sulfur oxide emission reductions of 95%, particulate matter emission reductions by 86% and the NOx emissions reductions by 6% to 12% depending on the vessels.  Reducing ship speeds, reducing ship drag, or ballast water optimization and treatment systems has also increased ship efficiencies along with improvements in ship procedures, crew training and performance measurement using independent third party environmental certifications like ISO 14001.

The Little (Hybrid) Tug That Can: Major cargo seaports are also collaborating with companies to introduce new technology to comply with stricter air quality regulations.  The world’s first hybrid electric tugboat, Foss Maritime’s Carolyn Dorothy which works in Southern California’s San Pedro Bay at the Port of Long Beach, California, emits 73 percent less soot (tugs are known high soot contributors), 51 percent fewer nitrogen oxides and 27 percent less carbon dioxide than a standard tug of comparable size.  The tug also can claim improved fuel efficiency and a quieter operation, all contributing to a lower environmental footprint.

Conclusions/Food for Thought

This past weekend’s announcement at Cancun and the slew of industry cross-sector, multi-modal collaborations are encouraging.  Whether it’s sea shipping, air cargo, rail or road transport, all modes play a vital key to solving part of the climate change puzzle.  As Maersks Kindberg stated this year at the FHWA conference, “We have to keep in mind that it’s the total lifecycle footprint that matters. Transportation is often only a small part of the total …If you focus on improvements and actually incorporate the carbon impact into business decisions, you can actually make real progress on both and perhaps also improve your business.’

It’s clear that all the nodes of a supply chain (from design to manufacturing and from point of use to end of life) and all the modal components in between want to be part of the solution, not part of the problem.  Businesses are stepping up to the challenge.

As we head into the final week of climate negotiations at Cancun, are the world’s climate negotiators up to the task?


[1]According to the Carbon War Room, the shipping industry is the largest emitter of NOx and is also one of the largest emitter of SOx.  It’s been estimated by the IMO that demand will increase, and CO2e emissions from ships will reach 18% of all manmade Greenhouse gas emissions by 2050 under “business as usual”.

[2] The IMO GHG Study 2009 estimates that eco-efficiency technologies could reduce CO2e emissions from shipping by between 25% and 75% with substantial monetary advantages.

Unilever & New Global Report: How Voluntary Sustainability Initiatives & Supply Chain Transparency Can Make a World of Difference

24 Nov

Two items caught my eye recently.  One is a new report called the State of Sustainability Initiatives (SSI) Review 2010.  This review was a collaborative effort by the International Institute for Sustainable Development (IISD), the International Institute for Environment and Development, Aidenvironment, the United Nations Conference on Trade and Development, and ENTWINED–Environment and Trade in a World of Interdependence.

The focus of the SSI Review 2010 is geared specifically to agricultural commodities, specifically the forestry, coffee, cocoa, tea and banana sectors.  What is interesting is that the review focuses on “voluntary sustainability initiatives” (VSI) and how they can impact overall market performance, governance, criteria coverage and implementation practices.  More interesting is how the report treats supply chain dynamics and decision-making.  In a nutshell (no pun intended!) the report reveals that major voluntary initiatives are altering the way supply chain decision-making is made by “providing civil society and developing country stakeholders with a more active role in setting trade rules and production practices”.  Further the report underscores how increased levels of stakeholder pressure and transparency in the marketplace are reshaping collaboration across and between supply chain networks.

Embracing the Triple Bottom Line

The SSI report indicated that companies are embracing triple bottom line aspects of their products in managing inputs and outputs along the value chain, focus within the three primary sustainability spheres:

  • Environmental criteria are strongest related to integrated pest management and use of restricted substances or prohibited chemicals, though less so on issues related to energy conservation and greenhouse gas management
  • Social criteria revolve less around gender, employment benefits, community involvement, and humane treatment of animals and more towards around International Labour Organization (ILO) conventions, (mainly coverage of health and safety and employment conditions).
  • Economic criteria are less likely to be addressed across the agricultural sectors although focus on product quality requirements and minimum wage requirements are gaining steam.

Focus on “Radical” Transparency

Growth across voluntary sustainability initiatives is also being driven by growing demands for transparency in global supply chains. There are generally three types of transparency evaluated in this report[1]:

  • Information Transparency: the act of making accurate, useable and substantial information available to stakeholders.
  • Participatory Transparency: the act of selecting the information to be made available based on user needs and input (i.e., “participation”).
  • Accountability Transparency: the act of presenting information that is neutral, objective and balanced, allowing stakeholders to reach their own conclusions regarding performance or evaluation.

The SSI Review reveals that “voluntary initiatives are playing an important role in improving supply chain transparency by bringing more credible systems for monitoring, enforcing and reporting on good practice.”  Specifically, key findings include:

  • 70 per cent of the initiatives reporting compliance with ISO 65[2] or application of an independent accreditation system;
  • almost all of the initiatives surveyed applying an annual audit process to ensure compliance with specified criteria, although there is considerable diversity in the degree of flexibility with which such processes are implemented; and
  • 70 per cent of the initiatives surveyed managing a separate Chain of Custody standard and a majority of initiatives applying some form of segregation of compliant products to allow for traceability.

This tendency toward additional transparency in the supply chain is lessening the potential for false product claims, although ‘greenwashing’ remains a constant threat to consumers looking for the “real deal” when purchasing environmentally responsible or eco-friendly food or consumer products.

The report further goes on to state that “transparency improves what we know about markets and the institutions that drive them. Improved access to information helps everyone in the market better understand the implications of their investments and dealings within the market. By enhancing information flow, transparency can promote market efficiency, social welfare and cost internalization, all core principles of sustainable development. Improved information also allows stakeholders to participate more knowledgably in the governance processes—thereby promoting participatory governance, also a core principle of sustainable development.”

Unilevers “Big, Bold” Example

Almost simultaneously to the release of this report comes a huge announcement last week of Unilevers plan to reduce its environmental footprint by 50% by the year 2020.    According to the article in GreenBiz.com by @marcgunther, the Sustainable Living Plan “breaks new ground for a number of reasons.

  • It is comprehensive, setting more than 50 social, economic and environmental targets.
  • It is rigorous; the company says it has measured the carbon, water and waste footprints of 1,600 products, representing 70 percent of its volume.
  • It’s far-reaching, taking into account the full life cycle impact of its product, from “seed to disposal,” as one executive put it.”

Unilevers plan is big, “hairy” and audacious- just what companies need to do stay ahead of the competition by implementing VSI’s that respond to consumer needs.  As part of the plan, Unilever plans to source 100% of its agricultural raw materials “sustainably” by 2020.  This will include aggressive supply chain outreach, monitoring and measurement (the metric will be raw or packaging material sourced from verifiable (certified and some self verified sustainable renewable sources or materials made from recycled materials (% by weight)).  Tea and palm oil are already in the queue with additional materials to be added as part of a sustainability focused program in place for the past 12 years. They also began to assess their environmental impact across the supply chain from sourcing raw materials to production, distribution, consumer use, and disposal.   Unilever has also implemented a Business Partner Code to ensure their suppliers meet their expectations on social and environmental impacts.

Supply Chain Value Recognition

The SSI Review and companies like Unilever are motivated by recognition that improved understanding of customer behavior, recognition of sustainable development challenges faced in a global marketplace and effective policy initiatives are vital to business success and societal vitality.  Doing so in a deliberately transparent and collaborative way stimulates innovation, better design and effective flow of goods and services across and through networks, continents and communities (from resource extraction to production, to distribution, to consumer and back again if possible).

Great lessons and cues on supply chain sustainability practices can be taken from the SSI report and Unilever regardless of what market sector you operate in.  You don’t have to be a coffee producer or banana company to gain an understanding as to how voluntary sustainability initiatives can improve your business and how driving these initiatives through your supply chain can gain great competitive advantage.


[1] J. M. Balkin, 1999, “How Mass Media Simulate Political Transparency,” Cultural Values, 3(4), 393-413.

[2]ISO 65 is the International Standards Organisation (ISO) guideline ‘General requirements for bodies operating product certification systems’. It is a general guide for product certification and has been referenced or used as a base for most organic norms and regulations (especially in Europe, Japan, Canada etc.)

Five Ways to Achieve “Top Line” Business Value Through Sustainability

29 Jun

Note: This article also appears on GreenBiz.com at http://bit.ly/9kjYTV

In a comprehensive study released last week by the United Nations Global Compact and Accenture, a survey of 766 CEOs from around the globe indicate that despite the economic downturn, sustainability will be critical to the future success of their companies.  An amazing 93% of CEOs indicated that “a tipping point” could be reached that integrates sustainability with core business processes and systems, and its supply chains. http://bit.ly/cS93dR

So this suggests that ‘triple bottom line’ (TBL) practices and measurements will become commonplace in business…or will it.  Perhaps there is another way of looking at this trend  given the top-down commitments that CEO’s believe are necessary to create this massive shift in corporate behavior.  This point of view is called “triple top line”, but has generally been trumped by its “bottom line” twin.

Setting the Context

Top-Line Definition (Sustainability Dictionary http://bit.ly/aRPZh8)

The total revenues an organization reports on their income statement. While many activities within an organization are focused on reducing costs, initiatives such as innovative product and service development focus on creating more valuable and desirable offerings that increase revenues. Attention to human and natural capital (as well as financial capital) can often increase revenue by differentiating a company and its offerings in a beneficial way to the market. When this is done poorly however, it can be seen as green-washing and results in the opposite effect.

In contrast, bottom-line refers to Net Income (top line revenues – expense).  Bottom-line activities typically focus on cutting expenses in order to improve income.  William McDonough also coined this term from a design perspective in his landmark book Cradle to Cradle: Remaking the Way We Make Things (2002, North Point Press)

Triple Top Line Definition (Sustainability Dictionary http://bit.ly/9emKPX)

The effect that attention to sustainable management of natural, financial, and human capital has to an organization by increasing revenues (by offering more desirable products and services) and reducing costs and expenses throughout operations (through more streamlined operations. While many of these benefits are measured in terms of triple bottom line accounting, even more valuable are their effects to a company’s top-line financial performance because they require less capital investment and reduce the cost of capital.

In the UN/Accenture report, CEOs cited several barriers to achieving their sustainability goals, including ‘organizational silos’, competing priorities and lack of ‘value recognition’ by investors.  To counteract these barriers, several steps were needed, including CEO leadership to create real, value-added and long term change.  Specifically, five key areas were mentioned:

  • Shaping consumer preferences for sustainable products.
  • Training, training, training on sustainability issues- not only for the rank and file but managers too.
  • Improved investor communications with investors to create a better value proposition about sustainability.
  • Improved TBL metrics and communication of the value of business in society.
  • Partnering with governments to shape policy and regulation and create a level playing field.

A "Triple Top-Line" Strategy Yields Enhanced Business Growth

In sustainable terms, both a top-line and bottom-line focus is important. However, many recent efforts to slash expenses in the short-term can actually hurt long-term sustainable value.  Like the UN/Accenture study suggests, a focus on increasing top-line value through innovation, lean thinking, and smarter brand enhancement can lead to more sustainable and profitable growth.  I offer a simple framework to start down the path of sustainability from a top line perspective that recognizes human and natural capital as well as financial aspects of business.

1. Understand the current situation.

Gain awareness of the context in which environmental top line value can be realized.

  • Take stock of the organization’s core business strengths / strategies.
  • Identify the environmental aspects of the organization’s processes and services in each link of the organization’s value chain.
  • Identify customer environmental challenges and how the processes and services relate to customer needs.
  • Develop a business case for moving forward.

2. Develop a strategy.

Decide upon a strategy for creating environmental top line value that supports the organizations business strategy and takes advantage of the organization’s strengths.

  • Develop a top line strategy that will be a best fit for the organization.
  • Consider how the strategy will address sustainable business practices.
  • Determine whether any changes are needed to the existing business model or strategic plan to realize the strategy.
  • Develop an action plan to implement the strategy.

3. Choose initiatives and measure progress.

Develop and implement initiatives that will bring the strategy to life.

  • Consider how the organization’s existing processes and services can be positioned to address the chosen strategy, using the case studies for inspiration.
  • Examine each link of the product value chain to identify potential initiatives, such as reuse of recycled materials, resource optimization, reduced energy or water consumption, all of which can create top line value.
  • Measure your efforts by establishing meaningful and measurable key environmental, social and financial performance indicators
  • Be realistic about how process changes that can have direct environmental benefits fit into the overall set of differentiating features and benefits of the process. Do not assume that consumers will be willing to pay a price premium or accept performance or quality trade-offs.
  • Examine customers’ value chains to identify top line opportunities to meet customer expectations and support their sustainability initiatives.
  • Identify potential partnerships with stakeholders that will lead to top line value by promoting collaborative supply chain management.

4. Gain internal alignment.

The process of aligning an organization around the importance of taking action begins at the time an organization first develops an awareness of the context in which environmental top line value can be realized, and carries all the way through implementation of the top line strategy.

  • Gain buy-in from top management.
  • Communicate the business case for moving forward.
  • Identify internal champions within the organization who will move the top line initiative forward.
  • Start with pilot efforts to test the waters and generate early successes.
  • Communicate early successes.

5. Maintain the momentum.

Develop processes for maintaining the momentum of the top line initiatives.

  • Create a “change management” process to build environmental factors into new or modified processes or activities.
  • Develop business-based metrics of environmental and management and top line success.
  • Develop an award and recognition program for ideas or projects that result in environmental and/or management top line value.
  • Integrate environmental stewardship and associated activities with all operations.
  • Raise the capabilities of the customer service function to probe for and address customer-specific environmental or social responsibility issues/ concerns.

By following this simple ‘plan-do-check-act’ process, companies (large and small) can create upstream supplier alignment, downstream value for their customers and maintain a more secure competitive financial position in the global marketplace.

I believe the distinction between a good company and a great one is this: A good company delivers excellent products and services; a great one delivers excellent products and services and strives to make the world a better place. —William Clay Ford Jr.