Posts Tagged 'green house gas emissions'

The Leadership required for Sustainability.

Published May 22, 2012 carbon footprint , CSR , energy , leadership , sustainability , sustainability and investors Leave a Comment
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The leadership required to change a company to embrace Sustainability.

CSR gives a competitive advantage

For most companies Sustainability should have seized to be a marketing tool. There is sufficient proof that companies with a strong emphasis on CSR (of which sustainability is an important aspect) out perform their peers. This makes sustainability (and the other aspects of CSR) a strategic tool to improve the company.

CSR means fundamentally changing the DNA

It is also clear to most companies that sustainability should be more than window dressing. A company that does not fundamentally incorporate sustainability into its product and services will not convince consumers and find that its efforts do not bring the returns it feels it deserves.

 

  • First of all it should be clear that the company cannot continue doing what it has been doing in a different way. Taking sustainability serious means that companies have to look at the way they do their business in every aspect of that business. The cars driven by its sales people, the number of flights taken by senior management, the energy use of its offices, the extend to which it adheres to the cradle to cradle principle and the complete carbon footprint of its products and services.
  • Secondly companies should realise that sustainability is a long process. Management cannot implement a quick top down programme, sustainability has to be incorporated in the DNA of the organisation in a determined and if necessary prolonged move.

Strong modern leadership is required

Embracing sustainability however is not an easy task. It requires fundamentally changing the company and therefore requires strong leadership. This leadership is different from traditional leadership.

5 leadership practices are relevant

1. Use the momentum
2. Change selectively
3. Encourage experiments
4. Create openness and frankness
5. Crowd-source ideas

1. The leader should use the momentum of the current economic slowdown to install the need for fundamental change. He should create an urgency to change what and how work is done and who does it. This is a delicate task as too much pressure can cause panic and inertia, whereas too little pressure will lead to a return to old ways.

2. The leader should only change those things and move those people that prevent the required change; not everything has to be changed.

3. The leader should encourage experiments. The vision does not have to be produced as a Grand Design by the senior management, it has to be the consequence of much trial and error.

4. The leader should encourage a culture of openness and frankness. In many companies the status quo is protected by higher management preventing any sound of discontend or change to surface at the top floor.

5. The leader should mobilize everyone withing the organisation using for instance the newly developed crowd sourcing methods.

Felix Gruijters

Will the environment survive the economic downturn?

Published May 9, 2012 carbon footprint , carbon tax , energy , solar power , sustainability Leave a Comment
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Will the environment survive the economic downturn?

Saving PV film producer Heliantos

The past weeks the news from the renewable front has not been good. Today the first ray of sunshine in a while was that Vattenfall might have found a buyer for its solar film factory, Heliantos. It would be great news if true, giving Heliantos and its new owner a chance to continue building on the knowledge and expertise that Nuon/Vattemfall have invested in so heavily over the past 8 or so years.

A call to revive the Green Agenda

An article in the Financial Times of the 7th of May brings together some of the news items of the past weeks. Lord Smith to call for a green agenda revival.

In the UK as in other countries (for Germany the subsidies for solar were cut on the 23rd of Februray 2012) the government is cutting back on subsidies for renewable power. Austerity bites everywhere and thus also into the subsidies for renewables. This makes logical sense as there is no strong political reason why renewables should be excluded from the cut backs.

The Greens are being overshadowed by left and right wing populists

There is still strong supporters for green politics in Europe; in the quoted article Lord Smith refers to the success some of the green parties have had in UK by-elections, and he could have quoted the strong performance of the Greens is Schleswik Holstein, but this support is substantially smaller than the main voter’s sentiment, which is against reform and change and in support of maintaining existing welfare support and job security. In the Netherlands the no-change/anti reform parties (the SP on the left and the PVV on the right) are predicted to get a third of the seats in parliament. Their no change mantra could well lead to inertia in politics.

A lack of funds due to the economic slowdown and policies paralised by populist movements in or outside government do not bode well for the renewables industry and the environment.

The price for CO2 emission rights

It will be very interesting to see what the European Parliament and the European Council will decide in June on the CO2 emission rights. Will they again be over generous when allocating emission rights or will they “set a side” some rights, creating a true market for CO2 emission rights? It is telling that currently CO2 emission rights in the EU (@ less than €7 per ton) are cheaper than in Australia (@ 23 Australian dollars per ton). The UK has been leading the way with their carbon floor price.

It is obvious that a EU carbon tax could lead to carbon leakage. This is a very gradual process, it does not happen overnight. But a carbon tax will influence investment decisions and those decisions will not be in favour of investment in the EU. The compensation and opt outs offered by Chancellor Osbourne will not stop the leakage, it will only give international firms higher profits before the decide to invest in the US or Asia.

Introduce the CARBON FOOTPRINT TAX

The only way out of the inertia, providing the development of the green economy a much needed boost is the introduction of a carbon footprint tax. This is not a carbon tax on energy producers or other major users of fossil fuels. It is a tax on the carbon used developing, producing, transporting an selling a product or service.

It is a fact that we can measure the carbon footprint of a product, from raw material to shop shelve. Let us take these measurements and use them to base a tax on. Products with a high carbon footprint will be taxed higher, giving producers an incentive to compete on carbon footprint. Suddenly the incentive would be to preserve forests, reduce the use of fossil fuel, invest in the bio based economy.

Better still for all the politicians looking for a way out: the carbon tax will provide much needed revenue and, for Lord Smith, it will revive the green agenda.

Felix Gruijters

Innovate or reduce?

Published May 1, 2012 carbon footprint , chemical industry , energy , sustainability , Uncategorized Leave a Comment
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In this blog:

  1. Politicians should use the carrot and the stick, force energy saving in the short run and encourage innvation for the long term.
  2. A carbon tax putting a floor in the oil price or giving an advantage to low carbon products would be  a long term incentive to innovation.
  3. Irrespective of our (somewhat inert) politicians companies are introducing low carbon policies. They do this because they know their clients want it.
  4. Research has shown that companies which focus on low carbon policies are better at innovation creating their own future.
  5. It is therefore not surprising that PPR, owner of luxury brands Gucci and Yves Saint Laurent, announced it would follow Puma’s lead and present a full Environmental Profit & Loss account by 2015.

1. Question: Innovation OR reduction? Any problem has two solutions. Forego the wanted-end-result and stop causing the unwanted effect or achieve the same end result without the unwanted effect. In other words stop doing what you did or find a new way of doing it. Apply this to climate change and it explains why we have two competing climate policies.

1. On the one hand governments (its environmental arm), our finance departments and most environmentalists encourage us to use less energy. Saving on energy consumption does indeed reduce our green house gas emissions but if it leads to less production it erodes the economic fundamentals of a company. Reduction also does not fundamentally change the process, it means that we still emit green house gasses, reduction therefore only delays a process it does not stop it.

2. On the other hand the same governments (its industry and trade arm) and marketing departments will urge us to innovate. Innovation will create lasting new solutions to the challenges offered by climate change. The problem with innovation is that its occurrence and its effect cannot be predicted and forced. It is more a belief that it will occur. This uncertainty makes it less popular with the profits of climate doom and the environmentalists.

Answer: Innovation AND reduction! In the Harvard Business review of April 2012 these two approaches to climate change have been described and analysed. Roger Martin and Alison Kemper rightly conclude that to save our planet we will need both strategies. Innovation is obviously for the long term whereas reduction is to create a breathing space for a longer term solution. As both stratagies are necessary what should governments do? The answer form Martin and Kemper is clear: put a floor in the price of oil guaranteeing a long term outlook for new technologies.

2. Introduction of a carbon tax?

William Nordhaus the famous Yale professor in Economics and the environment has termed the Kyoto’s mechanism “inefficient and ineffective” and urged their replacement with a global carbon tax that would force consumers and companies, not governments to innovate. A floor in the price of oil or a global carbon tax will encourage innovation and, for the short term, encourage energy saving.With governments running out of cash, continued subsidising clean technology is under threat, a tax on, for instance, the carbon footprint would be a sensible alternative. This would be in line with the suggestion of the ACEA to use tax incentives to encourage the purchase of cars with low CO2 emissions.

3. Climate change has created its own momentum 

It is clear though that climate change has created its own momentum.
1. Irrespective of direct government regulation companies are adapting low carbon policies. This is in line with the findings during the 2012 Davos World Economic Forum: Rising GHG emissions are the third most important topic according to the particiapants. (Severe income disparity and chronic fiscal imbalances came respectively first and second).
2. According to a recent client survey performed by Rackspace, a datacentre in The Netherlands, clients preferred “sustainable partners” in their value chain as sustainability of a link in that chain reduces risk, improves efficiency and increase reward.”
 
4. Focus on climate change makes companies perform better!
 
Interestingly there is a very important side effect to this shift to low carbon policies. Focus on CSR increases innovation,
 
A survey conducted by Xueming Luo, Professor of marketing at the University of Texas and published in  HBR of April 2012 found that companies with a stronger than average focus (top third) on CSR brought out on average, 47 new products a year while companies in the bottom third brought out only 12. This effect is attributed to the fact a focus on CSR strengthens relationships with external stakeholders, including customers, suppliers, nonprofits, and governments. The focus on CSR provides access to a wide body of knowledge which help a company ton stay ahead of  shifts in market preferences, incorporate new technologies and facilitates creative leaps.
 
5. PPR is not afraid to be transparant about its environmental policies.
 
Already at the end of 2011 PPR announced that it would by 2015 provide a monetary valuation of the environmental impacts of its business operations and its supply chain. PPR expects, in line with the survey quoted above, that this approach will serve as a catalyst for the development of a truly sustainable business model.
 
 
 
 
 
 
 
 

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