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Profitable Sustainability Wins that You Can Achieve this Year

As sustainability professionals, we are all looking for organisational actions that deliver sustainability benefits AND profit improvements within the year (let’s call them Sustainable Wins). Four often-overlooked actions are suggested below and the conversation continues at the Twitter hashtag #SustainableWins. Pressure to produce in-year Sustainable Wins As sustainability budgets are shrunk, sustainability professionals are under ever-increasing pressure to deliver environmental, social and economic benefits – all in the one year before budgets and KPIs reset and the annual cycle starts over again. To achieve in-year profits, sustainability actions need a short lead-time, rapid payback (or low capital requirement) and of course significant environmental and/or social impact. There are not many Sustainable Wins like this and, in our experience, they can be easily overlooked. Here are four Sustainable Wins that we have found which are new to many organisations: Remanufactured office furniture Taking the long life elements of quality office furniture (like steel and aluminium frames), checking, recoating and then reassembling them with new outer parts to as-new condition is known as remanufacturing. While this circular economy approach is new to the office furniture industry, most brand name photocopiers have seen up to seven previous lives, demonstrating the high quality results of remanufacturing. Because the long life elements of office furniture are the most expensive (economically and environmentally), remanufacturing reduces the cost of a quality furniture item by around 50% and its environmental footprint by 80% (Giuntini & Gaudette, 2003; McKenna, 2012). Organisations like the NHS are using remanufactured office furniture to improve their offices with high quality, beautiful, ergonomic, brand-name furniture at contract furniture prices. Image: NHS Public Health...

Reducing the Costs that Matter

Sharing their learnings on cost reduction at the recent Lavery/Pennell Sustainable Innovation Breakfast were Pepsico, Nestle, Shell, Rexam, the University of Cambridge, Imperial College London and 2degrees. This note summarises the discussion. Do Some Costs Matter More than Others? Economists and managers have focussed traditionally on reducing labour costs. This resulted in the loss of 1.5 million UK manufacturing jobs from 1998 to 2011, reducing manufacturing labour costs from £100 billion p.a. to around £75 billion. But the £25 billion p.a. saved previously kept staff in meaningful employment, supported their households, and stimulated the economy through spending. And the loss of those staff (representing over a third of UK manufacturing jobs) has placed increased burden onto the welfare system and in many cases resulted in economic hardship for individuals and their communities. At the same time, non-labour manufacturing costs, comprising mostly raw materials and energy, have increased from £335 billion in 2004 to £345 billion in 2011 – an annual increase of 0.4%. Compare the impact of a 3.7% p.a. improvement from 1998 to 2011 (a similar rate achieved in labour headcount reduction) which would have saved £122 billion p.a. in costs by 2011. This 35% overall reduction in non-labour costs would have substantially improved the UK’s competitiveness and boosted exports, in turn creating more jobs and wealth. While the economic benefits resulting from a focus on non-labour costs attractive, so are the environmental and social benefits: Reduced biodiversity damage from mining and energy extraction Reduced transportation and refining impacts, including water take and waste Reduced greenhouse gas emissions Improved balance of payments for the UK from reduced importing...

How Purpose Drives Sustainable Innovation in Leading Companies

At the 19 January Lavery/Pennell Sustainable Innovation Breakfast, leaders from Unilever, Marks and Spencer,  Interface, Virgin, HCT, AB Sugar and the WBCSD shared insights into how purpose is driving successful sustainable innovation. This note summarises the discussion. The Value of Purpose Purpose is the reason why companies do what they do – not to make profit (which is a result of the company’s actions) – but the true problem that they are solving and the core of the company’s business. Purpose can create value for businesses by addressing increasing expectations of staff (who more-and-more choose to work for organisations who share their beliefs), consumers (buying from authentic brands that they trust) and communities (who provide a licence to operate). This was illustrated in the findings of a 2014 Deloitte survey which showed significantly higher growth expectations and staff engagement levels in companies with a strong sense of purpose (see Figure 1). Figure 1: The Impact of Purpose And purpose can and should drive innovation, with a sustainability-related purpose driving sustainable innovation. How Purpose Drives Innovation To fuel and encourage innovation, a company’s purpose provides: A compelling reason to strive for improvements that connects with the hearts and minds of staff (especially if the purpose is sustainability-related) Focus – which is vital for corralling creative effort A long term aim – enabling multi-year R&D initiatives A stretch target – requiring and empowering all staff to contribute their ideas Senior executive support Alignment reaching from the top to the bottom of an organisation around shared intentions – in part because purpose provides a simple end goal that is easy to understand,...

Paris Agreement supports sustainable innovation

The Paris Agreement on 12 December 2015 is great news for sustainable innovators. Key Points of the Agreement (full text here): Agreement to keep global average temperatures “well below” 2°C above preindustrial levels and pursue efforts to limit the temperature increase to 1.5°C Non-binding, depending on countries’ own “nationally determined contributions” which were submitted prior to the Paris summit and which result in a global annual emissions total of 55GtCO2e – which is estimated will result in a global temperature rise of 2.7°C. So beyond the national plans, which themselves require significant cuts beyond current programmes, additional reductions are still required to achieve 2°C (considered to require a global annual emissions of 40GtCO2e). Developed nations will set up a $100B p.a. fund providing “climate finance” to help poorer countries to adapt to climate change and reduce emissions. “Encourages” the voluntary cancellation of units issued under the Kyoto Protocol, including certified emission reductions that are valid for the second commitment period towards eliminating the accumulated surplus of credits, which would delay action. Why it is significant The Paris COP (and its lead-up) saw significant support for action to address GHG emissions from many sectors of society including business, investors, the church (e.g. the Pope’s second encyclical) and of course all 200 governments at the negotiation. We believe that underlying the Paris summit is a maturing of global thought to a position of acceptance and the development of a rational plan to tackle the problem. We have seen a progression consistent with Elizabeth Kubler-Ross’s model of the stages of change[1]: denial, anger, bargaining, depression and acceptance. The drive for a 1.5°C...

How to Collaborate for Sustainable Innovation

Sustainable innovation often requires collaboration to access the skills required and value on offer, but is it not easy. ‘How to Successfully Collaborate for Sustainable Innovation’ was the subject of the 14 October Lavery/Pennell Sustainable Innovation Breakfast in London, which brought together corporates, startups, financiers and not-for-profit organisations (including BP, Balfour Beatty, Interface, Virgin and the BBC). The discussion is summarised below. Why Collaborate? The rationale for collaboration is clear (as discussed at the July innovation breakfast), and includes: Many sustainable innovations are beyond the delivery capacity and capability of any single organization, such as those requiring scale, varied skill-sets, or significant funding. By their nature, some sustainable innovations require peers to work together. An example is the aviation industry in relation to noise reduction, fuel efficiency and alternative fuels. Other innovations are only viable if value is added by different types of stakeholders, such as companies working with not-for-profit organisations to combine beneficial products with credibility and market access. Speed is becoming ever more important for innovation; large companies traditionally do not do fast/agile well – collaboration can help address this. Figure 1 shows the types of value that different partners can bring to an innovation project. Figure 1: Different Parties Bring Different Strengths to Sustainable Innovation   Collaborative Innovation Approaches Recent Lavery/Pennell research identified 11 innovation approaches used by a range of companies[1]. Eight of these approaches involve collaboration (see Figure 2). Good practice companies use most of these 11 innovation approaches, but many acknowledge that they do not do all of them well. Figure 2: Innovation Approaches used by Leading Companies   Inspiring Examples Several successful...