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3 big differences between sustainable innovation and regular innovation

Sustainable innovation differs substantially from regular innovation. Read what a group of leading innovation and sustainability experts had to say on the subject. On 9 July, international corporates, startups, academia, financiers and not-for-profit organisations (including Pepsico, Arqiva, Imperial College, Green Alliance and the BBC) discussed sustainable innovation at the inaugural Lavery/Pennell Sustainable Innovation Breakfast in London. Sustainable innovation  is defined as innovation that leads to greater profits, better social outcomes and less environmental damage. And the conclusion of the group was that it differs from regular innovation in three substantial ways: Sustainable innovation is more disruptive New business models (such as remanufacturing, servitisation and asset sharing) challenge many aspects of incumbent companies including production, operations, brand, marketing and sales. They also introduce non-traditional risks. This broad challenge to corporates often causes them to defend the status quo; large organisations develop ‘corporate antibodies’ within the company’s culture to resist change. Beyond new business models, incremental sustainable innovation initiatives, like changing staff behaviour regarding energy use, have proven to be almost universally short-lived without significant accompanying internal system and process change to incentivise the new behaviours. “Quick wins” like installing more efficient replacement equipment are much less disruptive; however it was argued that these use existing technology with a strong economic case and so should not be recognised as “sustainable innovation”, even though they may have environmental and/or social benefits. There’s a stronger rationale behind sustainable innovation While sustainable innovation is more disruptive, it is also considered to have a stronger case for change than other forms of innovation. The drivers for change include: Changing consumer aspirations and behaviours, such as Millennials...

Profitable Sustainability: Oxymoron or New Opportunity?

New Opportunity Many commentators believe that sustainability harms profitability; we have found the opposite to be true – good sustainability programs add significantly to profits. This is because many of today’s business challenges relate to society and the environment. These include resource scarcity/security and resulting commodity price escalation, game-changing new cleaner technologies, disruptive resource-efficient business models and increasing corporate responsibility expectations. A well-designed sustainability program addresses these challenges and unlocks value through cost reduction, new product innovation, enhanced customer value propositions, brand enhancement, improving licence to operate, risk reduction, lifting employee engagement and raising barriers for competitors.   Examples Marks and Spencer’s Plan A sustainability program contributed £135M p.a. to its bottom line in 2012. Interface has lifted its profit margins and retained its leading market share of the global carpet tile market while moving to 100% renewable energy and reducing its greenhouse gas emissions by 90% in Europe. Toyota’s European operations have reduced their energy, waste and water use by over 70% per vehicle with minimal capital expense. Similar profitable sustainability examples include Unilever, Du Pont, GE, Body Shop, Ecover, Patagonia, Henkel and P&G. Would these global market leaders have continued to drive sustainability if it was not adding value for them? In over 50 projects completed by our team members we have helped companies to increase profits while improving environmental and social impact. For proof see Our Experience page. Key areas in which we find substantial value include: New business models (servitisation; circular resource use; shared use) Rapid product/service innovation Enhanced customer propositions (provenance; impact reduction; engagement) Radical resource efficiency Supply chain collaboration (suppliers; peers; customers) Cleantech (renewable energy; smart...

Building an Economy that Works

Lavery/Pennell’s research into the Next Manufacturing Revolution and the New Industrial Model are cited as evidence for and quantification of the benefits of ‘An Economy that Works’ in the Aldersgate Group’s December 2014 publication. The report can be viewed at this link: An Economy that Works...

New Report on Remanufacturing

The UK’s All-Party Parliamentary Manufacturing and Sustainable Resource Groups yesterday released a new report presenting the economic, social and environmental potential of remanufacturing and recommending a range of government support measures. Drawing on evidence including Lavery/Pennell’s Next Manufacturing Revolution and New Industrial Model reports, the publication is well timed to influence party manifestos in the lead-up to the 2015 General Election. Dr Greg Lavery was a member of the Steering Group. The report can be downloaded here: Triple Win: The Economic, Social and Environmental Case for...

Transforming sustainability from cost centre to profit centre

Sustainability teams in leading global companies are re-inventing themselves to move from squeezed cost centres to vital profit centres. They have realised that they must be able to answer the question: “What is the return on investment of the sustainability team?” Sustainability under Pressure Many sustainability teams, including those in DJSI leaders, are under pressure. Cost cutting is shrinking staff and budgets. Sustainability reports are merging into integrated reporting. The desire to embed sustainability throughout the company is seeing sustainability budgets and decision-making handed to business units/sites. One sustainability leader also described the worrying issue of “sustainability fatigue”. Sustainability teams focussed on compliance and reporting are nowadays being treated by senior executives as a necessary evil (i.e. a cost centre) which must improve its productivity and tighten its belt – especially with reporting requirements perceived to be reducing. Adding Financial Value through Sustainability We are helping a range of leading companies to move their sustainability teams from reporting and compliance to adding value within the core activities of the company. The overarching logic is that the sustainability team is responsible for the long term future of the organisation – while just about everyone else in the company is focussed on short term targets (and in doing so may harm the long term future of the company). Within this remit, consistently we find three major areas of financial value that sustainability teams can provide, over and above day-to-day executive management: 1. Operational cost reduction Sustainability teams can drive company-wide non-labour resource efficiency. This includes energy efficiency, waste reduction, transport & logistics efficiency, materials efficiency, packaging optimisation, circular resource use and supply...

Latest developments and untapped opportunities in resource efficiency

At the recent EPSRC Industrial Sustainability conference, Greg Lavery of Lavery/Pennell and Professor Steve Evans from the University of Cambridge spoke on recent developments and emerging themes in the field of non-labour resource efficiency. This included an examination on the impacts of the Next Manufacturing Revolution, the New Industrial Model and the Foresight Report into the Future of Manufacturing. The presentations, captured in the video below, identify that while some change has occurred in specific fields, substantial opportunities for cost savings and sustainability improvements...