Section
2: Natural Advantage a Business Imperative
In
Section 1 we argued that no one part of society
can address the scale of the sustainability
challenge on its own. In a world where business,
government and civil society all have significant
roles to play, we need to find the best ways
to move forward together. This section will
focus on the role business can play in this
process. This section cannot emphasize enough
the importance in business of seizing new opportunities,
encouraging creativity and the ability to work
effectively in teams to achieve innovation.
Running a business requires skill and frequently
demands long hours and significant personal
sacrifice. If there was an easy way always to
stay ahead of the competition, we would all
be millionaires. But there isn't. Successful
business people seek to remain up to date with
the shifting market for their products and services
and will come to see that sustainability provides
numerous opportunities for unleashing creativity
and innovation.
Whilst
this chapter, and the online databases it references,
is designed to assist any business to do its
homework faster, improve its strategic position,
and unleash the creativity of its staff, this
is not enough. Genuinely innovative and highly
competitive businesses are always on the look
out for new opportunities and ways to improve
business. The frameworks and guides that follow
will, we believe, help but at the end of the
day someone has to have good ideas and be willing
to take risks. In the end, success comes down
to the determination and united purpose of those
people involved. Is the risk worth the effort?
Many companies, such as Close the Loop® and
Interface, believe it is.
The
Changing Nature of Competition
Key
Reference: Porter, M. (1998) Competitive
Advantage : Creating and Sustaining Superior Performance,
New York : Free Press.
Among
other concepts, this is the work that introduced
the notion of the 'value chain': a concept that
helped launch a thousand reengineering initiatives,
some of which actually create! While more recent
models associated with business networks and ecosystem
metaphors have significantly progressed beyond
Porter's basic value chain concept, the original
is still well worth understanding.
View
Website
Key
Reference: Porter, M. (1998) Competitive
Strategy Techniques for Analyzing Industries
and Competitors, New York : Free Press.
This is Porter's original and classic work on
business strategy, and the bible of the positioning
school of strategy. The models are still valid
and highly relevant; they just need to be augmented
with additional new economy strategic concepts.
View
Website
| Porter's
Bio and Selected Works |
Critique
of the critique of Porter
Online
Overviews of the Latest in Business Theory to
Augment Previous Classics
Many
Worlds
Many
Worlds is an up to date knowledge network for
business thought leaders. The team at Many Worlds
work hard to bring you relevant and high quality
material. Their scope of topical management areas
includes business strategy, innovation, leadership,
organizational culture, advanced decision making
and strategic marketing. The service of this site
is free and is advertising free. They receive
no monies from either the authors or companies.
View
Website
The
Manager
This
website performs a similar function to Many Worlds
and contains a document related to Porters work
entitled 'Beyond Porter'.
View
Document
Quick
MBA
Quick
MBA is an online overview of key knowledge relevant
to business administration. Their goal is to help
business managers find the business knowledge
they need, when they need it. It also provides
an instructive aid to students.
View
Website
Why
integrate sustainable development into corporate
strategy?
The
Business Case for Sustainable Development
Key
Reference: Professor Michael Porter,
Harvard Business School , from the preface to
Tomorrow's Markets: Global Trends and Their
Implications for Business (2002):
"What
is the relationship between corporate strategy
and societal issues such as the environment, poverty,
health, population, and international development?
Business leaders have a tendency to see 'social'
concerns as having little relevance to competing.
Instead, these fall under the headings of corporate
citizenship or corporate philanthropy, or are
left to managers to address as matters of individual
conscience. It is becoming more and more apparent,
however, that treating broader social issues and
corporate strategy as separate and distinct has
long been unwise, never more so than today. Seeing
strategy narrowly leads to missed opportunities
and bad competitive choices. It can also cause
managers to overlook potential competitive advantages."
View
Document | View
Website
A
Capital Idea: Realising Value from Environmental
and Social Performance
Financial success for business is increasingly
linked to good environmental and social performance.
Companies are subject to the ever-rising expectations
of stakeholders, including customers, employees,
the community, non-government organisations, and
lenders, insurers and investors.
Download
PDF | View
Website
Corporate
Sustainability: An Investor Perspective, The Mays
Report
This Australian report was conducted with ABN-AMRO
Morgans, AMP Henderson Global Investors, BT Financial
Group, Insurance Australia Group, Investa Property
Group, Securities and Derivatives Industry Association,
Securities Institute, and Sustainable Asset Management.
Download
PDF | View
Website
Equator
Principles
The International Finance Corporation (IFC) convened
a meeting of banks in London in October, 2002,
to discuss environmental and social issues in
project finance. At that meeting, the banks present
decided to try to develop a banking industry framework
for addressing environmental and social risks
in project financing. This led to the drafting
of the Equator Principles.
Download
PDF | View
Website
Natural
Capitalism: Creating the Next Industrial Revolution
The next industrial revolution, like the previous
ones, will be a response to changing patterns
of scarcity. It will create upheaval, but more
importantly, it will create opportunities. Natural
capitalism is a new business model that enables
companies to fully realize these opportunities.
Download
Document | View
Website
Innovating
Our Way to the Next Industrial Revolution
Key
Reference: Senge., P.M. and Carstedt,
G. (2001) 'Management of Technology and Innovation',
MIT Sloan Management Review , reprint
4222; winter, vol. 42, no. 2, pp. 24-38
Senge
and Carstedt argue that the 'New Economy' looks
much like another wave of the industrial economy,
rather than a genuinely post-industrial one, and
is not sustainable. They urge a new corporate
environmentalism driven not by regulation, but
by innovation in technologies, products, processes,
and business models. Eco-efficiency is insufficient
to create a post-industrial economy. Senge and
Carstedt explain that i ndustrial-age systems
follow a linear flow of extract, produce, sell,
use, and discard: the 'take-make-waste' approach
to economic growth. A systemic approach would
reduce all sources of waste: from production,
use and disposal. Command-and-control management
worked for industrial-age organizations, but sustainability
requires a different approach.
View
Website
The
Benefits of Lean Thinking
Lean
production analysis and lean thinking methodologies
demonstrate that a closed-loop economy is highly
economic in many industries. Leaders in this area
James Womack, from the Japan Program at MIT, and
Professor Daniel Jones, the Head of the Lean Enterprise
Research Centre at the Cardiff Business School
, propose that closed loop production which encourages
recycling and waste minimisation is a far better
way to cut total manufacturing costs, across whole
supply chains for many industries. In this way,
major economic/environmental win-win goals can
be achieved. What is exciting is that they have
shown that significant economic gains are obtainable,
through lean production, that will offset the
short-term costs of adopting new environmentally
motivated technologies and continue to supply
savings into the future. Womak and Jones have
published several 'how to' manuals on this topic.
View
Website
The
Shifting Nature of Competition in Emerging Economies
Developing
Value: The Business Case for Sustainability in
Emerging Markets
Developing
Value is the first large-scale study analysing
the business case for sustainability in emerging
markets: the opportunity for businesses to achieve
benefits such as higher sales, reduced costs and
lower risks from better corporate governance,
improved environmental practices, and investments
in social and economic development. It pinpoints
the many opportunities available to diverse businesses
in Africa, Asia, Central and Eastern Europe, the
Middle East and Latin America.
Download
PDF | View
Website
Community
Banking in Developing Countries
Micro
enterprise development has become recognized by
many international agencies, particularly the
World Bank and United Nations, as being the most
effective form of sustainable poverty alleviation,
as simply giving people handouts is not a hand-up
and it doesn't sustain. The most famous example
is Bangladesh 's Grameen Banking for the Poor.
View
Website
References
from the Book
1.
Anderson
,
R. (1998) Mid-Course Correction: Toward a Sustainable
Enterprise
:
the Interface Model, Peregrinzilla Press, Atlanta,
GA.
2.
Fairbanks, M. and Lindsay, S. (1997) Plowing the
Sea: Nurturing the Hidden Sources of Growth in
the Developing World, Harvard Business School
Press, Boston, Chs 1-7 (with a Foreword by Michael
E. Porter).
3.
Porter, M. (1995) CIO, magazine interview, 1 October
(cio.com).
4.
Ibid.
5.
Foster, R. and Kaplan, S. (2001) Creative Destruction:
Why Companies that are Built to Last Under-Perform
the Market and How to Transform Them, Doubleday
,
New
York.
6.
Porter, M. (1990) The Competitive Advantage of
Nations, The Free Press, New
York
(reprinted in 1998).
7.
The 'CSIRO Solutions for Greenhouse' website provides
an extensive overview of how to cost effectively
reduce greenhouse emissions.
8.
CSIRO, Australia
's
leading science and engineering research body,
provides up to date news on their latest innovations,
and exciting business opportunities online including
a free sustainability monthly electronic newsletter,
edited by Elizabeth Heij.
9.
UNEP's Industry Best Practice Database highlights
industry as a partner for sustainable development
in a series of reports developed by UNEP in conjunction
with various industry organizations. The reports
gauge the progress across 22 private sectors towards
sustainable development.
10.
Speech by George Yeo, Minister for Trade and Industry,
at the Singapore-Stanford Partnership (SSP) MOU
Signing on 25
February 2003 .
11.
Building the Future, Australian Financial Review,
10
December 2001 .
12.
Rocky Mountain Institute: Green Development Services
CD-ROM of European green buildings, World Green
Building Council.
13.
Wilson
,
A., Uncapher, J., McManigal, L., Lovins, L. H.,
Cureton, M. and Browning, W. (1998) Green Development:
Integrating Ecology and Real Estate, Rocky Mountain
Institute/John Wiley & Sons, p18.
14.
EcoGeneration: Magazine of the Australian EcoGeneration
Association, Issue 12, June/July 2002, p12.
15.
Gipe, P. (2002) 'Soaring to New Heights: The World
Wind Energy Market', Renewable Energy World, July-August.
16.
Sinclair Knight Merz (2001) Portland Wind Energy
Project Environmental Effects Statement and Planning
Assessment Report: Summary Document, Sinclair
Knight Merz, p17.
17.
McDonough, W. and Braungart, M. (2002) Cradle
to Cradle: Remaking the Way We Make Things, North
Point Press, San Francisco. Point out that the
word 'eco-efficiency' was first used by the WBCSD
in their 1992 publication 'Changing Course'. It
seeks to encapsulate the idea of using fewer resources
and creating less waste and pollution whilst providing
the same or better services. According to the
WBCSD, eco-efficiency entails the following: a
reduction in the material intensity of goods or
services; a reduction in the energy intensity
of goods or services; reduced dispersion of toxic
materials; improved recyclability; maximum use
of renewable resources; increased durability of
products; and greater service intensity of goods
and services.
18.
Amory Lovins interview, 'Natural Capitalism' as
broadcast on Radio National's Background Briefing.
19.
Cascio, W. (1993) Downsizing What do we know,
What have we learned? Academy of Management Executive
7; AMA (American Management Association) (1996)
Survey: Corporate Downsizing, Job Elimination
and Job Creation, AMA, Washington, DC; Dorfman,
J. (1991) 'Stocks of Companies Announcing Layoffs
Fire up Investors, but Prices Often Wilt', The
Wall St Journal, 10 December; Littler, G., Wiesner,
R. and Vermeulen, L. (1997) The Effects of Downsizing
Cross-Cultural Data from Three Countries, Academy
of Management Meeting, Boston MA.
20.
Collins, J. and Porras, J. (1994) Built to Last:
Successful Habits of Visionary Companies, Century,
London.
21.
Gundling, E. (2000) The 3M Way to Innovation,
Balancing People & Profit, Kodansha International
Ltd, Japan.
22.
Sonnenfeld, J.A (2004) 'A Return to the Power
of Ideas', MIT Sloan Management Review, Winter,
vol 45, no 2, pp30-33.
23.
Braithwaite, J. and Drahos, P. (2000) Global Business
Regulation, Cambridge
University
Press, Cambridge.
24.
Ibid.
25.
Fairbanks, M. and Lindsay, S. (1997) Plowing the
Sea: Nurturing the Hidden Sources of Growth in
the Developing World, Harvard Business School
Press, Boston, Chs 1-7 (with a Foreword by Michael
E. Porter).
26.
For an overview of further case studies and reports
on these issues we recommend the following sources:
Smith, D. (2000) Asian Development Bank Sustainable
Development in Asia Report, Asia Development Bank,
Manila; UNDP (2001) Human Development Report:
Making New Technologies Work For Human Development,
UNDP, New York; UNDP (2003) Human Development
Report: The Millennium Development Goals. A Compact
Among Nations to End Human Poverty, UNDP, New
York.
27.
Smith, D. (2000) Asian Development Bank Sustainable
Development in Asia Report, Asia Development Bank,
Manila.
28.
Deni Greene Consulting Services (2001) A Capital
Idea: Realising Value from Environmental and Social
Performance, prepared with Standards Australia
and Ethical Investment Services for the Australian
Department of Environment and Heritage.
29.
Annan, K. (1998) 'UN Secretary-General Press Release',
SG/SM/6638, 14 July (www.un.org/News/Press/docs/1998/19980714.sgsm6638.html).
30.
Rainforest Action Network (2000) Democrats to
Citigroup: Show Us the Money! - Citigroup Receives
Award from DNC: America
's
#1 Bank is #1 in Democracy Buy-Out, Press Release,
17 August.
31.
Corporate Governance is the system by which companies
are directed and controlled. The goal is to improve
the structures and processes of companies to improve
their performance and make them more accountable
to shareholders and other stakeholders. It covers
issues such as the nature and structure of the
boards, financial reporting, issues of transparency,
conflicts of interest and separation of powers.
32.
Chapter by leading sustainability consultant Molly
Harris Olsen in Dunphy, D., Benveniste, J., Griffiths,
A. and Sutton, P. (eds) (2000) Sustainability:
The Corporate Challenge of the 21st Century, Allen
& Unwin, Sydney.
33.
Taken from a transcript from Hunter Lovins' presentation
to the Sopris Foundation, 13
July 2002 Aspen,
Colorado.
34.
For further reading on organizational change see
Dunphy, D., Griffiths, A. and Benn, S. (2002)
Organizational Change for Corporate Sustainability,
Routledge, Hove, East Sussex; Dunphy, D., Benveniste,
J., Griffiths, A. and Sutton, P. (eds) (2000)
Sustainability: The Corporate Challenge of the
21st Century, Allen & Unwin, Sydney.
35.
Arora, S. and Cason, T. (1995) 'An Experiment
in Voluntary Environmental Regulation: Participation
in EPA's 33/50 Program', Journal of Environmental
Economics & Management, vol 28, no 3, pp271-286;
Arora, S. and Cason, T. (1996) 'Why do Firms Volunteer
to Exceed Environmental Regulations? Understanding
Participation in EPA's 33/50 Program', Land Economics
November, pp413-432.
36.
DeCanio, S. and Watkins, W. (1998) 'Investment
in Energy Efficiency: Do the Characteristics of
Firms Matter?', Review of Economics and Statistics
February, pp95-107.
37.
Recent estimates indicate that in 1996 the Australian
chemical industry had a turnover of AU$35 billion,
and employed approximately 80,000 people, Environment
Australia, National Profile of Chemicals Management
Infrastructure in Australia
,
1998.
38.
Anastas, P. and Williamson, T. (1994) Green Chemistry,
Designing Chemistry For the Environment, American
Chemical Series, 208th National Meeting of the
American Chemical Society, Washington,
DC
.
39.
Anastas, P., Heine, L., Williamson, T. and Bartlett
,
L. (2000) Green Engineering, American Chemical
Society, November.
40.
Anastas, P. and Williamson, T. (1998) Green Chemistry,
Frontiers in Design Chemical Synthesis and Processes,
Oxford
University
Press, Oxford.
41.
Quoted from the Foreword to Anastas, P. and Williamson,
T. (1998) Green Chemistry, Frontiers in Design
Chemical Synthesis and Processes, Oxford
University
Press, Oxford.
42.
Hawken, P., Lovins, A. and Lovins, L. H. (1999)
Natural Capitalism: Creating the Next Industrial
Revolution, Earthscan, London,
Ch 6.
43.
von Weizsäcker, E., Lovins, A. and Lovins,
L. H. (1997) Factor Four: Doubling Wealth, Halving
Resource Use, Earthscan, London.
44.
Hawken, P., Lovins, A. and Lovins, L. H. (1999)
Natural Capitalism: Creating the Next Industrial
Revolution, Earthscan, London,
p 117.
45.
Australian Greenhouse Office Motor Solutions Online:
comprehensive information and guidance, as well
as practical information and tools, to help you
make the right choices about electric motors.
Achieving best practice will improve motor system
reliability, minimize energy costs, maximize profits
and, ultimately, reduce greenhouse gas emissions.
46.
Porter, M. and van der Linde, C. (1995a) 'Green
and Competitive: Ending the Stalemate', Harvard
Business Review, September-October, pp121-134.
47.
Foss, M., Gonzales, E. and Noyen, H. (1999) 'Ford
Motor Company', in Hastings
,
M. (ed) Corporate Incentives and Environmental
Decision Making, Houston
Advanced
Research
Center
,
Houston
,
TX
,
pp35-52.
48.
McDonough, W. and Braungart, M. (1998) 'The Next
Industrial Revolution', The Atlantic Monthly,
vol 282, no 4, pp82-92.
49.
Ibid.
50.
Benyus, J. (1997) Biomimicry: Innovations Inspired
by Nature, William Morrow, New
York.
51.
The WFEO is a non-governmental organization (NGO)
and was established with the support of UNESCO
in 1968. The WFEO currently represents an estimated
15 million engineers. ComTech is the WFEO Standing
Committee on Technology. Its purpose is the sharing,
transferring and assessment of technology.
52.
von Weizsäcker, E., Lovins, A. and Lovins,
L. H. (1997) Factor Four: Doubling Wealth, Halving
Resource Use, Earthscan, London.
53.
DeCanio, S. (1998) 'The Efficiency Paradox: Bureaucratic
and Organizational Barriers to Profitable Energy-Saving
Investments', Energy Policy, vol 26, no 5, pp441-454.
54.
Feldman, S., Soyka, P. and Ameer, P. (1997) 'Does
Improving a Firm's Environmental Management System
and Environmental Performance Result in a Higher
Stock Price?', ICF Kaiser International, The Journal
of Investing, Winter, pp87-97.
55.
Drozdiak, W. (2000) 'Firms Become "Green" Advocates
Global Warming Talks Near End', Washington Post.
56.
Lovins, L. H. and Link, W. (2002) Insurmountable
Opportunities?: Steps and Barriers to Implementing
Sustainable Development, Comments to the UN Regional
Roundtable for Europe and North America, Vail,
Colorado.
57.
Ibid.
58.
NZBCSD ( New
Zealand
Business Council for Sustainable Development)
(2002) Industry Guide to Zero Waste, NZBCSD, August.
59.
Dumaresq, D. and Greene, R. (2001) Soil Structure,
Fungi, Fauna & Phosphorus in Sustainable Cropping
Systems, Rural Industries Research and Development
Corporation (RIRDC).
60.
Womack, J. and Jones, D. (1996) Lean Thinking:
Banish Waste and Create Wealth in Your Corporation,
Touchstone
&
Design,
New
York.
61.
Jones, D. (2003) 'Supply Chains of the Future',
presentation to the Efficient Consumer Response
(ECR) Conference,
Berlin,
Germany.
62.
Ibid.