A revelation atop the Himalayas

Conservation comes after breakfast

Which of the following items will take the shortest time to degrade in a landfill:

Aluminum can

Styrofoam cup

Cigarette butt

Disposable diaper

Which of the following items will take the shortest time to degrade in a landfill: Aluminum can

Styrofoam cup

Cigarette butt

Disposable diaper

Tasty mushrooms from dirty diapers

Sources of GHGs emission

33%

28%20%

11%

8%ElectricityTransportationIndustryCommercial & ResidentialAgriculture

Overall…

~Approximately 40% GHGs relate to subsistence activities

~60% of GHGs can safely be attributed to business related activities

Business and environmental sustainability

Environmental concerns

Business activities

Why should business care for the society/environment?

• Moral obligation

• The iron law of responsibility

• Social contract/legitimacy

• It pays off

Who other than business firms?

• Customers

• Watchdogs/NGOs

• Industry associations

• Governments

Business firms

Wide array of sustainability oriented

actions

Sourcing Manufacturing Selling

Sourcing stage- raw material choice

Aluminum can

Styrofoam cup

Cigarette butt

Disposable diaper

Concrete vs. wood/ wood vs. FSC certified wood

100 years

Immortal

10-12 years

75 years

Manufacturing stage- energy/waste management

Selling stage- Green logistics and retailing

Sustainability vertigo

Sustainability impasse

Why that impasse!

Restraint/regulation

Radical Innovation

Thomas MalthusRestraint

Regulation

Robert SolowRadical innovation

Deregulation

Restraint is intuitive, why not side with that?

A Solovian belief …

“…the world can, in effect, get along without natural resources,

so exhaustion is just an event, not a catastrophe.”

Three categories within the restraint paradigm

Conscious consumerism

Conscious business practices

Intervening mechanisms

Three categories within the restraint paradigm

Conscious consumerism

[Refuse/ Reduce/ Reuse/

Recycle/ Upcycle]

Conscious business practices

Intervening mechanisms

Three categories within the restraint paradigm

Conscious consumerism

Refuse/ Reduce/ Reuse/

Recycle/ Upcycle

Conscious business practices

[Workplace austerity, business model changes]

Intervening mechanisms

Three categories within the restraint paradigm Conscious consumerism

Refuse/ Reduce/ Reuse/ Recycle/ Upcycle

Conscious business practices

Workplace austerity, business model changes

Intervening mechanisms

[Regulations, standards]

Two categories within the innovation paradigm

Remedy oriented

“Eco-effectiveness” oriented

Two categories within the innovation paradigm

Remedy oriented

[Un-do the harm]

“Eco-effectiveness” oriented

Two categories within the innovation paradigm

Remedy oriented

“Eco-effectiveness” oriented

[Zero waste, cradle to cradle design, bio mimicry, circular industrial system]

Interaction between paradigms

When innovation fosters restraint

A shower that forces you to leave when you’ve wasted too much water

Interaction between paradigms

When restraint fosters innovation

Corporate fuel efficiency (CAFÉ ) standards

Restrainers’/regulators’ verdict

• Innovation is terrific but not the panacea

• Solovians are delusional in their denial of the earth’s carrying capacity

• Solovians risk lulling the public—and businesses-- into failing to reduce, reuse, and recycle as much as is required

Innovators’/deregulators’ verdict

• Focus on restraint can delay our collision with the earth’s carrying capacity but not allow us to innovate our way over it

• Malthusians are dreary and depressive: resist possibilities contained in innovation

Making innovation work

• Abundance of risk capital

• Policy against “problematic” practice

• Reducing the time between technology breakthroughs and mass commercialization

• Moore’s law for clean tech

• Unintended consequences (Jevon’s paradox)

Making restraint work

• Consistent, conscious, collective actions

• Social pressure on individual and companies

• Economic incentives?

Customers-sustainability

interfacePanwar – Kozak

Wood 465

Heard about Starbuck’s “race together” campaign?

• Brand misalignment

• Authenticity

• Reaction

Why customers in this conversation?

Let us learn something from FSC story (Buyer be fair Youtube)

What is the “take away”

Environment left to market forces: if customers want, they can pay a premium price for environmentally benign products

What does (or may) that mean?

• Tied to regulate/restraint- innovate/de-regulate dilemma

( and shhh…… it seems that they just voted against regulation)

• Should environment be left to consumers choice?

(Also consider this: …. https://vimeo.com/10324258 --Your brain on climate change: why the threat produces apathy, not action)

• Why should cost of environmental performance be passed on to consumers– reward/punishment dilemma?

• Will they pay?

Do customers care for corporate sustainability?

YES!

Are customers willing to pay for sustainability actions?

Conclusion of a meta-analysis

wood products with low base prices capture some price premiums

(Cai & Aguilar 2013)

实现森林可持续发展

潘瓦尔  – 科扎克(Panwar – Kozak )

Wood 465 (木材 465)

(Toward achieving sustainability in the forest sector)

About the title of the chapter

Words, words, words….

A typology of sustainability oriented initiatives

(i)Private governance networks

(ii)Transnational regulatory policies

(iii)Transnational voluntary market based policies

(iv)State level (national) regulatory policies

(v)State-level voluntary policies

Private governance networks

(i) FSC

(ii) PEFC

(iii) FFD

Transnational regulatory policies

(i) CITES

(ii) ITTA

(iii) UNCBD

Transnational voluntary market based policies

• International green purchasing network (IGPN)

• Equator Principles

• WB forestry financing

• Forest carbon and conservation policies– (e.g., REDD+)

• Global forest and trade network (GFTN)

State-level regulatory policies

• Lacey act

• European Union Timber Regulation

• How about BC’s Wood First Act?

State-level voluntary policies (market based)

• Green procurement programs

Bi-preferred

Eco- buy Australia

Or innovation is the answer?

Stopping illegal logging: DNA Barcoding of tropical woods

Initiatives on the manufacturing side

• Environmental management systems (EMS)

• Industry codes of conduct

• Environmental product declarations (EPDs)

Or are there some fundamental shifts to be made?

• Decentralization

• Fostering sharing economy

Sharing economy

Panwar –Kozak

Wood 465

Sharing

An informal co-operative arrangement

A niche market

An emerging economic system

“A system within which broad segments of the population can collaboratively make use of under-

utilized inventory via fee-based sharing”

“Developing value from untapped potential residing in goods that are not entirely exploited by their

owners”

For book-worms

“What’s Mine Is Yours: The Rise of Collaborative Consumption”

(Botsman & Rogers)

Drivers and enablers of sharing economy

• Financial incentive

• Concerns for sustainability (or perhaps a post hoc justification)

• Evolution from Web 1.0 to Web 2.0

• Changes societal views of sharing (doesn’t equate with intimacy)

How is it a fundamental shift?

• Consumption centric economy: you are what you own

• Sharing economy: you are what you can access

A semantic landscape of sharing economy

Collaborative consumption

Market mesh

Commercial sharing systems

Co-production

Co-creation

Prosumption/prosumers

Access-based consumption

Consumer participation

Online volunteering

Examples abound…

• Collaborative web content (Wikipedia, YouTube, Twitter, Flickr, fb,)

• Zipcar, Airbnb, Freecycle, Uber

• $335 billion by 2025

• P2PL/P2PI (e.g., Prosper and LendingClub)

(Goldman Sachs is seriously considering to invest in p2p platform Aztec Money)

Why give a damn…

sharing economy is going to represent a serious threat to established industries, due to fewer purchases and consequent

distress in conventional markets

So… learn to adapt to sharing economy!

1. Sell the use, not the product

2. Support your customers in their attempts to resell

3. Take advantage of unused resources and capacities

4. Provide repair and maintenance services

5. Align with collaborative consumption to target new customers

6. Find new business models based on the sharing economy

Sell the use, not the product

• Hilti Group (Liechtenstein)

products, systems and services to the global construction industry

sales losses to competitors’ inexpensive small tools in 1990s

sought to learn from its customers how the company could improve its offerings

Hilti learned (i) that workers sometimes saw small tools as basically disposable, (ii) that cheap battery-powered tools — while seemingly efficient at first glance —overload constructions worksites

Hilti’s response

• commoditization of tools represented a threat to current sales, it also opened up an opportunity to compete by providing customers with convenience and a service known as “tool fleet management”

• Customers can lease tools for no upfront capital investment and a fixed monthly rate within a defined usage time

• Not just flexibility and efficiency, but also an all-inclusive repair service

Zipcar triggered adaptation in auto industry

• Daimler AG- Europcar joint venture Car2go

• BMW’s Drivenow

• Peugeot’s Mu

Support your customers in their attempts to resell

• Ikea launched an online platform in Sweden allowing customers to resell their used Ikea goods– open to members of their loyalty program, Ikea Family

• Patagonia established the Common Threads Partnership with eBay. The partnership aimed to make it easy for anyone to buy and sell used Patagonia products

• Brand aligned de-marketing

Take advantage of unused resources and capacities

• share existing assets and capacities

• Maschinenring

- association in the industries of agriculture and forestry

- began with the basic sharing of machines, but now facilitates collaborative use of machinery, and even personnel renting

- Collaborative strategies- leveraging each other’s competencies (think Strategy as Ecology)

LiquidSpace (the “Airbnb of work spaces”)

• Collaborative consumption to the world of office space

• Tailors workspaces and meeting rooms to the particular needs of renters

• Connects corporations that have unused office space with those who are temporarily in need of it

• Enablers : the pressure of businesses to control real estate costs, mobile and social technology, and employees who like working from home

• Lq app relies on a “how I work” profile

Provide repair and maintenance services

• FedEx built up a large body of knowledge in the area of repairing electronic devices that its employees use in the process of making deliveries.

• FedEx TechConnect-- specializes in repairing electronic devices

• Coming back to the idea “what business are you in”

• You just cut lumber or are you in construction business?

Best Buy’s Geek Squad

• BB bought in 2002

• For both old and new purchases

A recommended reading

“Sustainability through servicizing” by Sandra Rothenbeg (2007). SMR.

Align with collaborative consumption to target new customers

What all could it mean?

Find new business models based on the sharing economy

• Kuhleasing.ch (a cow-leasing website)

• Illustrates how conventional industries can establish new business models by moving away from traditional revenue

Confronted with decreasing milk prices and the abolition of a cheese export union in 1999 Swiss farmers faced the challenge of selling large amounts of cheese to surviveActing from necessity, a Swiss farmer started leasing his cows to customers instead of solely selling the cheese- Lessees pay a fee to sponsor a cow for a season. The

arrangement includes a photo of the cow and a certificate, plus the option to visit the farm to help out as a volunteer or to watch the daily farm work

- The leasing cost does not include the cost of the final cheese product, but it guarantees a special price for a minimum purchase of 30 kgs of cheese from that cow

- The farm also offers additional leasing options that are available as gifts, such as short-term packages

- According to one farmer, all 150 of his cows are leased to customers around the world — in countries including Japan, South Africa and the United States

The Wine Foundry, a company that enables amateur and professional winemakers to make their own wine without owning a vineyard, by providing tools and assistance for wine production.-The Wine Foundry is a one-stop shop for custom wine production. -The company offers a full range of services, from fruit sourcing to label design.