The Challenge of IntegrationThe Challenge of Integration

The Expandable Limits to Corporate ResponsibilityThe Expandable Limits to Corporate ResponsibilityCorporate Industrial EcologyCorporate Industrial Ecology

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Chapter 8

8.1 Expandable Limits of Corporate Responsibility

• The limits to corporate integration in product cycle and infrastructure

• Benefits of integrated control over products and processes

• Benefits of distributed control among product cycle stages

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Integrated and Distributed Responsibility in the Product Cycle: Oil Companies

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* * ResourceExtraction

* MaterialsProcessing

PartsManufacture

ProductAssembly

* * Distribution

Consumption

MaterialsCollection

Recycling

Material & Energy Inputs

Pollution Outputs

* Primary responsibility

* * Secondary responsibility

Integrated and Distributed Responsibility in the Product Cycle: Cars

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ResourceExtraction

MaterialsProcessing

* * PartsManufacture

* ProductAssembly

* * Distribution

Consumption

MaterialsCollection

Recycling

Material & Energy Inputs

Pollution Outputs

* Primary responsibility

* * Secondary responsibility

Integrated and Distributed Responsibility in the Product Cycle: Retail

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ResourceExtraction

MaterialsProcessing

PartsManufacture

* * ProductAssembly

* Distribution

* * Consumption

MaterialsCollection

Recycling

Material & Energy Inputs

Pollution Outputs

*Primary responsibility

* * Secondary responsibility

How to include physical infrastructures?

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ResourceExtraction

MaterialsProcessing

PartsManufacture

ProductAssembly

Distribution

Consumption

MaterialsCollection

Recycling

Social Infrastructure:Gov’t, industry assoc.s,

NGOs, etc.

Material & Energy Inputs

Pollution Outputs

Physical Infrastructure:roads, sewers, land use,

electricity, etc.

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Value Cycle

ResourceExtraction

MaterialsProcessing

PartsManufacture

ProductAssembly

Distribution

Consumption

MaterialsCollection

Recycling

Social and Physical Infrastructures

Material & Energy Inputs

Pollution Outputs

Value Exchange

Transfer Impacts

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• Improved product quality• Increased staff commitment• Improved community relations• Positive pressure group relations• Improved media coverage• Green products• Cheaper finance• Lower insurance and legal costs• Reduced risk exposure• Assured present and future compliance• Reduced costs because of improved materials and

energy efficiency• Improved materials• Reduced cleanup and decommissioning costs

Values Created through a Sustainable Business Strategy

8.2.i Leasing 8.2.ii Product stewardship8.2.iii Extended Product Responsibility8.2.iv Demand Side Management8.2.v Investing in natural capital8.2.vi Carbon offsets

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8.2 CORPORATE INDUSTRIAL ECOLOGY

– Meaning: Sell services and retain ownership of products. Value is created by offering customers a consistent flow of satisfaction rather than an accumulation of goods.

– Manufacturing companies capture benefits of increased resource productivity and closed-loop activities.

– Service companies compound downstream savings and avoid stocking and labor costs.

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(servicizing, selling function)

8.2.i Leasing

Xerox’s Leasing Model Designed re-manufacturable machines and components, paper, energy

and hazardous waste saving machines

Also redesigned business delivery system by: Recovering assets Designing its own ‘reverse logistics’ Selling the function of the photocopier and components--not the

photocopier

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Examples of industrial Ecology: Xerox

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Commitment of a firm to design its products so that they reduce environmental impact wherever they are used in the product cycle.

Design responsibility is taken but otherwise there is little attempt to control the other stages of the product cycle. Proctor and Gamble’s low environmental burden consumer products.

8.2.ii Product Stewardship

Emphasizes designing low environmental burden consumer products

Designs products and packages to get "more from less.” Designs product to have low impact when disposed of

down the drain, released into the atmosphere, and burned or buried.

Exerts influence downstream on wood fibre and uses few hazardous materials

• Forces companies to reuse, recycle, or dispose of their products and/or packaging or pay someone else to do it;

• Gives companies the incentive to design for reduction of product materials,packaging, and toxins, and to otherwise make reusing, recycling, and disposal easier and cheaper.

• Producer (brand owner, importer or manufacturer) has primary responsibility because of greater influence on design.

• In practice, responsibility shared by stakeholders in product cycle: consumers, government, waste sorters, and recyclers.

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Requiring a company to deal with its product or packaging at the end of its product life.

8.2.iii Extended Product Responsibility

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The German Dual System for Packaging Materials from all Industries

Government Industrial Ecology Initiatives• improve the collection network through programmes on

separation of waste at source;• adopt PRSs as a major measure to enhance the recovery of

recyclable materials;• lease suitable STT sites exclusively to waste recyclers;• establish an EcoPark to provide long-term land for the

environmental and recycling business;• adopt a green procurement policy to enhance market demand

for recycled products;• continue to support and encourage research and development

of new recycling technologies through the ECF, the Innovation and Technology Fund, and funds for small and medium enterprises; and

• continue to organise educational programmes at the community level to increase the public awareness of waste recycling.

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“Exporters see red over EU green rules”

8.2.iv Demand Side Management

• Usually in utilities such as electricity and water supply

• Utility can gain from putting off investments in capacity; load leveling; profit sharing with customer

• Utilities often educate and subsidize changes on demand side.

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Producers helping customers (i.e. the demand side) to reduce their costs and improve the performance of their purchased electricity, water, or other good.

CLP’s Demand Side Management

• Information and Education, Energy Efficiency Centre, Pilot Lighting Programmes

• Non-residential Energy Efficient Lighting Rebate Programme

• Non-residential Variable Speed Drive Rebate Programme

• Non-residential Energy Efficient Air-conditioner Rebate Programme

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Making money by not investing in more facilities and maintaining service.

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Non-Energy Efficient Lighting Equipment vs. Energy Efficient Lighting

Incandescent Lamp vs. Compact Fluorescent Lamps

(CFLs) 70 ~ 80% energy saving

Fluorescent Tube (FT) vs.Energy Efficient Fluorescent

Tube (EEFT) 10 ~ 30% energy savings

Conventional Electromagnetic Ballast (EMB) for Tubular Fluorescent Tube Electronic Ballast (EB) for Tubular Fluorescent

Tube 20 ~ 30% energy savings

Reinvest in natural capital

Meaning: • Business must meet the necessity to

restore, sustain, and expand the planet’s ecosystems so that they can produce their vital services and biological resources more abundantly.

• Business can create value at the same time it fulfills these needs.

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8.2.v Investing in Natural Capital

• Organic farming—and purchasing• Natural ingredient and sustainable harvest

based products• Natural waste recycling• Ecotourism• Green factories• Residential development

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Environmental Impacts: Green and Black’s Chocolate

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•farmers grow cocoa trees under the shade of indigenous trees alongside other crops, including avocado, pineapple, coffee, papaya and bananas. The canopy of shade trees - mahogany, cedar and teak - are grown above the cacao trees and ginger is occasionally grown underneath.•variety of cocoa and shade trees and interspersing with other plants promotes biodiversity and helps fight off diseases like black pod.•cocoa trees are not treated with pesticides and certified organic (farmers don’t suffer from the health related problems suffered by farmers growing cocoa conventionally).

8.2.vi Carbon Offsets• Companies can fund other companies, communities, or

governments to reduce their GHG emissions by changing to renewable energy or other types of technologies that reduce or eliminate other greenhouse gases and by funding the sequestration (storage) of carbon dioxide.

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Companies can fund other companies, communities, or governments to reduce their GHG emissions by changing to renewable energy or other types of technologies that reduce or eliminate other greenhouse gases and by funding the sequestration (storage) of carbon dioxide.

Eliminate, reduce, sequester Cheaper and more flexibility than inhouse hanges Suppliers Real benefits Brand building or greenwash?