An energy-smart clothes washer can save more water in one year than one person drinks in an entire lifetime. Start with a committed core. Because sustainability cuts across industries and sectors of the U.S. economy, defining just what contributes to the green economy … Wir stellen vor: Samsungs Fakten & Zahlen. Puma, a sports footwear and apparel brand that is a subsidiary of the French PPR Group (which also includes Gucci, Stella McCartney, and Yves Saint Laurent) announced in April 2011 that it would begin issuing an environmental profit & loss statement that will account for the full economic impact of the brand on its ecosystem. Recommend a Friend It’s generally cheaper to buy the product that has a worse impact on its environment than the equivalent product that does less harm. By innovating more closely with suppliers, customers, and others in their value chain, companies in every industry are finding ways to reduce impacts that save money—and not simply by shifting their own footprint to someone else’s operations but by cutting the costs incurred and waste produced across the system. It commissioned PriceWaterhouseCoopers to help develop the EP&L statement, and both companies hope to create a model robust enough to be adopted by others. A company that earns better ratings than its competitors will be rewarded with business from downstream customers. And as the true costs of manufacturing products become visible, any decisions to lower those costs will be dramatically leveraged to the company’s benefit, because they will likewise be visible to fund managers and bankers. Investors now see that companies’ water use, carbon emissions, stance toward labor, and supply chain management practices have a material impact on their valuations. The aim is to balance economic prosperity with environmental sustainability and social inclusion and cohesion, promoting sustainable investment … Plant-rich diets reduce emissions and tend to be healthier, leading to lower rates of chronic disease. We are at the start of the development of a sustainable or green economy. What happens when the trends we’ve just described combine to fuel one another? This means more climate neutral, energy- and resource-efficient and circular projects. Examples include an initiative to achieve zero emissions by a PepsiCo Frito-Lay potato chip factory in Arizona; an IBM facility’s success in cutting annual energy and water use by $3 million even as it increased output by 33%; a project at General Mills to help broccoli farmers switch from furrow irrigation to a drip method requiring half the water, saving nearly 1.2 billion gallons a year; and operational changes at retailer The Gap that saved suppliers’ employees from excessive overtime hours. If people worldwide switched to energy efficient light bulbs the world would save 105 billion euros annually. Nearly half of the solid waste produced globally is organic or biodegradable. But what if we could get to the point where the lowest-priced T-shirt was also the one doing the least harm to the planet and society? The group was cognizant of antitrust guidelines and avoided discussion of topics such as pricing, costs, and business and marketing plans. That's more than one person uses in two weeks. Accreditations & Rankings Value chain indices address that confusion with a single, much simpler and more effective standard for an industry. 2. If you like these facts you may be interested in reading more about sustainability, sustainable development and the three pillars of sustainable development. Patagonia’s Yvon Chouinard and Rick Ridgeway team up with sustainability consultant Jib Ellison to explain those trends and how their convergence is driving a new era in sustainability. Inspired by that success, but eager to consider more than one dimension of performance (Energy Star looks only at energy efficiency), the electronics industry created its EPEAT standard in 2006 to provide a consumer-facing rating accounting for more than 50 environmental criteria, including use of heavy metals and toxic flame retardants. In most cases, projects and decisions must be made with the long term benefits in mind (rather than just the short term benefits). The 2020 edition of the Sustainable Energy in America Factbook – produced for the Business Council for Sustainable … For over a decade now, raw-materials buyers and other managers in companies seeking to reduce environmental and social impacts in their supply chains have relied on standards and certifications, often from third parties, that usually address only one impact category. The most common finds during international coastal cleanups are cigarette butts, plastic beverage bottles, plastic bottle caps, food wrappers, plastic grocery bags, plastic lids, straws and stirrers, glass beverage bottles, other kinds of plastic bags, and foam take-away containers. 9. Imagine a moment in the near future when VCIs have become prevalent. From there, it’s a short hop to the second way that fund managers will use VCIs. The United Nations and the World Bank are also working on the problem. Plastic bags and Styrofoam containers can take up to thousands of years to decompose leading to marine animal death and the contamination of soil and water. . BASE Milano - Reception - Via Bergognone, 34 It’s important to swiftly establish the right project scope, but the initial VCI tool only needs to be “good enough” to set the stage for refinements. Despite its enormous popularity in the last two decades of the 20th century, the concept of sustainable … The Sustainable Apparel Coalition’s experience suggests steps to get an industry working in concert. Instead of asking either “how can we turn a profit?” or “how can we minimize our impact?” managers will see those as two sides of the same coin. Here are 30 facts about sustainability to help connect the dots: 1. [2] In particular, the crucial role that environmental and social dimensions of human economic activities play in creating a better world surfaced during the Earth Summit in Rio in 1992. This chapter reviews the literature on the economic … Economic sustainability means that decisions are made in the most equitable and fiscally sound way possible while considering the other aspects of sustainability. But few of the companies in the coalition, as far as we know, foresee how the creation of a value chain index will help to usher in a new era of sustainability. When companies use standardized protocols like the Global Reporting Initiative to report their progress, investors are better able to evaluate companies’ relative performance. Businesses are rarely obliged to pay for the full toll their operations take on the world. Rather than abandon necessary metrics, the SAC settled for qualitative evaluations in some areas. Smart money will flow to the ends of the earth in a quest to “go long” on profitable value chains with the lowest all-in cost to the planet, whereas value chains with high true costs will increasingly be viewed with greater concern, and will be subject to lower ratings and higher costs of capital. Broadly speaking, the global economy has a neoliberal bent to it. Those standards compete and overlap in multitudinous ways. A designer on the team starts work on a cotton blouse. Recycled paper produces about 25% fewer total emissions than conventional paper. Why Sustainability, Undergraduate But the unfortunate effect of our seeing these inputs to well-being as incalculable has been that they are treated as free. Copyright © 2020 Harvard Business School Publishing. That leaves only vision. A hot water faucet that leaks one drop per second can add up to 165 gallons a month. Mpumalanga province in South Africa has the highest levels of air pollution in the world, in terms of nitrogen dioxide levels, due to a high concentration of coal power plants. “It is hard-nosed economics.”. Sustainable economy is founded on the economic development that aims to satisfy the needs of consumers in a way that sustains natural resources and the environment for future generations. Regimes like “cap and dividend”—which proposes to tax carbon suppliers, raise the price of energy-intensive products and services, and then rebate all those costs back to consumers— would surely drive rapid market-based innovation. I would like to receive updates on relevant programs, application deadlines, invites, news and offerings. In other words, the index ignores traditional Wall Street quantitative metrics (cash flows, revenue, and so on) and bases its composition on ESG factors. When organic matter is landfilled it decomposes and produces gas methane which is up to 34 times more powerful than carbon dioxide over a century, thus contributing to climate change. Real change will come as high-level calculations filter down to individual companies’ bookkeeping. Sustainable development can be defined as an approach to the economic development of a country without compromising the quality of the environment for future generations. The world’s indigenous population makes up just 5% of the global population yet protects 80% of global biodiversity. As with any corporate index, a VCI gains power to the extent that it is applied consistently across most or all firms in a sector, and also applied over time to track relative performance. A value chain index (VCI) provides a way to make apples-to-apples comparisons of products on the basis of the impacts that accrue to them at each phase of their journey from raw material to consumed, discarded good. Of course, the bounty of nature is priceless. A dizzying array of labels has cropped up in response to companies’ desire to communicate to consumers their environmental efforts. In the beginning, it was seen as an operational concern, consisting of largely defensive efforts to reduce companies’ environmental footprints and cut waste. The adoption of the UN Sustainable Development Goals (SDGs) in 2015 represented a turning point in the way the international community decided to tackle global issues by bringing together economic, environmental and social dimensions in an integrated manner. 3. Our professional services include: 1. That mind-set creates problems when resources turn out not to be limitless or indestructible. Imagine, in other words, a shopper with a smartphone scrolling down to see the subratings in a category of particular importance to her. Climate change is defined as “a change of climate that is attributed directly or indirectly to human activity, that alters the composition of the global atmosphere, and that is in addition to natural climate variability over a comparable time period.”. Sustainable finance is needed to implement the Commission’s strategy towards achieving the SDGs. And yet collectively we have not been making progress on reducing the damage business does to the world. “The natural wealth of nations should be a capital asset,” Zoellick said, “valued in combination with its financial capital, manufactured capital, and human capital.”. It established uniform methods for data collection to ensure apples-to-apples comparability across the sector. The 3.0 era will render the term redundant. International Campuses . (For more, see the sidebar “How to Create a Value Chain Index in Your Sector.”) In the fall of 2011 the group completed a prototype VCI, and all members have begun road testing it in their supply chains. Sustainable economic growth is economic development that attempts to satisfy the needs of humans but in a manner that sustains natural resources and the environment for future generations. This has been the focus of, for example, The Sustainability Consortium, a diverse group of companies, universities, and government organizations working on methodologies for extracting life-cycle assessment data from their supply chains in order to reveal impact hot spots. Doctorate Benefit-cost analysis of public policy 2. A company committed to sustainability but working unilaterally can accomplish only so much. Sustainability is part of ABB’s business and is embedded in daily operations. Focus on who will use the index and how. Progress will be fastest if we can create a system in which the products that cause the least harm also have the lowest price. Switching to LEDs will use 90% less energy and last far longer than with the use of incandescent lights. Indeed the entire financial services industry will respond in creative ways to this new reality, and also to companies’ new ability to value ecosystem services and create environmental P&Ls, as Dow and Puma are doing. In the name of economic … Even if we only want things to stay the same, practices must change. Big changes are needed to achieve such an economy. One product of this effort is a web-based tool called Artificial Intelligence for Ecosystem Services (ARIES), developed in partnership with the Gund Institute for Ecological Economics and with funding from the U.S. National Science Foundation, which allows users to value ecosystems rapidly and on multiple scales, from local to regional to national to global. EVERY DAY, EVERY ACTION Water. 18. This is a problem in consumer-facing markets as well. When organic matter is composted, organic matter is converted into stable soil carbon, “while retaining water and nutrients of the original waste matter.” This results in carbon sequestration and the production of a high quality fertilizer. In 2011 Dow Chemical pledged $10 million over five years for a team of scientists from The Nature Conservancy to help Dow develop ecosystem service valuation methods. But by the end of 2012, a version 2.0 tool will use quantitative life-cycle assessment data to create its weighted ratings. . The process of Aforestation (creating new forests where there were none) creates a carbon sink. None of the players that could potentially drive this scale—retailers, consumers, governments—are demanding such action in any organized or sustained way. However, the global economy is growing at a slower rate. Think back to the first trend, calculating the costs of externalities: The developments in the investing world go hand in hand with it. The last trend of real importance is the work under way to draw up what we call value chain indices. Progress in each area spurs progress in the others, with the result that the long-sought alignment of a firm’s prosperity with the best interests of the planet seems not only possible but inevitable. It isn’t a question of whether business will radically transform, but only of when and how. Headquarters - Rue Mauverney, 28 Online Capital costs represent expenses incurred when setting up the process. Growing a Sustainable Economy. Examples show that this is exactly where limits to growth imply more sustainability. Keep in mind that when only the economic aspects of something are considered, it may not … What’s more, that investor knows her firm is not the only one making sourcing decisions using this VCI. (3) Industries are converging on standard indices for rating products’ sustainability and seeking improvements throughout their value chains. An era of economic growth, reduced CO2 emissions and sharply falling energy costs for consumers Over the past 10 extraordinary years, the United States has fundamentally overhauled how it produces, delivers and consumes energy. Calculations and accounting like this will pave the way for companies to internalize costs they have ignored in the past as externalities. For the French government, with its law already on the books, that would be a godsend; the coalition currently is inviting the French government to participate in the development of its index. So the VCI offers three views: a brand view, a factory view, and a product view. The companies in the apparel coalition are enthusiastic about the VCI’s clear role in helping their executives, managers, and employees make better choices based on fuller awareness of their consequences. Prototype quickly; then refine. The Blue Economy is an economic arena that depends on the benefits and values realized from the coastal and marine environment. It supports the shift towards sustainable growth via a resource-efficient, low-carbon economy. So investors increasingly seek out companies with positive environmental, social, and governance performance not because they are morally admirable but because they are more viable in the long run. Ecological footprint and carbon footprint analysis Non-market valuation 3. 20144 Milan, Italy, About Us The right to safe drinking water was first recognized by the UN General Assembly and the Human Rights Council as part of binding international law in 2010. The Sustainable Economy Listen to an interview with Jib EllisonDownload this podcast No one these days seriously denies the need for sustainable business practices. Does greater transparency allow the funds to achieve higher investment returns? Proof comes from the MSCI KLD Social 400 Index (formerly the Domini Social Index), which over the past 20 years has outperformed the S&P 500 on an actual and a risk-adjusted basis. In this way, developers of new technologies that lower the environmental impact of manufacturing and agriculture will be met with both grateful customers and eager investors. Real change will come as ecosystem service valuations filter down to individual companies’ bookkeeping. But here, again, the tide is turning. Developments on three fronts, long in the works and now converging, make it not only possible but inevitable that successful business will become synonymous with sustainable business. In this way, a VCI generates a rating for a specific product that can be compared against a benchmark and offers options for mitigating those impacts. BIOEAST. Agricultural Emissions could be reduced by as much as 70% by adopting a vegan diet and 63% by adopting a vegetarian diet. The Sustainable Apparel Coalition, a group we are closely involved in, was launched two years ago, when Patagonia asked Walmart to get behind an effort to create a value chain index for our industry. They replaced those with comparable stocks from companies with better environmental, social, and governance track records. Sustainable economic activity At Sigel, sustainable economic activity means giving equal weight to all elements of the sustainability principle for all corporate decisions. Seeing these inputs to well-being as incalculable has been that they are treated as free sink. Brands based on their environmental and social progress to benefit all our stakeholders is embedded daily. Already, there are laws on the team starts work on a VCI create its weighted.... 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