An evening with Ronan Dunne

Monday, June 11, 2012

18:00 - 20:30

We devoted our June Forum to looking at O2’s strategy with its CEO, Ronan Dunne, in what promised to be one of the highlights of our 2012 programme.

It was a great opportunity to hear a CEO talk about what sustainability means to his business model, and having recently launched its Think Big programme there was a coherent strategy to debate. The format was be similar to our January Forum, when we had an evening with Ian Cheshire, CEO of Kingfisher. Many felt that was the best of our 70+ events - no pressure, Ronan.

Here’s how we will explored, debated and, hopefully offered collective wisdom on O2’s strategy through the June event.

  • We laid out and analysed O2’s strategy, based on interviews with key stakeholders, which we shared with delegates in advance.

  • Ronan opened with a 10-minute speech on why sustainability is important to O2, and why it is innovating with its business model.

  • Jim Woods interviewed Ronan for 15 minutes, focusing in on some challenging lines of questioning to give Ronan an opportunity to demonstrate the depth of his understanding.

  • Ronan played the Good / Bad Game – great entertainment, but with the intention of identifying his values as a leader.

  • We had 30 mins Q&A with the audience, Twitter (#gmO2) and those watching live online.

In the 14 roundtables afterwards we focused on key areas of the O2 strategy, with O2 having provided some of the questions as a crowdsourcing exercise.

We may be watching the emergence of new leader in Sustainability, joining the ranks of Ian Cheshire, Paul Polman, and Sir Stuart Rose. We expected a senior audience – many of the O2 board were in attendance, and we had many senior business strategists from well known brands.

Speakers

Ronan Dunne O2

See bio
Round Tables

Supply Chain

What are you view’s on O2 supply chain strategy and what are you doing differently ?

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The supply chain table looked at how companies manage and measure supplier’s environmental impact and it was felt that ethical sourcing is a challenge for the whole industry. It was agreed that the three areas of O2 Think Big plan that put it into the leading companies was the involvement of their CEO, the eco-rating system and the fact that all staff are actively engaged in environmental practises.

1. Solutions
• Some companies have set up best practise forums with suppliers to promote innovation
• Use of electronic tools, e.g. E-TASC now being used with some companies to assess and manage supply chain risk
• O2’s new eco-rating mark reveals the overall sustainability performance of mobile handsets and is driven by customer’s purchasing patterns
• Senior management buy-in is crucial to engaging staff and creating legacy

2. Obstacles
• Staff in procurement in several companies have had a steep learning curve regarding the reliability of benchmarking supplier’s CSR data
• Difficult for SMEs to manage their supply chains and it was agreed that there was no easy answer at the moment.
• Need for government departments to raise profile of sustainability via education initiatives
• Some companies have reduced CSR activity and focus only on the minimum of sustainability activity whilst concentrating on social initiatives.

3. Examples
• Drive to support youth employment in some companies, measured by data listing number of new jobs gained and start of apprenticeship programmes for example
• O2’s Think Big plan is easily digestible to a lay person and a great communication tool

4. Red Flag (Warning)
• Some companies are investing in new energy sources, e.g. wind farms where others are not - should large companies be setting an example and leading the way irrespective of the cost?

Carbon Strategies

Microsoft recently announced an impressive carbon neutral strategy,  after a year when carbon has slipped down the agenda. What does the table think of Microsoft's strategy, and does it signal a renaissance for carbon neutrality?

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The theme discussed was carbon neutrality, different companies that have adopted it, and how it perception businesses. Microsoft recently announced a carbon neutrality scheme. Despite ambitious sustainability plans from leading corporations, sustainability and carbon efficiency has slipped off the agenda of many companies in the last 15 months, and it is a topic that seems to keep moving in and out of vogue with businesses. Further a lack of rigour in defining carbon neutrality results in businesses and customers receiving such claims with scepticism.

Soon after Microsoft announcement, M&S revealed similar plans. Large organisations are always looking at how others act, and can be influenced by their decisions. Though Microsoft is in IT sector, companies who wish to learn about sustainability can look at industries different to their own to learn about good practices. Effective and encompassing carbon neutrality policies often work best through a top down approach. IT companies also have the benefit of taking on consumers carbon, for example by reducing transportation emissions through services such as video conferencing.
There was debate about the value of the term carbon neutrality. Business cannot agree on a single definition, let alone agreeing with customers about what the term means. Afterall, carbon neutrality does not mean zero net carbon production.What is the scope of carbon neutrality, does it include all of the businesses activities, and how can we choose which activities are key for inclusion?Additionally, it is hard to address the carbon intensity of an entire product supply chain, and difficult to enforce sustainable practices on businesses other than your own.
There was discussion also about the value of the Carbon Disclosure Project (CDP), an organisation that evaluates the greenhouse gas emissions of major corporations, helping them assess their climate change risk and opportunity. It has become more important as customers are demanding carbon competitiveness from their suppliers, and expect them to be CPD certified. As a result the CPD is sometimes viewed as a compliance, tick box activity, and does not necessarily create an ethos of sustainability among the employees, or reflect the companies values. Investors also give importance to the sustainability a company is pursuing.

Many companies pursue carbon neutrality by purchasing carbon offsets. The beneficiaries of these projects are often abroad, for example wind turbines in China, or clean stoves in Mexico. A new approach should be sought that allows claiming emission reductions from investment in local projects that demonstrate additionality. One example is investment in renewable technologies for schools.

Solutions
1. Look at companies outside of your industry to learn about sustainability best practices.
2. Top down approaches are effective for carbon neutrality schemes, especially in collaborative projects.
3. Carbon offsetting by investing in local projects that demonstrate additionality.

Obstacles
1. Lack of agreement between businesses, as well as customers, on what qualifies as carbon neutrality.
2. Defining the scope of carbon neutrality is a challenge.
3. Influencing the sustainability practices of everyone in your supply chain
4. Counting carbon emissions is difficult.
5. Some companies do not yet want to go carbon neutral. Different companies are at different stages in the sustainability journey.
6. Inability to claim carbon offsets for investment in local emission reduction initiatives, such as schools.

Examples
1. Microsoft have announced a carbon neutrality scheme which begins in July 2012. The scheme is separated under the themes of be lean, be green and be accountable, and is tackling energy consumption from its data centres, offices, and travel which account for over 80% of its emissions.
2. M&S is first major UK retailer to become fully carbon neutral.
3. Land Securities, a UK based real estate firm are developing long term carbon reduction plans and giving significant attention to sustainability.
4. WSP Consultants integrate sustainability as a key part of their operation.

Red Flag
1. No universal baseline for measuring what a carbon neutral company is. What is the bar you must meet to say you are carbon neutral?
2. Several companies claim to be carbon neutral but is there any value to these claims?

Finance & Corporate Sustainability

The PPR Group recently announced the inclusion of social costs in their profit & loss accounts. Should more companies be seeking to measure social as well as environmental costs?

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“The PPR Group recently announced the inclusion of social costs in their profit and loss accounts. Should more companies be seeking to measure social as well as environmental costs?”

After the introductions at the table we began by discussing whether each attendee envisaged their company adopting a similar approach to the PPR Group as part of their CSR policy. It was immediately identified that the relative position of a business in the supply chain will impact upon the advantage of reporting social costs. A customer facing, retail business, such as Puma, will be vulnerable to different reputational risks from that of a supplier who acts an intermediary in the chain. As such an intermediary may not theoretically gain as much as a consumer facing business in reporting these figures. However, it was noted that if consumer facing businesses start to demand action from intermediaries this could create incentives for figures to be reported further down the line. It was also noted that the complexity of the supply chain could make it very challenging to understand the exact social costs of a particular business.
Following on from these opening remarks we moved onto the the challenges involved in defining a reporting standard and ensuring that reported figures have some “tangible” component. The desire to report “something” was contrasted with the need for industry-wide standards driven either by government or leaders within the sector. It was mentioned that there may be a comparative advantage in a particular business leading in the development of an appropriate standard. Their particular metric may thus influence both competitor behaviour and future government regulation. Furthermore it was broadly agreed that the risk of doing nothing exceeded the risk of reporting something as ultimately consumers will respond to a lack of action.
We also discussed the risks associated with being first and the possible advantage of collecting societal impact data but not reporting it. Finally we touched upon broader ethical issues and the question of whether by reporting these costs we are glossing over potential negative impacts. The question of whether “If I pay, do I have the right to do environmental/social damage?” was discussed.
In conclusion the chair asked each attendee whether they anticipated their company adopting a similar reporting standard following the discussion. The conclusion varied by sector but broadly speaking it was seen that reporting something was better than doing nothing but more rigorous, industry-wide metrics need development to ensure transparency and consistent comparisons can be made between competitors.

Summary Points

Marks and Spencer’s Plan A was a well published, leading strategy in this domain. A clear example of a company leading the field in their sector. (Example)
The Ecolabel was mentioned as a clear, comparative scheme which can indicate to consumers a product which meets high environmental standards. (Example)
Taking the lead in reporting figures could give a company an advantage in shaping future government policy in their sector. (Solution)
Consumer facing companies can demand of their suppliers that they act to report these figures at risk of reduced business. Thus creating competition between intermediaries in the supply chain. (Solution)
Often the motivation to lead is lacking in some industries as it may be perceived that the risk of reporting figures first could outweigh any benefits. (Obstacle)
Clear metrics need to be devised across sectors such that there is tangible meaning in reported figures. (Obstacle)
Often in a complex supply chain there exists a large number of variables such that getting accurate measurements of societal impacts for a particular business will be challenging. (Obstacle)
Is there any advantage to be had in reporting these figures? Further analysis of the PPR Group's results required to encourage others to act similarly. (Obstacle)
There exists huge uncertainty around what is expected within particular sectors. If a particular company publishes their impact who is to say whether this is good or bad? (Red Flag)
Without appropriate standards the publishing of figures could lead to unrealistic expectations on a particular company. (Red Flag)
A key question is when should a company look to start reporting societal impacts? In particular the demand for sustainable companies is coming but where is the comparative advantage to be found? (Red Flag)

Communications

Are there ways that consumers can better assess the sustainability of products and services? What does the table think of the algorithm based solutions such as www.goodguide.com, which now rates 65,000 products? Should we be creating central methodologies for comparative purposes?

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Summary
Brands are seeking to drive demand for more sustainable products, but they are not going to break the green market by pushing sustainability data down the throats of consumers. At the same time, footprint data should be available to those that want to compare products etc.

Social media has given rise to the need for radical transparency. So, as well as leveraging their full creative power to drive the desire for sustainable products, brands should also make data available.

Industry standards are needed to prevent companies from greenwashing and to enable educated decision-making on sustainability issues that they care about. A key issue is that there is already confusion over existing labels. Consumers want an easy way to evaluate the sustainability of their products – only a few will want to explore more and understand the data that goes into it.
In order to dramatically alter consumer behavior though, we may need to prove to consumers that ‘green’ choices can be equivalent to regular products in terms of cost, quality and convenience. And if every company offered sustainable products/services, brands would just rely on their own actions, rather than labels, standards, etc., to increase their consumers’ awareness of their products/services’ sustainability.

Solutions
1. Two ways to educate consumers – Point of sale and collaborative consumption
a. POS – companies are veering away from this ‘in your face’ approach, e.g. Tesco recently decided not to recertify products with the Carbon Reduction Label
b. Collaborative consumption – example is M&S’ shwopping initiative aims to educate and engage at the same time, in order to influence sustainable purchasing. There’s a view that people can donate clothes on their own, was M&S’ initiative just a cheap attention-getter? Clothing is also a natural area for collaborative consumption to take place – is it as natural with other product categories? British people seem to have a strong tendency towards ownership
i. Kingfisher encouraged shared tool hire (over the lifetime of a drill it is literally used for only 20 minutes), initiative was not a success
ii. Kingfisher encouraged collective buying on insulation – for every neighbor who joined the group, the price went down 5% until a maximum discount of 35%; however, customers ended up paying £500+ just to do this service themselves rather than buy collectively
2. Internet – A way to disseminate information for those consumers who are looking for it
3. Incentives – We cannot just show consumers what is the right behavior, we have to incentivize that behavior
4. Social media – A channel that allows consumers to challenge brands that are not truly embedding sustainability into their businesses
5. Other tools like goodguide.com – amee.com, a search engine for carbon footprints

Obstacles
1. Overabundance of ‘standards’ – There are a number of eco-labels and they’re misinterpreted by consumers as a quality label when there is no standard currently
2. Greenwash – Greenwash cannot be prevented until there are standards in place, but how can these standards be created?
a. The European Commission looks like it’s ready to start this process of setting a standard
b. The UK government has apparently already started – it’s created a consumer app where people can compare companies by 5 measures (i.e. waste, energy, etc.). This is putting more information in the hands of the consumer
3. Information overload – Is putting more data in the hands of the consumer even useful? More data means comparative sites like goodguide.com can exist, but what is the demand for this information (do only 2% of consumers care?). There are two camps:
a. Yes, information is good because it should be available for those who want to see it
b. No, because customers don’t always make decisions based on logic or data. Brands exist so that people don’t have to evaluate data for every decision they make. We have to understand how people make decisions and match the standard/product to them
4. Company participation – Standards may not work for all companies/industries. For example, the traffic light system for nutrition labeling was unfair to certain food groups and not every company ended up signing up to the system
5. Consumer options – Even though goodguide.com provides ratings on many products, it’s not a deep enough reach into people’s lives to change behavior. Consumers have so many other options available to them in store and sales promotions often lead them away from buying sustainable products. To truly change consumer behavior we have to change the selection that they are making choices from

Red Flags
1. Companies & government acting dictatorial – telling consumers what we want to tell them rather than what is geared towards their wants & needs. Communicating in a dictatorial way will not change consumer behavior
2. Many companies are staying out of promoting sustainability because:
a. Consumers often assume green products are more expensive
b. Companies are afraid of being accused of greenwashing – oftentimes campaigns state how green products are a money saver for consumers (i.e. reducing energy bills) but it’s found that after pulling in external costs they’re not giving consumers much instant savings (reference to whitepaper by Accenture)
3. What if a company footprints 1 product and advertises itself as sustainable? Do you want the company to:
a. Continue promoting the product so that they see the positive return for backing a sustainable product, and then increase their portfolio to 5 sustainable products?
b. Or do you accuse them of greenwashing and make them stop?
4. How do you gain competitive advantage with sustainability against strong competitor brands?
a. A real-time example is B&Q. The company recently succeeded in getting 100% of its products sourced sustainably, thus guaranteeing its consumers that by buying B&Q products they are not contributing to deforestation. John Lewis does not source 100% of its products sustainably, but because consumers see John Lewis as a good brand, they assumed that John Lewis was doing so. B&Q was faced with a choice of negatively marketing their competitor, or just doing positive advertising on itself – B&Q decided to take the latter route and will monitor results as the campaign rolls out
b. Fairtrade may be an example of sustainability branding working – consumers liked the idea, and then over time the positive associations with Fairtrade made them realize that products that are not Fairtrade are not positively contributing to social welfare. Perhaps this is the approach companies need to take – tout that your products are sustainable and people will realize over time that it means your competitors’ products are not

Technology

What are the different ways intelligent building technologies based on smart metering can be a game changer for energy efficiency?

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This month the technology round table had to confront with the question whether and how smart metering can effectively deliver energy efficiency improvements. In fact the conversation scope went a step beyond and taking a systemic perspective considered the role of smart technologies in a broader sense as drivers for energy efficiency.
The discussion opened with the dilemma whether technology will be the solution to the energy and related environmental issues that our societies are facing, or behavioural change is unavoidable. Very much in agreement with the view expressed earlier by Ronan Dunne, the roundtable participants had the unanimous view that any strategy intended to tackle issues that are so deeply embedded in people’s everyday life has to promote changes in behaviour. With this premises the view that emerged from the discussion is that smart metering and smart technologies in general are to be considered as instrumental to behavioural change, “behavioural changes enablers”. Therefore the contributions from the participants tended to highlight challenges and solutions for the translation of this conceptual framework into practice. A key example was the domestic smart meter as a tool to provide information to customers enabling them to make smart choices, instead of choosing for them.
A point of debate remained partially unresolved at the end of the session: how much do intelligent technologies require intelligent users? The general view was that this is a design problem: devices and user interfaces should be designed so that users intuitively understand them. However, while this may be an easy task if technologies are addressed to digital natives, the difficulties arise at the present time, when a large share of energy bills payers are still not fully comfortable digital users.
The key points addressed in the discussions are listed below.
CHALLENGES/OBSTACLES
• Achieve users engagement with smart technologies for energy efficiency;
• Integration of several technologies serving diverse energy end uses, traditionally designed as separate systems;
• Limited information processing capacity of users;
SOLUTIONS
• Effective user interface design;
• Multiplatform accessibility to smart meters data and controls;
• Standardisation ;
• Commercial partnerships between information and communication businesses with companies delivering energy efficiency solutions;
• Software solutions for technology integration;
• Use of smart controls in which decisions are based on algorithms and simple user inputs, to reduce users’ burden in situations in which optimal choice becomes complex (black-box type solution).
EXAMPLES
• User engagement can be driven by user interface design. Driving behaviour is proven to change when divers obtain real time information about the MPG they are achieving. When driving plug-in hybrid electric cars, drivers tend to maximise use of electricity from the battery instead of gasoline in response to real time information provided on the dashboard.
WARNINGS
• Digital generational divide: use of smart technologies may be easier for younger generations that are not necessarily those who currently pay the bill (in the short term);
• Commercial and domestic users’ smart choices may be driven by different factors. Cost savings are likely to be the biggest drivers for both, but in the domestic market other aspects may affect behaviour (e.g. attitudes towards environment or technology).

Energy Effeciency

Companies such as IKEA and Lego are investing heavily in self generation, despite longer paybacks and policy uncertainty. Do issues such as price certainty and energy security make the investment case attractive?

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Lego and IKEA are two companies that cover all their energy needs through self-generation. The focus of the discussion was to identify the incentives and obstacles for companies that would like to place investments on similar “energy efficient” solutions. Uncertainty around the future of fuel prices is a crucial factor. Thus, self-generation offers the ability to predict energy costs, be detached from feed-in tariffs and become more attractive to external investors. Moreover it provides energy security particularly in cases when there is no sufficient energy to supply the grid. Long paybacks are a restrictive parameter because the majority of the clients want to minimize the risk via short paybacks of 2-4 years. Another drawback is the absence of policy frameworks to support the investments and for example secure the level of subsidies in this direction. On-shore and off-shore wind farms were predominant in the discussion. On the positive side, tariffs for on-shore wind are getting cheaper especially for big sites. However there are usually issues with local people being annoyed. Offshore generation, on the other hand, is far from people’s sight but it is very expensive and it presents difficulties in the construction process. At the end, the participants of the table were asked if they believe that issues such as price certainty and energy security could make the investment case more attractive and everybody answered ”Yes”.

SOLUTIONS
1) Community wind farms and community-based energy projects offer financial motives to local community members and they are more popular with the local society.
2) Generation has to be a part of a broad portfolio of technologies in order to benefit from the price certainty of self-generation and at the same time to reduce the upfront investment without risking a shortage of resources.
3) CHP (Combined heat and power) has been referred to as a potential solution because it is powered by gas, therefore it is more secure. In addition it is cheaper and the technique has been proven successful (e.g. in gyms, laser centres and other public buildings).

OBSTACLES
1) Some companies may hesitate to install micro wind generation due to small birds that collide with the turbines and die.
2) Offshore wind turbine platforms have a strong impact on fishes and consequently fishermen tend to react with their construction.
3) Self-generation by intermittent sources of energy (e.g. solar or wind) is not always adequate. A common problem is the need for heating in a cold winter when the wind is no sufficient.
4) Moving away from large-scale generation may cause reaction such as tanker drivers’ strikes.

EXAMPLES
1) John Lewis partnership makes an effort to reduce carbon footprint by generating energy in their local network based on biofuel combustion. This strategy was motivated by energy security and in fact it is cost effective compared with buying energy from the grid.
2) Whiskey distilleries in Scotland become green businesses. Their by-products are used to produce biofuels which could be sold to farmers, offering energy independency with the available technology
3) Slough Heat and Power (SSE) is a power station at Slough that generates electricity from biofuel.

RED FLAGS
1) According to Ronan Dune’s view, there is a reputational risk for the brand investing in renewables.
2) O2 managers have decided not to invest in wind solutions because the economics were marginal.

Corporate Strategies

What do you think of O2's sustainability strategy? What is it doing well, what can it be doing better and who might it draw inspiration from?

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With the ‘Think Big’ sustainability strategy, Telefonica (known as O2 to UK customers) have set themselves an inspiring challenge over the next 3 years. By publicly announcing stretching targets and commitments to be delivered by 2015, this highly customer facing company are to embark on a remarkable sustainability ‘journey’ that could see them become sustainability leaders in the ICT industry.
Reflecting on the ‘Think Big’ Blueprint, the Corporate Strategy roundtable came to two broad conclusions. Firstly, the document articulates the strategy’s key message cogently and is accessible to a wide audience. Secondly, through the strategy’s targets and commitments, a clear theme reveals itself - O2 is leveraging its core strengths as an ICT company (communications, customer facing and youth) to build a strategy that will deliver real and powerful sustainability changes – in essence making sustainability their own.

What follows is a summary of the main points brought up in the roundtable discussion following the plenary session. Comments are not attributed. The notes have been labelled as Solutions (S), Obstacles (O), Examples (Eg) Red Flags (RF).

First impressions
• (S) The strategy is comprehensive, credible and well articulated
• (S) The concept of sustainability is introduced well, explaining the three interlinked pillars, which provides good context for the targets and corresponding commitments that follow.
• (S) The passion and commitment from CEO Ronan Dunne and others introducing the document adds to its credibility
• (Eg) BSkyB has a similar set of targets and pillars in their sustainability strategy, which acted as initial inspiration for O2, however hasn’t been put into such a digestible format
Stretching targets
• (S) Targets were developed in two phases, following CEO’s initial challenge to be the ‘best’
• (O) However when starting from scratch, what is a stretching target?
• (S) First phase involved setting internal targets that were not made public
• (S) Targets were developed by an extensive process of internal consultation of all departments, using an iterative co-development/co-learning approach
• (S) The collaborative approach ensured ‘buy-in’ from departments
• (S) Second phase involved external stakeholder engagement, both sustainability experts (eg. Forum for the Future) and customers
• (O) External stakeholders were critical, demanding the targets be bolder
• (O) Employee ‘buy-in’ on a personal level was also important
• (S) An atmosphere was created where sustainability was seen as an opportunity, by linking performance to personal development plans
• (S) (Eg) Personal plans needn’t just be environmental – personal well being plans (eg. fitness or weight loss targets) were borrowed from Wal-Mart
• (RF) Response to sustainability was varied between departments
• (RF) Marketing dept was incredibly protective of the O2 brand; exposing it to criticism by publicly publishing targets could be damaging

Working with industry competitors
• (Eg) In the pharmaceutical industry, early stage R&D model had to be turned on its head for 3rd World drug development, with collaborative models replacing competition
• (Eg) Network sharing and universal chargers are examples of collaboration in a competitive industry

Measuring benefit
• (S) O2 has entered into collaboration with Durham and Tyneside universities to develop metrics in order to measure the social benefits
• (S) Internally there have been benefits not initially envisioned – business to business sales have improved; flexible working has improved staff retention and staff illness profile
Challenges ahead
• (O) Engaging customers to achieve behavioural change is a big challenge
• (S) Key to meeting this challenge is to empower employees with the confidence to engage customers on TB topics directly
• (S) Strong branding of all the TB activities under one brand improves customer recognition and loyalty to the overall sustainability strategy
• (O) Despite efforts (O2 lease and Handset rating & recycling) closing the loop further on material recycling is a challenge

Energy Policy & Strategy

‘Energy Market Reform is increasingly being described as a "car crash". How will it impact on energy users and how should organisations be responding?

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- Although attendees did not necessarily consider the term ‘car crash’ appropriate, there remains considerable confusion about how exactly the EMR will work and so about the best responses for organisations.
- Just understanding the whole suite of policy issues is time consuming at the moment (especially given that smart metering and the Green Deal will be coming in at a similar time).
- The lack of certainty is deterring investors, and so it’s still not clear that the proposals will deliver the scale of new build generation required to the necessary timescales.
- The uncertainty is also making it difficult for end-users to plan ahead and understand the impact of the proposals on their energy bills so that they can budget effectively.
- Attendees had direct experience of the introduction of the EMR proposals delaying decisions or resulting in a ‘no go’ decision.
- There was also concern that the UK should not have acted to amend carbon price unilaterally and would have been better off lobbying EU to sort out EU ETS.
- There was also some concern that FIT CFDs will detract from market incentives and mean a focus on regulatory, rather than market, drivers for uptake of renewables.
- The current FIT scheme was cited as having helped raised awareness of renewables amongst households, but of being a victim of its own success in terms of the pace of uptake.
- Despite the higher awareness of renewables, energy is still see as an area of ‘low interest, high concern’ for the public.
- Attendees discussed the role of suppliers in helping end users reduce their energy use; some saw this as a role that customers would view sceptically while others considered that (particularly in younger age groups) it would be accepted
- A key shortcoming of the policy identified from energy users’ point of view was a lack of joined-up policy to manage the demand side at the same time as the supply side; the EMR proposals only seem to mention demand side management in passing and there’s insufficient detail e.g. to work out the business opportunities here.

Resource Efficiency

How can companies work together to achieve truly ‘closed loop’ product lifecycles? What lessons can be learned from different sectors on how to create a cradle-to-cradle design system?

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The table on resource efficiency deliberated on a wide variety of challenges and solutions that come under the umbrella of closed-loop product cycles and cradle-to cradle design systems. There was a consensus that in order to deliver maximum impact on sustainability resource efficiency and reusability should be an overarching theme covering all parts of product life cycle right from product design and not just be an end of life activity. Encouraging behavioural change in customers to make ethical choices for sustainability was seen as most vital to the success of green initiatives across industries and sectors. Technology was seen as the other major source which can lends itself to substitute industry operations that even at their highest resource efficiency may have significant carbon footprint. While Government intervention was not necessarily favoured but it was observed that in certain cases it delivers an impetus to sectors to do more towards sustainability over a fixed period and incentivizes their actions through potential tax savings. It was also noted that younger generations were indeed more attuned to green initiatives and therefore more amenable to programs initiated by industry to educate customers in making sustainable choices as their way of life.

Solution
1. Educating the customers so as to drive a behavioural change that sways their process of selection at the point of purchase and steers them to make more ethical and sustainable choices was seen to be a challenge as well as solution for the sustainability initiatives to succeed.
2. From the point of inception products designers should seek to design products that can at the end of their life cycle be easily dissembled into parts that can be recycled or disposed.
This was understood to be a solution to the problem of sourcing materials for recycling.
3. Materials that can be recycled and reused without appreciable loss of quality such as gypsum, aluminium, glass etc. should be preferred in product design where possible. This allows the manufacturers to recycle and reuse their own products thereby incentivising the organization to recycle as well as solving the need to find consumer for its recycled product.
4. Legislation and taxation can often help provide impetus to organisations to undertake sustainability measures and make measurable savings (against taxes).Some organisations utilise this opportunity to lead their sectors in such reforms which also acts as their differentiator.
5. Many of the challenges to resource efficiency and closed loop product lifecycles can be met by moving away from the existing model of consumer owning their product to a concept of the consumer leasing the product and the manufacturer maintaining the ownership. At end of life cycle of the product the consumer is upgraded to next product and offered some discount. The manufacturer regains the product and can choose to recycle or reuse it. This will also incentivise manufacturers to design products whose lives can be easily extended and use materials that can be readily recycled and reused.
6. It was also viewed that the older generations look at “product recycling” as sustainability initiatives whereas the younger generations perceives it is as a norm rather than exception. Thus the youth is more likely to make the ethical behavioural choices that support sustainability as a way of life.
7. Major sustainability improvements are also seen to be ushered by changes in technology that are proving to offer being a substitute to the traditional modes of operation that have greater carbon footprints.


Obstacles
1. One of the impediments in achieving truly closed loop life cycles is that the supplies and demands for the recyclable material can often not be bridged locally.
2. Firms often recycle their own products at EOL (end of life) but since recycled material is not the same quality as the virgin material (as is the case with plastics) the firms cannot re-consume the recycled material in manufacturing. This causes a loss of material in the recycling loop. IT is required that the recycled material can then be consumed in other organisation or sector with lower demands for quality for that material.
3. Change of technology is making goods obsolete at a faster pace than before, thereby adding to the already pressing need to recycle for ensuring sustainability.

Examples
1. An example was cited where a closed loop recycling of plastic boards was locally met within an Industrial park. Damaged boards were sent back to a manufacturer to recycle, who in turn offered new goods to that firm at discounted price.
2. EU regulation has dictated the standards for construction companies to reach zero waste landfill by 2025. Saint-Gobain has proactively taken up the initiative to work with construction firms to not only meet these targets but also achieve them in more aggressive timelines. In certain cases they have managed to achieve reductions from three landfills to zero landfills in under three years. High landfill taxes also seem to have played an incentive in driving these initiatives to succeed.
3. A reference was made to the National Industrial Symbiosis Programme (NISP) as an initiative to connect supplier and demands for recycled goods and thereby improving industrial resource efficiency.
4. LOCOG provided a wonderful example of extending lifecycles of products whereby after the Olympics games they are flat packing and shipping away the basketball courts to Rio for use in the next Olympics.
5. Coca-Cola cited an example in investing to find technological substitutes that can drive sustainability for future. The bottling plastics can only be recycled a few times before it is unusable and production of virgin plastics itself depends on petroleum. Thus Coca Cola are investing in R&D to look at alternatives that may produce plastics without using petroleum as the base material.
6. Redeem who partner with O2 for recycling mobile phones provided an insight of how they are adding life-cycles to the old cell phones (and rechargers) by looking to partner with insurance firms and ICT companies to offer second-hand phones to customers as a stop gap offering in a period where the customer has lost their phone and awaiting replacement/upgrade.

Red Flag (Warning)
1. As much as it is important to partner with other firms and even competitors for achieving truly closed loop life cycles, collaboration could also be perceived (by regulators) as collusion.

Plenary roundtable - 1

How big an issue is rising youth unemployment to society, and what can the corporate community do to tackle this?

Plenary roundtable - 2

What are the ways in which the  Information and Communications Technology (ICT) sector can create new paths to sustainable living, and which of these has the most potential?

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Through the discussion, it was established that the most ICT can help in a sustainable living is to provide flexible working for the employees; it can empower women to balance family / maternity needs and work. Most organisations do not embrace innovation in their strategy for sustainable benefits but more for financial gains / benefits. Behavioural change is a major challenge in all innovative initiatives – IBM has been trying to study with other not-for-profit trusts and have released a report on the same.
Internal innovations are quite challenging and consumer product companies have shown their lead here.
O2 has taken a major step forward and encourages innovation and sustainable benefits in all of their business cases. They have crashed their n/w with Vodafone in order to reduce their network footprint by 10% helping them not only reduce their costs but providing better services to their customer, collaborating with competitors to bring about efficiency and also reducing the carbon footprint. They have taken up many other initiatives which does not necessarily generate new revenue streams for them but actually benefits the society overall.
Discussion highlights:
• Solutions
o Sustainability initiatives should not just be related to cost and energy savings but have a social angle to it
o Government needs to incentivise organisations / society to adopt to greener ways
o IBM carried out a study with “Prince of Wales” trust to identify ways of bringing about a behavioural change
• Obstacles
o Although innovation for sustainability is a big part of strategy in most organisations but it happens in pockets within organisations and does not really get pushed up the entire organisation
o ICT can facilitate flexible working for the society which has tremendous benefits with regard to increase in productivity and motivation but has downsides/challenges too:
 How to measure output here
 Lack of personal contact may prevail
 Need to change mind-set of managers – lack of trust and cultural issues
o Innovations in ICT bring about transparency in information but it is really thought of more to generate more revenue streams through additional service to customers, generating more green dollars, bring about efficiency in business and bring brand value to business
 In Microsoft, there were many a partners who moved towards virtualisation; but more to justify for green dollars rather than benefits
• Examples
o Consumer product companies are good at internal innovations
o O2 has taken a major step forward
 Innovation and sustainable benefits are required to be part of business case presented to executives
 Many initiates more for the benefit of the society rather than generating new revenue streams – helps strengthen brand image
 Initiatives such as sim cards in car help in safer driving and improved insurance underwriting for insurance companies through dissemination of information, mBanking to provide mobile banking services for those not having easy physical access to banks, eHealth for telemedicine and telecare, making different levels of education easily accessible : Initiatives to include incentives to make things better and provide sustainable living
 O2 Learn : Teachers were asked to record themselves to impart training and these recordings were made available online – no commercial benefit for O2
o O2 crashing their n/w with Vodafone
 Reduce n/w by 10% bringing about not just cost-savings but also better service and reduction in carbon foot-print and embracing collaboration
• Red Flag (Warning).
o Education and IT make a society most sustainable however people don’t really think of the sustainability at large and only a tiny fraction is really realised
o Small things at times do get overlooked with bigger initiatives in place
o There are no concrete examples of ICT solutions being deployed without a commercial rationale – benefits are aligned with financial costs

Plenary roundtable - 3

Collaborating, co-learning, co-creating…how can digital technologies enable mass participation & innovation?

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Engaging your stakeholders via social media requires a very open and genuine approach and a clearly defined mutually beneficial outcome in order to succeed. Communities should be asked specific questions that are around solutions, not for concepts and ideas. Very few organisations have cracked this, there has to be real trust in the brand, and the part it will play in hosting the discussion and delivering a valuable outcome as a result.
Obstacles:
- Going public is a real commitment
- The challenge is not collaboration, its collaboration at scale
- Fear that you wont get quality back, but committed to do something with it. This has resource implications
- Sustaining the momentum of unnatural/ newly made communities is resource intensive
- Users don’t always trust why the company is running the initiative, and the company’s ability to do anything valuable with the ideas/ inputs
- Digital natives are the collaborators/ co-creators, yet they don’t have the corresponding buying power (yet)
- KPIs can create noise- don’t measure inputs, measure the value of the end result
- B2B much harder than B2B
- Choose your social media platform appropriately
Solutions:
- Ask for solutions, not ideas/ concepts
- Make your questions as specific as possible
- Few: few, rather than 1: many or many:1 works best
- Involve the end users
- Rewards inputs with a tangible, visible result- make it worth their while contributing
- Incentivise correctly, make sure there is mutual benefit
- Approach from a gaming angle- completely changes the psychology
Examples:
- B&Q are trialling renting
- Ben & Jerrys “do the world a flavour”
- McDonald’s Stories
- “The Cluetrain Manifesto”- great online book from the first days of social media
Red Flags:
- B2B and B2C are very different, don’t approach in the same way
- Be very very careful about setting your KPIs, by being clear about the outcome you want to achieve

Ecosystems & Natural Capital

A new WWF report has concluded that we're using 50% more resources than earth can provide. What can drive radical change in the way we use resources?

Venue Detail

Bank of America Merrill Lynch: King Edward Hall

King Edward Hall | 2 King Edward Street | London | EC1A 1HQ

Directions

Bank of America's offices are a very short walk from St Paul's tube station (Central Line). Exit the station at Cheapside/Newgate Street. Go past the BT centre, with it on your right-hand side and take the first available right down Edward Street. Continue down this road for 80m and the entrance to the venue is on your left-hand side.

Do not go to the main reception desk at their offices when you arrive. You are looking for an entrance that leads you directly into the King Edward Hall.