Strategic Opportunities and Unlocking Strategies - That Light Bulb Moment

Tuesday, February 01, 2011

18:00 - 21:00

Strategic Opportunities and Unlocking Strategies - That Light Bulb Moment

The February 2011 Green Monday looks at the trends, processes and structures that may help you find the major strategic opportunities that unlock your integrated sustainability strategy. It’s a big topic, but if we can give 10 people “light bulb” moments, it may be the most important thing we can do.

The benefits of building a sustainable business are well documented – higher staff retention, easier hiring, higher staff productivity, being alert to new market opportunities and reducing costs. However, many of the components of an integrated sustainability strategy get stuck with the Finance Director, who compares the perceived returns of these intangibles with investment in other areas, and often in the context of tight resources.

The FD is often right to put a higher value on the directly measurable. However, a number of Sustainability 2.0 companies are showing – Siemens, GE & M&S to name a few – that when you genuinely enter the new paradigm, opportunities keep flowing and competitive advantages builds. All of these companies have at the heart of their strategy a major strategic opportunity, driven by the CEO and board, giving it commercial respect within the organisation. The FD sees the benefits, the door opens.

Speakers

Benjamin Kott Google

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Michael Liebreich Bloomberg New Energy Finance

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Peter Lacy Accenture

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Round Tables

Built Environment

What are the top five opportunities within the built environment for the next five years?

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The above challenge sounds like a simple one but following a very active discussion from all the dozen or so participants we came up with far far more than five. In my mind this indicates a positive and optimistic view for the role the built environment holds in our society going forward. From how the built environment is influenced by and actively influences how we live, work, move, communicate and manage resource flows at one level right down to the nitty gritty method of managing moisture and mould as buildings become more airtight
Several of the opportunities cluster easily together so I have taken the liberty of putting them under five umbrella type opportunities.

1. Commercial
Enhancing yields from property – making the actual building work harder such as using the roof to carry PV to generate electricity.
Green Deal – provided the incentives and clarity are there this will offer a great opportunity for retrofitting key technologies into existing domestic and commercial buildings. Provided the incentives for finance providers can be aligned with those that benefit from the investments in green deal projects then this offers huge potential for the UK carbon budgets.
Construction opportunities – One quote is that it will take £450bn investment to achieve the UK’s 80% reduction in CO2 required by 2050 – this offers a huge opportunity for the construction industry – new, new for old , retrofit, market for re-using resources considered waste elsewhere and inventing new materials and technologies. Plus we live in an urbanising world (51% of UK population lives in cities as or 2010).
New materials – opportunities for new materials designed to improve energy efficiency, breathability of buildings made from virgin and waste products which are simply resources waiting to be used.
Modular Construction – huge opportunity for modular construction yet to be realised offering savings on resources, avoidance of waste and consistent implementation.

2. Step Change Approach to Flexibility
Better use of existing buildings – changing the way we think about buildings such as schools and other public buildings to enable them to be more widely used by the community. This might mean altering how we design for new and indeed retrofit such buildings to enable them to be more flexible across time and function.
Change in use / upgradability
Design building structures such that new generations of technology, services or interior layouts can be installed as they become available. Design in modularity or upgradability. Intelligent buildings that can be adapted over time. An ageing population means buildings will need to meet different demands over the next 5, 10 and 15 years.
Retrofit occupied buildings – organisations that can devise ways of retrofitting energy saving and generating technologies in existing buildings without significant disruption to paying commercial or domestic tenants are onto a winner. This is a key obstacle to deterring organisations from under taking even simple programmes and preferring to wait until the space is vacant – delays before benefits are accrued.

3. Information and Communication Technology
Smarter Building Management systems – as commercial buildings become more complex. Opportunities will grow for domestic BMSs as complexity appears at home – hardening energy tariffs will be a driver.
Smart buildings talking to smart equipment connected to a smart grid. We are about to experience the beginning of a massive revolution as millions of bits of kit need to start to be able to communicate with each other, building energy management systems and the national grid. Energy supplies will be more fragmented as intermittent, localised renewables come on stream which in conjunction with energy demand management, will require a smart dynamic grid. Smart buildings will play a key role in leading the way with the commercial sector leading the way – increasingly differentiated energy tariffs will provide the incentive.
Apps – a likely explosion of apps that will do everything from tell you what the PV generating potential your roof has to switching electrical equipment on and off in your house.
Knowledge transfer –between local authority planning departments in order to accelerate the roll out of both simple and complex best practice. Traditionally this is a slow process and this is not compatible with the scale and speed of change required over the next five years.

4. Capacity Building
Training for SME Contractors – a large proportion of the installation of new technologies will be by small companies so providing training across the sector is crucial to success. Capacity building is a huge opportunity for both the formal education system and for the private sector supplying new processes, technologies and materials.

5. Health and Wellbeing
Design for walking and biking – right from inception of buildings and communities. Healthier, safer, quieter and makes you more aware of surroundings; cycling and walking where appropriate will be key to improving the nation’s wellbeing ( and saving NHS money).
Managing contradiction of air tightness and airflow to deal with moisture in a house. This is a huge opportunity for building design and services in order to avoid dampness, mould and ill health.

There should be something in the above list that could be used to trigger a discussion with almost any organisation whether you design, regulate, build, fit out, own and lease, rent or even provide services to buildings be they commercial or domestic!

Walking in your suppliers’ shoes – when does the sustainability light bulb go on for suppliers? (especially SME’s)

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The question of supplier motivation is often framed as “why do suppliers adopt sustainable practices?” However this can lead to the usual, and rather generic, list of ‘sustainability drivers’. Instead the group considered other key dimensions of the issue such as: who was instrumental, when it happened, where the respective parties were and how the process unfolded.

An example was given of a major electronics firm in the US. Initially they had engaged their tier 1 suppliers on a peer to peer basis from the sustainability professional in the customer firm to those in the supplier. Both companies and individuals belonged to the same industry associations and on one level this contributed to a competitive dynamic in some cases blocking real engagement on the part of the supplier. The company decided to change the point of contact on both sides to buyers on the customer side with account managers from suppliers. These account managers, unlike their sustainability colleagues they had no desire to compete on a professional level to display knowledge on sustainability or to be defensive about current performance and were simply incentivised to please their customers. Therefore they were able to lead a more constructive engagement. The company also changed the “how”, moving away from a compliance perspective and integrating supplier performance on sustainability into an overall scorecard approach. Buyers were also sensitive to when they would expect to see change on the part of the supplier showing and understanding of the planning, investment and results cycle. In this case most tier 1 suppliers were also headquartered in the States but at tier 2 and 3 they were often in China where the cultural context brought other challenges.

The group shared examples that built on these themes: There were many shared experiences reflecting the importance of who to engage to switch on the light bulb. Increasingly in the collective experience pointed to senior roles like CEO’s, MD’s, CFO’s and FD’s being directly involved in customer-supplier dialogue, with sustainability functions playing a facilitator role. On the question of timing it was recognised that typically buyers exert their leverage at the time of contract renewal, but if they want to trigger genuinely new behaviour or investment they might need to send earlier signals. Some contributors sent a signal to suppliers along two timelines: first that performance to minimum sustainability standards would be a baseline to do business within say three years; while at the same time indicating that suppliers showing above average performance today could gain advantage over their competitors. The proposition was aired that both sustainability professional and procurement departments can be too rigid and bureaucratic in the way they specify thus limiting the potential for suppliers to innovate. If they were able to focus on specifying outcomes rather than processes they would stimulate more innovation in the supply base from both existing suppliers and new entrants.

The converse argument was also put that sometimes design departments needed to specify quite precisely preferred sustainable approaches or materials if suppliers lacked the knowledge to do this themselves. Which scenario was right seemed to be highly dependent on the supplier profile, not just their size but also their overall capacity to address sustainability performance. The importance of organisational incentives for successful sustainability performance, in both supplier and customer organisations was recognised at all levels of the organisation including: departmental KPi’s, executive remuneration and incentivising the so called ‘clay layer’ of upper middle management.

Finally all recognised that all of these challenges varied by region as cultural, professional and corporate capacity profiles are still very different across the globe.

Stakeholder Engagement

How do you elicit ideas for new business opportunities from staff and other stakeholders?

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Our discussion focused on strategies to encourage and incentivise staff to put forward ideas for new sustainable business solutions. We structured our discussion around three stages: (1) creating the right culture, where sustainability is valued and employees feel empowered to speak up; (2) introducing the right structure and support mechanisms to elicit ideas from staff, and (3) the need for some kind of incentive – whether reward or recognition – for putting forward good ideas.

During the discussion, several companies were highlighted as having introduced successful strategies for eliciting ideas from employees. They included PepsiCo’s Green Teams – engaged volunteers who meet every 6-8 weeks to discuss new green ideas, resulting in valuable ideas generation; and Cisco Innovation Europe – an online tool where employees can submit ideas and vote, and individuals are selected to develop ideas into a business model. We also discussed M&S as an example of successfully creating an internal culture that recognises the importance of sustainability (see Creating the Culture, below), and Levi’s use of Myoo Create – a sustainability crowdsourcing tool to generate new green ideas.

Main conclusions around culture, structure, and reward:

CREATING THE CULTURE
• Establish a culture of sustainability. We reached consensus that the fundamental starting point for eliciting sustainable ideas from staff, must be an established company culture that supports the principles and practice of sustainability. If employees don’t see and feel that the company is committed to environmental responsibility, they are unlikely to contribute sustainable ideas. Introducing this culture might involve starting with better education on what sustainability means in practice.
• Support from the top is key. Company leaders should show clear support for creating a culture where intrepreneurialism – ideas from within – is valued.

INTRODUCING THE RIGHT STRUCTURE
• Teams, committees, Academies and Dens: Ideas for structure included Green Teams of interested individuals to come together or independently generate new ideas; committees involving one person from each business area; an Academy, where those putting forward a good idea are given ownership of its development; and a Dragons Den-style ideas forum, with a leadership panel choosing a winning idea to develop. It was noted that although enthusiasm is important, the most passionate employees aren’t necessarily the ones with the best ideas. It’s often those closest to the issue or product who have the best ideas.
• Ongoing communication is essential: regular updates are essential to maintain engagement and ‘belief’ in the process. It should be clear why and how structures have been put in place, how much money and resources will or might be invested in new green ideas, what the outputs of the process are, and what is happening as a result of the process. Fair decision-making is important when selecting the new business ideas that the company will take forward.
• Create a buzz. Creating a sense of a community that’s producing ideas for real change is important for inspiring employees to take part. It should be easy for them to feel part of the creative community. Tactics might include establishing an online community, using wikis or the intranet, and creating virtual or real discussion forums.

OPTIONS FOR REWARD OR RECOGNITION
A reward or recognition can kick start the employee engagement process, perhaps even creating a snowball effect, where more and more staff are inspired to join in. Examples include:
Monetary e.g. bonus, can lead to rapid engagement including of those who aren’t normally interested in CR / sustainability.
A stake in the new idea/product/process, or naming it after the individual whose idea it was
The potential to get involved with the development of ‘your’ idea
An award for green ideas created from within the business

Carbon Strategies

Unlocking strategies for Carbon Management: barriers to action and paths to success

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The passionate and insightful plenary session set the scene for this month’s discussion. The chairman set the scene with a few numbers from February’s Green Monday survey and Accenture’s recent CEO survey:

• 65% of respondents citing energy efficiency as their main area of opportunity while only 7% have completed a MAC curve.
• 96% of CEO’s believe sustainability should be fully integrated into their strategy and 81% believing they have already done so. This compares to 48% of practitioners believing the same; although it was also suggested the true percentage may be considerably lower.

It’s this gap between C level rhetoric and ground level reality that we addressed during our discussion.

Our discussion began with a comment that if businesses are to lead on sustainability they need to back words with action. The example of an airlines carbon offset programme was cited – which when launched was expected to be taken up by 50% of passengers - in reality only a few percent took up the offer. It was suggested that a leadership approach would be to make the offset a mandatory component of its customer flights. This would help demonstrate the airlines commitment to addressing carbon emissions and therefore position on sustainability in both the eyes of passengers and employees.

We then turned to discussing data. It was argued that most businesses still lack the data needed to assess their real performance. Initiatives such as annual CDP reporting and complying with the forthcoming GHG reporting requirements set out in the 2008 Climate Change Act were seen as areas that are and will drive improvement. One participant suggested it was this sort of data that led directly to securing finance for energy efficiency related investments in their business. It was suggested that once data is widely available and accurate, shareholders and investors will take a more active interest in the sustainability performance of their investments. In turn leading to greater pressure on business to find both resource efficiency and market opportunities.

At the end of the discussion we moved onto discussing opportunities. Highlighting the revenue that companies, such as M&S, GE etc, are seeing by using sustainability as a driver for innovation was seen as a useful way to determine reality from rhetoric.

Key take aways
• Being able to collect accurate data from around the business is deemed vital to close the rhetoric/reality gap
• GHG data collection and reporting will be mandatory in the UK once the government introduce regulations (by April 2012)
• Using sustainability as a driver for innovation can create significant new revenue for businesses

Finance & Corporate Sustainability

How do you sell a business plan that will pass the CFO?

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The table this week was comprised of an even mix of corporate CSR professionals and consultants, ESG analysts and finance professionals. This provided a diverse range of experience and perspectives around the focus topic of engaging and gaining buy-in from the CFO for funding of sustainability programmes.

To get the discussion going, one participant, a CSR practitioner, volunteered a real-life scenario that they had worked through. The project in question was a building energy efficiency project, which was to be rolled out group-wide (internationally). It involved a single, proven technology, with a 1.5 year payback that would substantially reduce energy consumption and thus direct CO2 emissions from the enterprise. An initial proposal and business plan had been developed with detailed financials. This had been turned down not once but repeatedly, in favour of competing proposals unrelated to sustainability. Ultimately the CSR practitioner has been successful in gaining acceptance for a pilot, which if successful can be rolled out more widely. This however, took a much broader approach.

Learnings from this experience included the key issue that, whilst vital, it is not sufficient to have a solid business plan and financials. Large organisations have many competing priorities and although this proposal was more financially compelling than competing proposals, they were selected due to other factors, for example being percieved to be more about ‘core business’, or as it required capital investment, or was not percieved by the CFO either to be beneficial to their personal KPIs or to delivering reputational benefit internally. In some regards this type of project is not seen to be ‘cool’ or ‘sexy’. The importance of internal lobbying and demonstrating the strong desire to get a particular project done was also highlighted as vital to the ultimate success of getting buy-in.

The group felt that this reflected their own experiences and there was general agreement that this contrasts with the oft-held view that sustainability professionals do not pitch their proposals effectively, i.e. in the language of the CFO and backed by realistic financials and analysis. Whilst this is of course fundamental, the increasingly experienced CSR professional is capable of doing this, yet often then relies on the numbers to ‘do the talking’. Instead, this is only the beginning and needs to be followed by engagement of the CFO’s team and peer group to lobby for support when the proposal is analysed. Further, the influencers and decision makers need to be shown the broader corporate context and, importantly, what’s in it for them in terms of enhanced reputation or kudos within their function or peer group. It was highlighted that ‘CFOs are people too’ with the associated egos, pre-dispositions, time pressures and KPIs.

Other related considerations to getting the atmospherics right around a strong financial proposal included that the CFO - and other investment professionals – are culturally aligned around, and most comfortable identifying and quantifying risk. They are thus inclined to find potential issues that may undermine their view of the financial returns. Extra care must be taken to demonstrate that broader risk analysis as well as financial analysis has been carried out. The surprisingly low pay-back period of some ‘low hanging fruit’ projects may incline CFOs toward the view that some proposals are too good to be true, reinforcing the search for risk.

In addition the role of the CEO and Board was identified as crucial in creating the environment where CSR projects are viewed positively by the CFO, rather than being seen as a distraction from core business. KPIs are a vital reference for senior management, therefore if aligned with cost saving or reputation management in relation to CSR goals, such projects will see much greater likelihood of success. CSR projects must be seen as genuinely part of business as usual.

Suitable communication was also seen as a very useful tool to engage CFOs in CSR, for example by relating energy savings or consumption to memorable equivalents, such as data centre energy consumption with a small town. This turns the abstract KWh into something more meaningful. Incorporating individual proposals within a clear overall theme is a similarly useful approach.

In summary:
CFOS are people too. They need to see professional proposals and realistic financials but they also need to feel that their staff and peers are supportive and that there is broader business and personal benefit in approving a CSR project over that of another department. They also need to be ‘given permission’ and a performance driver by the CEO to give preference to CSR proposals. Lobbying is vital.

Communications

What are the five best examples of communicating successful new sustainability businesses

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The group decided not to constrain the discussion to just new sustainability businesses, and covered existing businesses too. We focused on what it was that helps you communicate new sustainability businesses or business initiatives. A number of challenges were also talked about, which are worth noting.

Overall points:

• Building trust - with low levels of trust in business, whether it’s a new venture or existing business, building trust is critical. Do so by using 3rd party messengers, like NGOs, potential customers, supporters etc is a good solution.
• Make it fun - http://www.thefuntheory.com/ make it so exciting and engaging that people want to get involved. Put your effort into creative thinking at the beginning, rather than slogging it out over time trying again and again to convince people to listen to you.
• Make it visible/salient – tap into people’s desire to be looked up to, respected, thought of as clever/cool/sexy etc. Use status, make it aspirational. Best new business example Kindle The product to service business model revolution in the publishing industry.
• Make a remarkable product – Make whatever it is so interesting and good that people can’t help buying it and showing it off to their friends.
• Don’t talk about sustainability – think first about launching a successful business that makes a strong, positive sustainability contribution, not an entity that is about sustainability first and a business second. Best existing example M&S Plan A It seems you can’t escape a sustainability comms session without mention of Plan A. Here are the whys and wherefores that were discussed:
• Align it with your brand - If the new sustainability thing you are doing doesn’t fit with customers expectations of what your brand stands for, it will fall flat. M&S did this brilliantly in visual execution, content and copy.
• Tap into consumer frustrations – waste being the example here.

It’s a very visible and important issue for the consumer, so M&S tapped into that frustration and, in keeping with their brand, sorted the issue out for their customer. McDonald’s was also discussed; they have done a very good job at shifting their business into a more sustainable place. In the group’s view, their strategy was right. They couldn’t shout from the rooftops like M&S did, their subtler approach, threaded through all their touch points has worked. However, the group recognised the attitudinal mountain they have to move in the minds of those that have more experience of the brand of old, pre-Super Size Me.

CSR Reporting Best Practices

How do you communicate the scale of opportunity the sustainability agenda represents in a CSR report?

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CSR reporting is typically undertaken to address specific needs within the business to communicate both internally and externally then positive messages relating to sustainability and progress made on an annual basis. The theme of this round table discussion focussed on the forward goal setting rather than the backwards achievement reporting.

Some of the key discussion points raised:
• Potential to establish a brand enhancement within the sector
• Better understanding of ones own aspirations and internal establishment of a baseline of achievements
• Promotion of positive interventions, even if not complete, and the setting out of the vision and mission for a company or brand going forwards.

One of the key barriers to this appears to be “fear” of increased exposure to adverse commentary, in other words, establishing a higher risk reporting strategy that could result in failing to achieve what is planned and proposed. It is seen as easier to just report on what you have done than to set challenging targets that you may not know at the time of setting how they are to be achieved.

The focus during discussion was distinctly financially focussed than environmentally focussed, possibly reflecting the change in approach of many Sustainable Development practitioners.

Pioneers who has changes the face of CSR reporting and the structure of their own businesses, specifically the business models that have SD running through them (M&S, Unilever) were seen as reaping the benefit of establishing “pioneer space in their sector, clearly differentiating them from their main competitors. For these companies, the risk appears to have paid off.

In conclusion it was agreed that setting and publishing stretching targets for businesses to aspire to, along with a strategic plan and possible restructuring of the business model, to enable these targets to be met, appears to be a winning strategy for the communication of the scale of opportunities that sustainable development can bring to a business.

The quote of the night was:

“Sustainability through CSR and the reporting of it, is a little bit like dieting, its relatively easy to lose weight, but damn hard to keep it off without changing your lifestyle!”

Technology

Corporate venturing: how do corporates invest in clean tech companies?

Energy Effeciency

The first five rules in calculating the returns on investment between different energy efficiency measures

Sustainable Transport

What are the top opportunities within the corporate sector around sustainable transport?

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In a lively session we identified a wide range of practical and achievable opportunities for corporates to benefit from or by sustainable transport. The following list is in no particular order and includes (in italics) an outline of actions.

1) Consolidating centres for materials/ resources - freight and storage logistics. Bristol Urban Consolidation for Freight is one of the best examples. Need live examples, case studies

2) Web conferencing for cost savings and increased productivity. High quality systems must be widely available, not just to larger businesses

3) Reducing carbon footprint. Minimising business travel by air and road in favour of rail. Business facilities on trains need to be improved. Smarter booking of internal conferences needed. Choose conference venues near transport links

4) Selling surplus energy for vehicle use eg EV charging points, biogas. Innovation and support to commercialise

5) Co-funding of new transport links to avoid high asset costs, eg Nottingham car park levy spent instead as contribution to new tram. Cooperation with the Big Society

6) Adding services the customer wants but did not know they wanted, eg building energy meter. Innovation

7) Acknowledging and measuring the health benefits of sustainable personal transport

8) Co-locating with clients especially service sector. Openness to new ways of working

9) Rethinking transport of materials to customers. Switch from road to rail will not fix this.

10) Taking waste products away from construction sites efficiently. Finding local uses for waste material where possible – agency would help

11) Making fleet logistics around region more efficient eg vehicle routing and selection of vehicle type. Decision support modelling

12) Investing in battery technology to change the dynamics of property energy use – and could charge or be charged by vehicle. Would help consumers manage energy more efficiently. Culture change

13) Avoiding car park costs by switching to sustainable transport

14) Planning for business continuity in the event of worsening weather problems

15) Sharing transport logistics to avoid half empty vehicles (people, resources). Needs agency support eg National Industrial Symbiosis Programme

16) Green branding substantiated by evidence of sustainable travel practices. New disclosure metrics and enforcement

17) Agreeing how to divide the benefits of investment in sustainable transport between stakeholders. Complex picture needs up-front analysis and partnership agreements

Corporate Strategies

How do you evaluate new sustainability opportunities for your business?

Energy Policy & Strategy

Energy scenarios: What are the most likely domestic, regional and global energy policy landscapes?

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The focus for the round table discussion was how businesses and individuals can keep pace with rapidly evolving energy policy, understanding what the key Government considerations are for change and whether current policy goes far enough or does it just create more uncertainty.

Picking up on some of the issues from the plenary session, the discussion kicked off with a fairly open ended question on what the table thought would be the key emerging themes that would drive energy policy over the next 10 to 20 years and beyond and whether Government’s were mindful of these issues and had the ability to create a policy framework fit the for the future.

The consensus around the table was that the future, naturally is unknown and therefore creating a policy framework to address futures issues or technology advancements is an immense and perhaps impossible task. The underlying thread of the discussion was that the ability to create awareness right down to domestic level is essential for any policy to be successful. Unless individuals change their habits and engage in the need to lower consumption and improve efficiencies then ultimately they will pay the price through higher energy bills. One member highlighted that improving energy efficiency at a domestic level could deliver real savings but that those savings alone were insufficient to deliver the UK’s carbon savings targets.

It was widely agreed that the only way to get the message through and to keep people engaged was to actual highlight the financial implications of actions, e.g. driving your car, using the tumble dryer. If meters could actually demonstrate usage in financial terms rather than by volume, this would help boost awareness of consumer actions and how it impacts them directly.

There was consensus that the goal of reaching the UK’s renewable energy and emissions targets would remain elusive without significant technological advance or change in behaviour. It was suggested that one of the issues was energy policy had become too fragmented and very difficult to engage with. The myriad of measures, subsidies, taxes, and objectives that are continuously tweaked must be simplified or risk not meeting future targets. Businesses are simply finding the message too complex to comprehend, this creates huge uncertainty about how to “upsell” the message within a business and to identify real opportunities.

The chair raised the question as to whether energy policy should be governed by security of supply or sustainability recognising that one the of the Government’s core objectives was affordability. Some argued that security of supply should dictate and that the market should be left to decide the best technology fit, highlighting the example of the gas industry where technology advancements in the extraction of gas from shale deposits had changed the global gas market. Others suggested that there perhaps needs to be some government intervention in choosing the right mix of technologies as there was no guarantee that the market would deliver in a timely manner.

There was discussion around the role of a carbon price in driving the changes in behaviour and investment decisions required. The merits of a carbon floor price were discussed, including a view that the government needs to set this at a sufficiently high level. If the outcome is higher prices, then this would start to create the necessary incentive to drive change through business and at domestic level. Nuclear was discussed and whilst the table agreed it has a future in the supply mix, it was the legacy cost and waste issue for future generations that was the cause for concern.

Concluding remarks:
• Energy policy as it is, is too fragmented and subject to constant change making it difficult for businesses and individuals to engage with. Policy must be simplified and the core objectives must be spelt out – highlighting both the risks and rewards.
• One approach is for power prices to increase to a level where they drive change. A carbon support price could be an essential component to that. If this approach is adopted, end users need to be aware that prices will only rise over the long-term. Unless businesses are prepared for this future it will impact their competitiveness and bottom line.
• Senior management need to buy into that message today, and be prepared and bold enough for change.

Resource Efficiency

What are the 3 best examples of a business uncovering a strategic opportunity in resource efficiency?

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Participants represented both the public sector and a range of industries in the private sector. In addressing the ‘3 best examples of uncovering strategic opportunity’ we explored a number of case studies already known to usand discussed why we felt them to be innovative/strategic. The strategies adopted by each were broadly grouped into the following areas:

1. Examples of companies making strategic changes to their business models:
a. A fertiliser/pesticide company that wanted to address the environmental impact concerns of its product. By thinking more laterally about their business they moved to selling ‘pest free fields’ thereby changing the offering from a product to a service and turning fertiliser into a business cost rather than revenue item. Required a complete shift in the way they thought about their business.
b. The relationship between a paint supplier and car manufacturerthat was causing both parties certain levels of dissatisfaction. The paint supplier moved to running the paint shop, again moving from a product to service and turning paint into a business cost rather than revenue.
c. A glass manufacturer that moved from the production of glass bottles to a bottling facility that included production, filling, storage and distribution services. Whilst not driven by resource efficiency, the change to the business model created resource efficiencies by consequence.
d. The global cement sector, whilst driven by legislation, has changed the way it uses cementicious materials.

2. Examples of company partnerships that have turned one company’s waste product into another company’s commodity.
a. Examples included the trading of waste water, which provides significant opportunities in areas that suffer from water scarcity.

3. Examples of sectors that have changed their understanding of material specifications
a. Here we talked about the construction sector which has started to use materials with lower embodied carbon as opposed to virgin materials in applications.

4. Examples of the adoption of technology in different applications
a. LEDs, whilst around for 30 years or so, have only very recently been used in lighting–leading to the use of components that are cheaper to manufacture, easier to dispose of and last longer.

The barriers discussed centred on behaviour change which was felt to lag behind technological advancement. Opportunities included education on a low carbon world at a far earlier stage (for example, as part of the national curriculum) and resource efficiency audits which can help develop a baseline from which businesses can produce a prioritised list of actions and technologies.

In drilling down to the top three, the group agreed on the following examples:
• The role reversal in a business model which was illustrated by the fertiliser/pesticide company.
• The application of LEDs in lighting.
• The construction sector adopting new materials with lower embodied carbon.

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.