Sustainable Innovation


Social impacts of products

Underpinning company mission

Paint

An important reason to start measuring social impact is to underpin a company mission. More and more companies define company aspirations in terms of social impact. Take for instance Danone, that has a dual mission of business success and social impact. Philips aims to improve the lives of 3 billion people. And L’Oréal strives with its ‘Sharing Beaty for All’ program for all its products to have a social or environmental beneift. It is  important to substantiate these goals with tangible examples and report on progress based on solid metrics. How to do so?

Learning from NGOs and philantropy

Social progress is the ‘raison d’etre’ for Non-Gouvernemental Organisations (NGOs) and philantropic organisationsFor NGOs it would be unthinkable not to track the number of people lifted out of poverty, the income generated for small holder farmers or the number of girls educated. A number of tools and guidelines have become available to forecast and track progress , for instance those ‘Global Impact Investing Network’. The reporting guidelines of the Global Reporting Initiative provide inspiration as well for companies that wish to steer on social impact. However, these type of guidances do not always provide the level of granularity needed to steer the social impact of products.

Social impact through products

Companies can create the largest positive impact with their products and services. Through products companies have the ability to create the most significant impact in society: billions of end-users are reached, manufacturing processes can be changed in own organisation and supplier organisations. The choices companies make for their products have a direct effect on the impacts the products have on the planet and people. These impacts are created in all stages of the product life cycle from extraction of raw materials – all the way to the producten, use phase and the end of life of a product.

Life cycle approach

The impacts created by products can be related to all stages of the product life cycle, .’Life Cycle Analyses’ have become a common methodology to assess the environmental impact of a product. Take for instance the standard defined by the World Business Council for Sustainable Development (WBCSD) for life cycle assessments in the chemical sector. It is also possible to assess the social impacts along the life cycle. If you wish to integrate ‘people perspectives’ a good source is the Handbook for Product Social Impact Assessments developed by a group of industry peers.

Better for people and planet

DSM strives for products and innovations to be measurably better for the planet (Eco+) and people (People+)  based on a life cycle approach. By 2020 65% of DSMs products should be ‘Brighter Living Solutions’, measurably better for planet or people. Some examples:

  1. Alpaflor® Edelweiss is a personal care ingredient. It contributes to better skin health and comfort, and is sourced in a very socially sustainable way, contributing to good working circumstances and prosperity of farmers in the Swiss Valais region.
  2. Synthetic chains made of Dyneema® used for marine structure mooring are 8 times lighter and 70 times less noisy than steel chains. Users experience a safer and more comfortable use, shipping companies report improved operational efficiency.
  3. Medical gowns reinforced with breathable Arnitel VT® contribute to the protection of surgeons against virus and bacteria in high risk hospital environments, and allow surgeons to work in a comfortable way.
  4. Decovery® is a plant based and waterborne paint ingrediënt for paints. It is a solvent free and low odor product, and reduces health risks of the people involved in production and the users of the product.

Benefits of social impact measuring

Social impact measuring is useful to underpin company missions. Life cycle assessments can be instrumental to spot new innovation opportunities and business differentiators. They also help to train product developers and sourcing managers to choose the most sustainable alternatives, and marketeers to communicate the differentiators in a balanced way. More about business benefits here.

– based on the earlier published article by Karen Maas (Academic Director Impact Center Erasmus) and Jacobine Das Gupta (DSM Corporate Sustainability) in Dutch for NRC Live Impact Day

 

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ADN orchestrates non-food surplus donation to French charities

The ‘Agence de Don et Nature’ (ADN) has become thé intermediary trusted partner between donating enterprises and certified associations in France. Enterprises can donate their unsold goods for the good cause, reassured that items will not be resold. Associations are happy to receive goods against a small financial compensation.. A promising new organisation in France based on a not-for-profit principle inspired by Gifts in Kind International (1).

  

Stéphanie Goujon, Chief Executive Agence de Don et Nature

Yearly, 400 million euro non-food goods are being destroyed in France (Study AT Kearney Office 2009). Companies are searching for proper destinations of their industrial surplus, but want to be guaranteed that the items are not being resold for legal reasons. They also want to be reassured that the associations that can be trusted. How to find these NGO’s ?

8 million French people live below the poverty line having less than 30 euro per year to spend (study of INSEE in 2009). A few hundred NGOs and Associations are supporting these people in France. NGO’s need money for their activities, but as well.. office furniture, paper, clothes, cleaning products, and so on. Where to find the generous companies that could help them out ?

Organisation Agence du Don en Nature

‘Agence du Don en Nature’ was created in April by a group of French social entrepreneurs, supported by the foundations of Carrefour, l’Oréal and Leyton & Associés, inspired by the American ‘Gifts in Kind International’. It has quickly become known in France as the intermediary logistics organisation, not-for-profit, that matches the needs of charities and offer of non-sold items of enterprises.

AND is run by CEO Stéphanie Goujon. Mrs Goujon has a background in the Fast Moving Consumer Goods sector (P&G, Danone and Unilever). She works in close cooperation with a team of highly qualified volunteers of different backgrounds like private equity, supply chain, HR and Internet.

It became soon obvious that ADN would need a place to store the goods of donating enterprises at a secure place and not too far from Paris where most associations are located. With help of partners Groupe SOS and Fairplace, ADN found a storage of 4000m2 and 5000 palets in Chambly-sur-Oise which is just 30 minutes by car from Paris Gare du Nord.

Agence Don et Nature warehouse of 4000 m2 a Chambly-sur-Oise (60)

Since the start in 2009, already 20 corporate and 38 charity partners have signed up. Last year, products with a value of 6,4 million euro have collected, 2,4 million euros in products have been donated, and between 50,000 and 100,000 people have received the goods via the charities in France.

Benefits for the partner associations

If associations needed clothes, paper or shampoo in earlier times, they were counting on personal relationships between founding partners and enterprise directors. It these relationships resulted in the supply of some goods, the better. Unfortunately, often the right product could not be found, had been already send to the landfill. Or contacts within the enterprises were lacking at all.

ADN allows associations to express their needs for specific products and does all efforts to match this need with the offer of non-sold items from the donating companies. An online product catalogue is available. It can be used to make an order and get the goods delivered. Only a small financial contribution is asked to cover logistic expenses. 

 

The ADN website has a ‘product catalogue’ which shows the actual stock and latest specific items offered by the donating entreprises.

Charities are very enthusiastic. They can now precise their specific needs like ‘toothpaste’ or ‘children underwear’, instead of ‘cleaning products’ or ‘clothes’. The associations only pay a small financial compensation for the logistics costs. A volunteer of ADN makes sure the products are delivered from ADN warehouse to the charities head office within 7 days. 

Association partner contract guarantee that items won’t be resold. ADN signs partner contracts with the adhering charities. Among the conditions are the guarantee that items will not be resold, but only used by the volunteers and benefitting people of the association.

 

Partner Charities of Agence du Don en Nature

Benefits for donating entreprises

Many companies start to remodel their Supply Chains to minimize their stock and unsold goods. Despite these studies, enterprises have to admit it seems inevitable that enterprises maintain to produce goods that end up unsold. 

CSR and Sustainability Policies make people realise that it may be a good idea to donate the surplus of brand new goods to charities instead of destroying it.

The Agence du Don en Nature guarantees the donating enterprises that goods won’t be resold on the market and supply a yearly transport report of the destination of the goods. Enterprises are happy to report this in their respective annual Sustainability Report. They can also profit from tax deductions in some cases, though this is certainly not the most important requisite, according to Stéphanie Goujon.

Entreprise partners are very satisfied by ADN services.l’Agence du Don en Nature offers [us] various advantages. As a logistics specialist, she has implemented [both] ethical and transparency parameters [by partner association contracts] which guarantees us from a legal point of view that products are distributed to the right people (4).

Partner Corporates of Agence du Don en Nature

What are outlooks for Agence du Don en Nature ?

One of the key success factors is the high involvement of the donating and founding companies, such as Coca Cola, HSBC, Groupe SEB, ATKearney and Price Waterhouse Coopers, explains Stéphanie Goujon. Supply chain directors and consultancies offer their expertise to set up the logistics and distribution chain. Without this support the association would not be so efficient and successful, Mrs Goujon acknowledges. She is therefore keen on carefully maintaining these partnership relations as ADN keeps growing in the coming years.

Supply-demand balance. Some products are over-asked and currently under-supplied. For instance baby nappies, sleeping bags, socks and baby clothes are very much demanded by the charities, whereas potentials suppliers seem to have found alternative destinations. A new initiative steered by a group of Science Po students (French University of Technology) is the Ambassador Program aiming to understand better the association needs and notably find new donating enterprises for the most required products. This initiative will certainly help to improve the match between the donated goods and requested products.

Ambitious Goals. With all these activities going on, ADN has set itself ambitious goals : By 2011 it wants to help 1 million French people by 2011 by distributing goods representing a value of 10 million euros.

French enterprises and associations are invited to learn about the program and join : www.adn.org : ‘Moins de gaspillage – plus de partage’ or :  ‘Less wasting- more sharing’.  

Sources : 1. Presentation AND may 2010, 2. Site ADN : http://www.adnfrance.org/, 3. Supply Chain Magazine ‘ADN, une chaîne efficace entre donateurs et associations http://www.supplychainmagazine.fr/TOUTE-INFO/Archives/SCM043/Experience-43-ADN.pdf, 4. Moins de gaspillage, plus de partage’, Rapport d’activité Responsable 2009.



French Government presents Grenelle II Laws ; Focus on Local Application

Today, the new ‘Grenelle II’ laws are presented in the French Parliament. Though the  ‘Tax Carbone’ has been abandoned (France will wait EU regulations). detailed plans are presented for building, transport and energy sector. Local authorities are asked to play a more important and facilitating role. French NGO’s point out the weakened ambitions since the Grenelle II and ask French parliament members to push the government to keep its promises (1, 2, 3, 4).

The Grenelle II follows the Grenelle I (2007) and a second public consultation round with representatives of large companies (MEDEF), SMEs (CGPME), NGOs.

The new law package contains six pillars and contains the ‘outlines’ and ‘logistics’ of the application on regional and local level.

1.  Improving the Energetic Performance of Buildings. Among the measures are : insisting on ‘Batiments a Basse Consommation’ (BBC, < 50 KW/H/m2 per year) for new buildings and to reduce the consumption of existing buildings by 38% untill 2020. Which makes sense as the existing buildings use on average 250 KW/H/m2 per year, as stipulated in earlier article.

2. Creating a change in Transport Use. Among the measures presented are : speeding up the process of public transport infrastructure, insisting local public authorities on offering ‘lease-bikes’ and car-sharing programs, and subvention of electric and hybrid car development.

3. Reducing significantly Energy Consumption and Carbon Emissions. Measurements foreseen are : Obligation of all entreprises with over 500 employes and municipalities with more than 500.000 inhabitants to calculate CO2 emissions on a yearly bases, see also earlier article, Stimulation of Renewable Energies, notably by simplification of governmental procedures.

4. Preserving Biodiversity. Pharmaceutical and hospital products will be more restricted and reported. Choice of new geographical zones that need special attention.

5. Risks, health and waste. Various measurements are proposed, such as the Protection of Electrical and Telephone Network workers. Quite remarkable is the new and explicit Interdiction of telephone use in all schools of all ages. The phones may only be used outside the school, nly with seperate earphones connected with a wire to the phone.

6. A new Ecological Governance Model. Introduction of Five ‘Colleges’ of Stakeholders : ONG, Entreprises, Unions, Public Authorities and Public Administration. Regions with over 50 000 inhabitants will be obliged to create a Sustainable Development report.  Exchange with NGOs, Associations and Entreprise Representatives will be extended on a regional and local level to reinforce transparance and exemplarity. Each product should carry CO2 emission information, related to the CO2 emissions created by transport of people and goods.

Open Letter of French NGO’s to vote against the new laws. A group of French NGOs have sent an open letter to the French public representatives to express their inconvenience with the current proposed laws that are regarded as ‘weakened’. They point out that the French Government tends to forget the earlier made promises in 2007 of the Grenelle I claiming to promote renewable energies, whilst subventionning notably nuclear (not solar nor wind energy) in the 2009 Grand Emprunt Plans. They ask the delegates to carefully study the new laws, ask clarifications, clearer and obligatory transparancy on social impacts of French companies and clear dates as of which new laws should be operational (such as the Eco-Etiquettage) (4).  

Sources and more information on : 1. http://www.euractiv.com/en/sustainability/France-seeks-to-establish-local-%27eco-governance%27-news-488893?utm_source=EurActiv+Newsletter&utm_campaign=57f6e90466-my_google_analytics_key&utm_medium=email; 2. http://www.developpement-durable.gouv.fr/Projet-de-loi-Grenelle-2-le-temps, 3. http://www.developpement-durable.gouv.fr/IMG/pdf/repere_focus.pdf; 4. http://www.fondation-nicolas-hulot.org/sites/default/files/pdf/publications/lettre_ouverte_deputes_grenelle2_28av2010.pdf



Shells Sustainability Challenges refined with Scenario Planning Analyses
April 9, 2010, 3:38 pm
Filed under: Best Practices in The Netherlands | Tags: , ,

Scenario Planning continues to be one of Shells tools to anticipate on trends and adapt its business plan consequently. At present, Shell recognizes two paradoxical needs : at one hand  a growing energy need, at the other hand an urgent need to reduce CO2 emissions. The energy and petro-chemical company has decided to invest in energy efficient solutions, energy diversity and carbon storage solutions.

 

Bert Fokkema, Issue Manager at Shell International

Royal Shell, the Anglo-Dutch energy and petrochemical multinational has its Headquarter in The Hague in The Netherlands. The company is currently employing 101,000 employees worldwide in over 100 countries. It produces 3% of the yearly gas and 2% of the yearly oil production and generates 280 billion dollar revenues (2008 numbers) (1).

 

Examples of two of Shells key projects (1) Refinery platform in the icy sea of Okhotsk (Russia) and vessel with pipeline in the ‘Parc das Conchas’ (Bresil)

Bert Fokkema is ‘Issue Manager’ within Shell The Netherlands. Biologist by education, Mister Fokkema has covered various positions within the Shell Group in the UK and The Netherlands. Among the positions covered was the role of toxicologist within the group Health Safety and Environment. In his current role as Issue Manager, Fokkema is responsible for the ongoing dialogues with external stakeholders, particularly NGO’s, but also groups such as national governmental bodies, social investors, academics .

1.   Which trends are foreseen in the energy sector ?

Scenario Planning has been a important tool for Shells Top Management to analyse societal, economical and environmental trends. As of the early 80ties, the Planning Department has been using this interactive methodology to investigate key societal, technological, economical and environmental trends that create a huge impact on the business. It is common to develop multiple scenarios of possible futures – knowing that no one can predict the future – to investigate the impact of trends that are existing ánd to develop a robust corporate strategy.

In 2008 the new ‘Shell energy scenarios 2050’ have been developed (2). Two distinct scenario’s have been developed ‘Scramble’ and ‘Blueprint’, that we will explain later. The scenario’s were inspired by 3 ‘Hard Truths’ identified by teams of internal and external experts :

Three Hard Truths about Energy & Environment :

1. DEMAND : Step-change in energy use : A growing world population (up 40% by 2050) and upcoming economies will result in a rapidly increasing energy request and transportation needs. Alternative energies or energy efficiency methods, unfortunately, won’t offset the growing demand in the world.

2. RESOURCES : Supply will struggle to keep pace. Fossil fuel production won’t keep up the pace of the demanded growth of energy consumption. Environmental degradation post limits to use of coal that produces large quantities of green house gases. Along renewable energies, it is, biofuels may become more significant part of the energy mix.

3. ENVIRONMENT : Environmental stresses are increasing : Remaining within desirable levels of CO2 concentration in the atmosphere, to avoid severe threat of human-well being, will become increasingly difficult.

 

Shell has defined two scenario’s for 2050 that seem plausible based on the identified trends : Blueprints and Scramble. Unfortunately, neither of them are comfortable, both need to be investigated and anticipated on, as also Shall can’t predict or ‘choose’ the future.

In a Scramble world in 2050, National governments are the principal actors in this future imaginable world. National governments focus on national security and crises, day to day business and solving energy supply-demand issues. In this scenario, neither the international governmental bodies nor the private industry groups have been able to implement climate laws or carbon emission trade schemes. Actions to address climate change are pushed into the future. Major energy providers are the rule makers that influence policies. Rivalry between states is huge. Economic and energy performance is varying between different countries. Due to gas and oil scarcity, energy production based on coal (expected to grow by a factor 2,5) and biofuels will be significant. Second generation biofuels will start to take off as of 2020. The concentration of CO2 will be above 500 ppm (parts by million by volume), which is way higher than the 2% above pre-industrial times proposed for COP15 (Copenhagen convention 2009).

Scramble Scenario, screenshots of Taxi Driver explaining Blueprints and Scramble Scenario’s, Shell production 2009

In a world called ‘Blueprints’ in 2050, to the contrary of the ‘Scramble’ scenario, International bodies have managed to create a set of international frameworks, laws and well-performing carbon trade systems. Entreprises are still driven by market mechanism. Public and private sector actively develop and implement new ‘blueprint’ solutions for renewable energy and CO2 storage.  Energy efficiency improvement measures and mass-market electric vehicles production has been accelerated. Progressive cities around the world share good practices of efficient infrastructure development, congestion management and integrated heat and power supply. A variety of carbon capture and storage (CCS) systems underground are implemented. Despite all energy efficiency measures and an increasing renewable energy proportion, it is expected that in this scenario the rate of atmospheric CO2 will still be somehow higher than the 450 ppm CO2 equivalent (the 2% limit of COP15). The high levels of CO2 in the atmosphere is creating a constant concern and push to switch to a less energy-intensive path.

 

Blueprint Scenario, screenshots of Taxi Driver explaining Blueprints and Scramble Scenario’s, Shell production 2009; see  Descriptive Video

The Scenario’s are agood framework for discussions with internal and external stakeholders. ‘What if’ questions can be asked and tested. Future strategy directions can be ‘ ‘simulated’ in both scenario’s. Energy efficient measures will be important in both scenario’s, as energy will become, anyhow, scarce.

2. What are the CSR & Sustainability Objectives of Shell  ?

Shell has defined Sustainable Development for itself as : Helping to meet the world’s growing demand for energy in economically, environmentally and socially responsible ways’ (1). The six pathways identified (3)

1. Managing emissions from Shells own production facilities. CO2 emissions have been reduced by 20% since 1990 and will be reduced further. New investments calculate in CO2 management options and costs.

2. Capturing and storing CO2. Industrial plants such as power stations, refineries and chemical plants produce a large share of man-made greenhouse gases. Shells wants to move forward with pilot projects on CO2 separation and storage technologies.

3. Find and produce fossil fuels by producing less emissions. Grow development of gas projects. Already half Shell’s portfolio consists of gas opportunities which provide clean burning fuel.

4. Developing low CO2 forms of energy. Shell believes that biofuels will become an important energy source. The company will focus first on the 1st generation biofuels such as ethanol generated from sugar cane, corn and wheat to be blended with gasoline. 1st generation biofuels knowledge and acquired market share will make Shell ready for the 2nd generation biofuels that will come on the market in 5-10 years (4)

4. Helping customers to become more energy efficient. Shell is offering new fuels (such as Shell Ultralow Sulphur Super Diesel and Fuel Save) is educating drivers how to use their cars and fuel more efficiently.

6. Contribution to the creation of international frameworks of carbon CO2 regulation. Shell is actively participating and lobbying for clear international regulations that set a level playing field.

 

Shell advertisement in The Economist 30th of January 2010 showing the mission that Shell has set itself : combining delivering more energy while reducing CO2 emissions.

3.  How does Sustainability lead to Innovation at Shell ?

The different pathways intrinsically lead to innovation. We can distinguish technological innovation as well as new ways to cooperate with external stakeholders.

1. Technological Innovation. Next to improving methods of fossil fuel production to reduce climate impact, and biofuels, an important area of investment to be mentioned are new offshore wind parks (solar energy has been abandoned as a major R&D area in 2008). An offshore wind farm (108 MWh) has been developed with energy provider Nuon, 10 km west of the Dutch coast at Egmond aan Zee (5). Shells offshore technical knowledge with oil and gas platforms helped ensure 115 tonne turbines to withstand the harshest weather,

 

Installation of the wind offshore park ‘Noordzeepark’ west of the Dutch coast  in cooperation with Nuon (5)

2. New ways of Stakeholder Engagement. Shell has started to develop close relationships with its external stakeholders. Fokkema is one of the people responsible for these relationships. Contacts are maintained with the academic world, governmental bodies and NGO’s. The relationships provide two-way information (informing NGOs about latest Shell news and funnelling information of NGO into the Shell organisation). Shell is performing impact assessments and setting up engagementswith NGO’s and local communities to investigate impact of new upstream projects, in order to provide for a sustainable cooperation with local communities. An example is the project in the Arctic region. In cooperation with IUCN and Wetlands International, Shell is studying implications of construction of new upstream projects on tundra and permafrost environments. Traditional knowledge of Eskimos about ice seasons, whale and seal movements is therefore crucial. It helps Shell to plan better its offshore production, not to disturb traditional  fishing and hunting (6).

 

Sources : 1. www.shell.com ; 2. ‘Shell energy scenarios to 2050, Shell brochure 2009’ ; 3. Hard Truths and Opportunities, 2008, Rob Routs, Executive Director Oil Products and Chemicals Shell,  http://www.shell.com/home/content/media/news_and_library/speeches/2008/routs_engineering_conf_28032008.html ; 4. ‘Shell and biofuels, finding a sustainable energy way forward, 2008’  ; 5. ‘Shell Technology Report, Jan 2007’.  6. ‘Successful co operation between the Oil and Gas Industry and Arctic Communities’, Robert Blauw, January 2010.



Late Adoption of Corporate Responsability in France

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Why has France been rather late with accepting CR policies ? Elisabeth Laville, French Sustainability Consultant, gives 4 plausible reasons and Francoise Helene Jourda, Architect, adds a 5th one :

1. State held responsible for social and environmental matters . In French welfare state, people expect the government to take care of social and environmental issues.  Companies are supposed to create sufficient revenues for the benefit of its employees and  families. ‘Corporate Responsibility’ (CR) had been for long simply not recognized as a concept applicable to French companies. It was perceived as an Anglo-saxon invention.

2. NGO’s have limited influence. French company boards have not been really challenged by NGO’s about their social or environmental responsabilities. There is no tradition of dialogues between Corporate Companies and public pressure groups – the Grenelle discussions were an exception. Many French people feel less connected to NGO’s, compared to the UK, where Oxfam is very popular, and the Netherlands, where 30% donate to the World Wildlife Foundation.

oxfam world wildlife foundation

3. Pioneers lack in the private sector. First, Corporate Responsibility (CR) is seen as something invented in the Anglo-saxon world. There are limited examples of real French companies about which the French people can be proud of such as the Bodyshop in the UK – again an English example – started by Dame Anita Roddick.

bodyshopbodyshop title

Bodyshop Values : Protect the Planet, Defend Human Rights, Support Community Trade

4. Limited experience with holistic thinking and transversal working. Sustainable development require out-of-the-box thinking and cross-functional working. In sustainable architecture projects it has been proven a blocking point. The same challenge is recognized in other industries. In France, people value profession development and tend to stick to their career path. This complicates working in multi-disciplinairy teams.

5. Sustainable development believed to be ‘uncool’. Sustainable Development and Corporate Responsability had been simply ‘uncool’ for years. In architecture, according to Jourda, ‘Sustainability’ did in fact  devaluate an architectural design ! Fortunately, things have changed recently. Sustainability has become a must-have to create a rigid and acceptable design and it (almost) has become fashionable…

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