Tapping
the sustainability market
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Philip Sutton
Director, Policy and Strategy
Green Innovations Inc.
Tel & fax: +61 3 9486 4799

14th May 1997 (Version 1.f/w:iii; Doc. 184)

Thanks to Michael Pitcher
for marking up this paper
in HTML format.


Contents

Section 1. Introduction

Section 2. The next green surge

Section 3. What revolution? Nothing's happening!

Section 4. The tools meet the task

Section 5. The triggers of the third green wave

Section 6. The required scale and pace of change

Section 7. The leapfrog green economy

Section 8. Needed: activist green companies

Section 9. The big winners in the green economy

Section 10. Come on! Let's be realistic

Section 11. Promoting sustainability: some key questions for firms

Section 12. Strategic positioning

Section 13. Impact via products

Section 14. Impact via market development

Section 15. Impact via product/process improvement

Section 16. Making it happen

Section 17. References

1. Introduction

This paper [Note 1] has been written for the Pathways to Sustainability Conference in Newcastle, Australia from 1st-6th June 1997.

It explores the rationale for firms to become, not just green, but sustainability-promoting and outlines methods they might use to make such an orientation viable.

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2. The next green surge

Ecological sustainability is going to be a key strategic driver for business during the next two decades.

To put things in perspective, right now the glaciers in most parts of the world are shrinking rapidly. The big companies, that for a decade said that there's no such thing as global warming, have given up because its actually happening. The only argument now is, did humans trigger the warming or is it natural and should we do anything to prevent further warming caused by our impacts on the globe?

This dramatic symbolic issue is having some equally dramatic but definitely not just symbolic effects on what some very big companies are doing commercially. Over the next five years a group of 25 companies, including General Motors, Ford, Toyota and Daimler-Benz, will launch onto the market the replacement for the steel-bodied internal-combustion-engine-driven car. Its replacement, the carbon-fibre-bodied, fuel-cell/electric-motor-driven hypercar will, at the same cost as a conventional vehicle, use between 50% and 90% less energy to do the same tasks and will virtually eliminate automobile caused urban air pollution! This is not hype - upwards of $2 billion dollars is being invested in this environment-driven revolution and the sum is growing daily as the companies move from development to commercialisation.

Over the next decade, the coal industry is going to come under increasing pressure from gas, cost-competitive conservation and renewables, and from the changing of the playing field as a result of the outworkings of the Climate Convention (ecotaxes and tradeable permits).

The wood products and fishing industries are in transition from the use of native ecosystems for harvesting to farm-style production. The water industry is moving from dam building to closed-loop recycling. The Internet is transforming how we do business, how we shop, and how we educate and entertain ourselves. The closed-cycle, dematerialised economy is on its way.

Environmental concerns about greenhouse warming, pollution of humans and ecosystems, and loss of biodiversity will just get greater and greater as the problems mount. And the feedback into changes in the market place will become even more intense as government environmental agencies and environmental groups become more effective at triggering a transformation of the market. For example, the technical design of the hypercar and the market-shifting strategy that got the invention from the drawing boards to the factory floors were both the invention of the public interest Rocky Mountain Institute.

Why should business get involved in the greening business? Because the inevitable changes in how we meet human needs, required by the imperative to protect the environment, will change virtually every product now on the market, requiring it to be either reinvented 'green' or replaced - often by something radically different.

Moral concerns and the community self-interest imperative to protect the health, happiness and economic welfare of humans and the health and survival of other species will drive the change, creating competitive pressures and commercial opportunities so powerful that, as the next decade unfolds, no company will be immune from the changes.

This revolution can be experienced either as a continuing competitive nightmare or as a time of exciting commercial opportunity. In large measure the choice is in the hands of every business.

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3. What revolution? Nothing's happening!

The hypercar, for example, shows that indeed something big is happening. But there is no doubt that a lot of the green transformation of the corporate sector that was expected over the last decade has been stalled. So how do we explain this paradox of action and inaction? Paul Strebel in his book "Breakpoints" (1992) shows how when strong forces for change meet strong forces of resistance, for a period nothing much may happen. But if things move slightly in the direction of the forces for change, then like an earthquake, changes can suddenly be unleashed that seemed impossible moments before. The fall of the USSR and the Apartheid regime in South Africa attest to that. This is also the situation with the environment.

Within five years we will witness the start of the third and longest of the great surges in environmental awareness and action. The previous two surges, in the late 1960s-early 1970 and then in the late 1980s-early 1990s, focussed on individuals and governments. The next will focus on organisations, especially commercial firms. This will result in the long awaited mainstreaming of the environmental agenda. But in a surprising form.

It has always been assumed that as the environmental agenda is picked up by conventional forces it will be watered down to make it acceptable. This time round however commercial competitive pressures and the urgency and magnitude of the environmental stress the planet is facing will conspire to put an increasingly uncompromised agenda centre stage. The greatest commercial gain will accrue to those that can lead the corporate change the furthest in the direction of necessary greening.

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4. The tools meet the task

Over the last twenty years the corporate world has been learning to innovate and restructure very fast. 'Change' has become a corporate buzz word - to the point where many people caught up in it are heartily sick of the whole idea. But that is because these powerful tools are being used for trivial ends, to help Tweedle Dee Inc and Tweedle Dum Corp to fight for market share for products that no-one cares about or to enable the latest crop of corporate power players to inflict their mark on the organisation.

But the environmental imperative (and incidentally the imperative to improve the living standard of the world's poorest) suddenly gives these tools an application worthy of their power. Once the tools and the task are harnessed the results will be staggering (Dunphy and Griffiths, in prep.).

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The triggers of the third greenwave

The next decisive surge will occur as:

Scientific evidence: People are unlikely to make difficult adjustments unless they know they have to change. So, for example, the recent scientific consensus conclusion of the Intergovernmental Panel on Climate Change that "the balance of evidence suggests a discernible human influence on global climate" (IPCC, 1994) is an important motivator.

Transformative technologies are technologies that have the power to dramatically change the environmental impact of business and the most strategically important are those that are economically viable within the current price structure. The hypercar is a dramatic example of a transformative technology. It will decrease the demand for oil by as much as the OPEC countries have increased the supply and it will cut the car industry's demand for steel by 90% (Lovins et al., 1996). Because of the sheer scale of the changes in the economy that transformative technologies will trigger, in terms of product and corporate growth rates and money flows, these technologies will change the relative influence of firms and indeed whole industry sectors and they will change public perceptions about what is possible. This will make some commercial and public policy initiatives feasible where previously they would have been successfully resisted by the defenders of the status quo.

Community lifestyle programs: Already programs like the Global Action Plan are spreading through Europe, North America and beyond (Gershon & Gilman, 1992). They involve householders reviewing their environmental impacts and their consumption patterns thus helping to expand green product markets. Once an information feedback loop back to business is added to these programs they will become a very powerful influence on 'green' product development.

Win-win macro-economic policies: There will not be much corporate enthusiasm for the pursuit of ecological sustainability while most businesses think the economy will contract as a result. But there is increasing awareness that win-win economic strategies can be developed to deliver superior environmental and employment results without a GDP penalty (DRI, 1994). The European Union is leading this development, but interest is being generated elsewhere in the world. See Figure1.

Green business tools for sustainability: Businesses will not be able to become proactive in their pursuit of sustainability until tools are readily available to help them manage themselves as sustainability-promoting firms. A number of organisations are developing just such tools. [Note 2] (See Sutton, 1997.)

Key corporations go for sustainability: With the globalisation of the economy, large multinational corporations have become the dominant players in business. Until a number of these firms break away from the pack to pursue ecological sustainability as a serious source of competitive advantage, the bulk of firms will not see sustainability as having more than public relations significance. A small but influential band of large multinationals are now moving tentatively in the direction of such a transformation. [Note 3]

Media interest: It is rare for major shifts in public, corporate or government thinking to occur until the issues are picked up by the media for intensive treatment. The globalisation of the media has gone so far that local media outlets usually only treat an issue as newsworthy after the international news networks have picked it up in what they see as the trend-setting countries.

Scope for win-win economic results

 

Figure 1

 

© Green Innovations Inc., Ver. 1.b 24/04/97

It is the synergistic combination of the seven factors above that is crucial. The scientific evidence provides the non-commercial motivation and also helps to reduce commercial risk by making it clear that certain paths of future change are more probable than others. The transformative technologies ensure that the cost of change is not prohibitive, they make immediate action feasible thus creating commercial momentum in the desired direction and they weaken the power of the forces of resistance. The community lifestyle programs boost the size and breadth of the green market and reduce the risk of investments in this area. The win-win macro-economic policies ensure that there will be more winners than losers so making an alliance for change possible before the worst effects of environmental damage are felt. The creation of practical tools for sustainability-promoting businesses improves the ability of firms to recognise and undertake commercially viable su stainability-promoting activity. Any trend has to start somewhere and the emergence of some obvious examples of large firms that are making the transition will provide the role models and case studies required before others will believe in the reality or practicality of the change. Also the emergence of a number of powerful exponents of "sustainability-promotion" will increase the depth of activity and resourcing around this area. And finally large-scale media coverage will spread the idea and create a sense of excitement and inevitability about the change thus ensuring that it becomes unstoppable.

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6. The required scale and pace of change

To effectively promote ecological sustainability we need to know the true scale and urgency of environmental problems. One example will suffice for this paper, although the same dimensioning exercise needs to be undertaken for all environmental issues.

Let's look at global warming. Based on ten climate models from different parts of the world it is estimated that to stabilise atmospheric CO2 at 350 parts per million by volume, which is well above the natural level of around 290 ppmv, it will be necessary to reduce world industrial emissions to the atmosphere to zero (net), over the next 60 years, and then spend the next 80 years actually pulling CO2 out of the atmosphere on a net basis! (Enting et al.,1994).

To achieve this it will be necessary to eliminate the use of fossil fuels through conservation and the use of renewable energy sources. It is probable that resource use efficiency will have to grow at 4% to 5% per annum which is at least twice as fast as the improvement in the Japanese economy at the height of the OPEC oil price rises in the 1970s.

Changes of this scale and speed suggest that all major sectors of society need to be mobilised to the task since, if any very powerful sector of society is opposed to the change, it could probably block it. It also suggests that very gradual incremental change will not reposition society fast enough or far enough either.

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7. The leapfrog green economy

If gradual incrementalism is not sufficient, then a leapfrog approach is needed where many of the smaller change steps that dominate slower-paced development are skipped over. Community, government and commercial direction-setters need to have a clear idea or vision of future states of the economy to aim for so that large leaps toward these conditions can be designed and implemented.

This vision can be informed by concepts such as:

The closed-cycle economy manages the flow of materials so that wastes from one firm become raw materials for another (that is, zero waste/100% recycling). Industrial ecology or cleaner production principles are used to ensure that this is done effectively and efficiently using preventative, whole-system design principle.

Dematerialisation of the economy has two aspects. One is the reduction to the absolute minimum of the physical resources needed to meet human needs and the other is the decoupling of economic growth from additional resource use. Both of these objectives are made easier to achieve by reconceptualising all economic activity as providing a service via a physical platform. Economic growth can be decoupled from resource use if the physical platform delivering services does not grow even when service flows increase. This approach can only continue working indefinitely if the population has been stabilised and people's basic physical needs have been met.

The zero fossil fuel economy (without resort to nuclear power) rests on conservation to dramatically reduce the need for energy of all sorts and on the massive expansion of renewable energy supplies.

The zero extinction economy is premised on humans containing their spread into natural ecosystems and indeed it may involve the partial reversal of past encroachments. It also depends on a careful reduction of specific human impacts and the active management of self-propelling threatening processes that could cause extinctions (for example pest plant and animal spread).

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8. Needed: activist green companies

With the globalisation of the economy, the political leverage that government's need to regulate the economy to achieve environmental outcomes has been significantly weakened.

We are now in a position where necessarily strong regulation (whether law-based or carried out using market instruments) is politically impossible unless a significant number of large private corporations break ranks and join, as active partners, in what amounts to a community/government coalition to re-jig the economic playing field.

Traditionally business support is won by offering highly compromised environmental objectives. But global ecological sustainability cannot be achieved via compromised objectives and it cannot be achieved without support from key elements of business. Catch 22, it would seem!

The solution is to rethink what business is capable of. Why can't large firms, and small, that are committed to making money do so by pursuing the community's interest in achieving ecological sustainability, on an ecologically realistic timetable ie. fast?

Green management tools like ISO 14000 are genuinely helping to put green issues on the business agenda, but the typical way they are applied ensures that most businesses fail to achieve their greatest leverage on environmental issues.

The big challenge for firms is not to focus exclusively on reducing their own negative environmental impact - the typical ISO 14000 focus. Instead it is to use products and influence to empower the community and the economy to achieve ecological sustainability. [Note 4] After all, there's no such thing as an ecologically sustainable firm, only an ecologically sustainable society. It's a whole-system phenomenon.

So where are the firms, big or small, that are as enthusiastic about ecological sustainability as the green activist groups? How do we find eco-enthusiastic firms and how do we switch new companies on to this approach?

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9. The big winners in the green economy

At the moment, the firms with the highest level of green awareness are those that believe they have the most to lose from a deep-seated greening of the economy. However, because of their defensive motivations, these companies provide an unlikely (but not necessarily impossible) recruiting ground for the eco-enthusiastic companies that are needed to lead the charge to a green future.

On the face of it, the best recruiting ground ought to be among the companies with the nascent competencies required to provide the services, to people and businesses, that will typify a green economy, for example the information industry, service providers using hiring/rental strategies, firms catering to the needs of small families, providers of maintenance services, firms providing complex systems management and complex design and problem solving capabilities, firms involved in supporting healthy lifestyles, recreation and leisure with low resource use, and the providers of urban and industrial developments requiring very low levels of motorised transport for people and goods.

Stereotypically relevant firms such as those involved in direct materials recycling, pollution control and natural habitat management will certainly be winners but not the biggest winners in the shift to a green economy.

So, we have a perplexing situation here. The big losers know who they are (eg. virgin raw material suppliers and providers of goods and services with high resource or environmental use intensity). But the winners, who know they will be winners, are not those with the most to gain. On the face of it this is a situation where the change process is doomed to be stalled.

To tip the balance, what is needed is a coalition of interests that can communicate, to those who are potentially the biggest winners, what is at stake for them.

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10. Come on! Let's be realistic

By now readers with a sceptical turn of mind are sure to have reached the point where they think the author has taken leave of all sense of practicality. The sceptic will be arguing that, no matter how nice it would be for firms to behave as eco-enthusiasts, no firms of any significance behave this way and, more to the point, they never will. Some important objections supporting this view are itemised below. The objections need to be taken seriously, not as a basis for inaction, but instead as a trigger for the creation of practical response strategies.

Objections

Examples of response strategies

Promoting ecological sustainability is not part of the firm's charter

  • change the charter

The proposed changes are simply too huge to be taken seriously

  • support public discussion of the necessary scale and pace of change so that the ideas become commonplace
  • use appropriate tools for handling huge changes

Firms are motivated solely by short term profit (prompted by their internal culture and by the demands of shareholders and financiers)

  • recognise that not all firms or all parts of firms are short term in orientation - work with those that have longer perspective
  • change the corporate culture
  • change shareholder/financier expectations
  • find/create shareholders/financiers with longer term vision

Margins are too thin to take on altruistic non-commercial projects

  • make the promotion of sustainability contribute to the bottom line so it can fund itself
  • enter niche markets with wider margins
  • pool resources for non-commercial projects across firms

Corporate green activism cannot deliver bottom line results

  • devise strategies for making activism pay eg. the Body Shop 'advertises' through 'good works' rather than through TV ads

Desirable sustainability-promoting products are not commercially viable

  • recognise that there are many currently profitable opportunities
  • innovate to reduce costs
  • improve product value relative to cost
  • build market demand
  • support public policies to favour green over non-green products

Pursuit of long-term goals is too risky

  • work with commercial alliances based on shared change visions
  • gain public policy support for key directions of change
  • hedge risk

Talking green, especially radical deep green, will 'frighten the horses' or create the impression that the firm is detached from reality thereby alienating the firm's governing body, its financiers, analysts, customers, suppliers, etc.

  • educate governing bodies, financiers, analysts, customers and suppliers - and the community
  • get practical runs on the board before creating a green profile

There is no time to explore complex hypothetical futures, when the time of key managers is totally absorbed in handling present crises (of growth or contraction)

  • hire consultants
  • support research into and the creation of robust, simple models of practical green change

The concept of ecological sustainability is too woolly to be a basis for hard commercial decisions

  • access better educational materials
  • support research into and the creation of robust, simple models of practical green change

Firms don't have the knowledge and skills to work out how to operationalise a sustainability-promoting strategy

  • build internal competency
  • hire capability
  • support R&D for competency development.

When arguing about being realistic, it is important to recognise that firms and societies need to be realistic in two ways. They need to be commercially realistic and they need to be environmentally realistic. Pursuing ecological sustainability is the only realistic course environmentally and pursuing economic viability is the only realistic course commercially. Being half realistic (only pursuing one of the two realisms) is not enough.

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11. Promoting sustainability: some key questions for firms

Hopefully the examples above of strategies to make the pursuit of ecological sustainability viable will reassure readers about the potential practicality of the endeavour. Now we can turn to the 'what' and 'how' questions.

With respect to the achievement of ecological sustainability, will your firm:

Rationale

  • promote its achievement in the most effective ways possible?

Ecological sustainability will not happen unless the corporate sector embraces it as a goal and pursues it vigorously and effectively.

  • make its promotion a significant commercial strategy?

The funds devoted to the achievement of ecological sustainability by the corporate sector will only ever be significant if they contribute to firms' bottom lines.

  • contribute to leapfrog developments via product offerings?

Movements in the direction of ecological sustainability will only ever be large and quick enough if leapfrog developments are actively pursued.

  • help mobilise the community and the corporate sector?

The sustainability-promoting idea needs to be propagated through the community as fast as possible.

  • contribute to the changing of the corporate playing field?

While many profitable opportunities exist at present to contribute to the achievement of ecological sustainability, not everything that needs to be done will be profitable under the current price structures and regulatory frameworks.

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If the answer is "yes" to these questions then your firm will find the next four sections a useful guide to the tools needed to promote ecological sustainability.

It should be noted that the achievement of local ecological sustainability depends on the achievement of global ecological sustainability. If global life support systems (climate, atmospheric screening of ultraviolet light, productive soils, clean water and air, biodiversity) are deteriorating then local ecosystems and dependent human communities will suffer too. Also, for it to be possible to achieve ecological sustainability it is also necessary that society to have the capacity to solve major problems of any sort. Action on the environment will be sidelined if society is engulfed in major non-environmental issues that it cannot solve.

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12. Strategic positioning

How does a firm which is committed to promoting the achievement of ecological sustainability drive that action focus right through the organisation? (Sutton, 1997)

5-in-1 Customer : One good way to start is to expand the notion of customer service to encompass not only the direct user of the firm's services or goods but also the local community, people globally, future generations and nature. If a firm serves the 5-in-1 Customer in everything it does it will automatically promote ecologically sustainability. Adopting the 5-in-1 Customer concept means that not only will products be produced differently but the types of products produced may be quite different.

Inspirational stretch goals: To provide a concrete framework for the 5-in-1 Customer concept to operate in, it is useful to adopt a set of inspirational stretch goals to guide the firm's product development and innovation programs of all sorts. These stretch goals are not something that one would expect to achieve immediately, easily or even in some cases totally, but like the 'zero defects' idea adopted by the Japanese after the Second World War, they point the direction and give a sense of a preferred future state.

Some useful inspirational stretch goals are:

Main

Supporting

  • Zero biodiversity loss
  • Closed-cycle economy
  • Zero life support systems damage
  • ~90% dematerialisation
  • 100% matching of renewable resource production capacity with depletion of fossil resources

 

  • Zero natural productivity loss

 

  • Sustainable population

 

  • Continuous capacity for major problem solving

 

The goals in the second column support all the goals in the first column.

Living in multiple realities: One of the hardest aspects to deal with of committing to goals that imply massive changes in society is that the firm has to survive in the current reality even as it makes efforts (in concert with others) to create a new reality. Indeed with really large changes there may be quite a few distinct phases on the way to the achievement of the inspirational stretch goals so in effect the firm has to live in and plan for multiple realities. This approach needs to be built into the firm's management processes. Blanchard and Waghorn (1997) have recommended creating an improvement structure that reflects these multiple realities. One team the P Team (P for 'present') looks at how to improve the viability of the firm within the present realities and the F Team (F for 'future') looks at how to reposition the firm for different worlds further down the track. Both teams are permanent.

Scenarios of transitions to sustainable futures: To be able to plan for something that does not exist (yet) you have to be able to paint a picture of the possible new reality that is concrete enough to allow people to decide on practical actions. But the future is uncertain so firms will need to create several scenarios to 'sensitivity test' a range of possibilities. Scenarios are a key to identifying possible sustainability-promoting market opportunities. A useful scenario-framing concept for people with a negative twist to their creativity is to get them to imagine their most feared green competitor - then the firm can consider whether it will become that competitor.

Company stances: There are three stances that are relevant to sustainability-promoting firms. They are to be an ethical opportunist, a pioneer or a catalyst. The ethical opportunist company rapidly picks up on best practice options developed by others, the pioneer creates new ways of doing things that will become best practice and the catalyst prompts others to make desirable changes so that tomorrow's best practice will be better than it would otherwise have been.

All sustainability-promoting firms need to take on the catalyst role, but they may choose to have cultures or business plans that are dominated by either the ethical opportunist or pioneering stance. Of course, to be a product or marketing pioneer in non-environmental areas doesn't necessarily mean that the firm has to be a sustainability pioneer, but the various forms of pioneering can go well together. Ethical opportunist firms would tend to favour the strategy of bandwagonning on transformative technologies that are already entering the market, while pioneering firms might be the ones to initiate or substantially advance new transformative technologies. Ethical opportunist firms are more likely to promote fast but nevertheless incremental developments while pioneering firms are suited to promoting leapfrog changes.

Positioning strategies: Taking into account both the environment/economic scenarios for society and the implications of different environmental stances, sustainability-promoting firms need to develop conscious positioning strategies. (Strebel, 1992) To maximise the chance for leapfrogging, care needs to be taken to avoid locking the firm into second best intermediate strategies for long periods when even better strategies are available or imminent.

Competency development: A sustainability-promoting firm will need to develop special areas of competence. Skill in finding win-win solutions (Goldratt, 1994) and in undertaking whole-system design are critical. Other competencies will be dictated by the firm's chosen strategic directions.

Strategic alliances: It is rare, where major and rapid change is occurring, for firms to be able to successfully create the change by themselves. Strategic alliances can play a critical role in defining strategic changes and in product and market development. (Moore, 1996)

Business development plan: The final test of whether a firm is sustainability-promoting is whether strategic directions and actions to promote sustainability are built into its business development plan. If they are not, then sustainability-promotion is probably not a meaningful priority.

Environmental effect via products and influence: Traditionally firms take action on the environment by reducing their negative impact through improvements in their production processes and the life-cycle impact of their products. In contrast , a key part of the effort to reposition firms to be sustainability-promoting is to switch priorities as fast as possible to empowering the community to be ecologically sustainable, with the firm's product offerings and the influence it can exert as the major mechanisms.

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13. Impact via products

The 'impact-via-products' strategy is based on the idea that the community can be empowered to achieve ecological sustainability through the new capabilities that sustainability-promoting products make possible. It also assumes that products can be identified or designed that are commercially viable given the actual price patterns and cultural and institutional settings prevailing when the product is on offer.

The task then is to identify a product concept that meets the needs of the 5-in-1 Customer in a commercially viable way at the time the product is delivered. Given that the transition to an ecologically sustainable society will involve change over a period of decades it is most likely that the firm will need to create a number of generations of products to match the commercial, social and environmental realities at different times into the future.

The skills needed are those required to predict the actual conditions at the time that each generation of products hits the market place and the technical and creative skills to craft a product that maximises the environmental benefit in these actual circumstances.

Some of the design-related skills are:

Products as services:

Life-cycle assessment:

Whole system design:

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14. Impact via market development

The 'impact-via-market-development' strategy is based on the positive power of influence4 - the power of the catalyst.

While there is much that can be done to profitably promote ecological sustainability right now and in the 'established-trends' future, it is very clear that society will not be able to get close to ecological sustainability if institutional structures, culture and the underlying pattern of price trends stay the same.

One reason is that, over the last hundred years and almost certainly a lot longer, the cost of resource intensive products has fallen relative to the price of labour intensive products (Grilli & Yang, 1988; Barnett & Morse, 1963). This makes high physical resource consumption and, therefore high environmental impact, an economically advantageous strategy, everything else being equal. In the face of the long-run relative price trends it is no wonder that society has moved to a throwaway structure and it is no wonder that recycling continues to be undermined by the low cost of virgin resource production.

The principal institutional cause of the relative fall in prices of virgin resources is the way that society was structured in the transition from feudalism to capitalism with wage payments emerging as the way that most people earned their incomes, rather than say earning dividends through a cooperative business structure. When wages, as the dominant income source, combine with:

then the historically described long-run reduction in relative resource prices is generated. (Sutton, 1995a)

So there is something about the basic structure of the market which, until it is changed, makes it hard to have an environmentally sustainable economy. If firms want to help bring about ecological sustainability they need to not only produce the greenest products that are possible at any particular point in time, but they need to contribute to the restructuring of the market itself to favour sustainability eg. through ecotax and eco-investment strategies. (Sutton, 1996b, Sutton, 1995b.)

Complementing the restructuring of the market fundamentals, there is also a need to create a green market culture on both the demand and supply sides. There must be demand for green products, otherwise they will not be produced. Firms can support programs that promote green lifestyles and the emergence of a green culture and consequently increase the need for green products eg. the Global Action Plan. (Gershon& Gilman, 1992)

Cultural change on the supply side is equally important. Market research shows that business managers make up part of the least green segment of society. (Said, in prep.) The scepticism and sometimes hostility of managers to any deep-seated greening of the economy can be reduced by:

Educational programs for the greening of business need to provide consciously for a rapid transition from a 'softly-softly', 'don't-frighten-the-horses' approach to a 'tell-it-like-it-is', 'no-holds-barred' approach.

The market building issues above are all encompassing in reach. But there is one fairly specific issue that also needs addressing and that is the importance of creating a market for products that enhance biodiversity conservation in a very targeted way. In the thirty years since the modern era of environmentalism broke upon the world in the late 1960s, it has become clear that the disruption of life support systems and the loss of biodiversity are much more urgent issues than the depletion of fossil resources as such. But business environmental management systems are grossly inadequate when it comes to biodiversity.

There are of course formal regulatory frameworks in place to protect biodiversity or nature. However, the 70-80% of the economy, that creates demands for the resources or services that have high biodiversity impact, pays no attention to the issue. This maintains market demand for high impact products which in turn is used by the resource supply and other companies with high direct biodiversity impacts as a basis arguing that they must not be inhibited too much in their duty to keep supplying the economy.

If the rest of the market insisted that it would not purchase products and services that directly or indirectly cause the loss of biodiversity, then the supply firms would have to fall into line and governments would gain the courage they need to make their regulatory systems effective at last. For this to happen downstream firms need to assess their life-cycle impact on biodiversity and then curtail it and they need to provide information to the public that will enable responsible consumerism (Sutton, 1996a).

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15. Impact via product/process improvement

The concept of 'whole-system-design', discussed above in relation to products, can applied to production systems themselves.

Cleaner production / industrial ecology:

Ecologically sustainable industrialisation:

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16. Making it happen

Ad hoc experimental action: To get started nothing beats giving some ideas a go. This paper provides a strategic framework for action.

Environment management systems: Formal environmental management systems are becoming an increasingly common way of ensuring that firms' environmental commitments are followed through systematically and effectively. ISO 14001 and 14004 provide basic frameworks but a 'default' approach to implementing the standards has built up which is not appropriate for most sustainability-promoting firms. The author has developed an ISO 14001-conformingapproach that overcomes the default limitations (Sutton, 1997).

Preparing the ground for action: Before firms take the leap to tap the sustainability market people within them need to become excited about the possibilities. You can help make that happen by passing copies of this paper around in business and community circles. You might also arrange for the author to discuss the ideas with your colleagues. Green Innovations is building up a list of people with skills in the areas covered by this paper.

Since we will continue to develop this paper and will be creating implementation materials, we would appreciate any feedback from readers.

Contact Philip Sutton

Green Innovations Inc.
195 Wingrove Street
Fairfield (Melbourne) VIC 3078
Australia

Philip.Sutton@green-innovations.asn.au
Tel & fax: +61 3 9486-4799

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17. References

Alenby, B. & Richards, D. (eds.) (1994). The greening of industrial ecosystems. National Academy Press: Washington,D.C.

Barnett, H., & Morse, C. (1963). Scarcity and growth. Johns Hopkins Press: Baltimore.

Blanchard, K. and Waghorn, T. (1997). Mission possible:Becoming a world class organisation while there's still time. McGraw-Hill: NewYork.

DRI et al. (1994). Potential benefits of integration of environmental and economic policies. Graham and Trotman and Office for Publications of the European Communities: Brussels.

Dunphy, D. and Griffiths, A. (in prep.) Organisational Renewal: A Handbook for Heretics. Email address:<dexter@agsm.unsw.edu.au>

Enting, I., Wigley, T. and Heimann, M. (1994). Technical Paper No. 31: Future emissions and concentrations of carbon dioxide: Key ocean / atmosphere / land analyses. CSIRO Division of Atmospheric Research:Melbourne.

Gershon, D. and Gilman, R. (1992). Household ecoteam workbook. Global Action Plan for the Earth: Woodstock, New York.

Goldratt, E. (1994). It's not luck. Gower: Aldershot,Hampshire.

Grilli, E. & Yang, M. (1988). "Primary commodity prices, manufactured goods prices, and the terms of trade of developing countries: What the long run shows", The World Bank Economic Review, 2:1, pp. 1-47. The International Bank for Reconstruction and Development/The World Bank.

Intergovernmental Panel on Climate Change (IPCC). (1996). Climate change 1995: The science of climate change. WMO/UNEP.

Lovins, A., Brylawski, M., Cramer, D. and Moore T. (1996) Hypercars: materials, manufacturing and policy implications. Rocky Mountain nstitute: Snowmass, Colorado.

Lovins, A., Lovins, H., and von Weizsacker, E. (1997) Factor four. Earthscan: London.

Moore, J. (1996). The death of competition: Leadership & strategy in the age of business ecosystems. Harper Business: New York.

Strebel, P. (1992). Breakpoints: How managers exploit radical business change. Harvard Business School Press: Boston, Massachusetts.

Said, D. "The EMU report: A new map of the green market" in Sutton, P. (ed.) (in prep.). Proceedings of conferences on"Getting the best out of ISO 14000. Green Innovations/RMIT: Melbourne.

Sutton, P. "Targeting sustainability: The positive application of ISO 14001" in Sheldon, C. (ed.) (1997). ISO 14001 and beyond: Environmental management systems in the real world. Greenleaf Publishing:Broom Hall, Sheffield.

---- (1996a). Developing a method for biodiversity life-cycle assessment. Green Innovations Inc.: Melbourne.

---- (1996b). Transformed market conforming planning fora sustainable future. Green Innovations Inc.: Melbourne.

---- (1995a.). "Ecological tax reform: A policy analysis of the Costanza, Daly, Hawken and Woodwell package." Presented at the Inaugural Conference of the Australian and New Zealand Society for Ecological Economics: Redefining resource management and environmental policy through ecological economics. Coffs Harbour, Australia.

---- (1995b). Scenario 2 - waste elimination: waste minimisation report - chapters 2, 11 & 15. Green Innovations Inc.:Melbourne.

Wallace, D. (1996). Sustainable industrialisation. Earthscan: London.

NOTES

1 The Conference is publishing version 1.a in the proceedings. This is a revised version. Click here to return to text

2 For example, European Partners for the Environment/SustainAbility/Wuppertal Institute in Europe, the Natural Step Environmental Institute in Sweden, Australia and the US and Green Innovations Inc. in Australia are developing sustainability orientated management tools for business. Click here to return to text

3 Given the slowness with which even the leading countries are putting an ecological sustainability compatible industrial base, leading-edge 'green' firms may have to support the establishment from scratch of such an industrial base in one or more of the newly developing countries. Historically major shifts in industrial paradigm are associated with a geographical shift in the technological frontier or leading edge (the frontier moved from craft production in the UK to production based on interchangeable parts/mass production in the US, and from there to Japan with the development of lean production). See Wallace 1996. . Click here to return to text

4 Meaning advertising, staff training, investment policies, lobbying, peer relations within industry, strategic alliance management, etc. . Click here to return to text

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