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MYRA Business School, Mysore Business education in emerging markets - integrating environmental issues for business success - Pavan Sukhdev
 

MYRA Business School, Mysore Business education in emerging markets - integrating environmental issues for business success - Pavan Sukhdev

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Business Education in Emerging Markets - Integrating Environmental Issues for Business Success. Major consumer brand owners and retailers are adding ‘ecologically-friendly’ attributes to their ...

Business Education in Emerging Markets - Integrating Environmental Issues for Business Success. Major consumer brand owners and retailers are adding ‘ecologically-friendly’ attributes to their products and thereby building a sustainable relationship with the clients.

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MYRA Business School, Mysore Business education in emerging markets - integrating environmental issues for business success - Pavan Sukhdev MYRA Business School, Mysore Business education in emerging markets - integrating environmental issues for business success - Pavan Sukhdev Presentation Transcript

  • Business Education in Emerging Market Economies Integrating Environmental Issues for Business Success Pavan Sukhdev McCluskey Fellow 2011, Yale University Founder-CEO, GIST Advisory
    • Green Ideas for a Smart Tomorrow…
    • in Developing Countries
    • “ Green Economy”
    • What’s Environment Today is Business Tomorrow
    • Measure and Manage Externalities
  • Towards “Green Economy” ? Source : UNEP – GREEN ECONOMY INITIATIVE “ A Green Economy can be defined as one that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities.” Wealth + Jobs + Poverty -
  • Green Economy : Sectoral Success Stories
    • Many developing nations demonstrate successful, scalable, sectoral models for transition to a green economy,
      • Bangladesh “Grameen Shakti” – rural non-grid electrification using Solar PV, microfinance, kerosene replacement cost pricing
      • Brazil sustainable city : Curitiba - Bus Rapid Transit System, low congestion & fuel losses, lower fuel usage, green infrastructure
      • China Solar Water Heaters – household cost saving, relief from Rheumatoid Arthritis , employment gains, reduced emissions
      • India NREGA 2005, now $ 8 bn in local transfers, employing 30 milion, for water conservation reforestation,
      • Kenya feed-in tariffs 2008, initially for wind, biomass & small hydro, now also geothermal & solar
      • Uganda Organic Agricultural transformation
    Source : UNEP – GREEN ECONOMY INITIATIVE
  • Green Economy : reduces ecological scarcities…  Source : UNEP – GREEN ECONOMY INITIATIVE
  • UNEP – GREEN ECONOMY INITIATIVE
      • Green farming practices have increased yields, especially on small farms, between 79 % (Pretty et al, 2006) and 180 %.
      • 10 percent increase in farm yields -> 7 % reduction in poverty in Africa, more than 5 % in Asia
      • Approximately 2.6 billion people rely on agricultural production systems for their livelihood. (FAO, 2009)
      • 525 million small farms world wide, 404 million less than two hectares of land (Nagayets, 2005), Small farms cultivate 60 % of arable land (Herren et al. 2010)
      • An increase in overall GDP coming from agricultural labor productivity is on average 2.5 times more effective in raising the incomes of the poorest quintile in developing countries than an equivalent increase in GDP coming from non-agricultural labor productivity.
    Agriculture : Challenges & Opportunities UNEP – GREEN ECONOMY INITIATIVE
  • Example : Low-Cost Storage (Metal Silos)
    • An FAO programme focused at the household and community level for more efficient grain storage
    • Farmers who invested in silos earned nearly 3 times more (US$ 38/100 kg of maize) by selling their crop 4 months after the time of harvest (US$ 13/100 kg).
    • Production costs for metal silos ranged from US$ 20 (120 kg small- capacity unit) to US$ 70-100 (1800 kg large-capacity unit)
    • Most farmers realized a full return on their investment within the first year of use.
    • Example of misplaced priorities : Even though post-harvest losses could be reduced relatively quickly, less than 5% of worldwide agricultural research and funding currently targets this problem
  • UNEP – GREEN ECONOMY INITIATIVE UNEP – GREEN ECONOMY INITIATIVE Source: United Nations Human Development Index Green Economy: Two Pathways Meeting the dual goals of sustainability – High human development and low ecological impact Source : WWF Living Planet Report 2006
    • Green Ideas for a Smart Tomorrow…
    • in Developing Countries
    • “ Green Economy”
    • What’s Environment Today is Business Tomorrow
    • Measure and Manage Externalities
    • From Recycling……….
    • Metals recycling:
      • High energy savings and reductions of GHG emissions
      • Secondary steel causes 75% less GHG emissions compared to primary steel
      • Recycled aluminum requires only 5% as much energy as primary production
      • Recycling reduces the pressure on biodiversity, water resources etc
    • Waste heat recycling:
      • In processes incl coke ovens, blast furnaces, electric furnaces, cement kilns - especially for electric power generation using combined heat and power (CHP)
      • Pulp and paper industry - CHP installations allow savings of over 30% of primary energy
    Growing Cost Management Opportunities..
  • The “Cost Management” Case
    • Private Profits gains from energy efficiency…..
    higher level of ambition requires wide use of economic instruments, incl price of carbon > US$150 per ton CO2 by 2050? Countries Sector Energy-efficiency initiatives ROI Payback CO 2 savings Bangladesh Steel Reparation of leaks and insulation of pipelines 260% 3.5 months 137 tons/year China Chemicals Installation of a heat recovery system to recover heat for a CHP 96% 7 months 51,137 tons/ year Ghana Textiles Installation of hi-tech de-scaling equipment for the boiler and steam pipes. Water conservation measures resulted in comparable savings. 159% 4 months Not available Mongolia Cement Improvements in the dust control system (filter bags) using new electric motors. 552% 2 months 11,007 tons /year
    • Global sales of organic food and drink over US$ 50 billion (threefold increase since 2000)
    • Sales of certified ‘sustainable’ forest products quadrupled between 2005 and 2007
    • From 2008 to 2009, the global market for eco-labeled fish products grew by over 50%, to a retail value of US$ 1.5 billion
    • Major consumer brand owners and retailers added ‘ecologically-friendly’ attributes to their products:
        • Mars (Rainforest Alliance cocoa)
        • Cadbury (Fairtrade cocoa)
        • Kraft (Rainforest Alliance Kenco coffee)
        • Unilever (Rainforest Alliance PG Tips).
    Growing consumer interest ...
  • Growing product innovation…
    • Sectoral Success Stories
    • Manufacturing : Caterpillar’s ‘remanufacturing’
    • Packaging : HP’s recycled product packaging
    • Packaging : EnviroPak’s recycled pulp - cost savings
    • Buildings : “LHS” of McKinsey Cost Curve ( -$35/tCO 2 )
    • Renewables : GE - Cost-beating Solar technology
    • Water : Micro Irrigation - SAM Sustainable Water Fund
    • Etc Etc
    Source: UNEP’s Green Economy Report, “Towards a Green Economy”, (2011).
    • Green Ideas for a Smart Tomorrow…
    • in Developing Countries
    • “ Green Economy”
    • What’s Environment Today is Business Tomorrow
    • Measure and Manage Externalities
  • private profits less subsidies Net of public costs of restoration after 5 yrs private profits 0 10,000 US$/ha private profits 5,000 If public wealth is included, the “trade-off” choice changes completely….. $584 ha $1220 ha $9632 ha $584 ha -ve $11,172 ha $12,392 ha Source: Barbier 2007 After adding public benefits from mangroves Environmental impacts : A local example PRIVATE PROFITS PUBLIC LOSSES Shrimp Farm Mangroves
  • Adding up life cycle impacts along a global value chain….
    • Top 3,000 Corporations (estimate by TRUCOST for UN-PRI ….)
    • Cost Externalities approx. 7% of Revenues
    • GHG’s, Water extraction, Air pollution,…
    • Total USD 2.25 Trillion per annum ( GHG’s = 1.45 Trillion)
    Top 3000 corporations (estimate by TRUCOST for UN-PRI) PRIVATE PROFITS PUBLIC LOSSES Environmental impacts : Global Concerns
    • US$ 6.6 trillion/year estimated global environmental costs of economic activity (11% of 2008 GDP)
    • Five sectors account for about 60% of environmental costs
    Source: Trucost for UNPRI, 2010. PRIVATE PROFITS PUBLIC LOSSES Environmental impacts : Global Concerns
    • Analyses of the water and GHG impacts were performed across PUMA’s value chain, including the operations of raw material and product suppliers as well as logistic services, which PUMA has limited control over.
    • Tier 4: Raw material production, such as cotton farming, oil drilling, etc.
    • Tier 3: The processing of raw materials, such as leather tanneries, chemical industry, oil refining
    • Tier 2: Outsourced processes such as embroiders, printers, outsole production
    • Tier 1: The manufacturing of its products
    • PUMA core operations: Design, logistics services, warehousing, head office functions and retail
    PUMA : Measuring Environmental Impacts Along the Supply Chain Source : PPR / PUMA Press Release, May 16 th 2011
  • PUMA : Measuring Environmental Impacts Along the Supply Chain Source : PPR / PUMA Press Release, May 16 th 2011
  • Financial Disclosure is both Desirable and Possible (eg : China, Construction, Forests)
    • US$12.2 billion estimated ecological cost of deforestation in China (1950-88)
    • 60% of this cost is attributed to logging
    • 64% of logging was for construction and materials sectors
    • External costs = 178% of the market price of timber (1998)
    Source: TEEB for Business, 2010 (Annex 2.1).
  • Estimate of Annual “Human Capital Creation” by an Indian Software and Consulting Major in 2007
  • Measuring & Managing Impacts : Leadership …
    • PUMA : Disclosure and Management Strategy for Environmental Impacts, 1 st True “TBL” Results Published in May 2011
    • BC Hydro: “ long-term goal of no net incremental environmental impact.”
    • Coca Cola: “O ur goal is to safely return to communities and nature an amount of water equivalent to what we use in all of our beverages and their production. ”
    • Danone Group: “ Attain carbon neutrality for the major Danone brands, including Evian, by the end of 2011. ”
    • Marks & Spencer: “O ur goal is to become carbon neutral by 2012 in our UK and Republic of Ireland operations. ”
    • Rio Tinto: “Our goal is to have a ‘net positive impact’ on biodiversity by 2015.”
    • Sony: “ strive to achieve a zero environmental footprint throughout the lifecycle of our products and business activities :“Road to Zero”
    • Walmart: “Committed … to permanently conserve at least one acre of priority wildlife habitat for every developed acre.”
  • Thank You ! www.gistadvisory.com