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Lee hendor ruiters


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Lee hendor ruiters

  2. 2. NATIONAL CLEANER PRODUCTION CENTRE SOUTH AFRICA @NCPC_SA Business Case for Eco-Innovation 3rd Industrial Efficiency Conference 14 September 2017
  3. 3. 1. Defining of Eco-Innovation 2. Eco-Innovation in South African context 3. Why Eco-Innovation 4. Benefits of Eco-Innovation in Policy 5. Eco-Innovation Pilot Project Contents
  4. 4. The creation of new, or significantly improved products (goods and services), processes, marketing methods, organisational structures and institutional arrangements which – with or without intent – lead to environmental improvements comparted to relevant alternatives - OECD (The Organisation for Economic Co-operation and Development) Defining Eco-Innovation
  5. 5. • Commitment to being competitive player in global markets and transforming its economy away from its former dependence on primary resource production and associated commodity-based industries; • Eco-innovation implicitly addressed in several national policies, strategies and action plans which promote research and development that meet sustainable development objectives (C. Moses, HSRC - 2017) Eco-innovation in South African context Source:
  6. 6. Why eco-innovation? 1. The expected environmental benefits and; 2. Faced with rising costs for producing goods and managing waste products, the competitiveness of firms, countries and even regions is increasingly linked to their ability to ‘eco-innovate’ Source:
  7. 7. Why eco-innovation? Major concerns of economic expansion and growth? - Climate change, energy insecurity and increasing scarcity of resources Manufacturing industries response - greater interest in sustainable production and adopting corporate social responsibility initiatives Source:
  8. 8. • Very little is known about the growing global trade in environmentally beneficial goods and services • We do not know much about the adoption of innovations to reduce the environmental impacts of companies, sectors and nations, and the environmental improvements achieved as result of applying eco-innovations • Eco-innovation can result from ‘unintended environmental innovation’ • The environmental benefit can be a side effect of other goals such as recycling heavy metals to reduce costs Why eco-innovation? Source:
  9. 9. • Innovative products, services, processes or business models can benefit the environment by reducing pressure on natural resources and/or emission of pollutants • Environmentally friendly innovation can foster economic development. • A number of OECD member countries’ governments see eco-innovation as a major driver of green growth. Benefits of Eco-innovation in Policy Source:
  10. 10. • Innovators may not reap all the benefits of their innovations • Environmental benefits may not be appropriately valued by markets, market mechanisms alone will not provide an appropriate amount of eco- innovation at the right time • Policy intervention is therefore needed The question is: What is the best way to support the development and diffusion of eco-innovation? Source:
  11. 11. NCPC-SA / UNEP Eco-Innovation Pilot Project
  12. 12. South African Pilot Project Timeline (2015 - 2017) - NCPC-SA, UNEP and Stellenbosch University - Sector : metals fabrication and tooling sector in the Western Cape - Sector associations : SASSDA + WCTI - Project Steering committee : Government departments - Technical project support : UNEP - Project team : L Ruiters, S Oldham, Z Zwavel, P v Heyningen - Industry Workshop : May 2015 Introductory - Kick-Off workshop + company workshops: July 2015 - Market analysis + company visits - Selection of final 5 companies 2016 and 2017 - Company visits and data collection - Key project deliverables quality management - Review of project
  13. 13. UNEP Eco-innovation approach  Eco-innovation provides an ideal approach to promote the application of sustainable business practices along value chains (greening supply chains)  Eco-innovation operates at the level of a company strategy. It aims to embed sustainability into DNA of a company.  It promotes systemic innovation based on holistic life-cycle approach throughout company’s operations - products (goods / services), processes, market approach and organizational structure.  It aims at influencing and involving stakeholders along the entire value chain.  Initial focus of the eco-innovation intervention is on sectors with highest potential for decoupling (IRP recommendation):  Food processing,  Chemicals manufacturing and use; and  Metal processing
  14. 14. Initial Findings - The process seemed complicated - Time constraints - Access to incentives and funding raised early - Scepticism about implementing theory - Innovation done in isolation of product development - No clear policy but supported by various environmental policies - Unintended outcome of sustainability activities - Innovation in research, technology, standards, regulatory approaches Sector and market analysis – Sustainability hotspots: - Component manufacturing dominant - Regional turndown turn and closures - Fluctuating commodity prices - Labour unrest - Highly competitive & low margins
  15. 15. Challenges Experienced with Eco-Innovation Approach - Life cycle thinking not prevalent - Sector macro economic challenges impact - Conservative growth prospects - Applying business model innovation challenging - Expectations misaligned to project outcomes Benefits - Access to new and growing markets - Increase productivity and manufacturing technical capacity - Attract investment / Partnerships - Improve environmental performance and adherence to regulations - Improve profitability through increased activities along the value chain - Driver for Responsible consumption and production (SDG 12)
  16. 16. RISKS • Higher operational costs and supply chain disruption • Shifting production and transportation patterns to adapt to local conditions • Public pressure for greater transparency • Regulatory and fiscal instruments increasingly complex OPPORTUNITIES • Market shift towards ‘greener’ products – water-efficient technology, green plastics and chemistry, sustainable infrastructure etc. • Growing market opportunity to recover, reuse e-waste • Reputational advantage from incorporating environmental trends into company strategy What does it mean for business?
  17. 17. What does Eco-innovation imply?
  18. 18. The Business Case for Eco-innovation How to communicate the benefits and opportunities of Eco-innovation to stakeholders, including companies. It helps service providers engage companies, especially SMEs. Available for download:
  19. 19. Business Case for Eco-innovation Drivers Access new and expanding markets New market segments (low and high end) Untapped markets for innovative solutions Company supply chains and SPP Increase profitability along the value chain Ultimate efficiency Enhanced resilience Enhanced knowledge and technical capacity Stay ahead of standards and regulations First-mover (competitive) advantages Industry leadership (brand reputation) Inform regulation Attract financial resources Banks, long term investors, crowd funders Local and national authorities Mergers and acquisitions Increase productivity and technical capacity Acquisition of knowledge Strong skill base Increased employee engagement
  20. 20. Natura, Brazil Product SOU compared to conventional cosmetic products: • 70% less plastic used • 60% lower CO2 emissions • Lower transportation costs • Innovation in the formula (ingredients) • More attractive retail price = new customer segment Business Strategy: Innovation for market differentiation and sustainability How? • Continuous research: new technologies, market trends • Open innovation model and R&D platform involving partners and scientific institutions • Investment from national financial institutions • Select suppliers on a “shadow price” • Creation of partnerships to build a chain with higher added value. • Life-cycle approach A calculator is used for all the indicators of an Environmental table, and simplified packaging LCA, for all sold products. Business Growth: Market share of 23 % in Brazil Annual growth of 26 % in 2005-2010.
  21. 21. Case: Ecover Eco-innovation at the core of their business strategy considering entire value chain. Open innovation model - Work across the value chain: Philips (maker of washing machines) BASF (chemicals) and retailers for refill through dispensers = strategic positioning • Innovations in all dimensions: – Product: Elimination of harmful chemicals and 100% biodegradable – Packaging: 100% use of bio-based plastics, 100% recyclable – Process: manufacturing & distribution channels – Organizational structure – long term innovation manager Business Benefits: Added value –a sustainable product reduced risk of harmful chemicals that meets client needs • Average annual revenue growth of 10-20 % in a flat market • Annual sales exceeding $200 Million • Expansion to large retail stores (market access) • Innovations through open innovation enables them access to funding and resources • Benefited from Sustainable Public Procurement (city of Ghent) Ecover will be used in 340 public buildings in the city of Ghent by the end of 2014
  22. 22. Eco-innovative Strategies Brainstormed Strategy 1 Improve profitability, customer satisfaction and environmental impact by changing transportation practices and packaging methods of final products Strategic Goals o Improve fuel consumption by 10% per annum through better driving methods o Reduce packaging materials by 30% per annum by changing packing of final products to flat pack methods and using reusable materials Strategy 2 Reduce the overall energy consumption of fully designed and installed kitchens: Strategic Goals o Improve customer energy use footprint by 30%: by offering dedicated energy efficient designed, installed, maintenance and performance monitoring service. Strategy 3 Expand service offering to include 3 clean technology solutions to add value across the value chain Strategic Goals o Reduce water waste to 50%, o Reduce food waste by 30%, o Reduce oil waste by 30% by offering service solution and clean technology products to existing and new customers. Case: MacBrothers
  23. 23. Business Models Proposed Business Model 1 Improve Energy Efficiency through: • EE restaurant designs • Eco-kitchen equipment offering Business Model 2 Reduce Carbon Footprint in Outbound Logistics by: • Improved packaging • Better driving method • Self installation Business Model 3 Re-using frying oil: • Biodiesel for own transport • Commercial selling • Reduce Carbon footprint • Reduce waste stream hotspot
  24. 24. Business Models Proposed
  25. 25. Implemented Strategic Objectives And Results Notconsidered Current Status – Case Study formulation • Optimal Product definition • Measure Current Situation (Baseline) • Implement new equipment • Measure Improvements • Compare results
  26. 26. Lessons Learned • Management buy-in • SME challenge • Customer Education and Awareness • Time - Not always immediate returns • Capital Intensive • Legislation – Speed of enforcing • Liaison with key customers • Innovation Culture • Momentum creation • Market leader advantage Key Challenges Key Opportunities
  27. 27. Eco-innovation Value Added • Fresh Eyes • Business Model