Does it pay to be ”green”?

       CBS Responsibility Day
            2010-09-01


      Christian Erik Kampmann
    Depar...
Change in perspective




Responsibility day   Opportunity day
Is climate problem real?
Numbers in perspective

Cost of cleaning up after the financial crisis*

      11.900.000.000.000 $
Copenhagen Accord supp...
Cost of climate abatement
Does it pay to be green?
    The skeptic position                 The free-lunch position
•   Firms should serve sharehold...
Nature is not efficient…




    … but effective!
Business innovation case #1
      Personal mobility
• The challenge of transportation and CO2
  abatement
  – 97% oil depe...
Market spaces in terrestrial
                   mobility
                       Private Property   1                      ...
Zipcar
• Founded in 2001
• 400.000 members
     – Growth 40-100%/year
• 2009 revenues $130M




Courtesy of Renato Orsato,...
Business innovation case #2
   Xerox – servicizing and
        sustainability
• Moved on to radical business model
   – ”T...
Business case #3:
     Grameen Bank – base of
       pyramid innovation
• Founded 1976
• Micro-credit and community
  deve...
Conclusion

• Environmental problems present huge
  challenges but also huge opportunities
• Technical innovation is neede...
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Christian Kampmann: Does It Pay To Be Green?

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Christian Kampmann: Does It Pay To Be Green?

  1. 1. Does it pay to be ”green”? CBS Responsibility Day 2010-09-01 Christian Erik Kampmann Department of Innovation and Organizational Economics (INO) CBS cek.ino@cbs.dk
  2. 2. Change in perspective Responsibility day Opportunity day
  3. 3. Is climate problem real?
  4. 4. Numbers in perspective Cost of cleaning up after the financial crisis* 11.900.000.000.000 $ Copenhagen Accord support goal for annual climate mitigation (from 2020) 100.000.000.000 $ Or 0.8% of cost of financial crisis *) Bailout and liquidity programs, global, as of Aug. 2009 (source: IMF)
  5. 5. Cost of climate abatement
  6. 6. Does it pay to be green? The skeptic position The free-lunch position • Firms should serve shareholder • It pays to be green – resource value and not loose focus by conservation = lower costs chasing environmental • move ahead of competition (and objectives beyond compliance regulation pressures) with public regulation • Innovation for the environment = • Compliance = cost increase competitive advantage • If it were profitable, firms • But firms don’t know that would do it .. but this assumes the pie is a fixed size, which it isn’t!
  7. 7. Nature is not efficient… … but effective!
  8. 8. Business innovation case #1 Personal mobility • The challenge of transportation and CO2 abatement – 97% oil dependent, 60% of world oil cons., 23% of global CO2 emissions, 28% of global energy cons. • Solutions have tended to focus on improving vehicle technology – Smaller cars, lighter cars, cleaner cars – Alternative fuels • An alternative view: focus on the use of vehicles!
  9. 9. Market spaces in terrestrial mobility Private Property 1 Underexploited 2 VEHICLE OWNERSHIP Private Cars Internal Combustion Engines Rental Taxis Cars Small Cleaner Fuels Car-sharing Cars Alternative Schemes Powertrains Busses Trains Mobility Operators 4 Public Property Unexploited 3 Public Transport Station Cars Smart Vans Busses, Trains, Light-rail, Metro Station Bikes Individual Use Collective Use VEHICLE USE Courtesy of Renato Orsato, INSEAD, all rights reserved.
  10. 10. Zipcar • Founded in 2001 • 400.000 members – Growth 40-100%/year • 2009 revenues $130M Courtesy of Renato Orsato, INSEAD, all rights reserved.
  11. 11. Business innovation case #2 Xerox – servicizing and sustainability • Moved on to radical business model – ”Take-back” scheme (disposal) – Renewal program (leasing model) – Machines are disassembled, upgraded, reconfigured, reassembled, and resold at new-machine prices • Benefits – Xerox: cost, barriers to imitation, loyal customers – Customers: No worry about disposal or obsolesence
  12. 12. Business case #3: Grameen Bank – base of pyramid innovation • Founded 1976 • Micro-credit and community development bank • Solidarity lending (peer pressure, value-based conduct) • Owned by borrowers (7.4 M in 2007), 97% are women • 2.468 branches covering 43.681 villages (2007) • Cumulatively distributed $6.6B in loans (2007) • >98% recovery rate of loans Nobel Laureate Muhammad Yunus, • Diversification into energy, Founder education, fisheries, telecom, …
  13. 13. Conclusion • Environmental problems present huge challenges but also huge opportunities • Technical innovation is needed for sure… • … but business innovation has an equally important role to play… • … and that’s where you all come in!

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