An Integrated Framework
for Wealth Creation in
Businesses
John Cleveland
Innovation Network for communities
1 • Integrated Wealth Creation• © 2009 by Innovation Network for Communities. • www.in4c.net • All Rights Reserved.
An Integrated Framework for Wealth Creation
Wealth creation involved the creation of assets (or
“capital”) that increase one’s choices in life. The
difference with “sustainable” businesses is that they
define wealth in a broader, more holistic and
integrated way than traditional businesses.
Sustainable businesses will typically focus on four
major categories of “capital formation”:
Defining the Four Forms of Capital:
•Financial capital (economic value-added)
Human capital: The physical, mental, emotional
and spiritual capabilities of employees, as well as
legally protected intellectual property. Human
capital is created through the processes of
learning, creativity and personal development.
•Human capital (knowledge value-added)
•Social capital (community value-added)
•Natural capital (ecological value-added)
By holding themselves accountable for superior
performance in each of these four areas, the
companies adopt what has been referred to as a
“multiple bottom line” business strategy, seeking
performance outcomes beyond simple financial ones.
The key premise to this approach is that these four
domains of business performance reinforce each
other – that instead of requiring trade-offs (i.e. I have
to sacrifice profits to achieve higher environmental
performance), an integrated approach improves
overall competitiveness (better environmental
performance spurs innovation and creates new
efficiencies that improve profits).
Financial capital: Company assets that can be
readily converted into some form of money (stock;
cash; property; equipment; licenses; etc.).
Financial capital is developed through the process
of customer value creation.
Social capital: The social relationships (and the
institutions they are embedded in) that constitute
the “social fabric” of the community a company is
located in. Social capital is developed through
processes that build trust and reciprocity in
relationships.
Natural capital: The natural resources and
ecologies that a company depends on for its raw
material inputs, as well as the environment in
which it and its employees live. Natural capital is
created through the natural processes of water,
mineral, energy and biotic cycles.
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Integrated Performance Outcomes
An integrated business model requires that there be clear performance outcomes that reflect the
business approach – the “multiple bottom lines” need to be defined in ways that are measurable and
that create accountability.
CAPITAL
WHAT SUCCESS LOOKS LIKE
Financial Capital
The enterprise creates sufficient economic value added to:
•Generate competitive rates of return for its investors
•Pay above-average compensation to its employees that exceeds “livable wage”
standards
Human Capital
The enterprise nurtures the intellectual, physical, psychological and spiritual growth of
its employees in ways that:
•Result in higher rates of innovation and intellectual property creation
•Minimize unwanted employee turnover
•Encourage entrepreneurial spin-offs
•Inspire a sense of contribution to the greater good
Social Capital
The enterprise contributes to the economic, social and environmental well-being of
the communities that it is located in, and deliberately structures its core business
processes to contribute to the growth of social equity.
Natural Capital
The enterprise radically reduces consumption of minerals, biological products, energy
and water in an effort to eventually become part of a “closed loop” industrial ecology.
Long-term, the enterprise contributes to the “re-weaving” of the natural ecology that
has already been destroyed (restoration).
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Integrated Wealth Creation
Core Process: Customer
value creation.
Embodied in: Money,
physical assets, “good will.”
Core Process: Learning and
personal development.
Financial
Embodied in: Physical,
mental, emotional, spiritual
capabilities; and intellectual
property.
OUR FOCUS IS
HERE
Human
Core Process: Building trust
and reciprocity.
Embodied in: Social
relationships and social
institutions.
Social
Natural
Core Process: Water,
mineral, energy and biotic
cycles.
Embodied in: Natural system
resilience and productivity;
raw material inputs.
Human capital is at the middle of the triangle, because it is the basis for a
company’s ability to contribute to capital formation in the three other domains.
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Financial Capital and Economic Value Added
This is the capital that most business
enterprises focus on almost exclusively. It
encompasses company assets that can easily
be converted into monetary value, including
currency instruments (stock, cash, accounts
receivable, etc.) and physical property
(buildings, machinery, inventory, etc.). It also
includes things that are of financial and
business value that are more difficult to
monetize, such as “customer capital” – the
structural relationships the enterprise has with
its customers, including brand identity, market
positioning and other elements of strategic
differentiation (often referred to as “good will” in
valuation terminology).
Business Practices
Sustainable enterprises adhere to a rigorous set of worldclass business principles that maximizes financial capital
formation and economic returns to investors and
shareholders. These practices include:
•Strategic focus, market differentiation and customer
selection
•Use of balanced scoreboards and key performance
indicators
•Rapid product design and development
•Lean production systems
•Use of Continuous Improvement and Kaizen events for
rapid improvement
•Quality systems (including ISO certification where
appropriate)
•Workplace organization and visual control (“5S”)
The core process of financial capital
formation is customer value creation.
•Supply chain management and lean supplier strategies
•Team-based structures and decentralized decision-making
•State of the art information and production technologies,
including use of E-commerce
•Advanced financial analysis and planning tools such as
target costing, Activity-Based Costing, lean accounting and
Economic Value Added (EVA)
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Human Capital and Knowledge Value Added
Human capital includes both the physical,
mental, emotional and spiritual capabilities of
employees, as well as formally protected
intellectual property. Human capital is
embedded both in individuals, and in sets of
relationships between individuals that in
aggregate constitute unique capabilities of the
organization.
Value is created by people, and therefore
people are truly our most important asset. The
largest waste in most organizations is failing to
nurture and tap the capabilities of the
individuals who work in those organizations.
Therefore, multiple bottom-line enterprises
emphasize enterprise practices that build
human capital and invest in the continuous
learning and development of employees and of
the organization as a whole.
The core processes of human capital
formation are learning, creativity and
personal development.
Business Practices
A focus on human capital development is critical to
attracting the “best and the brightest” in the labor market.
Typical practices include:
•Organizational learning networks within and between
companies
•Continuous training and development
•An emphasis on innovation and creativity
•Aligning work with personal values and meaning
•Competitive “livable” wages with full benefits
•“Family-friendly” workplace practices
•Opportunities for employee ownership and other forms
asset accumulation, such as Individual Development
Accounts
•A focus on employee health and wellness
•Support for employees who want to start their own
businesses
•“Preferred provider” relationships with banks, insurance
companies, real estate firms, and others that can reduce
the cost of living for our employees
•Autonomous teams and decentralized decision-making
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Social Capital and Community Value Added
The concept of “social capital” is relatively
recent, and received popular attention primarily
as a result of Robert Putnam’s research on the
role of social capital in economic prosperity.
The term refers to the strength of the social
fabric in a community.
Healthy enterprises depend on healthy
communities. Therefore, multiple bottom line
companies have a strong culture of community
contribution.
These practices are driven by a conviction that
increased integration in the lives of our
communities will bring long-term returns to our
enterprises, particularly in the human capital
domain. The commitment to community
development enlivens and deepens the sense
of purpose and values in an organization, which
is a key source of loyalty and innovation.
The core process of social capital is the
building of trust and reciprocity between
individuals and institutions in a community.
Business Practices
•School-to-career links with the local educational systems
•Engagement in community improvement activities and
community service projects
•Financial investments and contributions to community
development institutions
•Location of facilities to support community development
•Systems to hire low-income or disadvantaged populations
•Products targeted to underserved markets
•Support for minority and women-owned suppliers
•Support of minority ownership within Integral Assets
companies
•Procurement strategies that emphasize local suppliers
•“Walk to work” and other strategies that improve the
neighborhoods in which our firms are located
The focus on social capital also leads to development of
non-profit enterprises that strengthen the social systems of
a community, such as charter schools; philanthropic
enterprises; community design institutions; etc.
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Natural Capital and Ecological Value Added
Natural capital refers to the ecosystem assets
that provide the raw material inputs that
enterprises use in their value creation processes.
The “foundation cycles” of natural capital include
water cycles, energy cycles, mineral cycles and
plant and animal population cycles. Generally,
business enterprises aren’t engaged in natural
capital formation unless they are natural
resource-based (such as forestry, farming,
fishing, etc.). Instead, the focus is on reducing
impact on current natural capital productivity.
A focus on natural capital is premised on the
understanding that human economic systems
are a subset of global ecosystem metabolics, as
opposed to natural resources being a subset of
(or input into) human economic metabolics.
Therefore, it is our responsibility to devise ways
to create wealth that do not deplete these
foundations of our well-being.
Water, mineral, energy, plant and animal
cycles are the core processes for creating
natural capital.
Business Practices
Some natural capital business practices include:
• ISO 14000 certification and other elements of an
Environmental Management System (EMS)
•Emphasis on closed-loop production
•Product design for reduced impact and recyclability
•Product development focused on original equipment and
components for “disruptive” sustainable technologies
•Facilities design based on “green building design” principles
•Purchasing policies that reward sustainable supplier practices
and that increase the use of recycled and/or sustainablyproduced materials
•Operations management to reduce wastes and pollution
•Reduced and returnable packaging
•Transportation and logistics strategies to reduce fossil fuel
use
•Sales and marketing to educate consumers and promote
sustainable practices
•Emphasis on business designs that sell solutions rather than
products, thereby allowing both our firms and our customers to
be rewarded for resource productivity
•Participation in community sustainability initiatives
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At the Intersection of Two Practice Fields
Social Venturing:
“For-Profit”
“Both/And” not
“Either/Or”
“For-Benefit”
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Integrating Two Cultures
Names for the “For Profit”
Culture
Names for the “For Benefit”
Culture
Robert Reich
Business Culture
Civic Culture
Jane Jacobs
Commercial Syndrome
Guardian Syndrome
Ken Wilber
Agency
Communion
Alan Fiske
Market Pricing
Communal Sharing
Thinkers
Values The Cultures
Emphasize
•Individualism
•Community
•Autonomy
•Belonging
•Freedom
•Obligations
•Choice
•Responsibilities
•Private good
•Public good
•Individual initiative
•Shared purpose
•Risk-taking
•Safety net
•Competition
•Cooperation
•Markets
•Regulated monopolies
•Wealth creation
•Wealth distribution
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Typical Business Practices
FINANCIAL
HUMAN
SOCIAL
NATURAL
•Strategic planning
•Balance scorecards
•Rapid product
development
•Lean enterprise
systems
•Continuous
improvement and
Kaizen
•Quality systems (ISO
9000)
•Workplace
organization and
visual controls (5S)
•Supply chain
management
•E-Business
•Activity-Based
Costing
•EVA
•Organizational learning
networks
•Continuous learning
and development
•Innovation and
creativity in the
workplace
•Livable wages with full
benefits
•Family-friendly
workplaces
•Opportunities for
employee ownership
and asset accumulation
•Employee health and
wellness
•Entrepreneurial
incubators
•Autonomous teams
and decentralized
decision-making
•School to career links
•Community service
•Financial investments
and contributions to
community institutions
•Facility location to
support community
development
•Hiring of low income or
disadvantaged
populations
•Support for minority and
women-owned suppliers
•Support of minority
ownership
•Procurement from local
suppliers
•Neighborhood
improvement
Closed loop production
•Design for Environment
•Green building design
for facilities
•Green supply chain
development
•ISO 14000 certification
•Reduced and
returnable packaging
•Reduced fuel use
•Customer education
about sustainable
practices
•Selling solutions rather
than products
•Participation in
community sustainability
initiatives
Most enterprises are strong in one or two areas of capital formation, but weak in the others. The “signature” of true
multiple bottom-line companies is a commitment to competence in all four areas of capital formation.
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Connecting Four Capitals to Core Business Processes
Enterprise Dimensions
How It Can Influence the Four Capitals
Mission
What its purpose is; what its long term vision is; how it
communicates to stakeholders
Leadership
What it values; who it recruits; how it develops leadership
Marketing and Product
Development
Who it sells to; what it sells; how it designs products and
services; where it sells
Production
How it produces; how much waste it creates; technology it uses
Human Resources
Who it hires; how many; how diverse; how it develops them;
where they are located
Supply Chain Management
What it buys; where it buys it; who it buys from; how it develops
its supply base
Facilities
Where it locates; how it constructs its facilities
Finance
Where it borrows money; where it invests funds; how it distributes
profits/surplus
Community Relations
Who it gives money to; how it contributes to the community; who
they lobby/influence and on what issues
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A Spectrum of Practice
“For-Profit” Culture
“For-Benefit” Culture
Traditional NonProfits:
“Dual Purpose”
Enterprises:
Purpose: Improve the
welfare of a target
population.
Purpose: Create social
and financial capital.
Purpose: Create
wealth for owners.
Products: Designed to
generate margins and
create social benefit.
Products: Products
and services that
provide value to
customers.
Products: Services
designed to achieve a
specific social
outcome.
Processes: Oriented
towards involvement
and intention.
Profits: Funded
through grants,
transfer payments;
third parties pay
costs. Target is break
even
Non-profits
become more
“business-like”
(Mission
unchanged)
Processes: Designed
for both efficiency and
social impact.
Profits: Revenues
from multiple sources.
Margins and social
contributions.
Traditional ForProfits:
For-profits pay
attention to
social
outcomes
(Mission
unchanged)
Performance: Social
impact and wealth
creation.
Performance: Impact
on quality of life.
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Processes: Oriented
towards cost and
quality efficiency.
Profits: Customer pay
for products and
services. Target is
maximum profit.
Performance: Profit
margin; return on
investment; growth.
Developing An Integrated Strategy
Enterprise Dimensions
Capital Formation Strategies
Financial
Capital
Natural
Capital
Social
Capital
Mission
Leadership
Marketing and Product
Development
Human Resources
Supply Chain Management
Facilities
Finance
Community Relations
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Human
Capital
Relevant Fields of Knowledge
FINANCIAL CAPITAL:
•Strategy development (Porter; Slywotzky; Gould et al)
•Lean production and total quality (Deming, Juran, Toyota Production System)
•Activity-Based Costing; EVA; Lean Accounting
HUMAN CAPITAL:
•Learning theory and developmental psychology (Kenan; Goleman; Wilber)
•Organizational learning (Nonaka; Senge)
•Intellectual capital formation (Stewart; Edvinsson)
SOCIAL CAPITAL:
•Social capital formation (Putnam)
•Corporate social responsibility (Business for Social Responsibility)
•Corporate involvement in Community Development
NATURAL CAPITAL:
•Ecological economics (Costanza, Daly)
•Holistic management (Savory)
•Industrial ecology
•Green design (McDonough)
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A Focus on Natural Capital
and Environmental
Performance
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Environmental Performance
With the undisputed (at least in the scientific world) emergence of global warming
that is altering climate patterns around the globe, and the continued rapid depletion
of many natural resources stocks (especially fresh water), there are increasing
pressures on the business sector to improve their environmental performance.
While the U.S. has been slow to respond to these trends compared to our
developed trading partners (e.g. Canada, Japan, and Europe) the effect is already
being seen in our manufacturing markets.
Consumer acceptance of “green” products is high and manufacturers are
responding by implementing strategies to “green” their supply bases.
Increasingly, ISO 14000 certification is becoming a condition of doing business
with many larger firms. (Ford, for instance, has announced its intention to require it
for all suppliers.)
In addition, states such as California are taking the lead in imposing new
environmental requirements for some sectors (such as emission levels for vehicles,
which will likely spur implementation of new engine and transmission technologies
for that state).
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Environmental Performance
Many emerging economies have much
less strict environmental regulations than
the U.S. This puts our manufacturers at a
competitive disadvantage. There is
evidence that some of the more polluting
processes are moving overseas to take
advantage of these unregulated
environments.
Environmental degradation brings not
only the challenge of improved
performance, but also opportunities to
create and market new products and
services.
One such opportunity is the booming
“Companies that ignore climate
change will be lower on the
learning curve; innovations
developed in other markets may
disrupt their markets and they
will be forced to play a game of
technological catch up. Perhaps
more importantly, they will lack
the management know-how and
familiarity with energy and
climate change issues to operate
effectively in a carbonconstrained world.”
(The Conference Board)
market for fresh water products and
services including a global boom in
construction of desalination facilities, as
well as the emergence of a $35 billion
global bottled water market.
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Elements of a Strategic “Map”
This “map” of economic development strategies to
support growth through improved environmental
performance has four different dimensions:
•Firm behavior. These are the different elements of a
company’s environmental performance, including
environmental aspects, impacts and goals for
improvement.
•Level of intervention. This refers to the level at which
an economic development strategy seeks to influence
environmental performance. Options include at the
level of the sector; supply chain; individual firm; or a
specific product, process or resource input.
•Product or process
•Environmental aspects
•Environmental impacts
•Improvement goals
Firm
Behavior
•Firm
•Supply chain
•Sector
Level of
Intervention
•Economic development purpose. This refers to the
specific type of economic development strategy that is
pursued. Options include business attraction; business
retention and growth; and new business formation.
•Lever for change. This refers to the specific valueadded input that economic development players choose
to use to influence firm environmental performance.
Examples include financial incentives; consulting
advice; information; demand creation; providing new
inputs; regulatory reform; etc.
These four levels provide a wide variety of individual
strategies to be developed. For instance, one strategy
could be to: “Reduce energy use in electric motors used
by existing metal forming companies, through in-plant
consulting and subsidies for new motor purchases.”
Strategy
•Business attraction
•Business retention and
growth
•New business
formation
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Levers for
Change
•Invest
•Create demand
•Subsidize
•Advise/consult
•Regulate
•Inform
•Engage
•Educate
•Provide inputs
Firm Behavior
The environmental performance of firms can
be looked at from at least three different
useful dimensions:
•Environmental impacts. The facet of the
natural ecology that is being affected (what
ISO 14000 referrs to as “environmental
impacts”)
•Environmental aspects. The dimension of
the company’s operations that can have an
impact on the environment (what ISO 14000
refers to as “environmental aspects”)
•Improvement goals. The generic strategies
that can be deployed to reduce environmental
aspects and impacts.
Each of these is described more fully in the
following pages. As a summary, these three
dimensions are then represented in a three-D
diagram.
AAt the heart of the current crisis in economic theory and
practice is the fact that we are consuming the earth=s
resources beyond its sustainable capacities of renewal,
thus running down that capacity over time C that is, we
are consuming natural capital while calling it
income.@ (Herman Daly, Beyond Growth, P. 61.)
ENVIRONMENTAL IMPACTS
This dimension of environmental performance refers to
the aspect of natural capital that company activities are
most likely to affect. The four main categories are linked
to the four primary natural cycles that sustain us:
•Energy cycles. Energy cycles represent the pathways
through which energy is captured, stored, and used.
Congressman Vern Ehlers refers to three different energy
“pathways” – energy “income” which is reflected in direct
solar absorption, biomass storage, wind, and hydro
power; energy “savings” which is our store of fossil fuels;
and energy “inheritance” which is our store of nuclear and
geothermal energy.
•Mineral cycles. These are the cycles of minerals from
underground to above ground and back to the earth. In
natural systems, this occurs through plants and the soil,
which makes minerals available for use by living species.
Mining and other human cycles accelerate and disrupt
these cycles.
•Water cycles. Waste moves through a continuous cycle
of evaporation, precipitation, percolation and infiltration.
Disruptions to the natural water cycles affect its quality,
quantity and timing.
•Animal and plant population cycles. Plant and animal
ecologies depend on energy, mineral and water cycles.
When we disturb these cycles, we affect both individual
species and entire eco-systems.
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Firm Environmental Performance
The environmental performance of firms can be looked at
from at least three different useful dimensions:
Environmental impacts
The facet of the natural ecology that is being affected (what
ISO 14000 refers to as “environmental impacts”)
Environmental aspects
The dimension of the company’s operations that can have an
impact on the environment (what ISO 14000 refers to as
“environmental aspects”)
Improvement goals
The generic strategies that can be deployed to reduce
environmental aspects and impacts.
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Environmental Impacts
This dimension of environmental performance refers to the aspect of natural capital that company
activities are most likely to affect. The four main categories are linked to the four primary natural cycles
that sustain us.
Cycle
Description
Energy
Energy cycles represent the pathways through which energy is captured, stored,
and used. There are three different energy “pathways” – energy “income” which is
reflected in direct solar absorption, biomass storage, wind, and hydro power;
energy “savings” which is our store of fossil fuels; and energy “inheritance” which
is our store of nuclear and geothermal energy.
Mineral
These are the cycles of minerals from underground to above ground and back to
the earth. In natural systems, this occurs through plants and the soil, which makes
minerals available for use by living species. Mining and other human cycles
accelerate and disrupt these cycles.
Water
Waste moves through a continuous cycle of evaporation, precipitation, percolation
and infiltration. Disruptions to the natural water cycles affect its quality, quantity
and timing.
Animal and
plant
populations
Plant and animal ecologies depend on energy, mineral and water cycles. When
we disturb these cycles, we affect both individual species and entire eco-systems.
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Market Drivers for Sustainable Commerce
External Drivers
Internal Drivers
•Consumer preferences
•Leadership values
•OEM requirements
•Employee values
•Regulatory
requirements
•Waste reduction & cost
saving opportunities
•Development of new
markets
•Innovation
opportunities
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Environmental Aspects (Company Systems)
The West Michigan Sustainable Business Forum has developed an excellent framework and set of tools
for thinking about a company’s environmental aspects (i.e. those dimensions of its operations that can be
changed to alter its environmental performance.) This framework is displayed below.
Sales and Marketing
•Measure customers green demands
•Promotion of sustainability
•Education of customers
•Use of green literature
Transportation
•Energy use
•Greenhouse emissions
•Waste reduction
Environmental Management
•Environmental policy
•Continuous improvement
•Pollution prevention
•EMS
Product Design
•Sustainability mandate
•Environmental impact score
•Life-cycle thinking
SUSTAINABLE
BUSINESS
PRACTICES
Packaging
•Green packaging guidelines
•Supplier waste reduction
•Minimum recycled content
•Returnable packaging
Operations
•Process redesign
•Pollution prevention
•Standard operating procedures
•Waste reduction tracking
•Hazardous/toxic materials
Facilities
•Energy conservation
•Water conservation
•Indoor air quality
•Construction materials
•Landscaping
•Biological diversity
Purchasing
•Whole cost accounting
•Supplier sustainability guidelines
•Green supplier development
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Improvement Goals
Goal
Reducing the intensity of
material or energy use
Strategic Focus
•This strategy focuses on simply using less of whatever is already being used to produce a
product or service.
•It is important to look at this both at the level of the individual user, and at the aggregate
level. So, for instance, we can have more fuel efficient cars that use less gas per mile, but
experience an increase in miles driven that effectively negates any aggregate energy
savings.
•This strategy encompasses activities focused on increasing the “yield” levels in
manufacturing, and reducing the level of waste produced in the process.
•It also encompasses strategies designed to replace materials with services.
Increasing use of
renewable material and
energy sources
•Changing the sourcing mix – switching from fossil fuels to wind energy, for instance; or
substituting bio-based materials for petroleum-based polymers.
Increasing the level of
material reuse
•Increasing the use of recycled materials as inputs, and increasing the recyclability of both
products and waste streams
Extend service and
function
•Increasing the length of service of a product, so that it needs to be replaced less frequently.
Reduce health and
pollution risks
•Reducing the toxicity intensity of both materials and practices.
Restoration
•Restoring the ecological productivity of damaged ecosystems
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Some Principles to Guide Improvement
The Natural Step Scientific Principles
“Mother Nature’s Quality Requirements”
1. Substances from the earth’s crust
must not systematically increase in
nature.
2. Substances produced by society must
not systematically increase in nature.
3. The physical basis for productivity and
diversity of nature must not be
systematically deteriorated.
Principles of “Natural
Capitalism”
•Dramatically increase the
productivity of our resource use.
•Shift to biologically-inspired
production models.
•Move to a solutions-based (vs.
product-based) business model.
•Reinvest in natural capital.
(Source: Natural Capitalism)
4. The use of resources must be efficient
and just with respect to meeting human
needs.
Eco-efficiency vs. sustainability.
•Improvements strategies that reduce the impact of businesses on natural systems are referred to as “ecoefficiency” strategies.
•These are to be differentiated from “sustainability” strategies, which eliminate impacts (total closed loop)
or reverse impacts (restoration).
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From “Lean” to “Green”
Eliminate 8 Deadly Wastes:
•Overproduction
•Inventory
•Waiting
•Motion
•Transportation
PURPOSE
•Non-value added processing
•Defective parts
•Not using people’s abilities
PEOPLE
PROCESS
“Lean”
Eliminate Wastes of Natural
Resources
•Material
Eco-Efficiency
Results:
•Reduced consumption
•Source changes
•Pollution reduction
•Ecological restoration
•Water
Business
Results:
•Energy
•Cost reduction
•Pollution
•Product innovation
“Green”
27 • Integrated Wealth Creation• © 2009 by Innovation Network for Communities. • www.in4c.net • All Rights Reserved.
•Consumer acceptance
•Reduced liability
Business Strategy Map for Environmental Sustainability
Environmental Performance
Outcomes
External Drivers
•Consumer
preferences
•OEM requirements
•Regulatory
requirements
•New markets
Innovation
Opportunities
•Policy and
management
systems
•Product design
•Facilities
•Purchasing
Internal Drivers
•Leadership values
•Operations
•Reduced intensity of material or
energy use.
•Increased use of renewable
materials & energy sources.
•Increased level of material reuse.
•Extended service & function.
•Reduced health & pollution risks.
•Restoration of ecosystem
resilience.
•Packaging
Business Outcomes
•Employee values
•Transportation &
Logistics
•Cost reduction.
•Waste reduction
opportunities
•Sales and Marketing
•Product innovation.
•Innovation
opportunities
•Consumer acceptance.
•Reduced liability.
28 • Integrated Wealth Creation• © 2009 by Innovation Network for Communities. • www.in4c.net • All Rights Reserved.
Summary Dimensions of Firm Behavior
Etc.
Transportation
Facilities
Operations
Product Design
ENV. IMPACT
Energy Impact
Mineral Cycle
Impact
Water Cycle
Impact
GOALS
Plant & Animal
Population
Impact
Reduce Use
Intensity
Increase
Renewable
Resources
Improvement
Goals
Reduce Health
and Pollution
Risk
Increase
Degree of
Reuse
Extend Service
& Function
Environmental Impact
29 • Integrated Wealth Creation• © 2009 by Innovation Network for Communities. • www.in4c.net • All Rights Reserved.
You Can Focus At Many Different Levels of the Economy
Level
Community
Focus
•Advance and support community sustainability initiatives.
•Develop a sustainable business cluster in a region (Michael Porter’s cluster strategy)
Sector
•Examples would include manufacturing (or sub-sectors, such as automotive, metal
forming, plastics, raw materials, leather processing, plating, etc.), farming, forestry, real
estate development, tourism, health services, etc.
•Sector strategies are designed around the idea that companies in a sector will have
common environmental issues, and that a higher scale of impact can be accomplished by
working through existing sector-based infrastructure (such as trade associations,
professional associations, etc.).
Supply Chain
•This approach focuses on the supply chain within an industry.
•An example would be the EPA Green Supplier Network, which in Michigan is focusing its
work on the automotive and furniture supply chains.
Individual
Company
•Many initiatives are focused on the individual company, and supporting either general
improvements in their environmental performance, or improvements linked to a specific
environmental impact or aspect.
Specific
Environmental
Aspect or Impact
•Some strategies are focused on specific environmental “value streams” – e.g. water,
toxic chemicals, energy use, etc., whether at the company, supply chain or sector level.
30 • Integrated Wealth Creation• © 2009 by Innovation Network for Communities. • www.in4c.net • All Rights Reserved.
Strategies to Support Sustainable Commerce
Strategy
Description
Invest
Invest, either directly or indirectly (i.e. through equity or debt funds) in
the growth of existing companies or the creation of new ones that
demonstrate superior environmental performance (e.g. “green
gazelles”).
Subsidize
Underwrite some cost of doing business (e.g. tax abatements; tax
credits; equipment purchase; land and utilities; etc.) that help
companies improve environmental performance.
Regulate
Change regulatory incentives and penalties to encourage environmental
performance.
Create New
Inputs
Through R&D and other investments, create new products, materials, or
intellectual property that can improve firm environmental performance
(e.g. university research institutes for alternative materials).
31 • Integrated Wealth Creation• © 2009 by Innovation Network for Communities. • www.in4c.net • All Rights Reserved.
Strategies to Support Sustainable Commerce (cont’d)
Strategy
Description
Create Demand
Be a customer for products or services that exhibit improved
environmental performance (e.g. buy green buildings; purchase green
power); aggregate demand among many customers to make the sale
more feasible.
Advise and
Consult
Provide consulting services to companies (such as MMTC’s “lean and
green” services; or the Green Supplier Network assessments)
Inform
Provide market research; tool kits; and other information materials.
Create indicators of environmental performance for firms and sectors.
Educate
Develop curricula (credentialed and non-credentialed) and educational
programs to provide the knowledge and skills that companies need to
improve environmental performance.
Network
Create relationships between players that would not happen in the
normal course of their business.
32 • Integrated Wealth Creation• © 2009 by Innovation Network for Communities. • www.in4c.net • All Rights Reserved.
References
USEFUL REFERENCES
Author
Title
Paul Ekins
The Gaia Atlas of Green Economics
Ray Anderson
Mid-Course Correction
Janine M. Benyus
Biomimicry: Innovation Inspired by Nature
John Elkington
Cannibals With Forks, The Triple Bottom Line of the 21st Century Business
Paul Hawken
Ecology of Commerce: A Declaration of Sustainability
Paul Hawken, Amory & Hunter Lovins
Natural Capitalism: Creating the Next Industrial Revolution
Brian Nattrass & Mary Altomare
The Natural Step for Business
Livio DeSimone & Frank Poposff
Eco-Efficiency – The Business Link to Sustainable Development
Claude Fussler
Driving Eco-Innovation
Lester Brown
Eco-Economy – Building An Economy for the Earth
Robert Costanze et al
An Introduction to Ecological Economics
National Academy of Engineering
The Greening of Industrial Eco-systems
Allan Savory
Holistic Resource Management
33 • Integrated Wealth Creation• © 2009 by Innovation Network for Communities. • www.in4c.net • All Rights Reserved.
The INC Mission is to develop and spread scalable innovations that
transform the performance of community systems.
www.in4c.net
Pete Plastrik
John Cleveland
231-448-3169
616-240-9751
pete@in4c.net
john@in4c.net
34 • Integrated Wealth Creation• © 2009 by Innovation Network for Communities. • www.in4c.net • All Rights Reserved.