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Sustainable Business and Safer Chemistry Through the Supply Chain: An Innovator’s Roundtable November 14-16, 2005 BATTEN INSTITUTE Lowell Center for Sustainable Production & School of Health and the Environment Darden Graduate School of Business Administration University of Massachusetts at Lowell:  Sustainable Business and Safer Chemistry Through the Supply Chain: An Innovator’s Roundtable November 14-16, 2005 BATTEN INSTITUTE Lowell Center for Sustainable Production & School of Health and the Environment Darden Graduate School of Business Administration University of Massachusetts at Lowell WHY ARE WE HERE AT DARDEN?:  WHY ARE WE HERE AT DARDEN? FOCUS ON SUPPLY CHAIN MANAGEMENT GREEN CHEMISTRY DRIVERS OF CHANGE PROCESS/PRODUCT INNOVATIONS BENEFITS BARRIERS NEEDS GOING FORWARD PURPOSE DOC IN YOUR BINDERS TOPICS – SUPPLY CHAIN AND GREEN CHEMISTRY:  TOPICS – SUPPLY CHAIN AND GREEN CHEMISTRY DRIVERS INNOVATIONS BARRIERS OPPORTUNITIES NEEDS NEW COLLABORATIONS Importance of Green Design Topics in Your Company’s Corporate Strategy:  Importance of Green Design Topics in Your Company’s Corporate Strategy Benefits from Clean/Green Supply Chain Efforts:  Benefits from Clean/Green Supply Chain Efforts Drawbacks Related to Green Chemistry Innovations:  Drawbacks Related to Green Chemistry Innovations Sustainable Business Innovation and the Traditional Economy:  Sustainable Business Innovation and the Traditional Economy Traditional Economy Entrepreneurial Sector Slide8:  WHAT IS DRIVING THIS ACTIVITY? Innovation in Chemicals/Materials Use: Drivers Of Change:  Innovation in Chemicals/Materials Use: Drivers Of Change SCIENCE -- New knowledge about chemicals & human health, chemicals & ecological stability; Old science, new science: what has changed and why; Trends, directions … INVESTORS DJSI … STOCKHOLDER PETITIONS … COUNTRY, STATE GOVERNMENTS STATUTORYREQUIREMENTS (increasing) (JAPAN, CALIFORNIA …) Innovators who set new standards and demonstrate the business case COSTS OF COMPLIANCE Going up OPPORTUNITIES & PROCESSES: Innovations, increased sales, cost savings, market share growth, new markets, brand enhancement, improved cost of capital FRAMEWORKS: Green Chemistry, Green Engineering, Industrial Ecology applications REACH legislation Innovation in the market CUSTOMERS REGULATORY DRIVERS:  REGULATORY DRIVERS U.S.-based companies that sell globally are scrambling to comply with an array of European environmental laws that are much stricter than those they face at home. Regulations enacted in Brussels now govern how computers, cellphones, and aircraft engines are designed. Fortune June 17, 2005 http://www.fortune.com/fortune/articles/0,15114,1071732,00.html GLOBAL ECONOMIC GROWTH DRIVERS:  GLOBAL ECONOMIC GROWTH DRIVERS Global companies are poised to capitalize. Immelt says that GE's investments in clean coal technology, wind power, nuclear energy, and fuel cells are being made with China in mind. "While Europe has been a driver for innovation in cleaner technologies, China promises to be its market," he says. Fortune June 17, 2005 Cops Of The Global Village How standards of conduct set half a world away are shaping big companies' behavior. By Marc Gunther http://www.fortune.com/fortune/articles/0,15114,1071732,00.html NGO/PUBLIC DRIVERS :  NGO/PUBLIC DRIVERS By Marcus Kabel Associated Press Friday, October 21, 2005; Page D02 Wal-Mart Nudges Foreign Suppliers Retailer to Demand Environmental and Social Responsibility Wal-Mart Stores Inc. will start holding its suppliers more accountable for environmental and social standards at foreign factories as public expectations in the United States rise, chief executive H. Lee Scott Jr. said Thursday. The company has come under mounting fire from organized opponents over the environmental and labor standards of the low-cost manufacturers overseas from which it buys. Wal-Mart must act because consumers blame stores, not suppliers, for abuses. Scott said Wal-Mart will be more involved in its suppliers' businesses to find new products that meet demand for higher standards. Wal-Mart will ask, "Are you running your factories in a way that promotes environmental sustainability? PUBLIC HEALTH DRIVERS:  PUBLIC HEALTH DRIVERS Compounds such as antidepressants, over the counter drugs, insect repellants and antibiotics are now commonly found in waterways receiving treated wastewater. They can arrive various ways, including: HOUSEHOLDS: A major source of these compounds is the home. Some substances are not fully metabolized and can pass through the human body and enter wastewater treatment systems. Substances such as insect repellants are rinsed off in shower water and enter waste streams. TREATMENT PLANTS: Many compounds flowing into treatment plants are not intercepted by cleansing processes and enter rivers with treated wastewater discharges. Much of the flow in some rivers in urbanized areas is treated wastewater. The Hartford Courant October 27, 2005 Pharmaceuticals And Personal Care Products In The Environment DRIVERS: FERTILITY IMPACTS:  DRIVERS: FERTILITY IMPACTS Air pollution linked to sperm damage         Air pollution can damage sperm, potentially leading to birth defects or miscarriages, according to research published on Monday. Scientists said the results were a warning of the number of chemicals commonly present in the air that can cause damage to human DNA. Led by Jiri Rubes of the Veterinary Research Institute in the Czech Republic, the study, in collaboration with the United States Environmental Protection Agency, found a "significant association between exposure to periods of high air pollution (at or above the upper limit of US air quality standards) and the percentage of sperm with DNA fragmentation." The results were published in the latest issue of the journal Human Reproduction. People’s Daily Online (China) September 29, 2005 Slide15:  Source: Science News, August 2, 2003, Vol 164 (p72)) Studies “now accepted by most researchers” have shown that community death rates rise and fall nearly in lock-step with local changes in concentrations of tiny dust particles – even when concentrations of those particulates are just one-quarter of the federal limit for indoor air. Research since 2001 links the greatest harm to the tiniest dust: particulate matter no more than 2.5 micrmeters in diameter, called the PM-2.5 fraction. Ultrafines, particles less than 0.1 micrometer across, may be the most dangerous. They represent a class of dust that environmental studies and regulations have generally ignored. – Joel Schwartz Harvard School of Public Health 2003 DRIVERS: RISING GLOBAL STANDARDS:  DRIVERS: RISING GLOBAL STANDARDS The drive to meet rising global standards of one kind or another is affecting just about every multinational FORTUNE 500 company. Spurred by regulation in Europe and the prospect of sales to China, General Electric is investing $1.5 billion over the next five years in research into energy-efficient and environmentally friendly products like wind turbines, clean coal technology, and appliances that save water or electricity. Intel, Xerox, Motorola, and Dell are revamping their supply chains to get lead out of microprocessors, copiers, cellphones, and computers. And Nike and Gap dispatch inspectors who monitor hundreds of their suppliers in the developing world, at considerable expense. What we're seeing here are local standards that have worldwide impact—for better or worse. It can be frustrating (not to mention costly) to comply with tough European Union regs, but it's bad business for multinationals to make things that won't sell across the global economy—so companies tend to cleave to the highest regulatory standards and consumer expectations no matter where they arise. Even a big state like California can have influence far beyond its borders, partly because of Washington's laissez-faire attitude toward regulation. Fortune June 17, 2005 http://www.fortune.com/fortune/articles/0,15114,1071732,00.html DRIVER: NEW KNOWLEDGE, CHANGED UNDERSTANDING:  DRIVER: NEW KNOWLEDGE, CHANGED UNDERSTANDING BODY BURDEN ENDOCRINE DISRUPTION – LOW DOSE CHEMICAL EFFECTS INCREASING INFORMATION ABOUT CHEMICAL TOXICITY YET, INCREASING KNOWLEDGE ABOUT HOW CHEMICAL STRUCTURE AFFECTS TOXICITY DRIVERS: GROWING RECOGNITION OF GREEN CHEMISTRY :  DRIVERS: GROWING RECOGNITION OF GREEN CHEMISTRY 'Green chemistry' work wins Nobel. Three chemists have been awarded the Nobel Prize for their work to reduce hazardous waste in forming new chemicals used in plastics and pharmaceuticals. Associated Press [related stories] http://edition.cnn.com/2005/WORLD/europe/10/05/nobel.chemistry.ap/ Green Polymer Field Blossoming. Opportunities for designing polymers and developing polymerization processes that are safe, prevent pollution, and are more efficient in the use of materials and energy are enormous. Chemical & Engineering News [related story] [Subscription Required] http://pubs.acs.org/isubscribe/journals/cen/83/i40/html/8340sci1.html?emFrom=emLogin www.EnvironmentalHealthNews.org DRIVERS: CUSTOMER/MARKET DEMAND – SUPPLY CHAIN PRESSURES:  DRIVERS: CUSTOMER/MARKET DEMAND – SUPPLY CHAIN PRESSURES LARGE BUYERS REQUESTING SAFER CHEMICALS/PRODUCTS USERS SUCH AS PATAGONIA, INTERFACE, ETC. RETAILERS SUCH AS MARKS AND SPENCER, BOOTS, HOME DEPOT HEALTH CARE PURCHASING ORGANIZATIONS AND HOSPITALS GOVERNMENT PURCHASING A Shift is Underway:  A Shift is Underway SRI (Socially Responsible Investment) funds represent 13% of all U.S. investment over $1.5 trillion A shift from negative screening of companies (no alcohol, no tobacco) to positive screening for companies that meet triple bottom line criteria (economics, social, environmental performance) 2003 Competitive Conditions:  Competitive Conditions Existence of many interconnected trends and factors that mean safer, cleaner products/chemistry make good business sense Your efforts and your firm’s activities that “green” processes and products though green chemistry are converging with forces and trends worldwide And the pace is picking up Being informed and creating new capabilities (personal and corporate) means you stay ahead of your competition FRAMING THE ISSUES:  FRAMING THE ISSUES THE INNOVATORS ROUNDTABLE DISCUSSION Schumpeter (1934) – Defined Entrepreneurship as INNOVATION:  Schumpeter (1934) – Defined Entrepreneurship as INNOVATION Causes, mechanisms, and effects of economic change CREATIVE DESTRUCTION of existing industrial and commercial patterns “creative” and “adaptive” response; creative response is outside the range of existing practice, adaptive is incremental change to existing activity creation of new products, services, technologies, markets, organizational forms Defines these activities as INNOVATION Entrepreneurship as Distinct from Economics:  Entrepreneurship as Distinct from Economics Explains the production of future goods and services Introduces significant changes, including but not limited to changes in products, services, technologies, markets, organizing structures Departs from, disrupts, existing industrial and commercial patterns Explains the emergence of new ways of meeting human needs INNOVATION & ENTREPRENEURSHIP FROM CONCEPT TO REALITY:  INNOVATION & ENTREPRENEURSHIP FROM CONCEPT TO REALITY MARKET OPPORTUNITY RESOURCES PRODUCT CONCEPT TEAM STRATEGY REFRAMING:  REFRAMING INNOVATION: THE SPECIFIC TOOL OF ENTREPRENEURS, THE MEANS BY WHICH THEY EXPLOIT CHANGE AS AN OPPORTUNITY FOR NEW PRODUCTS, PROCESSES, SERVICES, TECHNOLOGIES, MARKETS, WAYS OF ORGANIZING KEY DRIVER OF INNOVATION: THE NEXUS OF ECONOMIC GROWTH AND NATURAL SYSTEMS Sources of Entrepreneurial Opportunity:  Sources of Entrepreneurial Opportunity Inefficiencies (Hayek, 1945) Significant changes in social, political, demographic, and economic forces outside the control of the individual (Kirzner, 1973, 1997) Inventions and discoveries that produce new knowledge (Drucker, 1985) Variations in the distribution of Information (Sarasvathy, 1998) Different abilities to identify or pursue opportunities (Drucker, 1985) Seeing opportunities as opposed to risks and obstacles (Shane & Venkataraman, 1999) Network organizations, with clear and commonly held objectives (Larson, 1991, 2001, 2003) DRUCKER’S WINDOWS OF OPPORTUNITY :  DRUCKER’S WINDOWS OF OPPORTUNITY SYMPTOMS AND INDICATORS OF CHANGES: THE UNEXPECTED (SUCCESS, FAILURE, EVENT) THE INCONGRUITY PROCESS NEED CHANGES IN INDUSTRY OR MARKET STRUCTURE DEMOGRAPHICS PERCEPTION AND MEANING SHIFTS NEW KNOWLEDGE Slide29:  I remember when there was no damn environment THERE IS A REMARKABLE GROUP OF INNOVATIVE THINKERS IN THIS ROOM:  THERE IS A REMARKABLE GROUP OF INNOVATIVE THINKERS IN THIS ROOM LISTEN, ASK, READ, WRITE, REFLECT AT BREAKFAST, LUNCH, DINNER; IN THE CLASSROOM, DURING BREAKS, WALKING BACK TO YOUR ROOM, IN YOUR SLEEP HARD TO GET ANYTHING OUT IF YOU DON’T PUT SOMETHING IN IF YOU DON’T TAKE SOMETHING VALUABLE AWAY FROM THESE TWO DAYS … TAKEAWAYS:  TAKEAWAYS IDEAS LANGUAGE STRATEGIES TOOLS REFERENCES CONTACTS FINAL REPORT FUTURE POSSIBILITIES

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