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GREEN TO GOLD:

HOW SMART COMPANIES USE ENVIRONMENTAL STRATEGY TO INNOVATE, CREATE VALUE, AND BUILD COMPETITIVE ADVANTAGE National University of Singapore March 2009

Daniel C. Esty

 Hillhouse Professor of Environmental Law & Policy  Yale University 1


WHAT IS THE STORY BEHIND THE STORY?

© YALE CENTER for ENVIRONMENTAL LAW & POLICY

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THREE “REVOLUTIONS” IN ENVIRONMENTAL PROTECTION • Public interest rising – Especially on climate change – Water and air pollution – Toxic exposures – food safety

• Change in corporate attitudes – core to strategy – upside opportunity

• Shift in regulatory approach – – – –

innovation as key to progress private sector as engine of technology development “command and control” → market mechanisms Information Age environmental protection

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SPECIAL POLITICAL MOMENT • Global economic crisis • New American president • Intertwined challenges of energy, environment, security, and economy – climate change – trade liberalization

• Rising awareness of interdependence © YALE CENTER for ENVIRONMENTAL LAW & POLICY

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Book cover

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WHY IS ENVIRONMENT NOW A KEY ELEMENT OF BUSINESS STRATEGY

Energy Prices

+

+

+ Evolving regulation

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Natural world drivers

Green-oriented stakeholders

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ENERGY PRICES • Oil prices double the level of three years ago • New energy efficiency logic • Conservation/use calculations of the past now must be redone

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EVOLVING REGULATION • Carbon controls – EU “cap and trade” system – Changing U.S. political landscape – Emerging interest in China

• Food safety • Chemical regulation (REACH) • Waste and recycling rules • Extended producer responsibility © YALE CENTER for ENVIRONMENTAL LAW & POLICY

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NATURAL WORLD DRIVERS Climate change

Air Pollution

Energy

Waste Management

Water Quality & Quantity

Ozone Layer Depletion

Š YALE CENTER for ENVIRONMENTAL LAW & POLICY

Biodiversity & Land Use

Oceans & Fisheries

Chemicals,Toxics,Metals

Deforestation

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STAKEHOLDER ‘WHEEL’ NGOs

Banks

“Plaintiff’s Bar”

Insurers Acquirers Shareholders

Regulators

Investors & Risk Assessors

Communities “The Future” (Kids)

Source: Esty & Winston, Green to Gold (2006)

Politicians Media Industry Assoc.

Company

Employees

Players in traditional economic and business analysis

Rule-makers & Watchdogs

Consumers & Community

Business Partners & Competitors

B2B Buyers Competitors

Suppliers

Consumers CEO Peers

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CHANGE CREATES OPPORTUNITY Venture Capital invested in Cleantech in North America ($US m) $6,000

$5,000

$4,000

$3,000

$2,000

$1,000

$0 2001

2002

2003

2004

2005

2006

2007

2008

Source: Cleantech Group (www.cleantech.com)

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MAINSTREAMING OF GREEN BUSINESS

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NEED TO BE STRATEGIC

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ELEMENTS OF AN ECO-ADVANTAGE STRATEGY • Issue spotting – AUDIO analysis

• Stakeholder mapping – Stakeholder engagement evaluation matrix

• Eco-Advantage “plays” – Manage downsides – Develop upside opportunities

• Environmental management “best practices” © YALE CENTER for ENVIRONMENTAL LAW & POLICY

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BOTTOM LINE 1.

Environmental concerns are here to stay

2.

Society’s approach to environmental protection is evolving: - Information Age tools and opportunities - move towards market mechanisms - private sector as the engine of innovation

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Corporate environmental strategy offers an opportunity for competitive advantage

4.

It’s not easy being green

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www.yale.edu/envirocenter

www.yale.edu/cbey

www.EstyEP.com © YALE CENTER for ENVIRONMENTAL LAW & POLICY

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Green To Gold  

Is Making money in a sustainability world