Responsible Business International Intensive Week Lahti

Anna Pajari2 What is responsible business?  ”Behaviour of businesses over and above legal requirements”  ”Voluntarily and strategically managing the interconnected economic, environmental and social impacts of business activities”  Balancing the interests of different stakeholders  Must be integrated in corporate every day actions  CR does NOT mean charitable donations or philanthropy

Anna Pajari3 The Future of Environmental Management More fromMore and betterMore but different morefrom lessand in another way INDUSTRIALISM INFORMATIONALISM LOGIC OF ACTION industrialnetworkawareness MODEL OF SOCIETY Societysociety society Markku Wilenius 2009

Anna Pajari4 Development of Corporate Environmental Management 1. Production oriented - in industrialised countries largely achieved level 2. Product oriented - current focus 3. Need oriented - future focus

Anna Pajari5 1.Production Oriented CEM  based on technological improvements of the production  primary goal to meet legal requirements  produce more from more  Tools: environmental management systems

Anna Pajari6 2. Product Oriented CEM  based on life cycle thinking  primary goal to increase the eco- competitivness of the product  focus to the product development  product safety  produce more from less  Tools: life cycle assessments and environmental labels

Anna Pajari7 3. Need Oriented CEM  based on changing consumption patterns and infrastructure  primary goal to act in a sustainable way  focus to global satisfaction of needs instead of material welfare  factor x effect  significant impacts in all parts of society  produce something different in a different way

Anna Pajari8  factor 10 (Schmidt – Bleek 1994) = in oder to reach sustainable development, we have to halve the resource consumption globally which means need for ten-fold resource effectiveness in industrialised countries

Anna Pajari9 POLLUTION PREVENTION HIERACHY 9 Recycle Re use Re duce Re design Re imagime New priorities Traditional priorities Esty & Winston Green to Gold.

Anna Pajari10 1. TRADITIONAL PRIORITIES Product Recovery Options (EU) Reuse Repair Remanufacturing Parts and components Materials Energy 10

Anna Pajari11 2. NEW PRIORITIES  Re-design - e.g. cradle to cradle  Re-imagine Replacing products by services New kinds of ownership What else??? Blue Ocean Strategies 11

Anna Pajari12 Striving for Change  energy  efficiency - energy - materials  dematerialisation - product recovery - services

Anna Pajari13 Value Development Value 0 € Supplier Transport Producer Transp. Retailer Transp. Customer Retailer

Anna Pajari14 EXAMPLE OF A REVERSE LOGISTICS CHAIN / NETWORK Acquisition of end-of-life products Transport / warehousing Inspection & Selection Transport / warehousing Reprocessing Transport / warehousing Marketing = creating secondary markets 14 Disposal Another Company

Anna Pajari15 End-of-life product non-accessible Reprocessing not technically or economically feasible No market demand for secondary output Product detorioration Product demand and use & re-distrib. End-of-life product collection Reprocessing of secondary materials or products Inspection & separation

Anna Pajari16 CHALLENGES 16 Customer based Customer awareness Customer behaviour Trends Attitudes Product based Quality Materials Actors required Cannibalization Product safety Network design Profitability Changes in demand Uncertainties in supply Time delays = loss of value Producer´s responsibility

Anna Pajari17 To be considered  Time sensitiveness  Costs of transport and warehousing  Inspection and repair – human work  Customer behaviour  Cannibalisation  Pricing  Etc.

Anna Pajari18 From Products to Services  one way to produce something different in a different way is to replace a product with a service which meets the same need  three options: 1. product-oriented services 2. use-oriented services 3. need-oriented services

Anna Pajari19 1.Product – oriented services  services adding value to physical products (e.g. maintenance, recycling)  benefit for the buyer?  benefit for the seller / producer?  benefit for the environment?

Anna Pajari20 2. Use – oriented services  customer pays for using the product, not for the product itself (e.g. renting, leasing, sharing)  benefits for the customer: ?  risk: careless use because not owned by the customer  private customers vs. B2B

Anna Pajari21  Use – oriented services motivate the company to: - minimise the energy and material consumed by optimising their use, because payment is based on the unit of service, not on unit of consumed resources - to reuse collected components from disposed products because of cost savings

Anna Pajari22 - to extend the product life span through higher reliability, maintenance, repair etc. because it can postpone disposal costs and the costs of new product manufacture - to extend the material life through recycling etc. because it reduces landfilling and saves waste management costs

Anna Pajari23 3. Need – Oriented Services  product is replaced by a service  benefit for the customer: ?  benefit for the provider: ?  benefit for the environment: ?