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STRATEGICENVIRONMENTAL  MANAGMENT        Alfred MarcusCarlson School of Management
What is StrategicEnvironmental Management?
From Compliance to Business        Growth and Development   opportunity, not constraint   enhance competitiveness       ...
Win-Win     Conversion of Environmental Challenges to                Opportunities????                                   O...
Evidence of Economic Benefits from SEM   Corporate performance (CSP) and corporate financial    performance (CFP) are pos...
Evidence of Economic Benefits from SEM Saving $ through energy saving and prevention of  risks/lawsuits Support from soc...
H O W A C H IE V E               S E reduce wastes       •LOWER COSTS:                     M???       •INCREASE REVENUE: h...
SEM Valuation                                 •Energy Efficiency                                 •Material Efficiency     ...
3M --Dr. Joe Ling:                   Pollution Prevention                          “Pollution is … unused raw             ...
POLLUTION PREVENTION        LOWERS COSTS: REDUCES WASTE                                  product     TT   1               ...
Pollution Prevention Pays (3P)   Foundation for governmental    environmental                   3M’s 3P Results          ...
Valuation: Environmental Elements                              •New products                              •New markets    ...
NEW GREEN PRODUCTS 1985-1990                                    Do consumers accept?     350                              ...
3M- Using the Sun Instead of           Electricity                             “Piping” sunlight                          ...
“Core Daylighting” Impact   Prototype systems installed in Canada, U.S. and    Middle East       Energy savings larger t...
New Green Products TodayDo Good                 Bottom of the– Affirmative !!!       Pyramid (BOP)   • Activist   • Eco-en...
A $ 5 trillion Market
WHAT BUSINESS TO BE IN?INNOVATE ----INTRODUCE NEW TECHNOLOGIES &PRODUCTS*Develop and acquire “green businesses”*Divest and...
Strategic Realignment by Du Pont   Edgar Woolard CEO 1989-95       outspoken commitment corporate environmentalism     ...
   Funds research in “life sciences” with mature    businesses (e.g.nylon & polyester)   Sells Conoco   Acquires contro...
Uncertainties:                     Obstacles to Realization   Competition        Monsanto: genetically modified material...
   SEM NOT EASY TO ACHIEVE: no slam dunk,    but necessary and essential to corporate bottom    line
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Business and Environment Series: Marcus - Strategic Environmental Management

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Business and Environment Series: Marcus - Strategic Environmental Management

  1. 1. STRATEGICENVIRONMENTAL MANAGMENT Alfred MarcusCarlson School of Management
  2. 2. What is StrategicEnvironmental Management?
  3. 3. From Compliance to Business Growth and Development opportunity, not constraint enhance competitiveness 3
  4. 4. Win-Win Conversion of Environmental Challenges to Opportunities???? Old Model Hi Win-Loss ComplianceProfits Model (neutral) New Model Lo W in -w in Good Bad Environmental Performance
  5. 5. Evidence of Economic Benefits from SEM Corporate performance (CSP) and corporate financial performance (CFP) are positively correlated. Reputation is an important mediator of the CSP-CFP relationship. Meta-analysis of 52 studies by Orlitzky, Schmidt, & Rynes (2003) 5
  6. 6. Evidence of Economic Benefits from SEM Saving $ through energy saving and prevention of risks/lawsuits Support from socially responsible investment    $3.07 trillion in 2009 ($2.71 trillion in 2007) (Social Investment Forum, 2010) 6
  7. 7. H O W A C H IE V E S E reduce wastes •LOWER COSTS: M??? •INCREASE REVENUE: higher value products INNOVATE ----INTRODUCE NEW TECHNOLOGIES learningCost b e n e f it s Time
  8. 8. SEM Valuation •Energy Efficiency •Material Efficiency •“Dematerialization” •Reduction of Toxicity CostsStrategic And Earnings Cash Change Policy Flow InDecisions Value Risks Cost of Capital
  9. 9. 3M --Dr. Joe Ling: Pollution Prevention “Pollution is … unused raw material. By reducing the amount of pollution, … [3M can] save money both on pollution control and on raw materials the next time around. Its a win-win situation.”Dr. Ling launched 3M’s PollutionPrevention Pays program in 1975
  10. 10. POLLUTION PREVENTION LOWERS COSTS: REDUCES WASTE product TT 1 OO TT haz/solid AA 2 waste LL Process/process waste OI step water 3 UN TP air PU releases UT 4 TS T o t a l in p u t s = other S To ta l o u tp u ts
  11. 11. Pollution Prevention Pays (3P) Foundation for governmental environmental 3M’s 3P Results (aggregate first year savings) policies/programs globally  Over 3 billion pounds of pollution prevented Benefits for 3M or for its  Over $1.4 Billion saved customers & suppliers. Fundamental to 3M philosophy
  12. 12. Valuation: Environmental Elements •New products •New markets •New clients • Price premium CostsStrategic And Earnings Cash Change Policy Flow InDecisions Value Risks Cost of Capital
  13. 13. NEW GREEN PRODUCTS 1985-1990 Do consumers accept? 350 308 12% Introductions per Year * 300 9.2% Percent Share of Total Introductions 10% 250 262 200 * 8% 160 250 * 6% 122 4.5% 150 60 * * 2.8% 4% 100 2.0% 24 1.1% 2% 50 * 0.5% 0 0% 1985 1986 1987 1988 1989 1990Note: Chart includes any product that claims in label or advertising to address environmental concerns.Source: Marketing Intelligence Service 18
  14. 14. 3M- Using the Sun Instead of Electricity “Piping” sunlight through a building• Enabled by 3M MultilayerOptical Film• Materials & processbreakthroughs
  15. 15. “Core Daylighting” Impact Prototype systems installed in Canada, U.S. and Middle East  Energy savings larger than anticipated System now being commercialized 3-5 Year payback anticipated
  16. 16. New Green Products TodayDo Good Bottom of the– Affirmative !!! Pyramid (BOP) • Activist • Eco-entrepreneur Entrepreneurial– Sustainable Opportunities • Environment • Social • Economic
  17. 17. A $ 5 trillion Market
  18. 18. WHAT BUSINESS TO BE IN?INNOVATE ----INTRODUCE NEW TECHNOLOGIES &PRODUCTS*Develop and acquire “green businesses”*Divest and alter “environmentally damaging businesses 11
  19. 19. Strategic Realignment by Du Pont Edgar Woolard CEO 1989-95  outspoken commitment corporate environmentalism  “greening” of portfolio  voluntary exit CFC production  SUVA brand HCFC & HFC refrigerants, coolants, air conditioning agents Chad Halliday his successor  further “greening” of portfolio  WHY?  Global Challenge = Opportunity  50% more mouths to feed  aging population  Technology  7-8 years slight modification  4-5 years whole new crop
  20. 20.  Funds research in “life sciences” with mature businesses (e.g.nylon & polyester) Sells Conoco Acquires controlling interest Pioneer Hi-Bred
  21. 21. Uncertainties: Obstacles to Realization Competition  Monsanto: genetically modified material • finance Searle - Nutrasweet & drugs (Celebrex) – Novartis, Hoechst+Rhone Poulenc =Aventis • same strategy• Environmental & Regulatory  Frankenstein Foods  European regulation  separation approved and unapproved strains  food labeling Technological: picking winners - best options  feedstocks for bioengineered chemicals  corn for chicken feed  soy for heart healthy oil
  22. 22.  SEM NOT EASY TO ACHIEVE: no slam dunk, but necessary and essential to corporate bottom line

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