NGO Initiated Sustainable Innovation - the Case of Flame Retardants, an Enviro-NGO And

NGO initiated sustainable innovation

- the case of flame retardants, an Enviro-NGO and a global computer company at the frontline

Ernst Hollander (corresponding author)

Senior Lecturer

University of Gaevle,

SE-801 76 Gaevle, SWEDEN

Phone: + 46 (0) 8 -720 1935

E-mail: [email protected] www.hig.se/~ehr

Mona Blomdin Persson

Head of Environmental Protection Department

Swedish Society for Nature Conservation (SSNC)

Box 4625, SE-116 91 Stockholm, Sweden

Tel +46 (0)8 702 65 88

E-mail: [email protected] http://www.snf.se

Sverker Molander

Professor

Environmental Systems Analysis

Chalmers University of Technology

SE-412 96 Gothenburg, SWEDEN

Phone: + 46 (0)31 772 21 69

Fax: + 46 (0)31 772 21 72

E-mail: [email protected] www.esa.chalmers.se

1 Ernst Hollander has a background in future studies for government, public bodies and unions. After finalising doctoral studies, dealing with the concept of “demand shaping” his research now focuses

“bottom-up” sustainable innovation.

Mona Blomdin Person is head of department at Swedish Society for Nature Conservation (A Non

Governmental Organisation dealing i.a. with environmental questions = an Enviro-NGO)

Sverker Molander, has a background as ecotoxicologist, and is since 10 years dealing with environmental systems analysis – life-cycle impact modelling, ecological risk assessment and sustainability indicators – at Chalmers University of Technology.

The authors of the paper bring together knowledge of business innovation strategies, NGO strategies, ecotoxicology and environmental systems analysis.

2 Abstract

An initially unintended partnership between an Enviro-NGO (SSNC - the Swedish Society for Nature Conservation) and a large computer company (Fujitsu Siemens) is in focus here. The type of innovation process illustrated - that is initiated by a creative demand shaper - is seldom discussed in academia. Many typical traits of this type of innovation processes can be seen in the case: - The ability of an NGO to spear-head the demand in a new sustainability dimension; - The existence of souls of fire in both the demand shaping organisation and in the innovating company; - The need to bridge huge differences in manners of thinking; - The value of proto-markets where the requirements of the demanding organisations and providing firms can be matched. We expect that the unsustainable alternatives will be phased out in the future both as a consequence of voluntary actions and due to regulations, taxes, labels, enlightened media coverage or other external factors.

3 Business and Societal Background

Expectations about goals to be achieved by Sustainable Innovations abound. Those focused here are the ones related to innovations that reduce the environmental load per unit of good delivered to the consumer. Just as other innovations that contribute to a sustainable development they can result in win-win solutions meaning that producers, consumers and environment may gain from their success.

There are however some hurdles on the way.

Two problems form the background of this paper:

At the business level we can notice a rather high failure rate for sustainable innovation attempts.

At the societal level the problem is rather a dearth of commercially viable sustainable innovations.

Problems at the business level include lack of sophistication in the relations between business and the social carriers of the sustainability demands. (The social carriers might be public bodies, the expert community, NGO's or others).

Another problem at the company level might be a lack of farsightedness by upper management not giving sustainability oriented innovators a fair chance.

Problems at the societal level include how the responsibilities are shared among demand carriers.

Prohibiting or taxing non-sustainable products are tedious processes that often don't match innovative processes in a smooth way. NGO's that i.a. can create credible labelling systems can be much more flexible.

The TCO 92 eco label for IT illustrates the flexibility mentioned above. The union confederation TCO had already struggled a long time to ameliorate IT environments through pressure on authorities when it - in the late 1980's - instead turned directly to the market. One route to the market was labels. The strategy that included labels worked much better than one-dimensional pressure on authorities.

So there are remarkable NGO initiated success stories, carrying important lessons for sustainable innovators. One lesson concerns how to raise the level of sophistication in the relations between business and the social demand carriers. An especially illuminating case, that has taken place recently, is the substitution of brominated flame-retardants (BFRs).

The risks with BFRs

Due to their potential risks to humans and the environment, some of the BFRs have received a great deal of attention lately. BFRs are chemical compounds used in different materials in order to reduce

4 the spread of fire, in electronic equipment, computers, building materials, furniture, car seats, etc. Due to its long-term and widespread use BFRs can be found everywhere in nature, even in polar bears and whales.

DDT and PCB were banned in the 1970s. It is only now that levels of these toxins are beginning to drop in human breast milk, fish and sediments. Among the negative effects is damage to reproductive organs and reduced learning capabilities of children. Some BFRs are chemically similar to PCB and

DDT and are, like several other environmental toxins, persistent and bioaccumulative.

Many actors have been and are involved in the process of substituting for BFRs – scientists, authorities, trade unions, politicians, industry and environmental NGOs. Currently there are bans on three of the BFRs in EU and other actions are considered for more of them within EU. But it takes many years to do the risk assessments and for EU to take decisions. Therefore voluntary initiatives are needed.

New types of partnerships

An NGO, The Swedish Society for Nature Conservation (SSNC), thus started a chemicals campaign in

2001 focusing reductions of BFRs. A specific aim was to get important Swedish actors - such as government, private industry and trade - to endorse the phasing out strategy. Thereby a coalition should form that could impel EU to phase out BFR's. The campaign included visits to/calls on the

Swedish Government, Swedish members of the EU Parliament and the international bromine industry.

Also included were ads together with private Swedish firms such as IKEA.

A founding bloc of the campaign was the cooperation between the SSNC and the Swedish Rescue

Services Agency. The latter - a government agency - publicly stated that BFRs can be replaced by effective alternatives.

From an enviro-innovative aspect there were two especially interesting "partnerships". One was between SSNC and the building-industry company-group “detox the buildings”.

The other was between SSNC and the computer industry, especially Fujitsu Siemens. One result was the first almost BFR-free computer. The rest of this paper will focus on the latter partnership.

5 Sustainable Design in Production Chains

First, however, some starting points:

We interpret the concept Sustainable Design in a very broad way. Some examples of reducing the need for flame retardants are quite straight forward in their relation to design. You can for instance make TV sets less likely to catch fire if you don’t make the top of them flat (if it’s not flat it’s hard to put a candle on it). Many a person from the general public will agree that that’s a question of design. A lot fewer might think about the possibility to redesign the chemicals used in the product or in production.

Our definition of design, however, includes lots of possible levels of designing and innovating for sustainability. The example of non-top-flat TV set, by the way, comes from materials published by the

Swedish Rescue Services Agency during the campaign referred to above. In the case to be presented below we, however, concentrate on the way in which different societal actors related to each other during the early stages of an innovation involving chemical redesign for sustainability.

When discussing sustainable innovation it is mostly necessary to include the whole production chain

(the whole Life Cycle). We can also view this as an innovation chain. Sustainable innovation can take place all along the chain - from early stages such as "Materials Design" to late production stages such as assembly and distribution, and even further into use and waste-handling stages.

And a last caveat: Many accounts of sustainable innovations are written as success stories. Some on the other hand are marked by doom and gloom. Our aim here is to try to find a way between those extremes. We have, however, not been able to do all the interviews that would be needed for a fully balanced account. As a first inspiring sketch we, however, hope that the story presented below will be of interest.

A soft breaking of the ranks - the creative link between SSNC and Fujitsu

Siemens

The partnership between SSNC and Fujitsu Siemens Corporation (FSC) in one sense "just happened". The day after the SSNC launched its campaign to ban brominated flame-retardants - a request that was covered by headlines news on TV - a representative of Fujitsu Siemens called the

6 campaign co-ordinator in order to suggest co-operation. The base was to be an upcoming innovation - the first mother-board made without brominated flame retardants.

Of course there is also a longer background story within Fujitsu Siemens. It is worth recalling a part of the Siemens part of the story (Fujitsu and Siemens were merged in 1999): Siemens had experienced its share of the "brutal awakening" to the enviro-criticism that many segments of industry went through in the late 1980's. In the computer manufacturing part of the company the enviro-challenge was, however, soon seen as a business opportunity. Re-cycling programs as well as a drastic reduction of the earlier plethora of plastic materials was implemented.

In the late 1990's there was a partially new focus of the electronics industry choice of materials.

Criticism of the computer industry included demands for alternative mother board flame retardants that weren't halogenated (containing no chlorinated, brominated or fluorinated compounds). The producers of laminates for the mother-boards (that is companies further back in the production/research chain) responded to those demands by developing such alternatives but the broader market for green IT in this respect didn't appear until a bit later. The existence of alternatives, however, did mean that there was a prototype green computer including bromine-free laminates available when Fujitsu Siemens

Sweden visited the head quarters and main factory of Fujitsu Siemens in Augsburg, Germany in

October 2001.

The reason why the Swedish Fujitsu Siemens employees that visited Augsburg were attentive to the possible availability of alternatives was that those would meet demands for green IT that had evolved in the Swedish hospital market, notably at a huge hospital complex - Huddinge Sjukhus - just outside

Stockholm.

When SSNC launched its campaign in the fall of 2001 this further stimulated the demand for bromine reduction. Thus this criterion was included in a minor development project that was initiated jointly by

Fujitsu Siemens and the hospital complex mentioned above. The SSNC campaign and this project thus contributed to Fujitsu Siemens decision to bring forth prototype green computers with almost bromine-free motherboards. The sustainable innovation was on its way.

7 The solution was a substitution of the brominated flame retardant, TBBPA, to phosphorus compounds.

Such compounds have earlier been used as substitutes, and in some cases the phosphorus esters can also demonstrate serious hazard to health or environment. But in this case the compound was reacted into the plastic resin and therefore presented a very limited risk for leakage. And in contrast to brominated flame-retardants, the following waste process cannot form brominated dioxins, so the overall comparative risk assessment showed clearly that the substitute was a viable alternative from a risk assessment perspective.

In 2005 it is evident that a major restructuring in the enviro-dimension is taking place in Fujitsu

Siemens sales of computers. The share of Green PC (with enviro-friendly motherboard) had gone up to 55% of total sales of desktop PC compared to 16% the year before. This represented a 250% increase in number of units sold.

An intrapreneurial coalition

As indicated above the partnership between SSNC and Fujitsu Siemens wasn't planned. Quite a number of companies had been contacted for SSNC's campaign and some of them also endorsed the ads appearing in media. This, however, was not the case for Fujitsu Siemens. The contact that developed after the phone call referred to above (after the SSNC campaign was launched) was in fact at the operational level rather than at the managerial level.

The project leader for the SSNC campaign - Magnus - was not part of the permanent SSNC staff but was hired temporarily for the campaign.

At Fujitsu Siemens there were two persons who were most active in the relation with SSNC. One of them was Björn - an electronics engineer who at the time had a type of assignment in Fujitsu Siemens, which made it possible for him to work almost full time with environmental issues. Positions of that type didn't exist in other Fujitsu Siemens country organisations. It was due to the special emphasis on enviro-questions in Sweden.

The other person in the most active pair at Fujitsu Siemens was Hans - a senior sales officer. He had such a position in the company that he was able to exert pressure on the centrally located factory in

Augsburg, Germany.

8 The co-operation between Magnus at the SSNC side and Björn & Hans at the Fujitsu Siemens side became quite tight. An indication of this was that Magnus took part in many of the internal sales educational conferences in Fujitsu Siemens. There he helped Hans to get the message about the importance of enviro-questions across to the sales staff. Fujitsu Siemens on its side helped SSNC to spread the broader campaign message by distributing SSNC campaign material via its retailers.

Some “sticky structures”

As indicated above the sales department of the innovating firm needed help from outside (Magnus at the SSNC) to persuade its own personnel about the merits of the sustainable innovation. The external opposition was of course even stronger. In the US market the alternative flame retardant met resistance from the fire protection authorities that wanted to stick to materials they knew. And at the

European side of the Atlantic Ocean the enviro-pressure was limited outside the northern part.

Competitors and Industry Associations reacted in ways that are rather typical in relation to sustainable innovations. A part of the pattern of reaction that we have in mind is that competitors often quote

"scientific evidence" of the type where new materials are scrutinised much more thoroughly than old ones. One could call it the "Misdirected Precautionary Principle" = you know what you have but not what you get instead.

At the Industry Association level there is often a strong reluctance to accept competition when it is enacted at the sustainability level. When a company - as Fujitsu Siemens Sweden did - claims that it has found a solution to a sustainability problem many Industry Associations fear that the message heard by the public is that most of the products at the particular market are "risky" in some way. The reaction of the U.S. car industry in the 1950's comes to mind. As depicted in the motion picture

"Tucker" the Majors (The 3 Big U.S. car manufacturers) crushed a small potential entrant to the industry when the newcomer - Tucker - suggested that driving a car could be risky by introducing seat belts.

But obstacles could also be found at sources closer to the sustainability advocates. Even the Swedish enviro-authorities, in spite of their exposure to a culture where creative enviro-solutions are publicly

9 encouraged, have put up obstacles to innovations of the type discussed here. Moulded as they are, by a tradition where the industry response to regulations should be predictable, they seldom succeed in handling the good news that a situation has been ameliorated by an innovation. Authorities may also be part of the thought collective that furthers the "Misdirected Precautionary Principle" referred to above.

And in the sustainability NGO itself - such as the SSNC - there can be worries that its constituency might misinterpret the situation if an NGO endorses a solution suggested by a TNC (transnational corporation) such as Fujitsu Siemens.

Finally the TNC where the innovation takes place is likely to also contain some sticky structures. In the

Fujitsu Siemens case an example was that the innovative motherboard couldn't be sold outside Fujitsu

Siemens which meant that it was harder to recuperate development costs.

Sustainable innovation-conducive traits of the two partners

If the sticky structures mentioned had been allowed to dominate the scene no innovation would have appeared. There were, however, some traditions/traits conducive to sustainable innovations present within both the informal partners.

As regards Fujitsu Siemens we have already mentioned the serious way in which Siemens eventually responded to the challenges of the late 1980's. Another factor that should be stressed is that Fujitsu

Siemens - as opposed to most other computer manufacturers - had not out-sourced the motherboard assembly. When the green impulse came from Sweden (the SSNC campaign) it was possible - with

Fujitsu Siemens Sweden as bridge builder - to start development/configuration work together with the in-house production unit and the development department in Augsburg, Germany.

In addition to the souls of fire mentioned above - Magnus, Hans and Björn - some more creative actors should also be mentioned. Kristina Maartensson, the enviro-responsible person at the hospital complex Huddinge Sjukhus at that time saw the possibilities of entering into a joint project which

10 stimulated the development of halogen-free computers. There were also a number of people in Fujitsu

Siemens Augsburg whose roles ought to be explored in a more comprehensive account of the case.

When it comes to conducive traditions in SSNC some of those should also be mentioned in spite of the fact that one of the authors of this paper has a senior position in that organisation. We hope that the reader will accept that the two other authors have attempted to form independent views. In our view SSNC has a strong tradition of creative interaction with players outside the enviro-camp. It spearheaded the developments that led to the first eco-labels. The starting point for this was the big success with the green consumer's guide Handla miljoevaenligt in the late 1980's. In the enviro- centred Swedish election of 1988 the guide became the green best seller of the year. This led to the

Falcon eco-label. Later on SSNC became a strong part of the trade union led coalition behind the very successful computer hardware TCO eco-label referred to in the introduction to this paper. Those experiences among others made SSNC used to enter into innovative partnerships with commercial actors.

The prospect of a "Dominant Demand" and a willingness to cross boarders keys to relative success

But the SSNC also has a further quality that was of vital importance for its ability to create conditions where the sustainable invention can become a sustainable innovation (an innovation being an invention that successfully has entered the market). What we have in mind is that SSNC is a well- established organisation that through its contacts can create what we call a "Dominant Demand". We have discussed this concept elsewhere. In this context it is enough to recall that a Dominant Demand can be created in many ways. The examples given in Hollander (2003) are regulation, taxation, contract, scientific consensus, public procurement, certification and labelling. We could add enlightened media coverage and many other options. We will not dig deeper into this here.

In conclusion we just stress that the SSNC <-> Fujitsu Siemens sustainable innovation story in no way represents an unequivocal success. It, however, highlights a number of considerations that ought to inform all kinds of actors that want to nurture sustainable innovation and by extension sustainable design. It also sends the encouraging message that individuals daring to cross boarders and to break ranks in soft ways do have the chance to contribute creatively to sustainability. Finally it illustrates

11 what key role NGO's can play in sustainable innovation if both they and commercial actors are open minded.

References

Anonymous (2003) "HP och Fujitsu oense om Svanen", Miljoerapporten 2003-04-02 (Miljoerapporten is a Swedish periodical. A translation of the title of the article would be: "HP and Fujitsu in discord on the Swan label")

Blomdin, M (2004) "SSNC as a demand shaper" (unpublished course presentation in a course on

Enviro-innovation at the Royal Institute of Technology, Stockholm 2004)

Hedenmark, M (2005) "The introduction of an environment friendly computer. A non-success story and why? - A case study of Fujitsu-Siemens Computers” (unpublished background material to the present article, Stockholm 2005)

Hollander, E (2003) "The noble art of demand shaping - how the tenacity of sustainable innovation can be explained by it being radical in a new sense" Contribution to 11th international GIN conference

Hollander, E (1998) The Eco-labelling TCO 92/95. For EU DG XIII /SPHERE+ Project (1998)

Simons, B (2005), Fujitsu Siemens, Stockholm Sweden, personal communication 2005-06-21 and

2005-08-30

Svenska Dagblandet, (2005) “Groent kort foer mer miljoevaenlig dator” http://www.svd.se/dynamiskt/naringsliv/did_10374914.asp 2005-08-23

(In English the headline of the article "Groent kort ..." in a leading Swedish daily paper would be

"Green card for a more enviro-friendly computer")