Jonathan Scott, CIPS.1

The ‘Mechanics’ of Sustainability

An Introduction

Focus: conservation, restoration, performance (dynamic, economic, progressive, profitable for all)

Cost savings Control over work

32% 32% 29% 51% 32% Environment Environment 13%

7% 4% MANAGERS EMPLOYEES

657 managers and employees in 8 different countries asked, ‘What is most important to you?’

Eco-System Climate Change Decline

Surprise This is Unanticipated changes in... • Accumulating problems not • Innovation going • Systems / Operations • Education / Training Adapted from: away! Johan Rockstrom ©2016 Jonathan T. Scott / contact: [email protected] Purchase Costs Population growth

Disposal Costs Future Costs Eco-System decline Climate change

Operation Costs Unanticipated changes

Before World War II

1 calorie of fossil fuel 2.3 calories of processed food (diesel, fertilizer, pesticide, equipment, transportation)

Today

10 calories of fossil fuel 2.3 calories of processed food (diesel, fertilizer, pesticide, equipment, transportation)

55 calories of fossil fuel 1 calorie of beef (diesel, fertilizer, pesticide, equipment, transportation )

Typical Industrial Pumping System

Transmission line loss Power plant loss 9%-10% Drivetrain & 60%-70% Throttle losses 35% Motor losses Pump losses 10% 25% Pipe losses 20%

Fuel input 100% ©2013 Jonathan T. Scott / contact: [email protected] Energy output 9%-10% ¥ £ $ ¥ £ € $ Externalized costs € ¥£ Joseph Ling 3M €$¥ € £ £ $ $ € ¥ Waste: not achieving 100% from purchases and investments. Also called: Non-Product Businesses make it, but can’t sell it! ©2016 Jonathan T. Scott / contact: [email protected] Ling’s ‘Pollution Prevention Pays’ program Total savings after 30 years: $1 billion 1-billion kilos of CO2 emissions were ©2013 Jonathan T. Scott / contact: [email protected] eliminated in the process Basic waste elimination...

Tyche, Poland Nonna & Sons saves €28,800 per year just by turning off unneeded lights

Escambia County, Florida

35 Elementary Schools 9 Middle Schools 7 High Schools 20 other schools

Saved: $9 million over 3 years

Doritos

Recently completed a large water recycling system designed to re-use up to 90% of the water used in the plant.

‘When water becomes scarce our ability to produce products is affected.’

‘We want to have technology developed and scaled so we don’t need to move production to follow available water supplies.’

The company is also trying to get off the electricity grid by generating all its power fromA solarnnual voltaics savingsand cooking: $60 itsmillion chips with solar heat. Too many products are over-packaged.

20% of its garbage is packaging waste. …told its 60,000 suppliers to reduce packaging by 5%.

- Solid waste reduced by 25% Result: - Annual disposal costs reduced by $3.4 billion

The NEW Square Milk Jug

Reduces packaging expenses by 20 cents per jug.

Allows 50% more milk to be stored in crates. Increases cooler capacity from 80 jugs to 224.

15% waste

New law Maximum waste allowed: 6%

Average leakage: 20% - 30% New Law Maximum leakage allowed: 6%

Energy …particularly if Water Raw materials up to 90% of the Labour electricity these power plants generate is wasted because of inefficient systems.

which means more businesses can be brought into an Energy area… Water Raw materials Labour which creates more jobs…

which increases the tax base…

which can decrease tax rates.

Paper Plastic Electronics etc...

No more land is available for landfill

• Since 2004, nothing used in this factory (which has built 1.7 million vehicles) has gone to landfill.

• Since 2004, there have been no job losses or layoffs.

• In 2016, the parent company (Fuji Heavy Industries) will invest another $400-million into this factory, creating 900 additional jobs.

GM, Honda, and Volkswagen are now working to achieve ‘zero landfill’.

Anheuser-Busch and Xerox have ‘zero- landfill’ factories.

Smuckers and Colgate-Palmolive have stated they want the same. How difficult is it to find waste and wasteful practices?

These 6 students found over €15,000 of waste in this business in 2 hours and 45 minutes.

X 5 = € 75,000 X 20 = € 300,000

ü Redundancies in paperwork and systems... ü Over-buying... ü Any form of system or operational inefficiency... ü Not taking advantage of innovations and opportunities... ü Law-Suits, Fraud... ü Damages... Waste: ü Wasted time... not ü Bad service… achieving of ü Bad investments... 100% purchases ü Poor customer relations... and ü Human error... investments ü Wasted markets...

From Saving Money To Making Money

+ + = Basic materials Raw materials Energy Manpower

Converting basic materials into products:

+ =

+ + + + = = Raw materials EnergyEnergy manpower Basic materials Raw materials Manpower Basic materials

+ =

Manpower Energy Finished products

= +

• Operates 3 remanufacturing plants in the Over a five-year period: southeast USA. (job creation) • Profits doubled • Equipment components are manufactured • Employment doubled once and sold up to three times. • The company’s stock price • The business model helps encourage increased 550% customer loyalty. Over a ten-year period: Remanufacturing used engines vs. manufacturing new engines: - all capital expenses paid • Lower economic costs (30-53%), • Lower material consumption (26-90%), - 82% reduction in greenhouse gasses • Lower waste generation (65-88%), - 60% reduction in petroleum use • Lower energy consumption (68-83%), • Lower emissions (50-88%) - 75% reduction in water use • 73-78% less carbon dioxide (CO ), 2 - the only major carpet company to gain • 48-88% less CO, • 72-85% less nitric oxide & nitric dioxide, market share in the 2000-2003 recession • 71-84% less sulphur oxide, Source: Ray Anderson, TED lecture (2009) • 50-61% less non-methane hydrocarbons emissions. Source: Smith, VM and Keolian, GA (2004) The value of remanufactured engines, lifecycle environmental and economic perspectives, Journal of Industrial Ecology, 8(1-2) 193-222 Interface Waste Elimination and Resource-Life Extension on a macro-scale:

Cooperative Networks

Tokyo Metropolitan Government: Municipal Environmental Protection Ordinance

Energy Water Raw materials Labour • 15 different retailers • Consolidated deliveries to 30 stores

Result: • Number of delivery trucks on Tokyo roads reduced by 50% • 4,000 tons of GHG’s

©2014 Jonathan T. Scott / contact: [email protected] eliminated Introducing more natural daylight into a building is an effective way to make it more energy efficient and less wasteful (cost savings). Can it also generate more resource value? (i.e.: Will it produce more revenue?)

Lockheed Martin moved its offices to a new building lit by natural light and (along with a $500,000 reduction in electricity ) profited from the following:

• A 1.67% increase in productivity. • A decrease in absenteeism of 15% (which usually hovered around 7%). • Further investigation revealed that a 15% drop in a 7% absenteeism rate is equal to a 1% increase in productivity.

• The studyMoreconcluded than 1,500that wavea productivity lengthsincrease in naturalof 2 light% amounted to $3 million of additional revenue every year. The reduction in absenteeism paid for the building in less than 1 year. Additional examples of closed-loops in a business include:

ü Repeat customers...

ü Employees that continuously create value...

ü Renewable energy...

ü Workplaces and systems that enable increases in productivity...

ü Products that facilitate continuous future revenues, not costs...

ü Systems that facilitate continuous future revenues, not future costs... Resource-Life Extension: Obtaining on-going value from purchases and investments…

Reducing resource consumption and increasing profits by reusing and/or reselling currently used materials, ©2016 Jonathan T. Scott / molecules and resources (i.e.: doing more with less) contact: [email protected] To the Recycler?

…only AFTER waste elimination!

If WalMart sent its waste to a recycler instead of eliminating it, the company would not be saving $3.4 billion per year!

Waste Elimination (waste prevention) leading to the ultimate goal of

Resource-Life Extension (material re-use)

Many factory furnaces and boilers in Central and Eastern Europe are inefficient – and the region is in need of more electricity.

Your company wants to invest in a plan that captures waste heat from the inefficient furnaces of partners and converts it into electricity to sell at a profit.

Your office building has a 20-year old air-conditioning system. Installing a new, more efficient system will reduce electricity bills by tens of thousands of dollars every year.

©2016 Jonathan T. Scott / contact: [email protected] A Case Study... 19,000 sq. meter office building Location: Chicago Situation: Needs upgrade (window seals are leaking) The result: Improvements made: - Heat load reduced by 85% - Super insulated windows - Yearly energy bill reduced by 75% - Efficient light bulbs - a/c system replaced with a model: - Deep day-lighting • 75% smaller • more efficient - Efficient office equipment 4 times • $200,000 cheaper Total cost: $200,000 Total savings: $220,000

If all office buildings in the USA did the same, the country could save $45 billion in energy costs every year. ©2016 Jonathan T. Scott / contact: [email protected] Do you recommend proceeding? No or Yes?

Your company is interested in developing moulded and shaped batteries for devices like smart-phones. The idea is to make batteries bigger without increasing the size of the phone.

Institute of Longer battery use Technology

Power amplifiers can waste up to 65% of the electricity in a smart phone

Preparing for the future involves eliminating your waste and closing your loops...

Work with your suppliers and your customers.

What will happen to your business if your suppliers or distributors (or customers) are hit hard because they are not thinking ahead?

Where are the weaknesses in your supply chains and your customer-use chains?

©2013 Jonathan T. Scott / contact: [email protected] ...discovered during a rigorous product- lifecycle analysis that using P&G laundry detergent generated the Proctor & Gamble greatest amount of waste and pollution.

Specifically, 85% of the energy needed to wash clothes is used to heat the water in the washing machine. The result?

Cold water detergent! One of 7 new innovative products that have generated over $2 billion in sales. Investors HR professionals Are you paying attention? Service providers…

Do you want to invest your money in businesses that are full of waste? Do you want to hire people that know how to eliminate waste and optimize resources?

Waste Elimination (Waste Prevention)

Sustainability = Resource-Life Extension (Closed-Loop Economics Circular Economy) MAIN PRINCIPLES...

1. Sustainability: the capacity to continue into the long- term.

2. Convey your message in a way that the receiver understands.

3. Sustainability application: waste elimination leading to resource-life extension.

4. Involve suppliers, distributers and customers.

5. It’s all or nothing - there is no finish line.

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