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October 2013 - Terra Infirma


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31 October 2013

Interview with Sean Axon, Global Sustainability Director, Johnson Matthey plc

sean axonPrecious metals giant Johnson Matthey plc is one of those huge companies you may never have heard of, but if you have a conventional car then there's a one in three chance you own one of their catalytic convertors. The company is listed on the FTSE100, has 11,000 employees spread across 30 countries, and is one of Terra Infirma's clients. Here I interview Global Sustainability Director Sean Axon about his views on corporate sustainability in general, and supply chain management and employee engagement in particular.

How did you personally get involved in the sustainability agenda?

It goes back a long way. As a kid I was very interested in chemistry and what science could do, but equally realised the potential downside to ecology from industry.  I got a book with my Thomas Salter Chemistry set about industrial ecology and the effect of chemicals on the environment which was very influential. Later, at a key point in my career I got interested in green technologies – solutions that would provide answers to some problems such as greenhouse gases etc. So I started pursuing that as an area specific research interest in the company.

Once Johnson Matthey started developing some early thinking on sustainability, I got my foot in the door and said I’d be interested in contributing to the discussion. After about a year of that thinking evolving, there was a recognition that it needed some full time dedicated resource so I was invited by one of our Executive Committee members to take on the role and lead on sustainability. In our organisation, the fit of a technologist moving into the sustainability lead role was crucial. I’m not sure that somebody from a non-technical background would be the right fit for Johnson Matthey.

What is the business case for sustainability from your Johnson Matthey's point of view?

Lots. There is a financial benefit, clearly.

There is also a real sense around the legacy of our company, its founders and their attitude to ethical and moral behaviour. Our history is in assaying metals. The act of taking somebody’s precious metals and determining the composition for them is predicated on trust. So trust in assay and metal management is in-built in Johnson Matthey and our customers value that.

The other part was the recognition that the world was changing – governance practices, legislation and stakeholders taking more and more of an acute interest in this. And we’re seeing that ever more strongly, for example in the investor community and amongst our customers. Many of our products have arisen because of environmental legislation – they have been developed to help our customers meet tighter standards.

Security of supply is a part of the business case. Anticipating and planning for changes in the supply of materials has an impact on the products we make and their formulation. That also drives innovation in R&D in how we formulate or reformulate products.

Sustainability is not an add-on or an adjunct to our business – we really believe that it is at the core of our business. Our sustainability targets are the metrics by which we will judge the success of the business. Read the rest of this entry »

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28 October 2013

Tesla: The Apple of Greentech

Remember what smartphones were like before the iPhone? Fiddly keyboards, nests of menus and terrible web navigation. Then along came Steve Job's little shiny slab of cool and the market, and arguably society, were transformed. As every hagiography of Jobs reminds us, it was that constant drive to produce 'insanely great' products that work for the user (rather than the programmer) that delivered this mobile computing transformation.

I can't help but see a parallel with Tesla motors - insanely great products that people love, driven by an outspoken entrepreneur, Elon Musk, and just happen to be the greenest cars on the road. With the original Roadster, the company bucked the trend for dull, utilitarian electric vehicles by launching a sports car whose acceleration terrified petrol head Jeremy Clarkson (before he pretended it broke down). Now with the Model S, they've produced a saloon which has single handedly boosted US EV sales by 447% in a single year, tackling the 'fiddly keyboard' of the electric car world - range anxiety - with 310 miles in the tank battery. Musk's uncompromising vision, like Jobs, has set the bar high enough to finally make this revolution happen.

And the lesson for the rest of us? To succeed, green products and services must be insanely great. Full stop.

 

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25 October 2013

Green: The New Normal

grass feet small

If I told you about a country where, last quarter, more than a third of all electricity was generated from low carbon sources, which one do you think I'd be talking about?

Well I'm sat in it, and so are many of you: dear old Blighty.

Household recycling rates are nudging the 45-50% mark, depending on where you are in the country.

All this from what was 'the dirty man of Europe'? The one where renewable sources barely registered on energy statistics just a couple of years ago? The one with the throw-away culture?

As Fat Boy Slim would say, we've come a long way, baby.

What's interesting is that nobody has really noticed. Green is becoming the new normal. So much so that some organic food/drink producers now don't label their product as such in case consumers assume it's a niche product at a premium price. They just want it to be seen as a great product in a normal way.

And that's a good thing.

Some green ideologues may cry foul, saying that that this isn't deep green enough, but asking people to live in tie-dyed yurts, meditating on ley lines and knitting yoghurt, will get you nowhere.

Normal, everyday, mundane even - that's the ultimate green goal.

 

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23 October 2013

Interview with Ramon Arratia, Interface

RamonRamon Arratia is a Sustainability Director at carpet and floor covering giant InterfaceFLOR, reknowned as true sustainability front-runners. Ramon is a regular speaker on sustainability issues and author of the book Full Product Transparency. In this exclusive no-holds-barred interview, Arratia lays down the law on industrial sustainability in no uncertain terms.

How did you personally get involved in the sustainability agenda?

I wasn’t passionate about sustainability at first. I was a quality manager at Ericsson, when I was offered a job as sustainability manager and I took it. I soon realised that we had to deal with the biggest impacts first, rather than just say ‘oh, we have to do something’ and putting efforts into pet issues or issues that are not strategic. I’m not a hippie or a tree hugger who wants to ‘oh, save the world’, I’m more of a cynical person who wants to focus on the things that will make the biggest difference.

I moved from Ericsson to Vodafone in the UK and from there to InterfaceFLOR five years ago.

What are the main challenges you face?

We’ve come a long way in terms of managing our factories, but our factories only represent 10% of the whole impact of carpet. Most of the impact of carpet is in the raw material. So our main challenge is finding alternative raw materials or recycled raw materials that are cheaper than our current raw materials.  That’s a huge challenge.

We have achieved this in a couple of instances, but in others we still have to pay a premium price. Our recycled fishing net yarn is such a premium product – we accept it because we think reputation or margin-wise we recover that cost.

It depends on the customer – the average carpet fitter isn’t going to pay a premium, but if you sell it to, say, PwC in London where their biggest cost by far is employees, they’re willing to pay a premium for having nice offices with a nice story behind its fittings to keep those employees happy.

Read the rest of this entry »

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21 October 2013

Can you account for unknown unknowns in sustainability?

crystalballIn 2002, while trying to justify the forthcoming war with Iraq, United States Secretary of Defense, Donald Rumsfeld came out with the infamous quote:

"There are known knowns; there are things we know that we know. There are known unknowns; that is to say, there are things that we now know we don't know. But there are also unknown unknowns – there are things we do not know we don't know.”

This has been much parodied since, but actually he was quite correct (not about Iraq, but that's a discussion for elsewhere) - and these uncertainties apply to sustainability as much as anything other aspect of life.

Who knows what the world will be like in 10 years? Technology, resources, prices, economics, legislation, politics, demographics and societal pressures are all notoriously hard to predict individually more than a couple of months, never mind years, ahead. Throw them all in the mixer and you get a big soup of unknown unknowns.

So how do you handle future risks which we can't predict? Here's a few ideas:

  • Do the right thing: an environmentally sustainable business model is more likely to be economically sustainable than business as usual, no matter what the future landscapes;
  • Test your strategy against different scenarios: develop 3 or 4 different possible future scenarios and brainstorm what your business environment will be like within each (see the Urban Futures project for a good example);
  • A more simple approach is to carry out 'what if' analysis on key assumptions;
  • Build in flexibility and resilience: give generous margins of error and design systems to be easily upgradeable and adaptable;
  • Make your own luck: invest in your business ecosystem (customers, suppliers, employees, stakeholders) to improve both their resilience and yours (a la Creating Shared Value).

Overall, I think its important not to get paralysed by fear of what might and happen and to see such uncertainties as part of life's rich tapestry - part of what makes this job fun!

 

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18 October 2013

The Quiet Green Revolution

Gareth Kane BigEcoShow
Yesterday I opened the BigEcoShow at the Stadium of Light in Sunderland. My address was entitled "The Quiet Green Revolution" - reflecting on the scale of the changes happening already on the green agenda, and the need to develop more quality green products and services to bring sustainability to the mainstream. You can listen to my speech here:

Audio MP3

paultaylor camira

I was followed by keynote speaker Paul Taylor of Camira fabrics which is one of those fabulous green companies that no-one has ever heard of. In my favourite case study, the company took a month's worth of jute coffee sacks from Starbucks, made them into a fabric and sold it back to the company so they could use it on seating in four new outlets (this 'product with a story' is a theme which I think will grow in coming years). It is companies like Camira who are making that quiet green revolution happen.

Photos © Gavin Forster Photography

 

 

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16 October 2013

The 80:20 Rule and Sustainability

Pareto eighty twenty principle

Historical factoid klaxon: the 80:20 rule, or Pareto Principle, was named after Vilfredo Pareto, who observed in 1906 that 80% of the land in Italy was owned by 20% of the population and that 20% of the pea pods in his garden contained 80% of the peas (thank you, Wikipedia). But it is a phenomenon that in many situations, roughly 80% of the effects come from 20% of the causes - known in mathematical terms as a power law distribution.

Sustainability is a huge issue, broad and deep, and its sheer scale means practitioners are often paralysed with fear. But there is little point in worrying whether the Des Moines office of a third tier supplier uses plastic or paper cups in its coffee machine - some form of prioritisation is required.

There are two common ways to prioritise actions:

  • Go for quick wins - this gets momentum going which is no bad thing, but soon you'll run up against diminishing returns and you won't get much credit for ducking the big issues;
  • Use the 80:20 rule to identify the small number of big issues that really matter and tackle those - at the risk of appearing to be doing nothing in the meantime and/or you don't identify the 20% correctly.

The obvious answer is to do both - a quick wins workstream (which can be combined with employee engagement) and a major projects workstream to address those 80:20 issues. Some of the latter issues will be obvious, others less so, so it is important to be as objective as possible when carrying out a screening process. The following techniques can be used:

  • Life cycle assessment of the product/service - this process led P&G to focus on designing low temperature clothes washing products as heating water turned out to dominate the results;
  • Use a screening indicator (eg cost) to screen out the small stuff;
  • Carry out a risk assessment to identify which issues could have biggest impact on the business under different future scenarios;
  • Stakeholder engagement: ask regulators, NGOs, customers, employees, the public and/or others what they believe the big issues to be;
  • Standards such as the GRI G4 reporting standard have procedures for identifying 'material' issues.

Whatever you do, make sure you are focussing your resources on the issues that matter.

 

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14 October 2013

Interview with Stephen Weldon, CSR Manager of Greggs plc

sweldonI recently carried out a number of interviews with top CSR/Sustainability Managers for a couple of book projects I am working on. As I am only lifting short quotes for the books from each one, I thought I would share longer versions here over the next few weeks.

First up is Stephen Weldon, CSR Manager of British high street bakery  Greggs plc, a FTSE100 company.

So Stephen, how did you personally get involved in the sustainability agenda?

Purely by accident! I joined a public transport company called The Go Ahead Group as a graduate trainee. One of the hot topics at the time was air pollution in urban areas and we were an urban transport company. So we starting researching technologies to reduce urban pollution air emissions and presented that at the Labour Party conference.

On the back of this, the Deputy Chief Executive decided it was about time we had our own standalone report, so we ended up doing an environmental report for the Go Ahead Group. I was at Go Ahead for another 13 years and did all of their CSR reporting.

What is the business case for sustainability from your company’s point of view?

It’s done because it is the right thing to do. It stems back to Ian Gregg’s view that a successful business has a responsibility to put something back into local communities that helped it grow. That’s the angle that Greggs originally came at SR from – giving something back to local communities, initially via charitable grants which is how the Greggs Foundation came into existence.- It has become a deeply engrained part of the culture of the company.

On the back of that, as SR has moved on in the wider industry, the environmental element has come in. Greggs is a big user of energy as we have over 1600 shops, each of which is in effect a mini production facility that burns electricity in the form of cooking, heating, cooling, lighting, tills, computers etc. We also have central production facilities and we operate our own distribution fleet, all of which require energy. The rising price of energy and fuel brings cost control into the SR mix, as well as the responsibility to local communities. Read the rest of this entry »

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11 October 2013

Whose Footprint Are You Part Of?

preferred supplier cropped

 

On Monday, I spoke at the inaugural Preferred Supplier event at the Design Centre in Gateshead. My speech was entitled "Whose footprint are you part of?" - about responding to customer demand for improved environmental performance.

I recorded my 13min speech and you can hear it here:

Audio MP3

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9 October 2013

The 'cost of living crisis' is ecological

MGI

The UK's political conference season was dominated by a debate over the 'cost of living crisis'. Labour leader Ed Miliband blamed this on a lack of competition in energy markets and pledged to freeze prices should he take power in 2015. Right-wing Conservative MPs countered that the rise in energy prices has been due to the green taxes implemented by Miliband when he was energy and climate change Secretary and his Liberal Democrat successors.

Unfortunately neither claim stands up to much scrutiny - the evidence suggests the problem is much more fundamental than that.

First of all competition - the big 6 energy producers do not make excessive profits, at around 5-7% they are comparable to the big 4 supermarket chains which operate in a ferociously competitive market. Secondly, green taxes account for less than 10% of energy bills - and a proportion of that pays for energy efficiency programmes without which average energy bills would be even higher.

Look instead at the MGI commodity index (which includes energy, food and minerals) in the graph above. Having spent the 20th Century falling, commodity prices have soared in the 21st. Some blame this on speculation by investors, but prices have been on the up for over a decade now, a strong trend unlikely to be caused by short term financial manoeuvring in the markets.

I believe, the only explanation left for such an uptick is that supply is simply struggling to keep up with demand - our consumption is rubbing up against ecological limits. So maybe our politicians need to broaden their thinking and their policies - and the rest of us, too.

 

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7 October 2013

Blossom or fade away?

tombstone
The economy changes.

Sometimes it evolves slowly.

Sometimes it changes fast.

But more often there is a slow evolution up to a tipping point and, then, BOOM.

This can be in a niche area, such as the almost complete replacement of virgin glycerol by biodiesel byproducts. Or it can be on a massive scale, such as the high street meltdown caused by internet shopping and the associated shift to digital entertainment - MP3s, eBooks, movies on demand etc.

But with the big buyers - the big retailers and the public sector - shifting from low impact suppliers to high impact suppliers, some companies are going to see huge opportunities and others existential threats.

So are you ready to bloom in the new green economy, or are you just going to fade away with the old?

 

 

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4 October 2013

How to facilitate meaningful sustainability conversations

broing training

We've all been there - sat in the audience while a sharp suited executive stands in front of glossy corporate Powerpoint slides and tells us how wonderful their sustainability programme is. When it comes to the Q&A, any query with a hint of controversy is skilfully deflected with a well worn platitude. And all the time you're sat there thinking "I bet that's not the real story." And you're right, 9 times out of 10 the gloss covers some really deep cracks and doesn't extend into the darkest corners.

But how likely is it that that our speaker would stand up and list all the mishaps, outright failures and the stuff they haven't done yet as it's too difficult? For some brands such honesty would hit the headlines - and could pitch said executive onto the dole queue (it's been known to happen.)

So how do you open up honest conversations and meaningful dialogue while still allowing people to share what they have learned?

My Corporate Sustainability Mastermind Group relies on openness and honesty to work. We use the Chatham House Rule, which goes as follows:

When a meeting, or part thereof, is held under the Chatham House Rule, participants are free to use the information received, but neither the identity nor the affiliation of the speaker(s), nor that of any other participant, may be revealed.

This is incredibly simple, and it relies on trust, but it is very effective. We can share the WHAT but not the WHO, reducing the risk of recrimination and allowing us to share gems such as:

"We don't have a hope in hell of hitting that target, but if I dilute it, we won't even come close, so we're sticking with it to keep the pressure on."

Far more insightful than the typical public equivalent:

"We've hit 80% of our targets already and we're well on our way to hit the rest."

Typically the Chatham House Rule works better in smaller forums and those with a reasonably fixed membership so peer pressure does the enforcement.

The second rule of the Mastermind Group is "NO POWERPOINT" - if you want to have a meaningful discussion, then a 40 slide deck is not the way to go about it. Instead we have a facilitated discussion using one of my signature A0 templates and Post-Its. I've written about the power of workshops before, so I won't go into details here.

And, if you are wondering, the third and last rule is "No dreary executive buffets" - we eat properly!

 

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2 October 2013

Challenge, don't choke

diving inI've been asked again this week how certain sustainable supply chain ideas fit into a particular procurement framework. As I'm bureaucracy-intolerant, I always have to bite my lip at such times as my honest answer would be to scream "Who cares?! That's the wrong question! Sod the framework! How do we take sustainability to the next level? is the question!"

I recently interviewed Ramon Arratia of InterfaceFLOR and he made similar points:

“We continue to be impressed by what can be achieved when suppliers are encouraged to innovate and are rewarded for solving our problems instead of us trying to solve theirs. We have witnessed how much more the ‘inspire, measure, innovate’ approach can deliver than ‘code, questionnaire, audit’.”

"Rather than ticking boxes and checking certificates and all that crap, if you stop doing business with a high impact supplier and start using low impact suppliers, things will start to change very quickly."

Whether we are talking with suppliers, employees or partners, the question should always be "how will you/we raise the bar?" That might mean ripping up existing systems if they only serve to choke off progress. Let's unleash people's latent creativity by challenging and inspiring them first - and sort out the dull bits second.

 

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