Sustainability: business threat or innovation driver?

The world's in trouble. Climate change, resource shortages and the likelihood of pandemics threaten our future. The scale of change needed to mitigate these threats will demand concerted global action. That's going to alter the context for business and for R&D, according to speakers at this year's EIRMA annual conference.

One of the pleasures of ageing is asserting that things were better in your youth. Knowing that this is nonsense, and that the round-eyed youngsters who listen so attentively are only being polite, need not reduce the pleasure. The world was a better place in your youth - fact.

Of course, the reverse is true. Look at global measures of health, poverty, longevity and education, among others, and you'll see that although we are very far from a perfect or equal world, we've left many perils behind. Peril now lies in our future, where issues such as climate change, resource shortages and pandemics threaten to slow, or even reverse, humanity's progress.

Biology is key

How bad is it? Stephen Emmott is director of computational science and head of computational biology at Microsoft Research, and professor of computational science at Oxford University. He starts his assessment from the premise that, since biology underpins the environment that sustains us, a good understanding of biology will provide the insight necessary to counter many of these threats. Unfortunately, and despite hundreds of years of work, Emmott argues that we still don't really know how biology works.

“We have decoded our genome and we know a lot of molecular biology but we have no idea how a cell works,” he said. “We don't know how the immune system works. We have no idea how a nematode worm [a 998-cell organism] works. We have no idea how the brain works and no idea how people work.

“At a systems level, we have no idea how to fix systems that are broken. We are completely unable to predict, prevent or manage a global pandemic.”

That's a problem. The Spanish influenza pandemic of 1918 killed 100 million people, at a time when there were no air travellers to spread the virus.

“Most models estimate that when, not if, a global pandemic occurs it will kill 1.5bn people directly, and another 500 million from related diseases,” Emmott said.

Similarly, he argues that we know precious little about our biosphere.

“We don't know much about plants, communities of plants, or microbes, but they form the basis of our entire support system and have a significant influence on environmental regulation.”

Current climate change estimates suggest that the atmosphere will heat up by 2°C by the year 2100, using models based on atmospheric physics. Estimates that also include modelling of the biosphere predict a 5°C increase by the same date.

“In terms of [influencing] climate change, we only have one shot at it,” said Emmott. “What's not in the climate change models is the role of plants, communities of plants, microbes and so on. About 30% of all the world's carbon dioxide is sequestered by biota [biological organisms]. The microbial community is around 50% to 70% of the biomass on the planet.”

His conclusion? “There is an asteroid on its way to destroy Earth, and it's us. It will take some profoundly uncomfortable policymaking to survive.”

Behaviour is key

That policy will have to affect the behaviour that has brought us to this point.

“Our problem is that we are living above the world's current capacity. Today we are consuming about 1.3 planets. By 2030 it is estimated that we will be consuming about two planets,” said Per Sandberg, managing director of the business role focus area of the World Business Council for Sustainable Development. “We need [to achieve] good lives for the whole of the world's population, within its global capacity. There is no way this can be addressed without our companies playing a major role.”

For example, stabilising the amount of carbon dioxide emitted on the planet will take a massive investment in low-carbon power generation, in everything from windmills to nuclear power stations. Sandberg argues that continuous improvement and single technology fixes will be not enough to solve these problems.

“We need continuous systemic innovation,” he said. “These are things that are profitable to do today and yet which don't happen.”

The building industry, for example, has many existing, profitable opportunities to reduce carbon emissions, yet fails to respond because it is uncoordinated.

“Innovation is needed to do something about the fragmentation that makes it difficult to tackle energy waste in buildings,” he said.

Sandberg argues that innovation for sustainability will need systemic change in seven areas: technology; public policies and regulations; public-private partnerships; physical infrastructure; mindsets, global equity and responsibilities; and financing.

The key to achieving that change will be to articulate the innovation need clearly so that a solution can emerge.

“There are enormous needs and opportunities for innovation in sustainability,” he said. “Some are very difficult to realise because they require global agreements, such as a common price for carbon emissions. Some are much easier to achieve, but it is best if the need is clearly communicated. I am focusing on articulating the need.”

The missing piece of the puzzle, Sandberg recognises, is on the demand side.

“Where are the customers for innovation for sustainability?” he asked. The World Business Council for Sustainable Development is trying to answer that question through a subgroup that considers industry's role in influencing customers to make sustainable choices.

Industry's response

Emmott looks at it the other way around - he's working to ensure that there will still be customers to make consumer choices in future.

“Microsoft, as all companies, has a responsibility to help solve the problem,” he said, “because it's not going to be at the top of anyone's list to buy a copy of Office or a new Volkswagen if we don't.”

Fortunately, the tools that Microsoft develops to analyse large computing systems can be adapted, extended and then applied to systems biology. Emmott and his colleagues are trying to use these tools to develop a systemic understanding of biology using the classical scientific techniques of thesis, experiment, results and synthesis, rather than the manic data-gathering approaches that are being tried elsewhere.

“Having a lot of data is not the same as having knowledge. It's easy to build large complex models, but not to build predictive models. Bigger computers are not the answer. We need a fundamental scientific revolution, similar to that led by Galileo in 1610, which changed the world from a geocentric to a heliocentric view and in doing so changed the Church's grip on the state.

“What the new tools need to do is reach a codification of biology,” he added. “Computing is all about reactive dynamic processes, massive concurrency, distributed control, time dependency and acting at multiple scales. These conceptual tools from modelling complex computing systems should read across to biology.”

Microsoft researchers have created what they call a programming language for biology with which they can describe simple systems, predict their behaviour from the model, and then see if their models match the reality.

“It's a precise, formal representation, specification, and codification of the dynamic, discrete, reactive processes of complex natural systems,” he said. It may become more than that eventually.

“We need to get to the stage where we're building computational models that are prediction machines,” Emmott said. “We're hoping that the conceptual models we're developing will become tools that are broadly available around the world to accelerate this research.”

Although Emmott's approach to systems biology may prove a useful counter to the threats that the world faces, he also believes that it could underpin innovation in business, health care, materials, design and architecture.

Concrete solutions

If Emmott's approach to the world's sustainability issues is from the top down, that of Jacques Lukasik, senior vice president, scientific affairs, Lafarge, is from the bottom up - literally.

Lafarge makes cement for concrete, a hugely significant building material, which contributes to global warming by releasing carbon dioxide during its manufacture. About 2.5bn tonnes of cement are made each year and this could increase to between 6.5bn and 7bn tonnes by 2050. So making better cement and better concrete could have a significant impact on global emissions.

For years concrete went largely unstudied, until about 1980 when scientists became interested in how the material achieved its properties. Through better observation and modelling, they began to understand and improve the way the material worked right down to the molecular level, giving Lafarge the confidence to commit, in 2001, to reducing the carbon dioxide emissions produced during cement manufacture in 2010 by 20%, as compared to 1990.

“By 2007 we had managed a 16% decrease, by replacing carbonated raw materials with materials that have already been decarbonated, using clinker additives, improving the energy efficiency of our plants and processes, replacing the fuels and introducing renewable energies,” said Lukasik.

As Sandberg says, there's already a lot that can be done to reduce carbon dioxide emissions if companies would just step forward and do it.

What's interesting about the research that has underpinned Lafarge's lower emission concrete processes is that it has also provided pathways to high-margin, high-performance new products.

“We've been able to innovate, creating radically improved performance concretes that have less environmental impact than the ones they replace,” said Lukasik. “Ductal^®, for example, has six to eight times the compressive strength of a conventional concrete, 10 times the flexural strength, greater adaptability, a better surface and is 100 times more durable than standard references. It is also designed not to need steel reinforcement. This higher performing material uses only 65% of the raw materials that a normal steel and concrete approach would, 54% of the primary energy, and produces only 47% of the carbon dioxide emissions.”

Broader issues

Sandberg argues that ensuring the sustainability of the world's population in decent conditions will take systemic changes at many levels. Chemicals company Akzo Nobel has been trying to achieve such a systemic change by embracing sustainability as a core principle and business driver. The company had 2007 revenues of €14.4bn and employs around 60,000, so, as with Lafarge's work, the decisions it takes can have a significant global impact.

Arie van der Steen, manager corporate HSE-RA staff group, Akzo Nobel, explains that the company lost its way in the early part of the decade, becoming involved in cartel litigation and other issues. A new board was appointed in 2004 to sort out the company by concentrating on new values, business principles and a code of conduct. It also introduced stronger governance and corporate social responsibility guidelines and, in 2005 issued its first sustainability report.

Akzo Nobel also tried to register with the Dow Jones Sustainability Indexes (DJSI), an effort to create league tables of sustainable businesses. The response to Akzo Nobel's application was a flurry of questions from the administrators of the Indexes, questions that took some time to answer. Akzo Nobel finally entered the index in 2005, and was number one in the chemical sector on the DJSI last year.

“In 2006 and 2007 we began to see the Sustainability Indexes not as risk management or an effort to greenwash or gain favourable public relations, but as being about business opportunities in value creation,” said van der Steen. “Now we're trying to 'fold in the future', looking for more efficient solutions, reducing our energy and carbon usage, creating a roadmap for reducing volatile organic compounds and looking for more sustainable ways of managing our water use.

“Sustainability is reshaping the competitive arena. Global gross domestic product continues to grow in a world where natural resources are constrained. The winners of this great game will have built up distinctive capabilities to create sustainable value in this context.”

Van der Steen says Akzo Nobel is now trying to drive the sustainability issue through the company's entire value chain, from market research to sales. This implies that suppliers begin to meet sustainability criteria in the same way that they now meet health and safety requirements and comply with other Akzo Nobel principles.

“This is a big new thing for our suppliers, because they were only interested in dollars, dollars and dollars,” he said.

“We also need to take sustainability into our research process and part of our challenge there is to get some of our research into the top quadrant for breakthrough innovation for sustainability, inserting a sustainability check into our Stage-Gate® process.”

Having started down the path to sustainability, Akzo Nobel finds that the issues keep multiplying. They now include the competitive advantage it can gain from eco-friendly solutions, its carbon policy, the sustainable use of fresh water and its solvents roadmap. These are also affected by demographic changes such as the new middle classes in emerging economies, urbanisation and poverty, technological change, increasing environmental regulation and the growing cost of transport and distribution.

“Big customers such as Wal-Mart are beginning to ask for sustainable products and are asking to see their carbon footprint,” van der Steen said. On the less positive side, he said Akzo Nobel had a recently built plant in China making a very saleable product that is currently running at half its capacity because of water restrictions.

Threat or opportunity?

Sustainability has undergone a remarkable yet painful transition in many companies during the past decade. Initially seen in terms of regulatory compliance, the first step to a more positive relationship with sustainability was to recognise the economic benefits of eco-efficiency - that using fewer resources is more profitable than business as usual. Yet many of these benefits are still not being realised, because of conservatism, fragmented industrial organisation, or the lack of customer demand.

The leadership-based approach, often known as Corporate Social Responsibility, reflects that industry needs to turn its attention to sustainability (because this is expected or because otherwise there won’t be any customers to serve), and that such an approach will create new opportunities for the successful firm.

Shifting to more sustainable yet profitable patterns of production and consumption means creating change, whether through R&D or business process innovation, and is a key opportunity to develop business advantage. Fixing these issues will also demand the creation of global frameworks that can price or regulate demand into existence, communication with customers about the benefits of sustainable products, and a profound understanding of science at both the fundamental and systems levels.

Addressing sustainability is also an opportunity for industry to take pride in its capabilities and actions. If the threat to the planet's future is only partly as bad as some predict, then it will take the concerted effort of entire industries and combinations of industries to counter it.