Av.

Torreblanca, 59
08172 Sant Cugat del Vallès (Barcelona)
T. (+34) 93 280 61 62
[email protected]
www.innovacionsocial.esade.edu

Daniel Arenas
Research co-ordinator at the Institute and Professor in the
Department of Social Sciences, ESADE
Business Going Green
He holds a PhD and an MA from the Committee on Social
Thought at the University of Chicago, a BA in Philosophy An exploratory study on the process towards sustainability
from the University of Barcelona and an Executive Develo-
pment Programme diploma from ESADE. He teaches cour-
ses in sociology, business ethics and corporate social res-
ponsibility. His research interests focus on the areas of

An exploratory study on the process towards sustainability

business ethics, sustainability and community relations.

Jérémie Fosse
Co-founder and president of eco-union and collaborator
with the Institute for Social Innovation
Industrial Engineering degree from INSA in Lyon, France,
specialising in industrial organisation. He studied at the
Technical University of Berlin (TUB) and has completed
an Executive MBA at ESADE Business School. He has ex-
perience working in several energy companies in various
countries. He is Director of Global Eco Forum and foun-

Business Going Green

ding member of Ecodigma, a strategic consultancy firm in
sustainability.

Institute for Social Innovation

Emily Huc Sponsors:
Collaborator with the Institute for Social Innovation
Law degree (University of Toulouse) and Business Admi- Institute for Social Innovation

Foto: Ed Meyers
nistration (EICD 3A, Lyon), Master in Human Rights from The Institute for Social Innovation’s mission is to deve-
the University of London and postgraduate studies in Or- lop the skills of individuals and organisations in the bu-
ganisational Change Management (Birkbeck University, siness and non-profit sectors to strengthen, through their
London). She has worked in international co-operation ISBN: 978-84-88971-39-5 activities, their contribution to a more just and sustaina-
NGOs in various countries in Europe, Asia, Africa and La- ble world. To this end, the Institute generates and disse-
tin America. Specialising in internal change, she has led minates knowledge and provides training in the areas of
change in the decentralisation of programmes for the in- Daniel Arenas | Jérémie Fosse | Emily Huc corporate social responsibility and the relationship with
ternational NGO, Christian Aid. Founder and president of stakeholders, NGO leadership and management and so-
the ethical clothing company ‘by eve’. cial entrepreneurship.
 Av. Torreblanca, 59
08172 Sant Cugat del Vallès (Barcelona)
T. (+34) 93 280 61 62
[email protected]
www.innovacionsocial.esade.edu

Daniel Arenas
Research co-ordinator at the Institute and Professor in the
Department of Social Sciences, ESADE
Business Going Green
He holds a PhD and an MA from the Committee on Social
Thought at the University of Chicago, a BA in Philosophy An exploratory study on the process towards sustainability
from the University of Barcelona and an Executive Develo-
pment Programme diploma from ESADE. He teaches cour-
ses in sociology, business ethics and corporate social res-
ponsibility. His research interests focus on the areas of

An exploratory study on the process towards sustainability

business ethics, sustainability and community relations.

Jérémie Fosse
Co-founder and president of eco-union and collaborator
with the Institute for Social Innovation
Industrial Engineering degree from INSA in Lyon, France,
specialising in industrial organisation. He studied at the
Technical University of Berlin (TUB) and has completed
an Executive MBA at ESADE Business School. He has ex-
perience working in several energy companies in various
countries. He is Director of Global Eco Forum and foun-

Business Going Green

ding member of Ecodigma, a strategic consultancy firm in
sustainability.

Institute for Social Innovation

Emily Huc Sponsors:
Collaborator with the Institute for Social Innovation
Law degree (University of Toulouse) and Business Admi- Institute for Social Innovation

Foto: Ed Meyers
nistration (EICD 3A, Lyon), Master in Human Rights from The Institute for Social Innovation’s mission is to deve-
the University of London and postgraduate studies in Or- lop the skills of individuals and organisations in the bu-
ganisational Change Management (Birkbeck University, siness and non-profit sectors to strengthen, through their
London). She has worked in international co-operation ISBN: 978-84-88971-39-5 activities, their contribution to a more just and sustaina-
NGOs in various countries in Europe, Asia, Africa and La- ble world. To this end, the Institute generates and disse-
tin America. Specialising in internal change, she has led minates knowledge and provides training in the areas of
change in the decentralisation of programmes for the in- Daniel Arenas | Jérémie Fosse | Emily Huc corporate social responsibility and the relationship with
ternational NGO, Christian Aid. Founder and president of stakeholders, NGO leadership and management and so-
the ethical clothing company ‘by eve’. cial entrepreneurship.
Business Going Green
An exploratory study on the process
towards sustainability
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Business Going Green
An exploratory study on the process
towards sustainability

Daniel Arenas | Jérémie Fosse | Emily Huc

Index

Prologue 9

1. Introduction 11
A global economy threatened by environmental crises 11
Transforming risks into opportunities to create a different business model 12
An exploratory study on the process of becoming green 13
Learning from leading green businesses 15

2. What do we mean by “green business”? 17

Exploring existing sustainability approaches 17
Shaping our understanding of green businesses 18
Other aspects of environmentally sustainable business 20

3. Stepping stones to green the business 23

Transforming organisations through change management 24
Collaborating openly with strategic stakeholders 31
Reengineering operations and process through eco-innovation 34

4. Methodology 39
Research methods 39
Selection of case studies 39
Interview methods 40

5. Case studies 41
Desso 43
Acciona 53
Scandic 65
Havas 75

Final conclusions and recommendations 83

Cultural Change – Embed sustainability into the company’s DNA 83
Open Collaboration – Partner with strategic stakeholders 85
Eco-Innovation – Integrate sustainability in operations and products. 87
For further insights – websites of interest 91

Bibliography and References 93

Prologue

As we write these words, an oil spill in the Gulf of Mexico, which has been spewing oil into the sea
for several months, has turned into one of the worst environmental disasters in world history. On
a similar note, the human and legal consequences of the Bhopal chemical disaster continue to fill
newspapers columns. And a few months ago in Copenhagen, political representatives from around
the world found it difficult to reach binding agreements on greenhouse gas emissions.

However, and in spite of everything, some companies and managers are beginning to see the need
to incorporate the environment into their business development strategy, along with the opportuni-
ties to put this into effect. Some of these ‘green’ companies, which have often undergone a genu-
ine internal transformation, are currently leaders in their sector of activity and key social actors on
the path towards sustainability.

After a year of field research and academic analysis, we are pleased to present this study. It
analyses the main key factors for transforming traditional twentieth century businesses, with a
business model focused on economic competitiveness, into innovative twenty-first century compa-
nies: based on a sustainability strategy that creates value not only for shareholders but also for
society and the planet as a whole.

The study begins with a presentation of the conceptual framework for the process of organisa-
tional change towards sustainability, and presents four cases of successful green companies from
various sectors and countries. This research is not intended to be exhaustive. Many other exam-
ples and valuable theories, which would have provided additional ideas, could probably have been
included. However, in drawing up this study we have attempted to highlight the main patterns and
models that may serve to inspire other companies to move towards a paradigm shift.

Hopefully, this study will encourage the business, social, political and academic worlds to further
explore and make progress in this field in order to fulfil the challenge of creating a more just and
sustainable society.

Daniel Arenas,
Research Director and Professor at ESADE’s Institute for Social Innovation;

Jérémie Fosse,
founding member of eco-union and Strategic Consultant;

Emily Huc,
eco-union collaborator and Change Management Consultant.

Business Going Green | Prologue 9

1. Introduction 1 Esty D., Winston A., (2006):
Green to Gold, How smart com-
panies use environmental
strategy to innovate, create
value, and build competitive
Our society is currently facing an unprecedented series of crises in mod- advantage, New Jersey: Yale
ern history--financial, economic, industrial and environmental crises--as a University Press.
2 Stern N. (2006), The Stern
consequence of an unsustainable development model based on the mis- Review: Report on the Econom-
management of social and natural resources. The more complex and ics of Climate Change, http://
w w w. h m - t re a s u r y. gov. u k /
dangerous threat is probably climate change. The temperature on planet stern_review_report.htm (ac-
Earth is rising. Fossil fuel combustion, irresponsible land use and exten- cessed August 2009).
sive deforestation are all contributing to an increase in the level of green-
house gas emissions, the main cause of global warming. If no significant
steps are taken to reverse this phenomenon, the rise in temperature
could lead to massive ecological disasters, social unrest, and the inabil-
ity of most societies to maintain their current economic activities.

However, crises often generate a number of opportunities. Companies

with vision and leadership have the opportunity to change their busi-
ness models and work towards a more sustainable future based on
energy and resource efficiency, the development of eco-innovations and
the empowerment of people. The businesses engaging in the “green
economy” will obtain a key competitive advantage and will be recog-
nised as leaders within their sector. In this theoretic and empirical
study, we examine companies that have already succeeded in this area,
inspiring others to follow their example.

A global economy threatened by environmental crises

Environmental issues at a glance1

Environmental Issues Business consequences

Climate Temperature rise: In Europe, the hottest ever recorded 8 70% of climate change is caused by the emission of
change years have occurred after 1998. carbon dioxide, CO2, which is produced primarily by
Sea level rise because of ice melting: In recent years, burning fossil fuel. The Stern Review warns that “stabi-
Mount Kilimanjaro has lost 80% of its ice. lization requires that annual emissions be brought
Disrupted ecosystems: Changes in rainfall patterns, sea down to more than 80% below current levels. The depth
level and temperatures will dramatically affect indige- and the scale of the change needed to reach such a low
nous species with major consequences on food produc- level of emissions imply that strict regulations will have
tion and land use. to be imposed globally, involving deep changes in busi-
Displaced populations: Some regions and countries such ness activities”. Today, some businesses such as in-
as Bangladesh will be particularly affected by the rising surance companies have already begun to suffer a di-
sea level, strong winds and increase in temperature. rect impact.
“Hundreds of millions of people could suffer hunger, water The consequences can be such that “ignoring climate
shortages and coastal flooding.” (Stern Review2) change will eventually damage economic growth.”
Energy End of energy as we know it: Fossil fuel causes air and “The power sector around the world would need to be at
water pollution and participates in increasing carbon di- least 60% decarbonised by 2050 for atmospheric con-
oxide emissions. Natural resources and oil, in particular, centrations to stabilise” (Stern Review). At the same
are scarce. The combination of these two factors will in- time, the demand for energy continues to rise globally,
evitably lead to a drastic transformation of humanity’s especially in developing countries. As such, there will be
energy use. increasingly high competitive pressures on energy use,
and energy prices will rise.
The energy crisis can also be seen as an opportunity to in-
vest in alternative energy sources: Solar, wind, and hydrogen.
(Continues)

Business Going Green | Introduction 11

Environmental issues at a glance1

Environmental Issues Business consequences

Waste Scale: According to Michael Braungart and William The cost of producing waste is likely to increase expo-
McDonough, both founders of the “Cradle to Cradle” nentially. However, it also represents a major opportunity
concept, “more than 90% of materials extracted to for businesses to re-think their production models to re-
make goods become waste almost immediately in the duce the material used and reuse what is currently per-
US.”3 ceived as waste.
Disposal: On a finite planet, waste disposal is a major
concern, especially for chemical and toxic waste.
Water Scarcity: According to the UN Millennium development Water practices will be increasingly scrutinised. In Kerala
goals, in 2008, 1 billion people still lacked access to safe (India), the local government imposed the closure of a
drinking water. As the population continues to grow, pres- Coca-Cola plant because its water consumption was in-
sures for clean water will increase, especially in dry re- creasing water strains among the local population.4
gions. The UN Environment Agency (UNEP) warns that 3
billion people will face water shortages within 50 years.
Land use Deforestation: Forests play a central role in regulating Land use, particularly linked to forest management, will
and CO2 levels in the atmosphere. However, deforestation become more controlled. Wood or paper packaging will
Biodiver- continues to increase and accounts for 25% of green- continue to be the target of NGO scrutiny and cam-
sity house gas emissions (Financial Times – December 2, paigns.
2008). Companies whose products are primarily agricultural
Agriculture: More than half of the world’s farmable land might be affected by soil quality and the loss of biodi-
suffers from major degradation and is threatened to be- versity.
come unproductive (UNEP in Le Monde Diplomatique – Finally, wherever they are located, plants and factories
Atlas 2006). will have to look more closely ay the impact of their ac-
tivities on local biodiversity.
Pollution Air: The European Commission estimates that air pollu- Control over air emissions is likely to increase as well as
tion causes 300,000 deaths annually in Europe. scientific interest in understanding how toxic chemicals
Chemicals: Little is known about the long-term effects of affect human health.
the toxic elements used.

In this context of complex, interrelated environmental crises and chal- 3 Braungart, M.; McDonough,
W. (2003). Cradle to Cradle,
lenges, businesses will not be able to ignore environmental sustainabil- remaking the way we make
ity for very long. The Stern Review estimates that “if we don’t act, the things. North Point Press.
4 Esty, D.; Winston, A. (2006).
overall costs and risks of climate change will be equivalent to losing at
least 5% of global GDP each year, now and forever.” The Review argues
that, if wider risks and impacts are considered, the damage might be
significantly higher and reach 20% or more of GDP. However, if action and
preventive measures are taken now, the cost can be limited to about 1%
of global GDP annually.

Transforming risks into opportunities to create a different business

model

Some companies with vision and leadership see the environmental cri-
sis as an opportunity to change their business models and work towards
a more sustainable future based on energy and resource efficiency, the
development of eco-innovations and the empowerment of people. A well-
known example is that of Interface, summarized below.

12 Business Going Green | Introduction

 Finding eco-advantages at Interface

In 1973, Ray Anderson created Interface Inc. after realising the need for flexible floor coverings
in newly built contemporary offices. Started as a small company with 15 employees, Interface
Inc. grew rapidly thanks to the rapid development of office buildings and the use of cutting-edge
technology. After a series of acquisitions, Interface became the world leader in modular floor
coverings in 1987. In 1994, Ray Anderson was asked by an internal task force to prepare a
briefing on Interface’s environmental vision. Their request caught Ray’s attention. With no clear
answer in mind, apart from the traditional compliance with legislation, he started to research
environmental literature. Reading The Ecology of Commerce by Paul Hawken was the real trigger
to what would become a sustainability journey: “I read it and it changed my life, it was a real
epiphany.” At that stage, the challenge of making Interface Inc. a sustainable enterprise was
enormous. Carpets and fabrics were made with petrochemicals and the company’s environmen-
tal footprint was disastrous: Interface was generating 10,447 tons of solid waste, 605 million
gallons of contaminated water, 704 tons of toxic gases and 62,800 tons of carbon dioxide per
year.5 Ray Anderson commissioned a task force, the “Eco-dream Team,” made up of internal
employees and external environmental experts and gave them “a mission to convert Interface
to a restorative enterprise.” This bold project was called “Mission Zero” and it was tied to the
promise to “eliminate any negative impact Interface has on the environment by 2020.” Since
then, the company has definitely integrated environmental challenges. In a little more than a
decade, success at Interface includes a decreased dependency on fossil fuels by 45% and a
dramatic reduction of water and landfill use by 80%. The company has introduced new products
such as The Evergreen Lease: Instead of selling the carpet, Interface offers a lease to its cli-
ents. The carpet is made of recycled material and Interface’s services include installing the
carpet, cleaning and maintaining it, and replacing the worn out squares one at a time. This
system ensures that Interface owns the carpet throughout its lifecycle and can therefore re-in-
tegrate used parts in the system to create a new carpet. Interface’s commitment to sustainabil-
ity has been recognised by a plethora of awards, and its founder has been named one of the
100 global heroes for the environment by Time Magazine. After having implemented a 14-year
strategy of sustainability, Interface is still the global leader in its sector. Its financial perform-
ance – assets of US $879 million6 - demonstrates that environmental awareness is compatible
with profitability.

Businesses leading the “green economy” will benefit from competitive 5 Anderson R., @issue, Volume
6, Number, Less is More at In-
advantages and will be recognised as leaders by customers and their terface, URL: http://www.cdf.
sector. org/issue_journal/less_is_
more_at_interface.html (acces­
sed on March 22, 2009).
6 Interface, Inc., A Model of Or-
ganizational Sustainability, Kyo-
An exploratory study on the process of becoming green toSmart website, URL: http://
www.kyotosmar t.net/pdf/
case_interface.pdf (accessed
What do green businesses look like? Do they offset their carbon emis- on April 12, 2009, p. 1).
sions? Are they certified by national, European or international stand-
ards? Have they switched to alternative energy sources? Are their em-

Business Going Green | Introduction 13

ployees acting as green activists? Have they integrated the concept of 7 Bob Doppelt, Leading Chan­
ge Toward Sustainability: A
environmental sustainability within their overall strategies? Or, are they Change-Management Guide
all of the above at once? for Business, Government and
Civil Society. (Greenleaf Pub-
lishing)
And, most importantly, how do green businesses manage this transition? 8 Infonomia and UAB univer-
sity (2009), Sustainability and
What does the journey towards sustainability look like? A lot of special- Innovation In Spain, March
ised literature focuses on specific measures and tools to implement 2009, (in Catalan)
9 UN Global Compacts “Annu-
sustainability. However, evidence suggests that, unless sustainability al Review”  2007.
strategies are fully integrated and people within the organisations are
actively engaging with those strategies, change will be very limited.
Scholar Bob Doppelt undertook a three-year study to understand the key
success factors in transforming a business towards sustainability. He
found that “few leaders fully grasp the deep-seated paradigm shift inher-
ent in sustainability; further most do not know how to stimulate wide-
spread cultural change. These failings combine to limit the ability of
most organisations to adopt meaningful sustainability efforts”7. This
suggests that the barriers to undertaking successfully sustainable busi-
ness strategies reside not only in technical aspects of carbon footprint-
ing or waste management but, rather, in organisational development as-
pects related to culture, integration and paradigm shifts.

Research shows that few businesses truly understand what sustainabil-

ity is nor do they grasp the importance of culture and people within the
change process:

• Failure to understand positive attributes of environmental sustain-

ability
A study on Sustainability and Innovation8 shows that, in Spain, ex-
ecutives believe that more than 60% of companies who engage with
sustainability issues do so for image purposes only. The report also
highlights that the numerous businesses not yet engaged with sus-
tainability fail to see tangible benefits (more than 60%), arguing that
leadership is not interested (55%) or perceiving environmental con-
cerns as a cost with no associated benefits (52%).
• Failure to get past internal barriers
A global survey9 by the UN Global Compact found that there are major
internal tensions and barriers preventing companies from committing
to sustainability concerns. The main two are: Competing internal stra-
tegic priorities (43%) and the perceived complexity of implementing a
sustainability strategy across all business functions (39%). Other ob-
stacles include: a failure to recognise a link to value drivers, employee
resistance and the difficulty in engaging with external groups.

14 Business Going Green | Introduction

In this study, we propose using business cases to illustrate what sustainability can look like and
how it can be an opportunity more than a cost. By analysing how companies have changed to
become green, we hope to prove that it is possible to engage in a sustainability journey, provid-
ing guidance on this process and demystifying it.

We propose exploring the reasons behind the successful transformation of sustainability leaders
with the belief that their stories can help inspire others to follow their example.

Learning from leading green businesses

In addition to the two major obstacles mentioned above, if many businesses have not yet em-
barked on a sustainability journey, it is due to a complex combination of the following mental
blocks:

• Short-term thinking – not projecting the company’s vision into the future
• Cost focus - Considering that environmental sustainability is a cost, bringing inefficiencies,
with no clear added value
• Lack of imagination and understanding - Failing to imagine what sustainability could look like
and to comprehend how to integrate sustainability within a company
• Fear of the unknown: Fearing that there will be too much work involved in incorporating envi-
ronmental sustainability and that it will fail.

If humanity is to address the threats associated to climate change and other environmental is-
sues, it is essential for businesses to overcome these mental blocks and grasp the breadth of
opportunities that sustainability represents. To be inspired to change, companies need more evi-
dence demonstrating the added value environmental sustainability has already brought to other
businesses, as well as examples of what sustainable companies look like and guidance on the
internal process of change itself.

The majority of literature on environmental sustainability within the business community empha-
sises the threats represented by environmental challenges and offers practical advice on imple-
menting restricted, piece-meal projects such as carbon footprinting or waste management strate-
gies. Whilst this guidance is useful, it will not trigger any major change nor will it integrate “green”
paradigms.

To inspire broader change and provide a clearer picture of what the internal transformation proc-
ess towards environmental sustainability entails, new trends are moving away from the conven-
tional discourse on environmental sustainability based on a reduction of impact. For example, we
have the positive approach of Michael Braungart and William McDonough (Cradle To Cradle) who
“believe that humans can incorporate the best of technology and culture so that our civilised
places reflect a new view . . . where human activities and ecosystems are mutually enriching.” With

Business Going Green | Introduction 15

this underlying assumption in mind, we shall conduct an exploratory study centred on the following
questions:

How do leading companies transform themselves to create expanded and integrated sustaina-
bility models focused on profitably while creating positive environmental change?

What can we learn from the strategic change processes implemented by leading sustainable
businesses?

The underlying objective of this study is to inspire businesses to integrate environmental sus-
tainability into their own practices. For this we propose:

• Proving that leading businesses have found value in integrating environmental sustainability
whilst remaining profitable,
• Illustrating what green companies can look like, and
• Providing recommendations regarding the key steps involved in the actual change process.

Incorporating environmental sustainability within a business is a non-linear journey which requires

deep change. To systematically guide our primary and secondary research goals we will explore:
the following themes, as the three main strategies need to be given special attention during the
change process:

• Cultural Change: Foster a dynamic, positive and widespread organisational “green” paradigm,
involving all the levels in the organisation.
• Open Collaboration: Collaborate with strategic stakeholders to inspire wider and deeper
chan­ge.
• Eco-innovation: Rethink operational and internal processes to reduce footprints and increase
innovation of products and services-

16 Business Going Green | Introduction

2. What do we mean by “green business”? 10 The Brundtland Commis-
sion was created by the Unit-
ed Nations in 1983 to provide
solutions to growing concerns
about “the accelerated dete-
This study is prompted by a central question: How do leading companies rioration of the human envi-
transform themselves to create expanded sustainability models focused ronment and natural resourc-
es and the consequences of
on profitably while creating positive environmental change? To answer that deterioration for econom-
this question, we first need to understand what characterises green busi- ic and social development.”
Brundtland Report (1987),
nesses. If existing sustainability definitions are useful to imagine what a URL: http://www.worldinbal-
sustainable society could look like, there is no widespread consensus on ance.net/agreements/1987-
brundtland.php (accessed on
the definition of a green company. Below we argue that green companies February 13, 2009).
are shaping a new business model based on environmental sustainabil- 11 Paul Hawken, Amory Lovins
and Hunter Lovins (1999),
ity. The latter implies profound changes in business activities which need Natural Capitalism: Creating
to be widely applied to have a significant impact. the Next Industrial Revolution.
London: Earthscan.

Exploring existing sustainability approaches

Definition of Sustainable development

The concept of sustainable development was defined by the Brundt-
land Commission in 1987 as “the ability to ensure that humanity
meets the needs of the present without compromising the ability of
future generations to meet their own needs.”10 The Commission’s
report argues that sustainable development is a profound change
journey “in which the exploitation of resources, the direction of invest-
ments, the orientation of technological development, and institu-
tions” need to be transformed in a process that will necessarily in-
volve “painful choices.” Because it provides a broad societal objective
of durability and advocates mainstreaming environmental concerns,
this definition offers an interesting starting point to introduce the
topic of sustainability.

The macro framework: Natural Capitalism

Lovins and Hawken’s Natural Capitalism11 Theory is based on what
they see as the inherent paradox of industrial capitalism: The econo-
my is based on the production of goods which uses more natural re-
sources than can be regenerated, with no financial (or any other kind)
value given to those natural resources. They advocate the “Next Indus-
trial Revolution” based on four central principles:

• Increasing resource efficiency,

• Eliminating the concept of waste,
• Shifting the structure of the economy from processing materials to
being service based, and
• Investing in natural restoration.

Business Going Green | What do we mean by “green business”? 17

This approach is very much centred on transforming the rules of produc- 12 Peter Senge, 2008, The
Necessary Revolution How In-
tion and promoting technological innovation. It seems like a very good dividuals and Organizations
theoretical base to start approaching environmental business sustaina- Are Working Together to Create
a Sustainable World. New York:
bility. Doubleday.
13 Oppenheim J., Bonini S.,
Bielak D., Kehm T., Lacy P. (July
The definitions above help us understand some aspects of sustainability 2007), Shaping the new rules
as their vision of the concept comprehends entire societies. However, of competition: UN Global Com-
pact Participant Mirror, McKin­
they do not help us picture what a particular sustainable business would sey&Company, p. 14.
look like. Because there is no globally or widely accepted definition of a
sustainable business, we propose defining one by looking at the general
characteristics of environmental sustainability.

Shaping our understanding of green businesses

A new conception of business models based on environmental sustain-

ability

The very idea of involving businesses in environmental sustainability

calls for a paradigm shift. It goes well beyond the traditional concept of
a business solely concerned with making profits while respecting cur-
rent legislation and, in some cases, contributing to the well-being of its
employees. It involves profoundly transforming the rules of the game
and creating “new ways of thinking and perceiving”12. According to a UN
Global Compact study13, 95% of the 400 businesses participating in
this UN initiative consider that the demands on their companies from
employees, consumers, local communities and other stakeholders are
broader than they have ever been. However, because the traditional
business paradigm is so deeply rooted in Western societies, integrating
these new social and environmental demands does not come naturally.
Peter Senge argues that the Industrial Age is comparable to a bubble
where the constructed reality within the bubble is so entrenched that it
becomes hard to face wider realities and imagine an alternative way of
functioning. He describes the bubble as being based on a “take, make,
waste” approach which considers natural resources as free and infinite.
He advocates the creation of a “life beyond the bubble,” transforming
values, beliefs and assumptions to take into account the protection and
regeneration of natural ecosystems. Environmental business sustaina-
bility is therefore a profound shift in mindset to try to find solutions to
the paradox of a system based on producing more material goods be-
yond the limits of natural resources.

18 Business Going Green | What do we mean by “green business”?

The scale of the environmental challenge implies profound changes in 14 Harvey F. (2 December
2008), “The Heat is on,” The
business models Financial Times, Climate
Change Series: Part III, Busi-
nesses, p. 6-8.
Environmental issues such as climate change have no frontiers; they are 15 Energy Information Admin-
the result of a very complex web of human activities. Scientists agree istration, “International Energy
Outlook 2007”, p. 14.
that the current climate change challenge will require humanity to reduce 16 Harvey F. (2 December
its gas emissions by 80% in the next 20 years.14 However, the reality is 2008), “The Heat is on,” The
Financial Times, Climate Chan­
that the world is more likely to double them; a report by Energy Outlook ge Series: Part III, Business-
states that the global demand in energy will rise 57% by 2030.15 It is es, p. 6-8.
17 Mackrael K., A Natural
hard to see how small changes can address such a wide and pressing Step Case Study: Nike, URL:
issue. The president of the European Commission, Jose Manuel Bar- http://www.naturalstep.org/
en/resources (accessed
roso, talks about the need for “a third industrial revolution” encompass- March 1, 2009, p. 8).
ing all parts of society, from individuals to governments and all business 18 John Elkington, 1998 Can-
nibals with Forks: the Triple
sectors.16 Bottom Line of 21st Century
Business. Oxford: Capstone.
The challenge of translating environmental complexity into practical
actions

It is easy to feel overwhelmed by the challenge. Where do you start and

how can you monitor the impact of changing small parts of the complex
global system? Sarah Severn, Director of Corporate Responsibility for
Nike, believes that the main sustainability challenge is translating the
concept into “actionable, practical steps.”17 This is also mentioned as
one of the main barriers to implementing environmental business strate-
gies by the companies participating in the UN Global Compact. In fact,
there is no “one size fits all” model. Whilst tools such as Cradle to Cra-
dle or carbon footprinting provide useful instruments for change, there is
still a lot left to be done regarding new approaches rather than applying
ready-to-use frameworks. The need to innovate and provide creative,
long-term alternatives is recognised as a major characteristic of busi-
ness environmental sustainability.

Protecting the environment is intrinsically linked to social sustainability

Whilst this study focuses mainly on the environmental side of sustaina-

bility, we must recognise that protecting the environment is fundamen-
tally linked to social protection. The Brundtland Report states that “a
world in which poverty is endemic will always be prone to ecological and
other catastrophes.” John Elkington’s triple bottom line approach18 is
another common way to portray sustainability; it defends a balance be-
tween profitability, protecting the planet and taking care of people.

Business Going Green | What do we mean by “green business”? 19

Other aspects of environmentally sustainable business 19 Epstein, J.M. (2008). Mak-
ing sustainability work. Best
practices in managing and
Business environmental sustainability and Corporate Social Responsi- measuring Corporate Social
Environmental and Economic
bility (CSR) impacts. Sheffield: Greenleaf.
20 Lozano, J.M. (2010). The
relational company: responsi-
Many companies approach sustainability through their CSR policies. In bility, sustainability, citizenship.
principle, the ultimate goal of CSR should be sustainable development. Bern: Peter Lang.
However, in practice, whether it takes the form of support from Non Gov-
ernmental Organisations (NGOs), employee volunteers or community
projects, CSR is often approached as a side project, separate from the
company’s core business activities. The organisation Forum for the Fu-
ture argues that CSR often implies a reactive approach which does not
seek to mainstream environmental concerns but, rather, works within the
existing framework without challenging it19. To avoid this pitfall, some
have stopped talking about CSR and have replaced the term with broad-
er concepts such as ‘citizen companies’ or ‘relational companies’20.

Environmental sustainability means more than compliance

Environmental sustainability does not merely consist of complying with

existing or future regulations. It means proactively seeking to create in-
novative business models which will lead the way for future regulations.
Compliance implies seeing environmental issues as a cost, whereas
sustainable businesses consider it as an opportunity to innovate and
improve performance and efficiency. Although regulation is needed to
create environmental sustainability standards and ensure coherence re-
garding actions, businesses also have a responsibility in this area. They
are responsible for the impact of their activities and they have the poten-
tial to design new frameworks based on sustainability.

Environmental business sustainability is profitable

The triple bottom line of sustainability integrates People, Planet and Prof-
its. Sound environmental measures should be profitable in order to be
fully sustainable. Blu Skye Consulting argues that not incorporating fi-
nancial requirements within environmental measures relieves the pres-
sure to innovate, a key success factor.

Integration is key

Sustainability should be fully integrated within the organisation and not

merely be the focus of one department. In fact, each individual employee

20 Business Going Green | What do we mean by “green business”?

and all company teams have a role to play both in the design and the implementation of sustain-
able strategies. If sustainability strategies are not integrated within the whole organisation, the
results will be narrow and limited to the specific departments in which environmental considera-
tions are taken into account.

No one size fits all

We understand sustainability as a complex aspiration. As of yet, truly environmentally sustainable

businesses are scarce. In this context, the process of change itself is central and needs to be
focused on fostering innovation. A plethora of tools exists to evaluate progress in terms of energy
efficiency, carbon strategies and waste reduction. There is no unique way of applying them. Each
business can create its own path towards sustainability.

Eco-effectiveness and sustainable value

Braungart and McDonough criticise the concept of ‘eco-efficiency’ whose objective is to make ex-
isting business activities as efficient as possible and reduce their environmental impact to a
minimum. They argue that this model is too narrow in scope and advocate, instead, a wider and
more positive concept they call ‘eco-effectiveness’: “The key is not to make human industries and
systems smaller, as efficiency advocates propound, but to design them to get bigger and better in
a way that replenishes, restores, and nourishes the rest of the world.” We understand environmen-
tal sustainable businesses as dynamic organisations seeking to create sustainable value.

Business Going Green | What do we mean by “green business”? 21

3. Stepping stones to green the business 21 Senior, B.; Fleming, J.
(2006). Organizational chang­e.
Third Edition Essex: Prentice
Hall.
To analyse organisational change towards environmental sustainability,
we will apply theories from change management. Senior and Fleming
compare “rational-logic” models of change to models of change centred
on organisational politics, culture and values21. They argue that the first
approach is suitable for situations of “hard” complexity characterised by
problems which can be difficult but circumscribed to one area of the or-
ganisation. In contrast, the second approach is more relevant for circum-
stances of “soft” complexity which have a much more widespread im-
pact throughout the organisation, there are qualitative aspects and
disagreements about the solutions. This classification is an interesting
introduction to the subject of change management as it sets out basic
principles: Change can take many different forms; the type of change will
influence the approach chosen; and, finally, there is a difference between
approaches based on rational thinking and approaches incorporating
psychological analyses.

Environmental challenges are more in line with the situation of “soft”

complexity described above. In fact, all parts of an organisation are
interconnected and have a role to play in finding creative solutions
towards eco-effectiveness. Moreover, introducing environmental sus-
tainability within the remits of a company’s agenda is a new concep-
tion of business which calls for a profound paradigm shift. This shift
will certainly be driven by values and organisational culture though it
is enabled by people. Organisational development sees people as
the central enablers of change and advocates of focusing change
programmes on communications, empowerment, learning and col-
laboration.

In the section below, we rely on change management literature to expand

our analysis framework based on three stepping stones:

• Because including sustainability within business strategies calls for

a profound paradigm shift, we will analyse the role of organisational
culture: How have sustainable leaders engaged their employees? How
can a positive environmental sustainability paradigm be created within
an organisation?
• Because sustainability is not an individual quest but, rather, de-
mands global action and cooperation, we will seek to understand the
role of collaboration within the change process: How do leading busi-
nesses inspire their stakeholders to follow their direction and how are
they inspired by others?

Business Going Green | Stepping stones to green the business 23

 • Because of the complexity of translating sustainability into action, 22 Senior and Fleming (2006).
we will examine transforming operations: How can operations be
reworked to better integrate environmental sustainability?

These three aspects or stepping stones are reflected in Figure 1 below:

Figure 1.  Green Business Paradigm

Eco-innovation
Cultural Change R&D
Management Value Chain
Customers Marketing
Employees Greening Operations
Shareholders Business

Open Collaboration
NGO
Suppliers
Competitors
Regulators

Source: the authors.

Transforming organisations through change management

What constitutes culture? Culture is usually seen as the “soft” side

of the organisation, famously known as “the way things are done
around here”22. Culture is also primarily concerned with the role of
people in organisations. However, people naturally tend to be resist-
ant to change, so what processes can persuade people to alter the
way they operate? We look at general cultural change management
approaches and see how they fit in with green agendas.

Organisational culture: An introduction

Organisational cultures have common traits. Firstly, culture is shared

by a group (in this case the members of an organisation); it is there-
fore primarily concerned with people. Depending on the organisation’s
size and cohesion, there can be several internal and sometimes com-

24 Business Going Green | Stepping stones to green the business

peting cultures. Secondly, culture is generally considered as the infor- 23 E. H. Schein, 2004. Organ-
izational Culture and Leader-
mal side of an organisation. It encompasses all the habits, attitudes ship. San Francisco: John Wi-
and beliefs that are not necessarily written down. The cultural web ley & Sons.
24 Johnson et al. in Senior B.,
(see Figure 2 below) explains that cultural manifestations (stories, Fleming J., (2006): Organiza-
symbols, power and organisational structures, control mechanisms, tional Change, Harlow: Pren-
tice Hall.
rituals and routines) are, in fact, the visible sides of a central para-
digm based on core organisational values. Because culture is not nec- 25 Senior and Fleming (2006).
essarily written down and because it is centred on the shared values
within a specific group, they might be difficult to understand, espe-
cially for people outside the given group. However, as Schein23 argues,
organisational cultures are discovered and developed by the members
of the group themselves. Thus, culture is dynamic and always evolv-
ing. Finally, the new beliefs can be taught to new members. We can
then deduce that, if culture can be learned, it can be changed.

Figure 2.  The Cultural Web24

Symbols
Stories

Power
The Paradigm structures
Rituals
and routines

Organisational
Control structures
systems

Source: Johnson et al. en Senior, B.; Fleming, J. (2006). Organizational Change. Harlow: Prentice Hall.

The importance of culture in change management

Change Management & Organisational Development

Organisational development is the change management approach con-

cerned the most with culture. French and Bell define organisational de-
velopment as “a long-term effort, led and supported by top management,
to improve an organisation’s visioning, empowerment, learning, and
problem-solving processes, through an ongoing, collaborative manage-
ment of organisation culture”25. Organisational development centres on

Business Going Green | Stepping stones to green the business 25

the role of people in change management, focusing on empowerment, 26 Cameron, E.; Green, M.
(2007). Making sense of
learning, collaboration and culture. It is participative and process ori- change management. A com-
ented. plete guide to the models, tools
and techniques of organiza-
tional change. London: Kogan
Another important element is that this approach conceives organisa- Page.
tions as complex systems where all parts are interconnected. Therefore, 27 Kotter, J.P. (1996). Leading
change. Cambridge, Mass:
the change process cannot be merely concerned with transforming one Harvard Business School
fraction of the organisation; it has to modify the whole organisation. In Press.
organisational development, change is a process; it is not a short-term
mechanistic plan but, rather, long-term development.

Resistance to change, a major cause of failed change initiatives

A cause of failure among change initiatives is internal resistance. Lewin’s

Force Field Analysis seeks to address this by advocating the establish-
ment of an equilibrium between the forces driving and resisting change.
Lewin advocates that a process of change is successful only if the inter-
nal forces driving the change outweigh the internal forces resisting it26.
He considers that traditional management uses force to drive change
and argues that, the more energy is used to force the change, the great-
er the resistance. As an alternative, he suggests focusing on under-
standing the resistance: Why are people opposed to changing the agen-
da? Do they feel threatened? Do they understand the need for change?
He believes that, to achieve the equilibrium necessary for change, atten-
tion should be focused on understanding and addressing the obstacles
and resisting forces rather than forcing change through the use of power.

Lewin’s framework shows that the reality of change management is more

complex than it appears; it is based on a fragile balance. For change ini-
tiatives to work, securing commitment is more effective than using pow-
er and force.

How you can engage people in change initiatives and influence culture
change?

Kotter argues that the biggest mistake managers make when launching
a change initiative is to allow too much complacency regarding the rea-
sons behind the transformation27. To avoid this pitfall, he advocates
establishing a sense of urgency by largely communicating the risks in-
volved in maintaining the status quo while, at the same time, explaining
the opportunities to be found in adopting a new approach. The opportu-
nities or “why people should strive” to make the image a reality, should

26 Business Going Green | Stepping stones to green the business

be crystallised in the development of a new vision. For Kotter, a good 28 Cameron & Green (2007).
vision serves three objectives: First, clarifying the general goal and pro-
viding a positive picture of the future; second, motivating and inspiring
people to work towards it; and, third, synergising all the efforts in the
same direction.

Many argue that, to be effective, this vision should be shaped by the

people who are going to implement it. More broadly, not only the vision
but the new direction of the organisation should be supported by a wide
range of people within the organisation. Buchanan and Boddy insist on
the central role of change agents in shaping the vision, communicating
it and facilitating the implementation of the new strategies. Kotter ar-
gues that a “guiding coalition” is more effective. This coalition should
include enough positions of power, represent the different sets of exper-
tise and knowledge necessary for the organisation, have enough credi-
bility within the organisation and count on enough leaders to drive the
new strategies.

Finally and perhaps most importantly for successful cultural change, it is

crucial to “insist on collective ownership of the change”28. In fact, people
are key to the change process’ success or failure. Throughout the organ­
isation, they will transform (or not) the way they work to make the vision
a reality. For this reason, people need to be involved in the process from
the beginning and then empowered to be able to make the necessary
decisions in favour of the change agenda.

Figure 3.  Eight stages to lead organisational change (Kotter)

1. Establishing a sense of urgency

2. Creating the guiding coalition
3. Developing vision and strategy
4. Communicating the change vision
5. Empowering employees for broad-based action
6. Generating short-term wins
7. Consolidating gains and producing more change
8. Anchoring new approaches in culture

Building a culture of sustainability

If transforming organisational culture plays a major role in change man-

agement initiatives, is this also true for a change in favour of sustaina-
bility?

Business Going Green | Stepping stones to green the business 27

The necessary paradigm shift: From industrial thinking to green lenses

As mentioned above, environmental sustainability implies a new conception of business models,

very distant from the mainstream and traditional industrial paradigm. This model moves away from
a “take/ make/waste” approach to a more circular and regenerative production system. This new
conception needs to be reflected throughout the organisation to create new ways of functioning.
Different ways of thinking lead to different ways of behaving. Therefore, if people working in or-
ganisations are to be influenced in terms of their actions, they first need to be convinced to trans-
form their values and ways of thinking. Furthermore, environmental sustainability is not a “one size
fits all” model applicable to any organisation. As such, people need to create innovative ways of
working, suitable to the specificities of the organisation. This flexibility can be created through
cultural change.

To initiate profound, long-lasting cultural change, specialised literature in change management and
sustainability suggests focusing change processes on four main triggers:

1. Design a Vision
A great deal of thought needs to be given to the exact nature of the company’s ambitions: How
does the willingness to change the business model translate into the organisation’s strategy?
Designing a compelling vision which explains the need for change and the expected result is one
of the most common first steps towards cultural change. What should the vision look like? Peter
Senge argues that visions should be defined broadly as they will necessarily change as the proc-
ess evolves. He argues that visions are powerful ways of attracting more people and unifying
strengths. For Bob Doppelt, a sustainability vision creates a shared set of beliefs and common
mental images and should “provide an absorbing positive image about the future”. Change
management authors agree that visions should be drafted in simple, clear and straightforward
terms to achieve maximum commitment.

2. Expand communications during the change process

If a compelling, positive vision embracing environmental sustainability is central to the change
process, it is not an end in itself. In fact, a vision provides a sense of direction, but it should not
be just a written compass. Clearly, a vision is only useful if it is widely known by the members
of the organisation. Because people have a natural inclination to be resistant to large transfor-
mations and change, in general, the need to change and the organisation’s new direction need
to be continuously communicated to personnel to encourage their participation. Kotter’s motto
is: “Repeat, repeat, repeat” both the reasons for change and the new vision.

3. Develop training programmes and empower people

Bob Doppelt talks about the importance of ongoing learning as a particularly effective approach
to generate the right information and plan to adopt informed actions on environmental sustain-
ability. In fact, visions of being green embrace so many different realities in each company. And
innovation can only be successful if it is based on correct data and information. Training pro-

28 Business Going Green | Stepping stones to green the business

 grammes and rewarding learning help convey the new environmental 29 Oppenheim, 2007.
30 Blu Skye Consulting,
sustainability values. As for any new change agenda, people need to (2007): Making sustainability
fully grasp the underlying concepts to successfully implement them. work: understanding the disci-
pline of sustainable value,
Environmental sustainability is complex, and human understanding of http://www.bluskye.com/ (ac-
this field is constantly evolving. This implies a need to continuously cessed on August 15, 2009).
31 McKinsey Quarterly (2007):
update the organisation’s knowledge. Training and ongoing learning How companies think about
also lead people to feel empowered to innovate. climate change, a global survey,
http://www.mckinseyquarterly.
com/How_companies_think_
4. Ensure integration through leadership about_climate_change_A_
McKinsey_Global_Sur-
Is this a prerequisite or can the process start in another part of the vey_2099
company? Epstein argues that the most successful sustainability pro-
grammes are top-down. Bob Doppelt adds a nuance to this analysis,
suggesting that, if an organisation lacks vision from the top, the rest
of the organisation can try to engage in a bottom-up approach. The
bottom line is that, to design and convey a compelling vision, the new
“green” paradigm needs to be embraced by the top of the organisa-
tion, the only part which has the power to successfully align the whole
organisation. In fact, sustainability is “not a peripheral task to be rel-
egated to public relations or CSR department; it requires leadership
by the CEO and coordination throughout the organisation”29. Integra-
tion enables organisations to maximise the full potential of their envi-
ronmental sustainability measures: If every part of the organisation is
involved, information will circulate more easily; crucial data that would
otherwise have remained known only by a few will be disclosed to the
whole organisation. Finally, the consultancy firm, Blu Skye, argues that
“aggressive goals from the top can provide pressure and incentive to
drive the search for breakthrough innovations that create sustainable
value”30.

Despite evidence that culture is central to successful change processes

for sustainability, a McKinsey report about companies’ perceptions of
climate change indicates that more than 70% of executives do not in-
clude sustainability/climate change targets within their people manage-
ment strategies.31

Business Going Green | Stepping stones to green the business 29

Focus on The Natural Step Framework – www.thenaturalstep.org
The Natural Step (TNS) is a not-for-profit organisation and an organisational development and
planning tool. It is used by communities, businesses (e.g., Nike, IKEA, and Interface) and gov-
ernments to integrate sustainability visions within their strategies. TNS considers ecological
systems to be complex and seeks to position organisations and their strategies within this
complexity. The TNS approach echoes many aspects underlined in the section on organiza-
tional culture and emphasizes the development of a sustainability vision. The framework is
based on five levels: The systems level, understanding the functioning of the broader ecologi-
cal system; the success level, imagining what success would look like for the organisation; the
strategic level, designing strategies aligned with the vision of success; the action level; and
the tool level, implementing an action plan matching the strategies. In the following we briefly
summarize the first two.

1. Understanding the system: The Natural Step Funnel and the Four System Conditions

Thinking about an organisations’ impact on the rest of the system

The idea behind The Natural Step Framework emerged in the early 90s. Dr Karl-Henrik Robert,
a Swedish oncologist, started to develop a scientific approach to summarise the basic ele-
ments needed for sustained life on Earth. His objective was to reach a consensus on the defini-
tion of sustainability which would synergise efforts to protect the environment and guide people
towards a common objective. He based his thinking on a systems approach: “What happens in
one part of the system affects every other part.” This framework has been refined over the
years and it now uses two main tools to explain the basic scientific elements supporting the
sustainability concept.
Using an image to represent the current environmental situation

The Natural Step uses a funnel as a representation of the environmental strains and pressures
exerted by the economy. As natural resources decline and the population grows, the funnel
becomes narrower. Organisations which position themselves within this existing model are
bound to fail when the lack of resources does not enable them to satisfy the growing demand.
Therefore, the objective of contemporary organisations should be to step out of this vicious
cycle to find innovative ways of reversing the trend.
The Four System Conditions for sustainability

The second tool has been designed with participation from a community of scientists. It is
designed to determine “the basic conditions for sustainability in the ecosphere/society. By
understanding what nature looks like in a sustainable society, we can then deduce what we
need to change as a society to respect the system conditions for a sustained ecological
cycle.
(Continues)

30 Business Going Green | Stepping stones to green the business

 Cuadro 1. The Four System Conditions...

The Four System Conditions... ...reworded as the Four Principles of Sustainability

In a sustainable society, nature is not subject to a To become a sustainable society we must...
systematic increase in:
1. concentrations of substances extracted from the Earth’s 1. eliminate our contribution to the progressive build-up of
crust, substances extracted from the Earth’s crust (for example,
heavy metals and fossil fuels),
2. concentrations of substances produced by society, 2. eliminate our contribution to the progressive build-up of
chemicals and compounds produced by society (for example,
dioxins, PCBs, and DDT),
3. degradation by physical means, 3. eliminate our contribution to the progressive physical
degradation and destruction of nature and natural processes
(for example, over-harvesting forests and paving over critical
wildlife habitats),
4. and, in that society, people are not subject to conditions 4. and eliminate our contribution to conditions that
that systemically undermine their capacity to meet their undermine people’s capacity to meet their basic needs (for
needs. example, unsafe working conditions and insufficient salaries
with which to live on).

2. Imagining what success would look like: Backcasting from principles

Once the decision has been made to integrate sustainability within the organisation and the broad,
complex conditions of a sustainable society are understood, Natural Step recommends spending
time imagining a positive organisational future. Keeping in mind the broad sustainability principles
for the planet, imagine what type of success it would imply for the company. This method is quite
different from the traditional forecasting method which consists of “starting the planning procedure
from today’s situation and projecting today’s problem and trends and what are considered “realis-
tic” solutions today onto the future.” Once a positive image of success has been developed, a
strategy can be developed to achieve this vision, thus moving backwards towards the present.

32 Blu Skye Consulting,

(2007): Making sustainability
Collaborating openly with strategic stakeholders work: understanding the disci-
pline of sustainable value,
http://www.bluskye.com/ (ac-
Blu Skye Consulting argues that businesses which have started a sus- cessed on August 15, 2009).
tainability journey should engage in multi-sector partnerships to under-
stand where former practices have had a negative impact on the envi-
ronment and to find groundbreaking innovations for the future.32
Collaborating with other businesses, organisations and institutions is
central to the success of change processes for sustainability. In fact, it
can help companies access valuable data and information across the
supply chain and distribution channels. Involving stakeholders in the
transition process broadens the impact of a company’s sustainability
strategies and vision. Engaging with NGOs enables businesses to com-
municate about objectives, progress and results. Finally, building part-

Business Going Green | Stepping stones to green the business 31

nerships with specialised organisations (e.g., NGOs, scholars, scien- 33 Mc Kinsey Quarterly
(2007): How companies think
tists, etc.) can prove very important in the design of more innovative about climate change, a global
solutions based on their expertise. survey, http://www.mckinsey-
quarterly.com/How_compa-
nies_think_about_climate_
Influencing the supply chain change_A_McKinsey_Global_
Survey_2099
34 Bonini, S.; Oppenheim, J.
In a survey linking climate change and supply chain management, McK- (2008). “Cultivating the green
consumer”, Standford Social
insey found that 40 to 60% of a company’s footprint resides in its supply Innovation Review.
chain. However, only 23% of the companies consider climate change
when choosing or managing a relationship with a supplier.33

Outsourcing is no longer an excuse to free a company from the responsibil-

ity of the social and environmental impact of its products or services. Many
scandals related to sweatshops in the textile industry have aptly illustrated
this argument. Engaging the supply chain in an organisation’s quest for
environmental sustainability should include strategies such as: More long-
term partnerships, closer assessment of the supply chain and collabora-
tion during suppliers’ transition towards environmental sustainability.

Networking with NGOs, scholars and scientists

Specialised NGOs, academic institutions and scientific institutes all

have expertise in environmental sustainability. This knowledge can play
a pivotal role in learning about challenges and opportunities, gathering
data and specific research information and adding technical know-how to
the design of strategies. They can help a company access cutting-edge
technology and information.

Over the last few decades, the professionalisation, recognition and

weight of environmental NGOs has increased. They now play a funda-
mental role in the international arena. Communicating progress and con-
sulting them while developing new action plans avoids confrontational
relations between NGOs and companies. For example, Coca-Cola and
Greenpeace have recently announced a partnership aimed at eliminating
polluting CFCs from soft drink coolers.

Look into external communications and engagement with consumers

In an article aimed at understanding how to “cultivate green consum-

ers,” Bonini and Oppenheim34 argue that companies should aspire to
offer more to consumers. The idea is to ensure that consumers under-
stand the benefits of the environmental strategies enacted by the

32 Business Going Green | Stepping stones to green the business

company. Businesses should capitalise on their “greenness” and make 35 Holmes R., (March 2
2009), “Wal-Mart wants to be
sure that their efforts are easily understood by their customers. more like us,” The Guardian,
URL: http://guardian.co.uk/
lifeandstyle/2009/feb/24/
Furthermore, it seems only logical that working towards environmental patagonia-ethical-outdoor-
sustainability is like a “quest,” a long, complex and potentially very re- clothing-interview
36 Plambeck E., Denend L.,
warding adventure. Realistically, turnaround will not happen overnight. As (Spring 2008) Case Study:
a consequence, being transparent about the steps taken but also about The greening of Wal-Mart,
Stanford Social Innovation
the challenges faced and the actions that still need to be accomplished Review http://www.ssireview.
only reassures consumers and partners about the company’s intent. In org/articles/ (accessed May
3, 2009).
a context in which false environmental claims (known as “greenwash-
ing”) are increasingly common, transparency can make the difference.

Sector-specific clusters: Collaborating with competitors

Again, environmental sustainability is ultimately a societal objective; the

greater the number of people, companies and organisations who are on
board, the greater the impact. Business partnerships are developing in
this area. The World Business Council for Sustainable Development (WBC-
SD) is a coalition of 200 companies whose objectives include creating a
business case for sustainable development, participating in policy devel-
opment and promoting best practices in this area. These partnerships
have a real potential to change the rules of the game. Facing the same
agricultural production challenges for the future (climate change and an
exponential growth in food demand), Danone, Unilever and Nestlé have
jointly founded the Sustainable Agriculture Initiative. This platform gener-
ates knowledge and involves stakeholders in best practice pilot projects.

Focus: Wal-Mart taking sustainability to the supply chain

Tim Elm, Director of Strategy at Wal-Mart, highlights that in terms of sustainability most oppor-
tunities for improvement involve suppliers: “If we had focused on just our own operations, we
would have limited ourselves to 10 percent of our effect on the environment and eliminated 90
percent of the opportunity that’s out there.”35 Wal-Mart assures that its new relationships with
suppliers are based on long-term commitment as opposed to the 12 to 18-month rotation which
was previously common.36 The company has also built bridges between vendors and local NGOs
and supports suppliers with the new challenges that they face by working with organic cotton.
For example, the company buys alternative crops when farmers need their land to recover from
cultivating cotton which bleeds nutrients out the soil. Wal-Mart has also established a multi-
sector partnership involving 14 networks. The company encourages teams to engage with ex-
ternal experts to design goals and measure the company’s environmental performance, to
certify products and to accompany suppliers during the transition period. This is quite a revolu-
tionary way of conceiving business, very far from traditional practices of negotiating the lowest
prices and short-term commitments.

Business Going Green | Stepping stones to green the business 33

Reengineering operations and process through eco-innovation 37 Stern N., (2006): The Stern
Review: Report on the Econom-
ics of Climate Change, http://
According to Nicolas Stern, “Action on climate change will also create www.hm-treasur y.gov.uk/
stern_review_report.htm (ac-
significant business opportunities, as new markets are created in low car- cessed in August, 2009).
bon energy technologies and other low carbon goods and services. These 38 Blu Skye Consulting,
(2007): Making sustainability
markets could grow to be worth hundreds of billions of dollars each year, work: understanding the disci-
and employment in these sectors could expand accordingly.”37 pline of sustainable value,
http://www.bluskye.com/ (ac-
cessed on August 15, 2009).
Environmental sustainability represents major operational opportunities.
Savings from energy, waste reduction and the emergence of new markets
are just a few of the development prospects for green companies. A pletho-
ra of tools exists to guide businesses in deciding where to find these op-
portunities and redesign their operational strategies. Environmental sustain-
ability strategies are not all at the same level; some are tokens while others
are truly innovative and have a major impact on the environment. How can
one distinguish one from the other? Because there is no “one size fits all”
strategy, each company has to target its own approach to the specificities of
the company’s context. How do you know if a company has adopted far-
reaching operational strategies in its field or are they merely token attempts?

The consultancy firm, Blu Skye, argues that the journey towards sustain-
ability needs to be comprehensive and considered in a strategic way to
be fully transformative. Small steps cannot achieve the full potential of
sustainability. However, the development of what this firm calls a “sus-
tainability pathway” takes companies through different steps. The first is
adopting measures which represent quick wins for the organisation. The
second step is developing innovation projects, and the last is implement-
ing deep systems changes. The sustainable pathway is a useful frame-
work to assess the environmental value of operational measures.

Figure 4.  The Sustainable Pathway38

Sustainable
business
practices
ay
athw
inable p Systems A bigger “win” for
Susta change business and a
Innovation “win” for socitey
Today’s
projects
business
practices Quick wins

Focused
on a “win”
for business

34 Business Going Green | Stepping stones to green the business

 • Quick wins: Planning for quick wins is widely acknowledged as a major 39 William McDonough and
Michael Braungart , 2002,
success factor in change processes. Schein declares that, in times of Cradle to cradle: remaking the
change, “leadership must not only insure the invention of new and better way we make things, North
Point Press
solutions, but must also provide some security to help the group tolerate
the anxiety of giving up old, stable responses, while new ones are learned
and tested” (Schein, 1994). Quick wins help generate confidence in the
company’s new direction. In change processes towards environmental
sustainability, these measures are also called “low hanging fruits.” This
refers to actions which, for example, improve raw materials management
and energy efficiency relatively easily and rapidly. Waste reduction strate-
gies and offset of carbon footprint can also be illustrations of quick wins.
• Innovation projects: These projects require some level of invest-
ment but are still within the company’s mainstream framework. For
example, they can include the development of a line of eco-products
or the implementation of broader energy efficiency strategies.
• Systems change: These strategies are really transformative. They
consist of changing the system by re-designing a part or all of opera-
tions. They require more investment and bolder strategies. They truly
bring sustainable value and drive innovation both in the company and
in the industry. The application of the “Cradle to Cradle” protocol,
eco-designs and zero waste objectives are all illustrations of systems
change. Systems change can also affect relationships with suppliers.

Focus On Cradle To Cradle39

A widely applied and recognised framework to work towards eco-effectiveness and create truly
transformative strategies, the “Cradle to Cradle” approach is a perfect illustration of how envi-
ronmental challenges can be seen as opportunities.

An initiative stemming from an unexpected synergy

When William McDonough, designer and architect, was commissioned to build a crèche in New
York City, he started investigating solutions to avoid using toxic materials. His research led him
to meet the German chemist, Michael Braungart. The two talked about their visions of the fu-
ture and realised that they shared the same dream of a restorative economy which was both
profitable and respectful of people and the environment. They used their mutually enriching
specialties and experiences in design, architecture and chemistry to trigger a new design
paradigm: Cradle to Cradle. Using this approach and its protocol, they have provided consult-
ing services for a wide range of organisations such as Nike, Ford and Herman Miller. William
McDonough is also collaborating with the Chinese Government to build sustainable cities.
(Continues)

Business Going Green | Stepping stones to green the business 35

It’s not about “less bad”

Faced with such a wasteful and ill-thought production paradigm, the American architect and the
German chemist began thinking about possible alternatives. The authors rejected the tradi-
tional environmentalist view which associates growth to danger. On the contrary, they believe
that a positive, restorative development is possible. They criticise the mainstream concept of
eco-efficiency based on the 3 “Rs”: Reduce, reuse and recycle. They argue that this model
doesn’t go far enough. In fact, reducing only slightly diminishes the waste challenge; if the ma-
terials we use are toxic, reducing our landfills will not be good enough. If products are not de-
signed to ensure human and environmental health, reusing them forever will not change their
harmful nature. Finally, the contemporary process of recycling does not consist of endlessly
reprocessing materials but, rather, “down-cycling” them once, reducing the quality of the first
materials used.

The metaphor of the cherry tree

To illustrate their design philosophy, the founders of Cradle to Cradle use a metaphor. Imagine
a cherry tree in spring; the blossoms cover the branches and the ground underneath the tree.
Are blossoms a waste of energy or of materials? Quite the contrary, they nourish the soil and
feed birds and insects. The tree produces more than it needs for its own subsistence and, by
doing so, creates nutrients for its whole ecosystem. McDonough and Braungart challenge peo-
ple to think similarly, to imagine waste as food and eliminate the concept of disposable waste.
This is the cyclical model of Cradle to Cradle based on continuous restorative lifecycles.

The C2C philosophy

The Cradle to Cradle approach is based on a positive vision of renewal, restoration and creativity.
It advocates the creation of a model which can be designed to grow with positive consequences
for the health of humanity and our natural environment: “The marvelous thing about effective
systems is that one wants more of them, not less.” Cradle to Cradle designs consist of opening
the creative lens, moving from concentrating on the product to encompassing the whole system
in which the product evolves. It is also about going beyond what we know, transforming the na-
ture of the product itself by concentrating only on the need. Finally, it is opposed to the culture
of environmental control; on the contrary, it seeks to optimise the abundance of nature.

Rohner Textil … transforming waste into food

In the 1990s, Rohner Textil, a textile firm based in Switzerland, faced a major problem. Its waste
had been classified as hazardous. The company needed to solve this problem or move the plant
from its traditional location. The first solution envisaged by the CEO was to burn the waste with
the added advantage of saving fuel. Fortunately, this practice was illegal and other alternatives
were sought. William McDonough was invited to the plant to think the problem through. He
(Continues)

36 Business Going Green | Stepping stones to green the business

presented Cradle to Cradle’s principles and advocated expanding the view from merely looking
at waste to considering the whole production process and imagining waste as food. The solu-
tion came naturally: The textiles needed to be designed to become 100% biodegradable.
Michael Braungart advised the company on the use of cotton and ramie, both natural and resist-
ant materials. The issue became more complex when trying to find alternatives for the dyes.
Tests were carried out on 600 dyes and only 16 were found to be harmless for both humans
and the environment. However, with a mix of those 16 dyes any colour could be obtained. The
company was thus able to begin to produce biodegradable textiles. In addition, leftovers from
the textile products designed by Rohner are now used to create felt which is sold to local farm-
ers to cover their strawberry fields during the winter. The felt decomposes by spring and be-
comes food for the soil.

Business Going Green | Stepping stones to green the business 37

4. Methodology 40 Senior & Fleming (2006).

Research methods

An exploratory study

This study is exploratory. It is a “research that aims to seek new insights

into phenomena, to ask questions and to assess the phenomena in a
new light”40. We chose this research method for the following reasons:

• We were searching for a qualitative – as opposed to quantitative –

outcome.
• Environmental sustainability is not a mainstream business ap-
proach as of yet, making it more difficult to find statistical answers.
• The objective was to find compelling, inspiring stories which would
be hard to gather using statistical surveys or questionnaires.
• This area is a relatively new research topic which will require further
exploration and observation to discover new insights.

Theoretical and empirical Analysis

Our exploration was done through:

• A review of the literature, especially on change management and

corporate sustainability.
• A selection of four case studies of sustainable european compa-
nies.
• An analysis of the internal change processes using both secondary
and primary data.

Selection of case studies

We chose our four case studies according to the following criteria:

• The companies have already started a transformation process,

• They have included environmental sustainability in their visions,
• They take into account the environment in their operations and
products or services.
• There is easy accessibility and availability of accurate information.

When choosing the companies, we tried to analyse firms of varying size

and from different countries and industries. Thus selected companies
are based in the Netherlands (Desso), Sweden (Scandic), Spain (Accio-

Business Going Green | Methodology 39

na) and France (Havas). And the sectors to which they belong are carpeting (Desso), hospitality
(Scandic), energy, water and infrastructure (Acciona), and communication services (Havas). This
sample shows that the change towards sustainability is part of the agenda of companies belong-
ing to diverse variety of contexts and circumstances.

Interview methods

Semi-structured interview

We held at least two interviews for each primary case study, visiting company offices. The inter-
views were semi-structured with common questions though ensuring flexibility to expand the ques-
tions to the specificities of the organisation analysed. The interviews were recorded and analyzed
later.

A preliminary version of the case was sent to companies to review the note and receive feedback.
This process was repeated more than once in some cases. However this does not mean that they
are subscribing all what is written in the study.

40 Business Going Green | Methodology

5. Case studies

The four business cases are the following :

1. Desso, a Dutch manufacturer of industrial carpets.

2. Acciona, a Spanish construction, energy and water company.
3. Scandic, a Scandinavian hotel chain.
4. Havas, an international group of communication and advertising.

Business Going Green | Case studies 41

DESSO1

Name DESSO
Sector Carpet industry
Headquarters Waalwijk (Netherlands)
Number of employees 903 in two sites (Netherlands and Belgium)
Turnover 199 million Euros
Capital NPM Capital (private Dutch equity fund)
Certifications ISO 14001; Global Sullivan principles; GUT 10009; Cradle to Cradle
Energy policy Reduction of energy consumption by 23% since 1998
Water policy 50% savings in the Belgian factory over a goal of 100% (400 million liters)
Waste policy 90% of waste recycling from factories
Vision To be the first ‘Cradle To Cradle‘ certified company
Data: 2009.

Desso was created in 1930 by a Belgian manufacturer based in the

Netherlands. In its 80 years’ history, Desso has developed thorough 1 We would like to thank Stef
Kranendijk, CEO, Rudi Dael-
expertise in carpet manufacturing. An innovative company at heart, mans, Director of Sustainabili-
Desso launched its artificial grass range for playing fields in 1980 and, ty, Marianela Bonavita, Area
Director for Spain, and H.G.J.
a few years later, high quality carpets for the hospitality sector. Through- Klijs, Health and Safety Man-
out its history, the company’s ownership has changed several times, ager, who kindly shared with
us their experience during
though taken over in the late 1990s by Armstrong Flooring, part of Arm- Desso’s change process.
strong Holdings Inc. This American company used to produce asbestos, 2 Wikipedia, http://en.wikipe-
dia.org/wiki/Armstrong_World
incombustible, chemical-resistant, fibrous mineral forms used for fire- _Industries. (access in July
proofing, electrical insulation, building materials and chemical filters 2009).
before they started to manufacture interior furnishings. Due to this pre-
vious use of asbestos, the company faced injury claims that would cost
more than the value of the company at the time.2 After filing for bank-
ruptcy and undertaking a restructuring process, the company had to sell
Desso in 2007 to a new management team supported by a Dutch in-
vestment group. The new management decided to make a radical
change and market Desso as a leading environmental supplier.

From bankruptcy to strategic transformation

The new team enriched Desso with its experience in multinational

corporations, providing a new understanding of marketing and new
lenses with which to view the manufacturing process. For a time lost

Business Going Green | Case studies 43

within Armstrong’s wide range of floor covering manufacturers, Desso 3 For more information on the
‘Cradle to Cradle’ concept and
needed a new, clear positioning. With the idea of finding a convincing methodology, please refer to
strategy, the management team saw that sustainability was key for the section called “Culture” in
the Introduction.
the company’s further growth since they believed it would be the dif-
ferentiator in the near future. A chance encounter with Michael Braun-
gart, co-creator of the ‘Cradle to Cradle’3 concept, decided the way
forward.

Two years into the process of transforming Desso into a ‘Cradle to Cra-
dle’ company, the management team already began witnessing the ben-
efits of the new approach. The company’s market share increased, and
the new range of ‘Cradle to Cradle’ certified carpets were widely commis-
sioned with a special interest from governmental agencies. However, a
lot of work still needs to be done to fulfil the team’s vision of becoming
the first company with 100% ‘Cradle to Cradle’ designed products and
processes. As a result of this new focus, the company’s energy efficiency
was quickly improved by 23%, while 90% of its waste production was re-
used by other industries.

What does this radical journey towards closing the production loop
through the ‘Cradle to Cradle‘ philosophy look like? Let’s take a closer
look.

Cultural Change – Using the Cradle to Cradle concept as a philosophy

to trigger a paradigm shift

’Cradle to Cradle’ has been used by Desso to trigger a wider paradigm

shift towards innovation, taking a new direction after the change in own-
ership. Now the concept is merged with the company’s identity both in-
ternally and externally.

A new vision for a new start

Desso is working towards becoming the first 100% ‘Cradle to Cradle’

company though, currently, only products have been certified, never a
whole organisation. In other words, the company’s goal is to achieve a
manufacturing process with zero contamination by closing the produc-
tion loop entirely. Desso’s philosophy is shaped around two principles
which are directly related to ‘Cradle to Cradle’ values: A commitment to
good product design and superior functionality and the maximisation of
the company’s positive environmental impact.

44 Business Going Green | Case studies

How was the vision shaped? 4 The Environmental Protec-
tion and Encouragement Agen-
cy (EPEA) was founded in
When the newly appointed management team started to consider sus- 1987 by Dr Michael Braungart
to foster the implementation
tainability as the company’s new overarching goal, they soon realised of Cradle to Cradle principles.
that they were looking for more than a way to improve efficiency (mainly http://www.epea.com
concerned with energy, water and waste reduction). The team was hoping
to find a more positive way of incorporating environmental objectives into
the firm. The ‘Cradle to Cradle’ philosophy seeks to design manufactur-
ing processes which, instead of contaminating the Earth, work to replen-
ish it. So, when Stef Kranendijk, Desso CEO, met Michael Braungart from
EPEA4 (and co-founder of the ‘Cradle to Cradle’ philosophy), the link was
easy to make. Stef Kranendijk confirms: “I liked the concept immedi-
ately. It made full sense and was quite logical. I then decided that Desso
[should] be the first ‘Cradle to Cradle’ company even if it [meant] high
investments.” The ‘Cradle to Cradle‘ concept has been translated in
Desso’s Code of Conduct as the ability to “do the right things right in-
stead of less bad, in order to obtain the biggest positive footprint and to
maximize the positive impact of our products and processes.” The CEO’s
endorsement was fundamental to convince the rest of the management
team and the investment group owning the company. He was able to
defend a concept which had the advantage of improving Desso’s environ-
mental performance whilst, at the same time, clearly positioning the
company for the present and the future.

A workshop to work out the objectives

A first meeting was organised with Michael Braungart and other EPEA
representatives They needed to test Desso’s understanding of the ‘Cra-
dle to Cradle’ concept to ensure that their objective was not merely
marketing. Once agreement was reached, the difficult work started. The
management team had hoped that EPEA would guide them step by step
through the process. However, because of the emergent nature of both
environmental sustainability and the ‘Cradle to Cradle’ philosophy, this
was not possible. Whilst EPEA offered interesting ideas due to their pro-
found knowledge of the environmental impact of the chemicals used,
they were new to carpet maker. Therefore, Desso’s expertise was neces-
sary to research new operational processes. A workshop was organised
with the entire management team as well as representatives from four
departments to establish goals, objectives and key performance indica-
tors. They were then translated into actions. Importantly, this new vision
was mainstreamed throughout the company; it was no merely limited to
an ‘environmental’ development.

Business Going Green | Case studies 45

Embedding the ‘Cradle to Cradle’ concept in Desso’s identity

Like most change processes, sustainability at Desso met with internal resistance. Especially at
the production level, it was easier to fall back into old habits. However, the actual challenge
seemed to be leaving a cost reduction approach behind. ‘Cradle to Cradle’ operational processes
are difficult to implement and require investments. This approach was difficult to grasp. So the
struggle internally really implied going from cost reduction to sustainability. ‘Cradle to Cradle‘
goals are broader than technological innovation; they are about culture. Change is crucial for all
employees to share a two-fold vision encompassing both the environmental and sales potential of
this new approach.

To launch this new vision, a series of workshops were organised with Michael Braungart. All em-
ployees at the head office were trained on ‘Cradle to Cradle’ principles. Marianela Bonavita,
Sales Director for Spain, highlights the importance of this training: “It is very inspirational, and it
provides us important technical information and knowledge which is often enquired by our cli-
ents.” Another important learning shared by the CEO is the value of integration: “It is crucial to
make sustainability a real strategy, to provide constant communication and incentives, all in the
same direction.” All employees have clear goals and incentives to work towards the company’s
vision of sustainability.

Could Desso have achieved its objectives of environmental sustainability without ‘Cradle to Cra-
dle’? It seems unlikely. The concept of a closed production loop as advocated by EPEA became a
central part of Desso’s identity in two years: “We do not talk about Desso without mentioning
‘Cradle to Cradle’,” confirms Marianeta Bonavita.

Open Collaboration – Spreading the ‘Cradle to Cradle’ world

Getting the supply chain on board

A great deal of work has already been done by Desso to extend its efforts to its supply chain.
Because the company outsources most of the raw materials needed for carpet manufacturing
and some of the processes – such as fibre dyeing – it was crucial to engage suppliers in the
process. All the companies have been made aware of Desso’s new direction and asked to col-
laborate.

Communicating and spreading the client base

Publically owned institutions such as schools, hospitals and administrations are already very
interested in the ‘Cradle to Cradle’ range developed by Desso. Adopting a sustainability strat-
egy has opened new markets. At the same time, Desso is doing a lot of work to communicate
the benefits of their new approach to other stakeholders which have the potential to influence
the choice of clients. These stakeholders include architects, designers etc. Finally, Desso has

46 Business Going Green | Case studies

developed communications material explaining the concept of closed loop production systems,
potentially educating clients not just about Desso’s products.

Being ’Cradle to Cradle’ ambassadors

“We are interested in the ‘Cradle to Cradle’ philosophy and we hope to be ambassadors of the
concept, because in fact the more companies apply it, the most effective it becomes,” indi-
cates Marianela Bonavita. Desso’s aspiration is to convince other companies to join the move-
ment. As an illustration, Desso collaborates with consulting companies to foster the develop-
ment of the concept in Europe. In addition, Desso is studying with the EPEA the possibility of
opening a research centre to share the company’s experience, learn from other businesses and
become an open platform for new companies interested in adopting the concept. Desso’s ‘Cra-
dle to Cradle’ brochure ends with a call for other companies to join the movement: “We believe
DESSO belongs to a select group of companies that are responsible enough to consider their
influence on our whole world – companies that have the foresight to plan for a different eco-
nomic future and also possess the necessary creativity to act on these ideas. We believe that
these companies will prosper thanks to modern products that have been carefully designed for
the new, cyclic economy of ‘Cradle to Cradle’. This is why we actively encourage our clients,
suppliers and indeed all our affiliates to move forward with us in the exploration of new busi-
ness models and processes.”

Desso collaborative network

Source: Desso.

Business Going Green | Case studies 47

Eco-innovation – A thorough transformation towards a closed loop system

The ambition of becoming the first 100% ‘Cradle to Cradle’ company implies undertaking a thor-
ough shift in production processes. In fact, the concept entails designing products for quick disas-
sembly, manufacturing them using environmentally friendly components, all while using renewable
energy sources and reusing water. The whole model is based on the ‘waste equals food’ philoso-
phy, imagining products which will not only preserve the environment but will be designed to replen-
ish the Earth. Diametrically opposed to most current production processes, the ‘Cradle to Cradle‘
notion demands a radical change in the dominant paradigm and the complete transformation of
operations and products.

A thorough transformation

As highlighted above, Desso has chosen to implement a ‘Cradle to Cradle‘ strategy in close col-
laboration with EPEA. In fact, the management team strongly values earning a certification which
provides transparency, clarity and confidence in the processes used. This strategy involves me-
ticulously applying ‘Cradle to Cradle’ rules, guidelines and policies. EPEA is famous for its tough
standards, thus giving legitimacy to the concept. Carpet manufacturing and other industries tradi-
tionally contaminate the environment by using toxic chemicals and dyes. Therefore, the journey
towards sustainability necessarily implies re-engineering processes with an ultimate goal, in
Desso’s case, of “producing carpet 100% from post consumer material.”

Reduction of primary energy consumption at Desso factory.

8,000,000 100,000

7,000,000
80,000
6,000,000

5,000,000
60,000
Production (m2)

Energy use (GJ)

4,000,000

40,000
3,000,000

2,000,000
20,000
1,000,000

0 0
2001 2002 2003 2004 2005 2006 2007 2008 2009

Production Energy use (GJ)

Source: Desso.

48 Business Going Green | Case studies

A two-step plan has been designed to gradually implement new ranges of certified carpets. The
preparatory phase is set to last from 2008 to 2015, the aim being to eliminate all chemicals not
acceptable by EPEA standards, to switch 50% of the energy used to renewable sources and to
start the construction of a take-back system designed to collect carpets at the end of their lifecy-
cle. The implementation phase (2015 to 2020) will aim to have 80% of the company’s products
made from post consumer goods. All carpets will be certified by ‘Cradle to Cradle’ and 100% of
the energy consumed will be provided by renewable sources.

The first ‘Cradle to Cradle’ range of products

Actions undertaken to date have led to a 98% reduction in the amount of water used in the tile
printing process, a radical reduction of waste generated and the creation of nine carpets which
are fully certified ‘Cradle to Cradle’. These products are designed to be reused for other indus-
trial purposes, thus closing technical and biological loops. One is made of recycled materials
and another passively captures fine dust from the air, reducing allergens and bacteria. Recogni-
tion by the German Test Institute (GUI) guarantees the positive impact on air quality of Desso’s
carpets. Therefore, the Dutch and German asthma associations are reconsidering what is best
for asthma patients, whether hard floors or eco-designed textile carpets. Desso’s R&D Depart-
ment is currently looking at developing new materials to extend the range of ‘Cradle to Cradle’
certified carpets.

The Take-Back Programme – the start of a visionary project

Because ‘Cradle to Cradle’ certified carpets are designed to be recycled, the necessary next step
is to collect used products to reintegrate them into the process. This is characteristically how the
production loop can be closed. This process represents a very large investment (over 3 million
Euros per country), a time commitment and the creation of new logistical arrangements to gather
used products. Desso has launched its so-called “Take-back Programme” to gather used products
from businesses. The idea is to offer the customer to pay for the service which replaces the tradi-
tional landfill charge, the objective being to reintegrate the carpets’ fibres to manufacture new re-
cycled and recyclable products. In order to be able to reprocess the raw materials for new carpets,
the company is currently developing a new machine which will be able to separate the yarn from
the backing: The backing will then be reused, and the yarn re-melted to produce new white yarn.
The challenge currently faced is finding a suitable transport scheme and improving the environ-
mental impact of the whole chain.

Stef Kranendijk, Desso CEO, explains: “While carpets are recyclable, it’s vital to ensure that recy-
cling actually takes place. By collecting used carpets from our customers we not only divert them
from [the] landfill, we also safeguard valuable raw materials to be used in new goods. The ‘Cradle
to Cradle’ cycle is especially challenging in an industry like ours, where millions of square meters
of worn out carpet are potentially thrown away every year. But this is precisely why it is so impor-
tant that we adopt this advanced approach, rather than simply complying with current environ-

Business Going Green | Case studies 49

mental legislation. By sourcing sustainable raw materials, introducing new manufacturing meth-
ods and collecting used carpets from clients, we are doing everything to achieve a closed loop
system.”

“Cradle to Cradle” technical and biological cycles

Production Production

Materials Products
Materials Products

Production Usage
Production
Ciclo técnico Usage Ciclo biológico
Raw Used
materials Products
Raw Used Return +
materials Products Regeneration Recycling

Return + Recycling Biological nutrients

Tecnical cycle, for products for service Biological cycle, for products for consumption

Source: EPEA.

Lessons Learned

Cultural Change – Using the Cradle to Cradle concept as a philosophy to trigger a paradigm shift

1. Develop an ambitious and positive vision of sustainability. Turning around a company in dan-
ger, the bold and ambitious vision of transforming Desso into an environmental leader was critical
to the company’s success.

2. Use an inspirational philosophy and methodology to implement the vision. Clearly, ‘Cradle to
Cradle’ was both instrumental and inspirational for the company. It supported Desso by providing
a philosophy and guidance throughout the whole change process.

3. Expand internal and external communications during the change process. The extensive train-
ing of managers and employees created the necessary awareness about the environmental chal-
lenges faced by the carpet industry. In addition, the promotion of the ‘Cradle to Cradle’ philosophy
on Desso’s websites and leaflets and at international fairs made the journey a no-return trip for
the company’s stakeholders.

4. Ensure integration through internal and external leadership. The combination of environmen-
tal vision of ‘Cradle to Cradle’s founder and the leadership of Desso’s CEO fostered the integra-

50 Business Going Green | Case studies

tion of sustainability into the company’s DNA, giving incentives to all employees to work towards
this goal.

Open Collaboration – Spreading the ‘Cradle to Cradle’ world

5. Involve the whole supply chain. The strong commitment and collaboration of both Desso’s sup-
pliers and clients were crucial for the success of its transformation towards sustainability.

6. Invest in communications and education of clients and suppliers. Sustainability is still a new
concept in the business sector and needs to be explained and promoted through training, mailing,
leaflets, sponsorships, etc.

7. Work with other businesses to create a viable eco-system. Desso is convincing other sectors
and industries to adopt the ‘Cradle to Cradle’ concept in order to develop a critical mass which will
help to spread the sustainability benefits.

8. Use external environmental consultants with fresh views and original ideas. Desso developed
a strategic partnership with the EPEA consulting company to support its reengineering processes,
the design of new products and independent analyses of its materials and suppliers.

Eco-innovation – A thorough transformation towards a closed loop system

9. Set a two-phase plan with quick wins. The new ‘Cradle to Cradle’ product lines, the elimination
of expensive pollutants and the better efficiency of the company’s basic operations brought fast
and positive outputs for the change process. The development of a thorough innovation scheme
with long-term targets in terms of energy, waste and water savings then completed the transforma-
tion journey.

10. Embed sustainability into R&D. The ‘Cradle to Cradle’ philosophy is based on good product
design to have a positive impact on the environment and society. It is therefore crucial to integrate
sustainability within all Research and Development processes.

Business Going Green | Case studies 51

Acciona5

Name ACCIONA
Sector Renewable energy; water and infrastructures
Headquarters Madrid, Spain
Number of employees 33,112
Turnover 6,512 million Euros
Capital 60%, the Entrecanales family, and 40%, Spanish stock exchange
Certifications- Index Group ISO 14001 – Member of WBCSD – Dow Jones Sustainability Index – Global
Compact
Energy policy Objective 2008 – 2011: Improve energy efficiency ratio by 10%
Waste policy Increase the amount of paper recycled by 10% and decrease the amount of
hazardous waste generated by 10%
Water policy Improve water consumption efficiency ratio by 10%
Visión Meet the challenge of sustainable development so that the generations of today
and tomorrow will have a better life.
Data: 2009.

Traditionally a construction company, Acciona successfully led a strategic 5 We would like to thank Juan
Ramón Silva Ferrada, Sustain-
shift towards sustainability. In 2005 the corporation chose to position ability Area General Manager,
itself as a leader in the production of renewable energy. This new direc- and Diego Urreta López, Envi-
ronmental, Quality and Proc-
tion enabled Acciona to become a pioneer in sustainability in Spain. The ess Coordinator, who kindly
company now focuses on three main activities: Renewable energy, water shared their experiences with
Acciona’s change process.
and infrastructures. It is present in more than 32 countries around the Facts, images and data come
globe and is making a push for international expansion, primarily in the from Acciona websites and re-
ports.
following markets: Australia, Canada, USA, Mexico, Chile, Brazil, Poland,
the United Arab Emirates and India.

Sustainability-based development

Acciona was created more than a century ago. Today, it is listed in

Spain’s IBEX 35 blue chip stock exchange index and has more than
33,000 employees worldwide. The company reached a milestone sev-
eral years ago when it decided to diversify from the construction market
and incorporate water services and the production of renewable energy.
Acciona’s corporate mission became: “To be a leader in the creation,
development and management of infrastructure, energy and water, con-

Business Going Green | Case studies 53

tributing actively to social wellbeing, sustainable development and the creation of value for our
stakeholders.”

Like other businesses engaged with sustainability objectives, Acciona has its own vision of
how to meet the challenge of combining sustainable development with financial prosperity.
The strategic shift that took place in 2004 enabled the company to meet the latter objective.
Indeed, since introducing the production of renewable energy into its activities, Acciona’s
sales have increased by 13%, reaching 7,208 million Euros in 2008. For the third year in a
row, Acciona retained its position as industry leader in the Dow Jones World Sustainability
Index (DJSI World), the international benchmark for sustainability and socially-responsible
investing.

This was made possible by Acciona’s new positioning to attempt to achieve sustainable devel-
opment through innovation and financial investment. To reach this ambitious objective, the
company’s Research and Development budget was increased by 82% between 2007 and 2008,
with one-third of net profit invested in this area. The revised 2009-2013 R&D and Innovation
Strategic Plan envisaged doubling the investment of the previous four years to 400 million
Euros.

A bit of history

Initially founded as a construction company specialising in civil works, Acciona was created
in 1997 as a result of the merger between Entrecanales & Tavora (created in 1931) and Cubi-
ertas & MZOV. This merger was the first and most important in the Spanish construction sec-
tor. Acciona started its diversification strategy in the 1980’s. In 2004, José Manuel Entreca-
nales was appointed Chairman, leading the company’s transformation based on three strategic
pillars:

• A new business strategy based on providing sustainable development solutions to society,

• A focus on the energy, infrastructures and water sectors, and
• A vocation of international expansion.

Strategic transformation

The decision taken in 2004 by the new chairman, José Manuel Entrecanales to move from the
very profitable real estate and construction sectors to the incipient renewable and water infra-
structure industry was, at that time, quite surprising and risky. In fact, the “traditional” construc-
tion sector was securing huge incomes and benefits. Time has shown, however, that this decision
was visionary, avoiding the worst consequences of the current financial and Spanish real estate
crisis. Juan Ramón Silva Ferrada, Sustainability Area General Manager, emphasises the rational
argument, claiming that “sustainability is not philanthropy but the key driver of future business
models in a prosperous society.”

54 Business Going Green | Case studies

Transformación del modelo financiero de Acciona (2003-2009-2013)

2003 2009 2013 (Forecasting)

Revenues Revenues Revenues
8% 9%
4% 2% Water and Water and
74% 45% Environmental services
Energy Other Environmental services
Infrastructure 53% Infrastructure
Infrastructure 32%
20% Energy
Services 21%
Other

18%
Energy
14%
Other
€ 3,865 m € 6,512 m € 11,000 m

Benefits (EBITDA) Benefits (EBITDA) Benefits (EBITDA)

4% 4%
3% Water and Water and
50%
Other 20% Environmental services 14% Environmental services
13% Infrastructure
Infrastructure Infrastructure
Energy 59% 71%
Energy 11% Energy
Other

17%
34%
Other
Services

€ 411 m € 1,043 m € 2,300 m

Source: Acciona website.

In 2003, the construction business represented 74% of Acciona’s total income and 50% of its
profits. Five years later, it accounted for only 52% of total revenues and 20% of benefits. By con-
trast, the energy business grew from 4% of total income to 18% and from 13% of profits to 59%.
In September 2008, Morgan Stanley and Standard & Poors reclassified Acciona as an Electrical
Utility.

Development through acquisitions

Acciona started to invest massively in the renewable energy sector in 2003-2004 through the
acquisition of different renewable energy companies:

• EHN, a leading manufacturer of wind generators founded in 1989 and based in Navarre
(Spain), was acquired in 2004 for 773 million Euros. It brought around 2,590 MW of installed

Business Going Green | Case studies 55

 wind generators, an assembly plant, 19 mini hydropower stations, a biomass and biodiesel facil-
ity and several solar plants.
• The Spanish wind power company, Corporación Eólica (CESA) was purchased in 2006 for
1,370 millions Euros, bringing 536 MW of installed capacity.
• American renewable specialist, ecoEnergy, was acquired the same year, obtaining 1,300 MW
of construction rights.
• Finally, in 2009 a bold operation took place with Acciona selling off its 25% stake in Endesa
to Enel and the acquisition, at the same time, of 2,078 MW of Endesa’s renewable assets.

About José Manuel Entrecanales Domecq, Chairman & CEO of Acciona

Born in Madrid in 1963, José Manuel Entrecanales Domecq is the grandson of José Entrecanales
Ibarra, the Basque engineer who founded Entrecanales & Tavora, the construction company at the
origin of Acciona. José Manuel Entrecanales obtained an MA in Economics at Madrid’s Com-
plutense University after studying at Madrid’s Colegio Estudio, a school renowned for its openness
and innovative academic methodology based on the discovery of and respect for the natural and
social environments. He started his career in 1986 as an Associate of Merrill Lynch Europe in
London and New York. After serving as CFO at Acciona from 1992 to 2005, he was named Chair-
man. In 2009. Entrecanales also became the first Spaniard to be appointed to the World Business
Council for Sustainable Development’s (WBCSD) Executive Committee.

How did Entrecanales and Acciona achieve the shift towards a new strategic direction?

Cultural Change: a commitment of top management

In 2004, at the age of 41, and after 14 years working in different Acciona departments, Jose
Manuel Entrecanales Domecq was appointed the new Chairman of Acciona following his fa-
ther’s retirement. He had a clear and strong vision and was convinced that the only way for
Acciona to maintain its position as an industry leader over the long term was to steer its strat-
egy and culture towards sustainability. Once this decision was made, the next and critical step
was for him to get his team fully committed to achieve deeper and faster transformations. As
Juan Ramón Silva Ferrada explains, “We had to rush to implement what the company was say-
ing publically.”

An internal reorganisation to incorporate the vision of sustainability

As a result of a thorough self-assessment process aimed at enhancing the company’s sustainabil-

ity performance through benchmarking and audits, two working groups were created: One on Qual-
ity and the other on Environment.

Then in 2009 a new area was created to reflect the new strategy in the company’s organisational
chart: The General Direction of Innovation & Sustainability, headed by Chief Innovation & Sustain-

56 Business Going Green | Case studies

ability Officer, Joaquin Mollinedo, bringing together the areas of Sustainability, Innovation, Quality
and R&D, and Regulation.

The same year Acciona’s Board of Directors gave the go-ahead to the creation of a Sustainabil-
ity Committee to guide and supervise policy, objectives and plans in the sustainability and
Corporate Social Responsibility areas to evaluate their implementation and to periodically re-
view compliance.

The importance of measurement

Métrica, a proprietary tool to gather data and monitor environmental performance, was
rolled out across the company in 2008. The data gathered is quantifiable to facilitate the
analysis and development of appropriate actions. In 2008, 95% of the company’s produc-
tion centres were directly collecting information through this system. This direct involve-
ment by the production centres has led to more reliable figures and increased employee
engagement.

Raising awareness among employees

One of the first steps to implement the new strategy was training the company’s executives to
understand and apply the sustainability concept. More than 1,800 employees were trained in
2008-2009 through the online course, CRONOS, delivered by Cambridge University in the UK.
In 2009, a total of 6,368 environmental training hours were provided at Acciona’s headquarters
alone. In April 2010, Acciona launched its first MBA in Sustainable Economics to educate future
business managers.

Acciona organises annual internal conferences for its top management in an effort to raise
awareness and knowledge of the risks and opportunities of sustainability; eminent interna-
tional environmental experts such as Jeremy Rifkin, Daniel Esty and Rajendra K. Pachauri have
taken part as guest speakers in past years.

The company also runs an environmental campaign called “Butterfly” on energy efficiency and
water management within the company. An environmental best practice manual has been put
together and is constantly reviewed for improvement. It covers traditional areas of action such
as the efficient use of lighting, office waste management and the rational use of water. As com-
mented by Diego Urreta, Environmental, Quality and Process Coordinator, “the pressure to-
wards sustainability was so deep that it also affected employees’ personal lives, becoming
more aware about saving water and energy in their own homes”

Acciona aims now to link salaries to environmental performance. Aware of the complexity of de-
veloping such a system, the company is currently exploring different options.

Business Going Green | Case studies 57

Ethical channel

In 2007, Acciona’s Board of Directors approved the company’s Code of Conduct, with the aim of
providing guidance to its employees through the creation of a corporate culture based on integrity.
This approval was followed by the creation of a dedicated Committee and an Ethical Channel, a tool
which allows Acciona employees to put forward their queries on the Code or to report possible
breaches, all in the strictest confidence.

Open Collaboration - Dialogue With Strategic Stakeholders

Acciona has invested considerable effort in collaboration initiatives, from launching a massive com-
munications campaign on sustainability to taking part in a number of working groups and sponsorship
projects.

An emphasis on communications

As highlighted in the introductory section, external communications and en­gagement with consum-
ers are central to achieving wider societal change. Indeed, there is an understanding that compa-
nies have a responsibility to educate consumers on the environmental benefits of their products.
This communication should not be “greenwashing” but, rather, fairly transparent.

In 2005, Acciona launched its first large-scale social campaign. It aimed to communicate the
brand’s new direction and strategic positioning as a pioneer on sustainability issues. The campaign
achieved considerable recognition and earned a number of awards. The second campaign, launched
in 2009, ran on TV and in print and digital media. It consisted of two parts: The first aimed to
prompt a reflection on the existing development model using an intriguing slogan “Re –“ to invite
the public to enter the website www.sostenibilidad.com. The second phase proposed an analysis
of what constitutes sustainable development and the path chosen by Acciona to contribute to it. A
study from The Cocktail Analysis consulting company claimed that Acciona’s large-scale communi-
cations campaign favoured change in consumer behaviour and influenced consumers’ contributions
to sustainable development. This same study ranked the brand fourth in Spain in terms of its con-
tribution to the development of nationwide awareness of environmental challenges. With this cam-
paign, Acciona used its institutional communications investments to educate society and raise its
awareness of today’s main environmental challenges, such as climate change, waste, pollution and
energy, among others.

Stakeholder analysis

Three years into the development of its new strategy, the company carried out a stakeholder analy-
sis with the help of an external consulting company to identify the major interest groups in its main
markets. At the end of 2009, Acciona also launched a brand perception study to assess the percep-
tion of a variety of external stakeholders across a number of sectors and activities. The scope of

58 Business Going Green | Case studies

the study included recognised experts in the field of sustainability. The objective was to build a
specific line of behaviour for each group to improve the company’s engagement and communication
with them. The stakeholders identified include: Suppliers, employees, clients, NGOs and commu-
nity representatives, governments and public administrations as well as the media. Requesting
suppliers to comply with the UN Global Compact Principles was, amongst others, one of the subse-
quent changes prompted by the findings of the stakeholder analysis.

Participation in multi-stakeholder groups

Acciona participates in various multi-stakeholder groups through the Entorno Fundation, repre-
sentative in Spain of the World Business Council for Sustainable Development, to reflect on a
variety of topics such as energy and climate change, sustainable construction and the wider role
of business in society. The energy working group highlights the imperative to reduce emissions
in electricity, industry, transport and consumption. As a consequence of this group’s work, Ac-
ciona and other companies have publicly committed to work towards a low-carbon economy.
Similarly, the work of the sustainable construction working group focuses on analysing how the
entire supply chain needs to be reworked to become sustainable. The group promotes dialogue
between all agents including experts, governments, consumers and pressure groups. Finally, the
last business working group discusses ways to transform challenges into opportunities to add
sustainable value to society.

Acciona has also created an independent committee of experts which analyses and publically
comments on the company’s annual sustainability reports. It includes representatives from NGOs
and international institutions such as Transparency International, WWF Adena, Spain’s Fundación
Ecología y Desarrollo (Ecology and Development Foundation), the World Bank, Spain’s CECU con-
sumer organisation, Social Accountability International and Living Earth Foundation. Their ques-
tions, comments and observations are posted on the company’s website and published in the final
Sustainability Report.

In 2009 Acciona joined the EU Corporate Leaders Group (CLG), an exclusive business leaders’
organisation which brings together approximately 30 European companies with the shared task of
influencing EU politics with regard to climate change.

Strategic Sponsorship

Acciona supports various events aimed at raising awareness about environmental challenges
and opportunities. For instance, the company sponsored a conference in 2007 drawing atten-
tion to the challenges posed by carbon emissions. It also sponsored the presentation in
Spain of the documentary “An Inconvenient Truth.” Finally, in 2009, Acciona set up a founda-
tion, the Fundación Acciona Microenergía, to support micro energy generation. This founda-
tion is currently engaged in a project to provide thousands of homes in Cajamarca (Peru) with
solar energy kits, using a management model based on microcredit financing.

Business Going Green | Case studies 59

Eco-Innovation - Development of green products and services

Investing in Research and Development

By positioning itself as a leader in renewable energy, Acciona has profoundly transformed its prod-
ucts and services. Acciona set a record in R&D investment in 2009. The company reviewed its
R&D Strategic Plan and closed a financing deal with the European Investment Bank. The main
features of both were as follows:

• Investment of 92 million Euros in innovation projects, 30% more than in 2008; mainly in en-
ergy and infrastructure divisions;
• Implementation of more than 100 research projects grouped into 15 lines of research con-
nected to Acciona’s business lines: Nanotechnologies, new sustainable construction material,
wind energy technology, hydrogen production technology and water desalination; and
• A total of 377 professionals involved in R&D; managing currently a portfolio of 52 patents.

Renewable energy development

With zero levels of contamination, wind energy stands today as the most efficient form of alterna-
tive energy. In Spain, the first wind farms were built in 1995. Acciona is active in this sector in all
areas, from designing turbines to selling the energy produced. It has set up more than 163 wind
farms across the world for itself and its clients, generating 4,357 MW. This considerable amount
of wind power assets makes Acciona the world leader in the development and installation of wind
farms.

Solar energy is another widely recognised clean source of power. Acciona is involved in all tech-
nologies in this sector: Concentrated Solar Power (CSP), photovoltaic and thermal. The company
owns 97% of the world’s largest CSP solar plant in the United States. It is also developing the
same technology in Spain.

Acciona has also set up three biomass energy facilities, using plant waste as fuel to produce
electricity.

Internal environmental performance

Acciona’s Environmental Efficiency Plan is the main tool to coordinate its environmental improve-
ment initiatives, with a view to improving the company’s efficiency ratios. The first stage of the Plan
(2008-2011) lays down the efficiency measures intended primarily for all of the company’s office
premises. The second stage will be launched in 2010 (running until 2012) and it will introduce
efficiency measures in all Acciona production centres, both at home and abroad. Emissions in
2009 were down 30% from 2008.

60 Business Going Green | Case studies

In line with the new policy, environmental data is now carefully gathered and monitored throughout
the company. Emissions tracking is closely linked to each sector of the organisation to enable ap-
propriate decisions to be made to reduce the company’s carbon footprint. In 2009, energy inten-
sity dipped 46% from 2004, while carbon intensity fell by 44%. Finally, 82% of production was ISO
14001 certified in 2009 (compared to 58% in 2005).

Energy Intensity Index (TJ/€ turnover)

100
100 95
81 78
80

60 55 54

40

20

0
2001 2002 2003 2004 2005 2006

Source: Acciona website.

Carbon Intensity Index (TCO2/€ turnover)

100
100 97
85 84
80
58 55
60

40

20

0
2001 2002 2003 2004 2005 2006

Source: Acciona website.

Business Going Green | Case studies 61

Evolution of Carbon footprint (Millions of tCO2)

10

9 8.70

7 6.87
6.51
6 5.60
5

2 1.64 1.74
1.28 1.11
1

0
2006 2007 2008 2009

Emissions generated Emissions avoided

Source: Acciona website.

Eco-efficient buildings

Acciona is a pioneer in the construction of eco-efficient buildings which keep energy consumption
down to a minimum and which integrate renewable energy sources to provide maximum comfort
and habitability. Acciona has built the world’s very first zero-emissions building in Pamplona, Spain:
Acciona’s Solar Energy headquarters. It is fitted with 110 kW of thermal solar panels, 50kW of
solar PV, a geothermal installation and a biomass cogeneration unit. It reduces the energy needs
to 44% of those of a standard building, the rest being covered by renewable energies and thus
saving 129 tones of CO2 emissions per year.

Lessons Learned

Cultural Change: a commitment of top management

1. Secure the personal involvement of the top leader(s) towards the new strategy. The CEO’s
commitment was essential to involve the entire company in the process of change from a tradi-
tional construction company to a pioneer in sustainable development, showing the way to follow
for other employees.

2. Dedicate time and resources to train employees and make them understand the new environ-
mental challenges. The group launched internal and external communications campaigns, confer-
ences and learning programmes to raise awareness amongst its staff.

62 Business Going Green | Case studies

3. Develop employee engagement tools to involve all collaborators in the journey. The company
prepared best practice manuals, online courses and measurement software and it is currently
studying linking salaries to environmental performance to assure everybody’s commitment at all
levels.

Open Collaboration - Dialogue With Strategic Stakeholders

4. Get the public at large involved through innovative educational campaigns on environmental
issues. This communications scheme can help build a positive image for society and increase the
company’s green positioning.

5. Be open to independent stakeholder reviews. Feedback from key stakeholders has improved
the company’s own policies and brought transparency and trust to the change process.

Eco-Innovation - Development of green products and services. To Green Services

6. Embed eco-innovation in Research and Development. The company is currently investing heav-
ily in clean technologies to become the leading provider of sustainable infrastructures for society,
drastically reducing its carbon footprint and taking part in the new green economy.

7. Invest strategically to strengthen the company’s positioning. Carefully chosen business ac-
quisitions have helped the group to start to consolidate its shift to becoming a sustainable energy,
water and infrastructures supplier.

Business Going Green | Case studies 63

Scandic6

Name SCANDIC HOTELS

Sector Hotel industry
Headquarters Stockholm, Sweden
Number of employees 6,496
Number of hotels 138
Turnover €661 Millions Euros
Capital Onwed by EQT, a private equity fund based in Sweden
Present in Sweden, Denmark, Finland, Norway, Estonia, Lithuania, Germany, the Netherlands,
Belgium and Poland.
Certifications Nordic Swan or EU flower
Energy policy 100% renewable energy in Sweden with the objective of extending this to all
countries where the hotel chain operates.
Waste policy Minimise the use of plastic from fossil fuels in both infrastructures and
consumption.
Carbon policy Carbon emissions have decreased by 72% since 1996, and the objective is to
become carbon neutral by 2025.
Water policy No bottled water is sold at the hotels; use efficient taps and low flush toilets.
Vision Creating value by being the place and inspiration for conscious people in a better
world.
Data: 2009.

The story thus far 6 We would like to thank Inger

Mattson, Manager of Sustain-
able Business, who kindly
Created by Exxon in 1963 as a motel chain, Scandic rapidly became the shared with us her experience
in Scandic’s change process.
largest Swedish hotel company and expanded across Scandinavia. Badly 7 For more information on the
affected by the Gulf War and the escalating oil prices, the chain suffered Natural Step concept and
methodology, please refer to
three years of consecutive losses. To turn the company around, a new the section called “Culture” in
management team was hired in 1994. They soon realised that, with all the Introduction of this paper.
the other chains improving the quality of their facilities and rooms, qual-
ity alone would not be sufficient to differentiate themselves. A better way
to gain competitive advantage, they decided, would be to create values
that guests could engage with and that employees could use as a guide
to carry out their tasks. They contracted the newly created “Natural
Step”7 group to guide them through the process of incorporating sustain-
able values. The idea was that “no company can avoid taking responsibil-
ity for the environment.” The changes in strategy survived the change of

Business Going Green | Case studies 65

ownership and continued to be a strong part of the company’s identity after it was successively
bought out by Hilton in 2001 and then by EQT in 2007.

Fifteen years later, Scandic has gained significant competitive advantage due to its environmental
positioning:

• It has built a company culture by synergising values. In 1994, the new management team
developed the brand around a vision of sustainability. This positive view of the future enabled
the chain to find common principles to harmonise the work of all its employees and to clarify the
brand’s values.
• It has developed a clear marketing position. One of the first hotels chain to actively start
working on the triple bottom line, Scandic created a real competitive advantage and built a
reputation by positioning itself as a “green” chain. It is difficult to measure how much this posi-
tioning has influenced client choice. Some customers are truly committed and manifest their
identification with the brand’s environmental values; the majority, however, do not voice their
interest in environmental policies. The company’s real marketing position has been gained
through corporate clients. In fact, their interest in Scandic’s environmental strategy has cer-
tainly grown over the last few years as their own environmental travel policies have been devel-
oped. They now systematically check hotel performance in this area before signing contracts.
• Scandic has drastically improved its carbon footprint. It is now a very popular concept. In
1996, however, it was much less well-known. Nevertheless, in 1996, Scandic started calculating
its footprint with the objective of decreasing its fossil emissions. And it did just that with a 72%
decrease in CO2 emissions per guest and night in 13 years.
• It has added significant value to the company. In fact, both Hilton and EQT’s interest in the
Scandic chain was reinforced by its environmental positioning. They were convinced that it of-
fered a competitive advantage and both companies worked to keep the chain’s culture of sus-
tainability very much alive.

Scandic Hotels Roadmap

1992: A new
management 2004: All
team is 2001: Swedish 2007:
1963: appointed to Scandic hotels are Scandic
First hotel help the chain is bought granted the is bought
created out of the crisis by Hilton eco-label by EQT

1991: 1994: The 2003: Decide 2006: All

Hotel new vision is to gain Scandic
industry launched eco-label for hotels in
affected focusing on their Swedish Sweden,
by the shared hotels Denmark and
Gulf war environmental Norway are
values ecolabelled

Source: Scandic website.

66 Business Going Green | Case studies

Cultural Change – A bold vision transformed into a living culture 8 Refer to the introductory
section on The Natural Step.

A complex social construction, organisational culture is difficult to as-

sess and impossible to measure. Scandic’s Manager of Sustainable
Business believes that “environmental sustainability is deep into the
soul of the company and creates a lot of pride amongst the employees.”

A story and a symbol illustrate the integration of environmental values

within Scandic. A number of employees who joined the chain straight
after university left their positions to join other hotel companies. They
subsequently came back, realising how much Scandic’s culture of caring
for the environment was both important to them and not matched by the
other organisation’s cultures.

At the symbolic level, “Om tanke” is a Swedish expression used exten-

sively within Scandic. It means care and consideration and, when em-
ployed by members of the Scandinavian hotel chain, it refers to the envi-
ronment and guests. It alludes to the notion that their goal is to grow
whilst, at the same time, respecting the people and the environment that
enable them to do so.

How have Scandic’s employees been engaged during the change jour-
ney? What have been the most significant steps fostering a culture ded-
icated to caring for the environment?

Building a “green” culture through a guiding vision

A visionary strategy …

In 1994, the new management team launched a visionary statement

declaring that:

“no company can avoid taking responsibility for the environment and
focusing on environmental issues; Scandic shall, therefore, lead the
way and work continuously to promote both a reduction in our environ-
mental impact and a better environment; Scandic shall contribute to a
sustainable society.”

The direction was set. Between February and April, members of the
Executive Committee attended a Natural Step training session which
gave them an insight on the four scientific conditions for a sustainable
society.8 This vision, combined with an understanding of global envi-

Business Going Green | Case studies 67

ronmental challenges and leverage points for change, led to the launch 9 TNS case study.
10 See The Natural Step case
of a four-part programme: First, integrating environmental priorities in study.
decision-making; second, improving resource efficiency; phasing out
harmful materials; and, lastly, sharing knowledge with employees, sup-
pliers and customers throughout the process.9

In 2009, the company’s vision evolved but it was and still is very much
concerned with having a positive environmental impact. More specifical-
ly, it is measurable and certainly more ambitious than the 1994 vision.
The company’s current goal is to

“create value by being the place of inspiration for conscious people in

a better world; reaching a 100% C02 reduction by 2025, even if this
includes influencing other stakeholders, among them district heating
companies. If you lead the way and take responsibility, you earn cred-
ibility and all stakeholders are winners, the energy industry, us, our
guests and the planet.”

… developed in a participative way

The company’s first environmental vision and strategy were developed in

1994 by the management team after engaging with stakeholders and
analysing their concerns. Employees were key participants. They were all
engaged in the process through a company-wide dialogue. Each team in
each hotel met to discuss the new vision and exchange ideas regarding
actions that could be taken to improve the hotel’s performance locally or
at the chain level. An “environmental networker” was selected in each
hotel to facilitate the process and share lessons learned with other de-
partments. A year and a half after the launch of the vision, 1,500 actions
were implemented involving 64% of employees.10 This process was par-
ticularly helpful in the creation of new principles as it gave all employees
a say in the matter, recognising their value whilst, at the same time, en-
suring they understood the new strategic direction.

Maintaining the momentum through engagement and training

Whilst it is difficult to engage employees with a new strategic direction,

it is also complex to maintain momentum in the same direction over the
years. Training and continuous engagement with employees have helped
Scandic keep its environmental performance as an important part of its
internal standards. The Swan certification also ensures that employees
are briefed on the company’s environmental concerns when joining the

68 Business Going Green | Case studies

firm, that they are informed regularly about the company’s environmental performance and that
they are continuously trained on general environmental issues and on issues related to their spe-
cific areas of work.

In 1994, all employees were trained by The Natural Step. Environmental training is now part of
every employee’s integration process. A further training programme designed to provide a global
understanding of environmental issues, challenges and stakes is also available on the company
Intranet. Furthermore, each team and department is responsible for training its own team mem-
bers on the environment so that they gain more targeted knowledge.

Monitoring environmental performance and integrating environmental targets and procedures in

each team is another way to engage staff members. Every month, a meeting is held in each hotel
where the management team discusses performance and, in particular, environmental perform-
ance. There is also a self-audit tool available on the Intranet that every hotel manager must com-
plete to check if they fulfil Scandic’s standards including those referring to environmental sustain-
ability. Finally, there is at least one meeting a year in each hotel to discuss overall hotel performance,
and it always includes performance about the environment.

Overcoming resistance through integration

To ensure that environmental considerations remain mainstream, responsibilities and standards

are integrated within different technical areas and at several hierarchical levels.

The Manager of Sustainable Business is responsible for “providing information and inspiration
around sustainability (both environmental and social) and to coordinate the work around sustain-
ability for the entire chain.” Whilst this Manager reports to the Director of Human Resources, she
works directly with the environmental coordinators who have different levels of technical exper-
tise. There is one coordinator in each of the 138 hotels. The coordinators volunteer to be in
charge of environmental issues in addition to their respective tasks. They are responsible for
setting environmental targets for their specific hotels, maintaining a flow of information around
environmental issues, ensuring that environmental measures are met and, finally, serving as in-
spiration for others within the hotel and identifying potential sources of innovation. To ensure
cohesion within countries, three managers supervise the coordinators in the largest countries of
operation: One in Norway (13 hotels), one in Denmark (23 hotels) and one in Finland (20 hotels).
These three Country Managers are part of the respective countries’ management teams and also
hold other technical functions.

Scandic is very centralised to ensure coherence between the hotels, with specific manuals to help
guide employees with their daily tasks. All these manuals contain a section on the environment.
In addition, all environmental coordinators also have technical responsibilities to help integrate
environmental considerations within the different departments and not relegate these tasks to a
single part within the organisation.

Business Going Green | Case studies 69

Open Collaboration - Influencing the supply chain and direct stakeholders

Extending sustainability targets to suppliers

Certainly the most impressive aspect of Scandic’s collaborative work is having successfully en-
couraged its suppliers to improve their own environmental performance. Scandic’s Supplier
Agreement is preceded by a Declaration through which the supplier commits to work towards The
Natural Step’s four-system conditions. The agreement also asks companies to set measurable
targets and encourages them to think about internal training and communications on sustainabil-
ity issues.

In the beginning, suppliers were surprised by these requirements; they were not sure how to deal
with Scandic’s new standards. Over the years, influenced by the bargaining power of the company,
most of them have made the effort to change their systems and behaviour to maintain their com-
mercial ties with the hotel chain. For Scandic’s Manager of Sustainable Business, “what we have
achieved is a real understanding and commitment from our suppliers so if we go back to them and
ask their support or help on an issue, they are prepared and very willing to do it and I am often
surprised at how offensive they are.”

The relationship between Scandic and its principal detergent provider provides an illustration
of the level of commitment reached. The chemical company has set targets to ensure that the
level of non-ecological detergent bought by Scandic does not reach a certain level. If it does,
the company alerts Scandic immediately. In traditional commercial terms, this measure makes
little sense. Why would a company set itself targets to freeze or even decrease its sales? How-
ever, understanding the strategic environmental shift within the hotel has enabled this supplier
to keep this particular client.

Influencing building owners

Scandic hotels are managed in operations only which means that the buildings in which
they are housed do not belong to the company. As a result, the hotel chain has little direct
power, in principle, to choose the material used outside the bedroom furnishings. However,
in practice, a lot is done to influence the building owners’ decisions, maintaining constant
conversations and negotiations with them. Conflicts of interest are frequent. For example,
though an energy efficiency measure may benefit Scandic and reduce the costs of its op-
eration, it may also increase building investments. A middle ground is often found in which
Scandic accepts to pay higher rent for a more energy efficient investment.

A long-term partnership with The Natural Step

The partnership between The Natural Step and Scandic hotels played a major role in shaping the
hotel chain’s vision in the early 1990’s. The Natural Step provided a scientific understanding of

70 Business Going Green | Case studies

what could constitute a sustainable society through its four-system con- 11 For a list of all actions,
please visit Scandic’s website:
ditions training. Equip­ped with a certain level of knowledge of the “bigger http://www.scandichotels.
picture”, Scandic’s management team was thus more likely to identify com/betterworld
leverage points of action within their context. The Natural Step also ac-
companied the hotel chain in the implementation process. In particular,
it provided widespread training to all 6,000 employees.

Today, The Natural Step conditions are still the core basis behind Scan-
dic’s work on sustainability. “The Natural Step today is more like a friend
than a partner, we share experiences; their spirit is in the company.”

Eco-Innovation - Green labelling and eco-rooms

The series of actions and steps taken by Scandic hotels to reduce their
environmental footprint11 has clearly taken them in the right direction.
The figure below compares the level of consumption per night and guest
and demonstrates a clear improvement between 1996 and 2006.

Comparative consumption table per night and guest

100%

80%

60%

40%
5.14 Kg CO2

3.57 Kg CO2

5 Packages

0 Packages
54.14 kWh

44.96 kWh

253.22 l

217.53 l

20%
1.5 kg

0.5 kg

0%
Electricity CO2 Water Waste Packages

1996 2006

Source: Scandic website.

Swan: Eco-labelled hotels

All Scandic hotels in Sweden are SWAN certified. The company’s hotels
are required to work towards the Swan certification in Scandinavia and
towards the EU Flower certification in the rest of Europe. Through on-site
inspections, both certifications recognise the hotels’ respect for a com-

Business Going Green | Case studies 71

prehensive range of standards including performance in the areas of energy, operations and main-
tenance, hotel premises & purchased products, hotel rooms, kitchen & dining, cleaning & launder-
ing, and waste & transport. Mandatory requirements include, for instance, the use of timers for
outdoor lighting, an orientation programme for new employees on the environment within their first
30 days, the non-use of disposable items in the kitchen and a ban on particularly harmful chemi-
cals.

Buildings going green: The eco-room

Because the core of Scandic’s services relies on the rooms it provides to its guests, a guide has
been developed to ensure that environmental standards are respected when refurbishing or build-
ing new rooms. SEREC (the Scandic Environmental Refurbishment Equipment and Construction
Standards) defines three lists of materials: Those which have to be banned, those which are ac-
ceptable and those which are recommended. This list has been developed based on The Natural
Step conditions. A wider approach is currently being developed, though not only looking at materi-
als but also lifecycles: Where materials come from, how long they last and what happens to them
when they leave the hotel.

Measuring performance

The Sustainability Indicator Reporting tool is used in each hotel to prepare monthly reports on
resource consumption, specifically in terms of water, waste, laundry detergent, chemicals, vehi-
cles, etc. It enables Scandic to keep constant track of its environmental performance. This tool
automatically uploads data to a section on the website which provides this information to the
public and ensures transparency.

Lessons Learned

Cultural Change – A bold vision transformed into a living culture

1. Put culture at the centre of the change process. Culture is crucial to transform in favour of
environmental sustainability and to maintain the momentum with all employees. This is probably
even harder in the service industry where operations rely on employees’ beliefs and willingness to
incorporate new values.

2. Engage with employees from the beginning with basic steps. The company engaged people
before deciding what was needed and planned few actions at the start. It then evaluated its foot-
print and developed its plans to reduce its emissions. Scandic’s dialogues with its employees
were central to trigger the generation of new ideas and ensure a good understanding of the com-
pany’s new direction.

3. Develop training programmes and staff empowerment. Scandic launched a large training event

72 Business Going Green | Case studies

at the start of the strategy process to educate all its staff followed by orientation programmes for
new employees and ongoing training for all others.

4. Ensure the integration of sustainability throughout the company structure. At Scandic, change
agents, called “sustainability champions,” are key to maintaining the momentum and mainstream-
ing environmental actions across the organisation.

Open Collaboration - Influencing the supply chain and direct stakeholders

5. Use bargaining power to influence the supply chain. Suppliers and customers represent a core
part of the opportunities for success. Good practices in procurement policies can make the change
process significantly easier.

6. Work with and lobby other strategic business partners. Scandic works continuously with build-
ing owners to influence their decisions. They lobby them to make the most environmentally-friend-
ly decisions.

7. Partner with external environmental organisations. Scandic has maintained a strategic col-
laborative agreement with a specialised environmental NGO since the beginning of the process to
set up the strategy and raise awareness among its stakeholders.

Eco-Innovation - Green labelling and eco-rooms

8. Get green certifications for innovative products. External certifications of Scandic’s sustaina-
ble services serve to consolidate its competitive advantage through green marketing, transpar-
ency and instilling trust among its customers.

9. Measure the company’s footprint, develop performance indicators and communicate progress.
The company permanently monitors its environmental impact, indicates its short and long-term
goals and informs about its progress.

Business Going Green | Case studies 73

Havas12

Name HAVAS
Sector Advertising and communication services
Headquarters Paris, France
Capital Bollore group (France, 33%), Rodes group (Spain, 2%), stock exchange (France, 65%)
Number of employees 14,400
Turnover €1,441 million
Present in More than 100 countries
Member of Global Compact, World Business Council for Sustainable Development , Tck Tck
Tck Campaign (Time for Climate Justice)
Carbon policy Commitment to reduce the carbon emission of 10% between 2010 and 2015
Visión Influence consumer behavior to address major issues facing the world
Data from Annual Report 2009.

Havas is the seventh communications group in the world structured 12 We would like to thank
Anne Courtois-Degorce, Direc-
around two business units: Havas Media and Havas Worldwide. The tor of Sustainable Business,
incorporation of sustainability concepts has just started within the and Guy Champniss, Director
of Global Business Insights,
group. Several strategies are currently being studied to determine who kindly shared with us
how to best integrate the triple bottom line approach within the their experiences during Ha-
vas’ change process. Facts,
services the company offers its clients. 2010 will be a key year in images and data were ob-
shaping this direction. Though the roadmap is not yet finalised, Ha- tained from Havas websites
and reports.
vas has already identified and taken many steps. They deserve a 13 Sustainable Futures, Ha-
closer look. vas.

A challenge for the communications industry

Clearly, advertising groups are ideally positioned to observe and ana-

lyse emerging consumption trends. Havas Media Intelligence recog-
nises that contemporary societies are increasingly concerned about
their long-term capacity to sustain themselves. In parallel, consumers
appear to trust large corporations less. Merging these two findings
has led Havas to identify a real opportunity to use sustainability “as
the foundation stone upon which to rebuild trust with consumers and
a wider stakeholder group.”13

In fact, NGOs, think-tanks and consumer groups are increasingly scru-

tinising marketing campaigns that use sustainability messages. For

Business Going Green | Case studies 75

instance, in France, an independent advertising observatory14 has 14 http://observatoirede-
lapublicite.fr/
been created by an alliance of NGOs to inspect publicity promoting 15 The term, “greenwashing”,
“green” attributes of different products, services or companies. The is broadly used to identify
advertising practices which
observatory uses its website to broadcast images and videos that seem to be environmentally
they consider abusive. They also prepare an annual public report to virtuous but, in fact, provide
false or partially true or irrele-
alert consumers on advertisement using messages considered to be vant information on the nature
“greenwashing.”15 of the product, service or com-
pany.
16 Sustainable Futures, Ha-
In this context, an internal survey was launched amongst Havas’ agency vas.
directors who recognised the need to advise their clients on how to use
sustainability messages. Fernando Rodès, Havas CEO, emphasises the
group’s “commitment to helping our clients understand and leverage the
opportunities from more sustainable practices.”16 With that commitment
recognised, the next questions are necessarily, what kind of advice
should they give other companies and how will the group integrate this
new accountability internally?

Greening ads

Environmental and social sustainability have only recently started to be

considered within the marketing and communications sectors. According
to Anne Courtois-Degorce, Director of Sustainable Business at Havas, it
is one of the last sectors to join global conversations on the topic. As a
result, there is little clarity around what constitutes the successful inte-
gration of sustainability within advertising campaigns, for instance. Is
there a need for more factual transparency or for fewer, more targeted
environmental messages? Which change model should be encouraged?
For Anne Courtois-Degorce, the question is really about transforming the
way the sector works: First, screening for and preventing negative mes-
sages and, more importantly, encouraging the use of more positive mes-
sages. It is about managing the paradox of marketing more consumer
goods in a finite planet. And it is about transforming the mainstream
paradigm which is still centred on principles of self-satisfaction and im-
pulsive needs.

Cultural Change – Overcoming resistance to lead the sector

There is a consensus at Havas that cultural change is the necessary

central element to successfully integrate sustainability concerns. In fact,
people are the group’s central asset. So what is the strategy to trans-
form internal behaviour and paradigms?

76 Business Going Green | Case studies

Commitment from senior management 17 Havas Communication on
Progress for Global Compact
(COP).
At the top of the company, Fernando Rodès, Havas CEO, has publicly
stated his commitment to sustainability. His ambition is to “lead and set
more ambitious goals for the whole sector (…). To be responsible for us
means that our communication campaigns have a benefit impact on hu-
man beings and offer more choice and possibilities to consumers.” Fern-
ando Rodès believes that sustainability is “more than just a trend” and
advocates the need for strategic corporate shifts which he sees as nec-
essary for companies to survive over the long run.17

Therefore, at the beginning of 2009, the group began implementing an

action plan aimed at transforming cultural values. The first step was the
creation of the Director of Sustainable Business position in April 2009
based out of the company’s headquarters in Paris. This position is re-
sponsible for coordinating all sustainability initiatives and fomenting cul-
tural change. This will be done through the implementation of an internal
“network of champions.” These champions were identified and the group
was scheduled to begin to work in 2010. Activities will consist of training
programmes and the establishment of a management information sys-
tem with progress indicators.

To strengthen the integration of the new vision, further proposals are

currently being studied. Potential directions include the creation of an
international group whose task is to build expertise, prepare case stud-
ies and train a panel of experts to guide decision-making.

A challenging cultural integration

There are several obstacles to the integration of sustainability within

Havas’ culture. First, the flat nature of the structure which has, thus far,
been an undeniable asset for the company, enabling it to adapt to local
contexts, will make it difficult to impose a corporate vision of sustainabil-
ity. The challenge will be to integrate new concepts without burdening
local agencies (14,400 employees in more than 100 countries). Sec-
ondly, the notion of social and environmental sustainability is quite far
from the traditional common paradigms shared amongst publicists. No-
tions of self-satisfaction and impulsive buys are not aligned with promot-
ing the responsible use of natural resources. Finally, there seems to be
a general fear of addressing these issues, questioning whether advertis-
ing experts should really engage in conversations based on the ecology
and the environment. Guy Champniss, Director of Global Business In-

Business Going Green | Case studies 77

sights, believes there is a need to build a wider acceptance of the fact that environmental sustain-
ability is an emerging issue requiring experimentation and not only in-depth expertise.

Engaging, training and monitoring

In 2008, the Havas Group started to train its employees and encourage them to be more virtuous
environmentally, both in their professional and personal environments. In the workplace, the
company particularly encouraged using public transportation or carpooling for commuters, using
video conferencing technology whenever possible instead of air travel, duplex printing and the
increased use of servers developed by IT Departments, switching off computer workstations and
printers at night.

Open Collaboration – An alliance with and beyond the industry

At Havas, partnerships are developed locally with national institutions. The possible creation of an
international panel of experts is the first global collaboration on the sustainability issue at Havas.
However, it seems that the central element is really the relationship between the agencies and the
advertisers.

Developing and sharing tools together with the whole supply chain

In the eco-publicité project earlier, Havas collaborated with different partners such as ADEME (the
French agency promoting energy savings), the luxury group LVMH and consulting company Pricewa-
terhouseCoopers to develop one of the first tools to measure advertising campaigns’ environmen-
tal performance. Available free of charge on internet, this tool analyses the campaign’s lifecycle,
taking into account indicators such as energy, water, waste and emissions.

Screenshot from the eco-publicité web tool

Source: www.ecopublicite.com

78 Business Going Green | Case studies

Originally, the project was launched after the meeting between several complementary players in
the communication industry’s entire supply chain. Havas Media France, as a service provider, was
considering ways to advise its customers regarding these sustainability issues. ADEME, as a
French public body focused on environmental awareness, was interested in a precise tool to meas-
ure campaign impacts. LVMH, a major advertiser, wanted to understand the ecological footprint of
its communications. Finally, PwC, through one of its company specialists in Lifecycle Analyses, was
able to provide the technical solutions. The shared interest in sustainable development issues
and a true complementariness of skills and experience created the necessary atmosphere of un-
derstanding for such a sensitive topic.

Taking part in local and international committees

Havas also participates with different initiatives at the local and international levels. For example,
it is a member of ORSE, the Observatory for Corporate Social Responsibility, a French network
designed to study and promote socially responsible investment (SRI), corporate social responsibil-
ity as well as all sustainable development-related issues.

At the global level, Havas is member of the World Business Council for Sustainable Development
(WBCSD), a CEO-led, global association of approximately 200 companies dealing exclusively with
business and sustainable development. The WBCSD provides a platform for companies to explore
sustainable development, share their knowledge, experience and best practices, and to advocate
business positions on these issues in a variety of public and private forums. Havas was also heav-
ily involved in the global campaign TckTckTck to raise awareness and lobby the international com-
munity in order to reach an ambitious, fair and binding carbon reduction commitment during the
Copenhagen summit in 2009.

Eco-Innovation – From mitigating environmental impact to eco-intelligence

What needs to be changed in Havas internal operations? Havas is applying the traditional ap-
proach of “green officiency,” mitigating the environmental impact of running an office. In parallel,
in its attempt to lead the paradigm shift in the sector, Havas is currently investigating how more
systemic, sector-wide change can be encouraged by integrating sustainability issues within the
services offered its clients.

Mitigating its direct impact

Traditional environmental audits analyse how the company’s direct impact can be mitigated.
Whilst visible impacts can be significant in manufacturing industries, service industries gener-
ally look at managing their carbon footprint through transport schemes, waste management
systems and improved supply chain management. Havas is doing just that with its threefold
commitment:

Business Going Green | Case studies 79

 • Carrying on with the carbon footprint scheme implemented in 2008, 18 Havas group’s 2009 Com-
mitments & CO2 Assessment
aiming to decrease its impact by improving transport and energy con- 19 Recommendations for
sumption policies; green communication plan­
ning, Catalyst, Havas Media.
• Reducing the use of natural resources and paper, in particular; and
• Reducing waste and increasing recycling.

In 2009 an external group carried out a complete assessment of total

CO2 emissions amongst all Havas agencies (direct and indirect emis-
sions – excluding communication campaigns). In 2008, emissions
reached 132,000 tonnes of CO2, with an average of 9t per employee
(from 6t in France up to 14t in the USA). The target is now to decrease
this figure 10% by 2015.18

Whilst this approach is a satisfactory first step, it does not trigger sus-
tainable innovation.

Developing sustainable products and services

Whilst the discussions on environmental issues have only just begun

and decisions on how to integrate sustainability concepts have not been
made, some initiatives have already been implemented, giving a hint of
their potential development in operations.

• 10 Commandments19 – a charter to guide green communications

This charter recognises that, in the very complex context of environ-
mental sustainability (a concept which has not even been consensu-
ally defined), there is a need for guidance on and clarity of green mes-
sages. With this document, Havas provides 10 directives to channel
green communications. The group recommends refraining from the
temptation of depicting a brand as a “green hero,” in other words,
avoiding greenwashing. It also emphasises the need to engage with
broader stakeholder groups, not merely the end consumers. It advises
that issues such as climate change and environmental degradation
should be looked at positively, highlighting the opportunities for
change.
• Eco-publicité: A platform to monitor ads’ environmental impacts
As mentionned earlier, “Eco-advertising” is a tool developed in collabo-
ration between Havas Media, Ademe and PricewaterhouseCoopers
which seeks to measure the environmental performance of a given
advertisement campaign. The objective is to analyse its entire lifecy-
cle, taking into consideration key indicators such as the use of energy,
water, waste and emissions generated.

80 Business Going Green | Case studies

 • “Sustainable Future 09”: A consumer study to develop sustainable strategy
Havas Media Intelligence believes that the real strength of a company will not only be based
on the efficiency of its sustainability strategies but also on its ability to translate these ef-
forts into long-term brand equity. To test this assumption and create a business case for
sustainability, Havas Media Intelligence commissioned a consumer study spanning 9 coun-
tries and studying 8 industries in each country. An indicator was developed, the Sustainable
Futures Quotient, measuring not only a brand’s environmental and social performance but
also the contribution of this performance to brand equity.
The results of the study are used to demonstrate to clients the need to integrate sustainabil-
ity concerns. In fact, the study found that 80% of consumers value responsible companies
positively and think that businesses should engage with sustainability issues. 48% of con-
sumers say that they would accept to pay a premium for a more responsible product though
68% see claims by companies as untrustworthy and consider them as mere marketing ploys.
The study provides evidence of the need to offer “compelling, authentic and materially rele-
vant” messages in this area to restore consumer trust.

Lessons Learned

Cultural Change – Overcoming resistance to achieve sector leadership

1. Invest heavily in transforming the company’s values and mindset. As culture is fundamental
in the service industry, Havas identified the champions and retractors of the change, creating a
network to convince all of them.

2. Secure the involvement of the leader(s) that inspire others to follow. Havas’ CEO clearly ad-
vocated the transformation of the group towards sustainability. Other top executives are also lead-
ing public initiatives to promote the new culture.

Open Collaboration – An alliance with and beyond the industry

3. Strengthen relations with strategic industry partners. The company involved its main stake-
holders such as public bodies, suppliers and clients to engage the whole sector in a systematic
change towards.

Eco-Innovation – From mitigating environmental impact to eco-intelligence

4. Implement measures which will provide quick wins. The carbon footprint analysis directly
presents concrete data with which to engage. Water, paper and waste use are in the process to be
measured and reduced through public commitment.

5. Develop eco-innovative products and services. Havas has broadened its business model, in-
corporating new sustainable studies, methodologies and assessment tools.

Business Going Green | Case studies 81

Final conclusions and recommendations

The initial object of this study was to analyse how companies change to incorporate environmental
sustainability concerns in their policies. We were particularly interested in how the change process
itself was managed. How do businesses start to transform once they have made the decision to
work towards environmental sustainability?

The initial review of literature suggested that three axes were of particular interest when adapting
a company’s activities to environmental challenges: Culture, collaboration and eco-innovation. The
analysis of the four selected case studies confirmed the importance of these elements. Whilst we
can extract lessons and provisional recommendations from the study of the literature and the four
companies analysed, we understand that these recommendations have not been quantitatively
tested. The four companies have all made a strategic change to incorporate environmental sus-
tainability internally. We deliberately chose businesses from different sectors and different loca-
tions to broaden the wealth of the lessons learned.

Cultural Change – Embed sustainability into the company’s DNA

The literature review in the first part of this study suggested that four main measures were central
to changing the culture of an organisation: Designing a vision, expanding communications during
the change process, developing training programmes to empower employees, and, finally, ensur-
ing integration through leadership.

Have all or some of these elements been applied by the four companies studied?

It is important to note that all of our four case studies have considered organisational culture
during their respective transformation processes. Whilst culture might not be the first element
coming to mind when thinking about sustainability and adapting to environmental challenges, it
appears as one of the keys for a successful change process for sustainability as well as one of
the areas in which most difficulties arise.

Our analysis of the change at Scandic and Havas suggests that culture is absolutely central
to transform service-oriented companies towards environmental sustainability. After 15 years
of efforts to make the business ‘greener’, Scandic Hotels found that the hardest task was
actually maintaining the momentum of change with all 6,600 employees. In fact, whilst poli-
cies and procedures can be written to accompany employees in their tasks, operations in a
service industry rely on employees’ beliefs and willingness to incorporate new values. At Ha-
vas, internal resistance to change and the willingness to maintain more ‘traditional’ concep-
tions of communications and advertising are a serious threat to the success of the company’s
‘green venture’.

Combining our initial model of cultural change and the study of Scandic, Desso, Havas and Ac-
ciona, four ways to transform organisational culture can be highlighted as particularly relevant.

Business Going Green | Final conclusions and recommendations 83

1. Design a disruptive, positive and ambitious vision.

The four companies studied have developed a series of aims, goals and objectives in the sustain-
ability area. In some cases, this ambitious and positive vision was developed with help from exter-
nal consultants and supported by scientific methodologies.

Coming from a situation of crisis, Desso chose to use the ‘Cradle to Cradle’ philosophy and meth-
odology to support its vision. Critical to the success of the company’s strategy was the bold and
ambitious vision of transforming the whole company to become 100% ‘Cradle to Cradle’ certified.
This decision implied making heavy investments, thinking long-term and making a strong commit-
ment to implement the necessary changes towards sustainability.

Scandic chose to design its vision of sustainability in collaboration with its employees. Engaging
all its staff from the beginning of the process made them aware of the challenges at stake as well
as the opportunities that the new direction represented. Organising dialogues with employees was
also fundamental to generate ideas that were closer to the reality of the company.

For both Desso and Scandic, working in collaboration with external consultancy firms (Cradle to
EPEA and The Natural Step, respectively) ensured that their ambitions were aligned with the envi-
ronmental challenges and wider ecological issues that their industries faced.

In contrast, both Havas and Acciona developed their green vision as a pro-active strategy to an-
ticipate the disruptive change perceived for their sector (the rise in consumers’ environmental
expectations for Havas and the real estate crisis for Acciona). This strategy has also allowed them
to differentiate themselves drastically from their competitors, diversify into new growing markets
and mobilise their employees to reach new goals.

2. Engage and empower employees and partners.

The four companies have created specific materials to engage and/or empower their employees
with respect to change processes. Acciona created best practice manuals, online courses and
measurement software. Scandic developed a large training event at the launch of the strategy
followed by automatic orientation programmes for new employees and ongoing training for oth-
ers. Havas is looking at developing a three-step plan aimed at engaging, training and mentoring
its employees. Desso measures team performance in relation with Cradle to Cradle objectives.

It seems that, whilst it is important to educate employees during the change process, this training
should also be part of the orientation process for new hires and reinforced and updated regularly
when the company is back to ‘business as usual’.

The introduction of Key Performance Indicators to evaluate employee and department perform-
ance is starting to be used to align the company’s vision with the staff’s individual behaviour.

84 Business Going Green | Final conclusions and recommendations

3. Secure the leader and top executive’s endorsement and commitment.

Whilst true for all major change processes, counting on the leaders’ endorsement seems particu-
larly crucial for the success of an environmental sustainability strategy. In fact, the ideological
perceptions surrounding environmental concerns are so personal and so linked to values and
beliefs that only by exercising leadership can one convince organisations regarding the need to
change and to inspire employees to follow their direction.

Acciona, Desso and Havas’ CEOs have all used their charisma and personal power to foster the
integration of environmental sustainability in their companies’ strategies. They actually took per-
sonal risks as substantial shareholders in the companies they lead. This is the definitive proof of
their profound and irreversible commitment to sustainability in the eyes of the other shareholders,
staff and society.

Another unusual aspect in this change management is that these visionary leaders didn’t actually
have specific knowledge about environmental sustainability at the beginning of the process. They
learned about it from readings, conferences, training programmes or meetings with environmental
experts. They understood that sustainability was essential for the future of their businesses and
took the risk to use their company as a laboratory to implement ad hoc strategies and lead the
change.

4. Maintain new values alive throughout the organizational structure.

With more than 15 years’ experience in sustainability, Scandic is a company which can provide
the longest insight on the change process towards sustainability. At Scandic, change agents
(called “sustainability champions” internally) are key to maintaining the momentum and main-
streaming environmental actions across the organisation. They all have other expertise (from
financial to maintenance) and voluntarily take on environmental responsibilities. This suggests
that adapting the structure of the organisation to incorporate environmental benchmarks and
responsibilities within each team can be particularly effective.

Desso, Havas and Acciona have also changed their operational structures to integrate environ-
mental issues deep within their organisational charts. ‘Quality Assurance’ and ’Environmental Di-
rectors’ have become ’Sustainability’ and sometimes ‘Innovation, Managers’ with more profound
and wider functions. This has helped to raise awareness and commitment both internally and ex-
ternally.

Open Collaboration – Partner with strategic stakeholders

The breadth of the environmental challenge suggests that a company’s or an individual’s iso-
lated efforts, even if important and praiseworthy, will not have an impact by themselves. Environ-

Business Going Green | Final conclusions and recommendations 85

mental sustainability calls for collaborative action. The introduction to this study concluded that
four directions could be given to this collaboration: Influencing the whole supply chain, network-
ing with stakeholders such as NGOs, scholars and scientists, looking into external communica-
tions and engagement with consumers; and developing sector clusters through collaboration
with competitors.

The joint analysis of the literature and of the four companies suggests four potentially cumulative
ways of engaging with others in the quest for environmental sustainability.

1. Use your bargaining power to influence the supply chain.

Both Scandic and Desso have used their bargaining power to encourage engagement from their
suppliers. They have had to end certain relations with some of their suppliers but have gained
renewed commitment from most of those who originally endorsed their new policies. Scandic’s
experience emphasises that the supply chain can potentially limit a company’s achievements, but,
if procurement policies are well designed, the supply chain can also represent a key source of new
opportunities.

2. Invest in communications with the consumer base.

Investing in communications evidently provides the twofold advantage of lobbying for wider soci-
etal change whilst, at the same time, improving the company’s image. Companies thus hope to
create a broader consumer base as well as promote general goodwill towards them from regula-
tors and public administrations, which can also be clients and important stakeholders. Acciona
understood the potential of this strategy and invested heavily in communication campaign. Simi-
larly, Desso devoted a great deal of efforts to inform about the ‘Cradle to Cradle’ philosophy. Ha-
vas used the Sustainable Futures study to present worldwide its new focus on sustainability. Fi-
nally Scandic hotel is directly communicating with the customer through specific Better World
website and the hotel facilities.

3. Partner with external consulting organisations.

Scandic and Desso have both worked in extremely close collaboration with organisations special-
ised in accompanying businesses through the change process towards environmental sustainabil-
ity. Working with ‘The Natural Step’ helped the Scandinavian hotel chain to understand the global
environmental challenges and to design a new strategy taking these challenges into account. The
scientific conditions for a sustainable society were seen as a basis for Scandic’s business model.

For Desso, the close partnership with ‘Cradle to Cradle’ framed the carpet manufacturer’s new
identity. Meanwhile, Acciona set up an independent expert committee with environmental NGOs to
improve its sustainability policy.

86 Business Going Green | Final conclusions and recommendations

4. Lobby other key business partners.

The four companies studied mentioned that their sustainability visions have influenced their rela-
tionships with their main business partners. Scandic hotels continuously lobby building owners to
make the most environmentally-friendly decisions. Desso partners with other companies which
have adopted the ‘Cradle to Cradle’ methodology to combine their communications efforts. They
are also encouraging new businesses to join the initiative. Havas is seeking to engage partners
and others companies in the sector to make steps together towards sustainability. Acciona par-
ticipates in different working groups dedicated to environmental issues such as energy and cli-
mate change.

Eco-Innovation – Integrate sustainability in operations and products.

When it comes to fighting large-scale environmental issues such as climate change, water scarcity
or loss of biodiversity, small steps are not the way forward. Deep structural changes are neces-
sary. If a business is serious about transforming itself in order to mitigate the impact of its activ-
ity on the environment, it needs to go beyond carbon footprinting even though the latter is a good
start. As explained in the introduction, among other methodologies and schemes, we refer to the
Sustainable Pathway which emphasises three steps on the road towards sustainability: Planning
for quick wins; developing eco-innovation projects with new green products and services; and stra-
tegically changing systems through re-engineering processes.

The four companies studied have not necessarily followed this exact order but they have all gone
beyond implementing token initiatives to enact deeper changes in their activity structures.

1. Use to reposition the company.

The four companies have integrated eco-innovative projects to strategically position their company
in their sector. Acciona has developed new green markets and effectively changed the core of its
activities, a shift which has been consolidated through business acquisitions. Desso promotes
eco-design as a way to reposition the carpet after a change of ownership and management. Scan-
dic uses environmental values to create a coherent culture which can engage both customers and
employees. Havas is “helping its clients to understand and leverage the opportunities from more
sustainable practices, through study and internet tools.” thereby improving its strategic positioning
in the ads industry.

2. Promote the change through green certifications.

Certifications have been helpful for the companies studied to achieve a real and lasting competi-
tive advantage and improve transparency and trust. Desso has earned Cradle to Cradle certifica-
tions for some of its product ranges. Scandic has secured eco-friendly labels and Acciona is

Business Going Green | Final conclusions and recommendations 87

broadly ISO 14001 certified. Environmental certifications help to rationalise the internal policy,
implement benchmarking strategies and commit the whole company to a common goal.

3. Secure quick wins as a first step towards systemic change.

Widespread change is not achieved overnight. Quick wins help pave the way towards broader sys-
temic business change. Havas has implemented a carbon footprinting strategy as a first step to
engage its employees and provide concrete data with which to engage them. Desso has created
a two-phase plan which consists of eliminating expensive pollutants in the first stage and better
efficiency of its basic operations. Acciona was able to quickly gain a strong leadership on wind
energy that help promoting the shift towards sustainability from its other business units such as
water and infrastructure.

4. Measure your progress and quantify your targets.

Measurement is central and helps focus efforts on the weakest areas. Havas, Scandic, Acciona
and Desso have all implemented measurement sche­mes. Key Environmental Indicators such as
energy efficiency, water use, waste produced, etc. are normally published in the respective compa-
nies’ sustainability reports along with their medium and long-term goals. This continous monitor-
ing helps supporting the re-engeneering of operations and products in the whole company.

88 Business Going Green | Final conclusions and recommendations

 Final conclusions and recommendations to transform business towards environmental
sustainability
Cultural Change – Embed environmental sustainability into the company’s DNA
1. Design a disruptive, positive and ambitious vision.
2. Engage and empower employees and partners.
3. Secure the leader and top executive’s endorsement and commitment
4. Maintain new values alive throughout the organizational structure.

Open Collaboration – Partner with strategic stakeholders

1. Use your bargaining power to influence the supply chain.
2. Invest in communications with the consumer base.
3. Partner with external consulting organizations.
4. Lobby other key business partners.

Eco-Innovation – Integrate environment into operations and products

1. Use strategic eco-innovative projects to reposition the company.
2. Promote the change through green certifications.
3. Secure quick wins as a first step towards systemic change.
4. Measure your progress and quantify your targets.

Eco-innovation
Cultural Change R&D
Management Value Chain
Customers Marketing
Employees Greening Operations
Shareholders Business

Open Collaboration
NGO
Suppliers
Competitors
Regulators

Source: Business Going Green, Esade.

Business Going Green | Final conclusions and recommendations 89

For further insights – websites of interest

The Natural Capitalism: www.natcap.org

Biomimicry: www.biomimicry.net

The Natural Step: www.naturalstep.org

Cradle to Cradle: www.mbdc.com

Strategy for Sustainability: www.strategyforsustainability.com

Green to Gold: www.eco-advantage.com

Global Footprint Network: www.footprintnetwork.org

Earth Policy Institute: www.earth-policy.org

Society for Organizational Learning: www.solonline.org

World Business Council for Sustainable Development: www.wbcsd.org

Worldwatch Institute: www.worldwatch.org

World resources institute: www.wri.org

Business Going Green | For further insights 91

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 Av. Torreblanca, 59
08172 Sant Cugat del Vallès (Barcelona)
T. (+34) 93 280 61 62
[email protected]
www.innovacionsocial.esade.edu

Daniel Arenas
Research co-ordinator at the Institute and Professor in the
Department of Social Sciences, ESADE
Business Going Green
He holds a PhD and an MA from the Committee on Social
Thought at the University of Chicago, a BA in Philosophy An exploratory study on the process towards sustainability
from the University of Barcelona and an Executive Develo-
pment Programme diploma from ESADE. He teaches cour-
ses in sociology, business ethics and corporate social res-
ponsibility. His research interests focus on the areas of

An exploratory study on the process towards sustainability

business ethics, sustainability and community relations.

Jérémie Fosse
Co-founder and president of eco-union and collaborator
with the Institute for Social Innovation
Industrial Engineering degree from INSA in Lyon, France,
specialising in industrial organisation. He studied at the
Technical University of Berlin (TUB) and has completed
an Executive MBA at ESADE Business School. He has ex-
perience working in several energy companies in various
countries. He is Director of Global Eco Forum and foun-

Business Going Green

ding member of Ecodigma, a strategic consultancy firm in
sustainability.

Institute for Social Innovation

Emily Huc Sponsors:
Collaborator with the Institute for Social Innovation
Law degree (University of Toulouse) and Business Admi- Institute for Social Innovation

Foto: Ed Meyers
nistration (EICD 3A, Lyon), Master in Human Rights from The Institute for Social Innovation’s mission is to deve-
the University of London and postgraduate studies in Or- lop the skills of individuals and organisations in the bu-
ganisational Change Management (Birkbeck University, siness and non-profit sectors to strengthen, through their
London). She has worked in international co-operation ISBN: 978-84-88971-39-5 activities, their contribution to a more just and sustaina-
NGOs in various countries in Europe, Asia, Africa and La- ble world. To this end, the Institute generates and disse-
tin America. Specialising in internal change, she has led minates knowledge and provides training in the areas of
change in the decentralisation of programmes for the in- Daniel Arenas | Jérémie Fosse | Emily Huc corporate social responsibility and the relationship with
ternational NGO, Christian Aid. Founder and president of stakeholders, NGO leadership and management and so-
the ethical clothing company ‘by eve’. cial entrepreneurship.
 Av. Torreblanca, 59
08172 Sant Cugat del Vallès (Barcelona)
T. (+34) 93 280 61 62
[email protected]
www.innovacionsocial.esade.edu

Daniel Arenas
Research co-ordinator at the Institute and Professor in the
Department of Social Sciences, ESADE
Business Going Green
He holds a PhD and an MA from the Committee on Social
Thought at the University of Chicago, a BA in Philosophy An exploratory study on the process towards sustainability
from the University of Barcelona and an Executive Develo-
pment Programme diploma from ESADE. He teaches cour-
ses in sociology, business ethics and corporate social res-
ponsibility. His research interests focus on the areas of

An exploratory study on the process towards sustainability

business ethics, sustainability and community relations.

Jérémie Fosse
Co-founder and president of eco-union and collaborator
with the Institute for Social Innovation
Industrial Engineering degree from INSA in Lyon, France,
specialising in industrial organisation. He studied at the
Technical University of Berlin (TUB) and has completed
an Executive MBA at ESADE Business School. He has ex-
perience working in several energy companies in various
countries. He is Director of Global Eco Forum and foun-

Business Going Green

ding member of Ecodigma, a strategic consultancy firm in
sustainability.

Institute for Social Innovation

Emily Huc Sponsors:
Collaborator with the Institute for Social Innovation
Law degree (University of Toulouse) and Business Admi- Institute for Social Innovation

Foto: Ed Meyers
nistration (EICD 3A, Lyon), Master in Human Rights from The Institute for Social Innovation’s mission is to deve-
the University of London and postgraduate studies in Or- lop the skills of individuals and organisations in the bu-
ganisational Change Management (Birkbeck University, siness and non-profit sectors to strengthen, through their
London). She has worked in international co-operation ISBN: 978-84-88971-39-5 activities, their contribution to a more just and sustaina-
NGOs in various countries in Europe, Asia, Africa and La- ble world. To this end, the Institute generates and disse-
tin America. Specialising in internal change, she has led minates knowledge and provides training in the areas of
change in the decentralisation of programmes for the in- Daniel Arenas | Jérémie Fosse | Emily Huc corporate social responsibility and the relationship with
ternational NGO, Christian Aid. Founder and president of stakeholders, NGO leadership and management and so-
the ethical clothing company ‘by eve’. cial entrepreneurship.