[MUSIC] Hello. My name is Håkan Rodhe, and today I will talk about business and environmental strategy. That is, how a company can navigate with regards to environmental issues that it's faced with, in order to be competitive. Basically, environmental issues can be either a risk or an opportunity seen from a business perspective. Back in time, environmental management in the business world, was perceived as a cost and a risk. Businesses were reactive and the strategy to address environmental issues was by installing end-of-pipe technology, that captured pollutants leaving the factory, a method that means additional costs and additional resource use. With the introduction of the preventative paradigm, it has become clear that preserving the environment also can be an opportunity and a saving. Pollutants are viewed as an inefficiency in the process. - the core question becomes why do these pollutants arise - and then solutions are sought by making the process more resource efficient. Eco-efficiency, while simple in its practice, has come to dramatically change the reality of environmental management. It has turned environment from a cost to an opportunity to save. It has engaged most of the workforce, rather than a few. And it has integrated the environment with the operation and development of the production process. Integration of the environmental management has become an opportunity also for other business functions, such as design, marketing, and sourcing, thereby extending the reach in the lifecycle of the product. Eco-design of products, green marketing and managing environmental impacts in the supply chain, have become common features of environmental strategy for business. This indicates another paradigm shift in environmental management. The move to lifecycle thinking. This extension of the boundaries is in line with the shift to us understanding production and consumption as a system, with many different organizations and other parts involved, often in different geographical and legal contexts. For business strategy, this means among other things a variety of stakeholders to relate to, with customers, owners, suppliers and employees as core groups to work with, are pretty complex maps to navigate. And this doesn't get less tricky when you realized how complex environmental issues can be. With uncertainties on what problems to prioritize and how a certain problem is impacted by the business. Thus there are many choices that a business can do and has to do, with regard to the environment. But back to business and environmental strategy. The basic question would be, if you can generate business value from environmental management, does it pay to be green? The answer is of course, perhaps. Or rather, if you're clever and lucky. A better question is, when does it pay to be green? Or as companies increasingly have to ask themselves, can we afford not to be green? To answer this we must understand that for businesses, environmental issues are one out of many things that have to be managed. And, if managed well, may generate business value. As with health, safety, and quality, environmental issues have special characteristics. One being that many environmental issues are not necessarily valued as competitive elements in the market. Environmental management is doing a lot of small things and some bigger. It can be hard to get credit for the many small things that you do. Are customers willing to pay more for green products? While some are for sure, but far from all. Thus customer action is only part of the driver for environmental management. And even in a relatively environmentally aware region as Scandinavia, it is clear that customers are not able to integrate environmental issues into decision making to the extent that the environmental problems facing us would call for. So, for a business that strives to green its operations, there are three key strategy options. One, making the production lean and green, and thereby creating a cost advantage. Two, going beyond present legal requirements to add value for employees, investors, and other stakeholders. And three, branding the products with environmental arguments for increased customer value. In addition, we can think of rearranging the business model to let customers lease the product. This can give an opportunity to combine environmental improvements, such as long lasting and upgradable products. This increase business value. This is something that will be more common in the future. With the large environmentally driven transformations facing our society today, there will many opportunities for using greening to gain competitive advantages or sustain business models. While not always having been considered a strategic issue, in business, nowadays environmental strategy is clearly a matter to deal with at board level. [MUSIC]
