Building a better future -Innovation, sustainable development and techonolgy

D E D I C ATED TO MAKING A DIFFERENCE

building a

innovation

better future

sustainable development

technology &

a pro g ress re p o rt

Innovation, whether through technology or otherwise, will continue toplay a crucial role in securing a more sustainable future. Companiesprovide a key route by which this innovation can happen and technologybe developed and brought into general use. In 1998, the World BusinessCouncil for Sustainable Development set up a task force to study thiscontribution to sustainable development and how it might be made moreeffective.

This is a progress report describing the task force’s main conclusions.Every effort has been made to check that the information and case studiesprovided by companies and other organizations have been reflectedaccurately and the WBCSD’s Executive Committee has cleared the reportfor publication. However the report and its conclusions remain theresponsibility of the authors named below and do not represent a formalposition of the WBCSD or its members. Questions can be directed toAndrew Dearing at the address indicated or to the offices of the WBCSD.

The joint authors of this report are:

David Brown, Arthur D LittleJosephine Green, Philips DesignFreeman Hall, J Kellogg School of ManagementSimona Rocchi, Philips DesignPaul Rutter, BP AmocoAndrew Dearing, Shell (present address: European Industrial ResearchManagement Association, 34 rue de Bassano, F-75008 Paris, [email protected] ).

The WBCSD continues to work on this subject under the jointchairmanship of the Chief Executive Officers of Aventis and Dupont.

© World Business Council for Sustainable Development, 2000.

ISBN 2-940240-12-4

Citation: Brown D, Green J, Hall F, Rocchi S, Rutter P, Dearing A (2000)“Building a Better Future: Innovation, Technology and SustainableDevelopment”.

building a

better futureinnovation

technology &

sustainable development

a progress report

June 2000

building a better future

Summary i

Innovation and Sustainable Development 1

Thinking about Innovation and Technology 4

How Companies Manage Innovation 9

Technology Cooperation within Developing Nations 16

A Management Framework for Sustainable Innovation 22

Shaping the Future or Responding to the Past? 27

The Way Forward 30

Acknowledgements 31

Further Reading 32

Social Surveys and the 1999 Regional Dialogs 33

Results of the Corporate Innovation Survey 35

Contents

building a better future i

People often describe sustainable development as requiring a joint andlong-term outlook by society that integrates social, economic andenvironmental objectives. Today, the private sector’s contributionscome from developing and using environmentally better, eco-efficient,ways to produce and provide products and services and by creatingwealth and employment respectful of changing expectations ofcorporate responsibility and behavior.

Delivering and extending this contribution beyond eco-efficiencydepends upon the continued innovation that effective design and thedevelopment and use of better technologies make possible. Sustainabledevelopment is a metaphor for opportunity and progress as well as areminder of obligations and uncertainty. It requires a step-changeimprovement in performance. Merely doing better what we are alreadydoing is not sufficient to meet the needs and aspirations of a growingworld population with dignity.

This is a progress report describing the WBCSD’s work on this processof innovation towards society’s sustainable development. The GlobalScenarios and Biotechnology Scenarios provide the starting points.Building on these scenarios, we have surveyed leading companiescommitted to sustainable development to learn how they aremanaging innovation and using technology. We have explored theresults with stakeholder groups worldwide to understand how theyview this contribution, heard their concerns and discussed what theyconsider are the targets to strive for.

Commercial success involves carrying out business in value-creatingways. Increasingly, we believe that this will depend upon recognizingand addressing the challenges that these stakeholders are posing onbehalf of society at large. No single approach will apply to all firms inall situations but there are some common underlying principles,summarized below.

Sustainable development offers an organizing framework based onopportunity and respect for human values. Innovation is about usingchange to better meet human needs and values. The connection seemsobvious although, in the absence of clear market signals and acommon language, it can be hard to realize, especially sinceinnovation can come unexpectedly “out of left field” and haveuncertain consequences.

Summary

ii innovation technology & sustainable development

Better design and new technologies give us the means to act smarterbut technology also creates uncertainty. Using these tools well dependsupon understanding what the public is expecting and being able tomeet its needs cost-effectively and in a more sustainable fashionwithout raising alarms and fears.

The process of innovation will happen within increasingly networkedeconomies with changing social values and growing environmentalpressures. While these forces are unavoidable, they are notunmanageable. Successful commercial approaches depend on havingthe flexible, multidisciplinary skills to respond to sustainabledevelopment in ways that reflect this changing context.

Within developing nations in particular, technology’s contribution tosustainable development comes largely through business-to-businesstransactions. The large gap in performance is typically not aconsequence of the lack of cost-effective technologies. The priority is toincrease the capacity to apply available solutions well. Key focus areasare to develop skills and capacity especially in the small-and-mediumenterprise (SME) sector and to find ways to reduce project investmentrisk. Overseas Development Assistance (ODA), Foreign DirectInvestment (FDI) and the newer flexible market instruments such asthe Clean Development Mechanism can be brought together tosupport innovative and effective public-private partnerships to addressthese points.

Some organizations respond best to sustainable development as avision, whereas others prefer more pragmatic approaches. Whicheverapproach is preferred, innovation often comes from facing strategicdilemmas that can only be resolved by finding new approaches. This isone reason why credible stretch targets can be an effective way tosecure major improvements.

The leadership task is to harness economic and social trends, capturethe tremendous amount of knowledge and experience that exists innetworks worldwide and combine these in ways that commandrespect, generate enterprise and create value. Traction is likely to begreatest when the management approach is positioned appropriatelyfor the company in its network and seen by staff to be relevant and self-evident, if not simple, in purpose and content. This requires cleardirection backed up by resources, management support and goodmetrics.

The task involves extending the principles of transparency andlearning, corporate social responsibility and eco-efficiency throughoutthe innovation process. This extends from research and developmentthrough technology selection and use, product and service design,investment and employment policies and global and local businessactivities, as well as to issues management and government relations.

building a better future iii

Already, leading companies have demonstrated the willingness toexpress what they stand for and in turn understand what societyexpects of them. These companies are actively developing andincorporating the tools to improve performance across the three pillarsof sustainable development. They are learning how to stimulateinnovation and are setting focused targets that measure progress andassure the link between their own values and those of their customers.But there is much more to be done and important lessons to be learnedand applied, especially to obtain innovation that addresses the socialpillar of sustainable development.

There are many ways in which other stakeholders can assist theseefforts. For example, governments can design regulatory frameworksthat set the direction, encourage and reward the experimentation thatfosters innovation and improves sustainability. They can demonstrate(through procurement policies and the information provided to thepublic) that they are committed to achieve the same objectives beingexpected of others.

In summary, the challenges are to learn to treat sustainabledevelopment as a framework for innovation, then use and extendestablished management principles to make this frameworkoperational and effective. As one of our member companies put it, wehave to become able to discuss, decide and then deliver sustainablevalue.

GenevaJune 2000

iv innovation technology & sustainable development

building a better future 1

Firms have used technology as an engine ofprogress since at least the time of theIndustrial Revolution, which gave usremarkable ways to marshal the physicalworld for human benefit. While innovation –the successful implementation of newdevelopments and ideas – depends uponmuch more than technological advance,technology has consistently provided theopportunities from which we have been ableto make and sell better goods and services andto do so more cleanly and more safely.

Many of today’s social and economicdevelopments are a result of technicaldiscoveries and developments in fields suchas communications, information processing,health sciences and energy supply. Thesepromise smarter, more tailored solutions tothe tasks we wish to accomplish. Rather thanbeing monolithic in approach, the tools areused by dynamic and responsive networks ofsmall and large, public and privateorganizations, working together and incompetition in ways that were never beforepossible.

The changes are tremendous and theopportunities profound. But technology canonly be part of achieving a more sustainabledevelopment and its contribution is notalways as positive as we might wish.Furthermore, other factors that drive andsupport progress are themselves changing.The well-defined social categories for whichpost-war Western institutions were designedno longer fit well with people’s aspirationsand values. Richer countries are experiencing

a shift towards an increasinglymultidimensional and diverse “MosaicSociety”, with uncertain needs but very realconcerns about many subjects includingscience and technology.

At the same time, despite there being greateraffluence than at any time in history, most ofthe world’s population remains poor yet verymuch aware of its relative poverty. For thesepeople, the economic and social benefits ofglobalization and global markets areincreasingly being questioned.

Other writers have offered cogent, visionaryideas of the improved sustainability that canbe obtained by marshaling recentdevelopments (see for example Lovins,Natural Capitalism). Our focus in this projecthas been on how firms can organizethemselves to realize these opportunities inways that benefit and are acceptable tosociety and also create value.

The approach we suggest is based onunderstanding how the concepts of corporatesocial responsibility and eco-efficiency havebeen implemented and extending theseconcepts to cover the management ofinnovation.

Leading companies have built theirapproaches to sustainable development uponprinciples such as those in box 1. For existingbusiness operations undergoing normalbusiness development, these are mutuallyreinforcing principles. They provide apositive and effective framework that firmscan use in mitigating environmental impact

Innovation and SustainableDevelopment

Sustainable development cannot be addressed in isolation fromconsiderations of social and economic well being. Technology enableschange but cannot be the sole driver of innovation.

2 innovation technology & sustainable development

and allaying public distrust (seeSchmidheiny, Changing Course; Fussler, Eco-Innovation; WBCSD, Corporate SocialResponsibility).

The stock market returns achieved bycompanies included in the recently launchedDow Jones Sustainability Index suggest thatinvestors are recognizing the managementqualities that make this possible.

Whereas twenty years ago, most companiesbased their performance standards onregulatory requirements, today many chooseto go beyond regulation because they seecommercial benefit in doing so. Establishedpractice in areas such as safety and qualitymanagement has demonstrated thatuncompromising principles are perfectlycompatible with the spirit of continualimprovement.

Stakeholder dialog has helped firms learnmore about others’ points of view and thenuse this understanding to set better prioritiesand move away from confrontationalapproaches. In extending systems of financialcontrol and audit to cover environmentalimpact, they have recognized the need togain early “buy in” by ensuring relevance tothe specific priorities of individual businessunits. Technology is playing a central role inmoving forward and engineers generally

seem to relish the opportunity to find moreeco-efficient solutions once the parametersfor improvement have been established.

Good Enough or Could Do Better?

This is intended to be a rhetorical question.During the last decade, the arguments andcounter-arguments about rates ofimprovement have been well rehearsed.Economic focus leads to “short-termism”.Regulatory frameworks offer too much (or toolittle) “command and control”, so we are notproperly pricing public goods, environmentalservices and social well being. Newapproaches are uneconomic in the face ofestablished manufacturing capacity.

Undesired impacts are associated with large,interdependent infrastructures (for example,the car, its fuel and the city), so require moresystemic approaches that can transcendtraditional business and political boundariesand avoid stranded assets. Technical progressis slower than expected, gets sidetrackedthrough lack of customer pressure or creates“rebound effects” by stimulating newdemand that consumes the improvementsthat have been achieved.

These concerns are valid but (with effort anda fair dose of humility) there are ways toovercome them. In some cases, effectivesolutions are already available; in others, we

Box 1: Corporate responses to eco-efficiency and corporate socialresponsibility involve:– Ensuring the corporation understands what society expects of it, in

return expressing clearly what the firm itself stands for, then reinforcingthese values to stretch the organization and create a spirit of continuousimprovement. (Attitude)

– Developing the tools and approaches to improve performance acrossthe social, environmental and economic pillars of sustainabledevelopment and incorporating these tools within routine businessprocesses. (Build the capacity to act)

– Setting focused targets and putting in place the means to measureperformance and confirm that the targets are being achieved. (Checkprogress)


may need to change the market’s rules of thegame. For example, it seems likely thateconomic instruments such as tradablecarbon emissions permits will improve themarket’s effectiveness in dealing with climatechange. Demonstrating that theseinstruments do work well requires agreementon rules and modalities and the willingnessto take action and learn from our mistakes.

In other words, sustainable innovationinvolves risk but it also requires structure.While much can be achieved by “continuingto do better”, it will be far more challengingand rewarding to learn to providemechanisms that will:

• Bring design, smart technologies and the“new economy” together to drive growthin ways that reflects changing concernsand values of a connected world

• Support faster and more sustainabledevelopment in the developing nations

We believe that success with these tasks canturn sustainable development into anapproach that is intrinsically value creating.But we also believe that some establishedways of doing business and the assuranceprocesses that accompany them will needimproving in order to achieve this.

For example, sound science is a lynch pin ofcorporate approaches to technology riskmanagement. Even though no one questionsthe need for high safety standards, too muchrecourse to scientific evidence and argumentcan come across as complacent andpaternalistic. The public’s sense of the role oftechnology has changed and its awareness ofpast mistakes has grown. Today we need tofind better ways to show that firms (andgovernments) are keeping their scientifichouses in order.

A paradox is that the success of today’sactivists owes much to their mastery ofcommunication technologies in getting theirmessages heard. Governments, inter-governmental bodies and corporations nowfind themselves to be hopelessly cumbersomein the face of resolute single-purpose

advocacy. Stakeholder dialog offers a wayforward but requires that we learn how toachieve open discussion when the risks seemlarge and the benefits unclear.

With this background, subsequent chaptersdescribe the work as follows:

• Thinking about innovation and itsconnection to sustainable developmentand changing social attitudes and values.

• Lessons to be learned from howcorporations committed to sustainabledevelopment are already managing thesequestions.

• International equity, technologycooperation and how companies can usetheir creative and technical capacities andglobal outreach to foster more sustainableeconomic growth within developingnations.

• A management framework for innovationto help companies guide staff throughthese questions.

The main conclusions in each chapter areused to construct checklists that can beadapted to assess firms’ own approaches tosustainable innovation.


In preparing for an uncertain future, we needa sense of what might develop while avoidingplacing expensive bets on particularoutcomes. Scenario planning offers one wayto extend our strategic thinking.

The WBCSD used this tool in its GlobalScenario and Biotechnology Scenario projectsand we found the approach helpful inlooking at the broad questions of business-ledinnovation and use of technology. Thissection gives a brief summary of these twosets of scenarios. Other publications (seereading list) describe the method and give thecomplete stories.

The Global Scenarios explored sustainabledevelopment in terms of two parameters:

Uncertainty: How we will recognize theresilience, limits and critical thresholds facedwithin the global ecosystem.

Governance: What forms of social system canbest respond to the challenge of sustainabledevelopment.

FROG!, GEOPolity and Jazz describe differentways in which people view and respond tothese parameters. The real world reflectsaspects of all three.

Some who have worked with the results wantto realize the benefits of the dynamic Jazzworld and look for solutions that will fosterits innovative spirit and market-basedapproach. Others feel that Jazz will be a verychallenging world in which to live and workand consequently may not deliver everything

they wish to achieve. GEOPolity offers otherways to approach these challenges.

FROG! - First Raise Our Growth!

FROG! describes a low-trust world in whichpeople focus on jobs, economic survival andshort-term financial returns. Althoughpeople believe they value sustainabledevelopment, local economic pressuresdominate their thinking. After all, people (atleast those who are already affluent) find itobvious that their neighborhoods havebecome far cleaner, presumably because theyhave already adopted the right approaches.

This local focus leads to a poor reading ofsignals. Signs of global environmentalproblems – for example the risk of climatechange – and growing social inequity eithergo unnoticed or trigger disagreement aboutwhat signs of change mean. No action will betaken until it becomes impossible to continueignoring the signs, by which time it will becorrespondingly harder to respondeffectively.

In the meantime, the public takes advantageof what business offers and punishescompanies that are seen to cause harmthrough their goods and services and ways ofoperating. Voter-sensitive governmentsensure that exposures are discovered anddealt with promptly, so firms act defensivelyto anticipate and limit liabilities.

FROG! generates solid economic growth yetthis will probably be unsustainable becauseno one takes care to address sustainability as

Thinking about Innovation andTechnology

To achieve greater sustainability, we will need both the experimentalspirit of Jazz and the effective governance that GEOPolity can provide.Consumers expect companies to go beyond minimum requirements and bemain actors in realizing these conditions.


their ambition. There will be continuedtechnological progress but this is unlikely tobe directed towards greater sustainability.Existing approaches, ways of working, etc.,will be extended rather than replaced bysomething better. There will be an emphasison tools for monitoring, quantifying anddocumenting the performance of existingoperations rather than going pro-activelybeyond these standards.

Governments will legislate, set technologypolicies and support R&D in order tostimulate local competitiveness andaspirations. Aspects of these policies, and theinnovations that result, may accidentallyalign with the ambitions of sustainabledevelopment. Ambivalent consumerattitudes and lack of long-term thinkingabout ethical and other implications willlimit the sustainable value of the results.

GEOPolity

GEOPolity starts with a recognizedenvironmental crisis. The palpable failure ofnational governments and multinationalcompanies to deal with the crisis as well aspast problems destroys the already limitedcredibility of these existing institutions.People recognize the need for newmechanisms to address global issues such asthe health of the planet and to resolveconflicts of interest in a peaceful manner.

The spirit of the age – the “mood of themillennium” – captures the attention ofpeople who have the ambition to put thingsright. This aligns their effort into a collectivesense of purpose and they build aninterlocking global governance systemcoordinated at an international level.

GEOPolity reflects a human desire for bigsolutions to grand challenges. Its institutionswork towards market-based solutions but setnew rules and regulatory frameworks formarkets to follow. To achieve greatersustainability, these global institutions mayengage companies in a joint attack on bigchallenges.

Consequently, this scenario will developworld-scale technologies and drive forwardmajor global infrastructure projects. One canimagine the 21st century equivalents ofConcorde and Apollo, designed to addressclimate change, provide equitable supplies ofclean water and food, manage critical eco-systems and foster “connectedness” andopportunity.

In such a world, technological prowess will bea key tool that firms use to ensure credibilityand secure their license to operate, shapelegislation and achieve competitiveadvantage. Technology-rich companies maysee great value in encouraging and becomingcontractors to these initiatives. (Today’snuclear industry developed very rapidly in aworld rather reminiscent of GEOPolity.) Assymbols of their prowess, they are likely toprefer process and product technologies thatcan be patented to intangible knowledge-based approaches.

A strength of GEOPolity is its ability to setdecent rules and regulations to steer thecollective effort. This scenario will probablybe very effective if global standards andregulatory frameworks are needed (and canbe agreed) in order to build better solutions.

Its weaknesses include the difficulty ofchanging existing institutions that alreadyfeel empowered to deal with matters and thegeneral risk of bureaucracy and slow responseassociated with “big institution” processes.

As a result, there may be undue up-frontselection of “winners” within GEOPolity, toolittle engagement of customers in the choicesbeing offered and too little attention tounintended consequences and side effects.

Jazz

Jazz describes a world in which peoplerecognize that they can care about issues suchas sustainable development without needingothers to legislate the solution. These peopleharness the markets to find solutions to theirconcerns, in the process creating a complexmarket-led world of ad hoc experimentation.


This is a demanding world of partnershipsbetween consumers, businesses, governmentsand non-governmental organizations.Alliances form and break fluidly to meet civildemands. High transparency enforces quicklearning by allowing the public to identifyand punish companies and governments thatbreak the social norms. In Jazz, the public seesno need to applaud expert opinion for itsown sake.

In this world, technology is a cross-fertilizerthat enables firms to work within diversepartnerships but it also creates challenges forthem to overcome. For example, in atransparent world, innovative companiesneed new ways to safeguard their intellectualassets. This will encourage greater speed ofuse of these ideas and emphasize the less-tangible, knowledge-rich technologiessuitable within a service economy.

Jazz can align people worldwide to commoncause but the nature of their alignmentcannot be taken for granted. Initiatives suchas the redesign of large infrastructures or thehandling of sensitive new technologies stillrequire a consensual basis and public groundswell to move forward. Furthermore, eventhough its public wants to achieve progressacross a broad front, communities andorganizations that lack resources and skillsmay find it hard to join the Jazz band.

Implications for Company-ledInnovation

Scenarios help focus our aspirations andactions by sharpening our understanding ofthe diverse forces within today’s society. Ofthe three Global Scenarios, GEOPolity andJazz appear more able to support sustainabledevelopment. Signs of all three can be seenaround us today.

Many people consider Jazz to be the moreappealing world to aim for, because of itssense of personal responsibility, collectiveeffort and transparency but it also seemsimportant to maintain the framework-settingstrengths of GEOPolity.

The stories suggest (see Dearing, Have We theForesight for Sustainable Development) thatsustainable innovation will involvecompanies in:

Á Taking advantage of dynamic,experimental approaches and providingconsumers the information and pricesignals to exercise informed choice.

Á Being willing to build and work withininstitutional structures to coordinatelarge-scale tasks and constrainunacceptable behavior while avoidingthe tendency to “plan mega-solutions” asa matter of course.

Á Expanding local focus to legitimize actionon a broader front, for example byactively disclosing impact and workingwith the public on risks and benefits.

An important conclusion is that theapproaches taken to education, regulation,social values, public understanding ofcomplex subjects such as technological riskand the precautionary principle stronglyinfluence how well societies can address theirsustainable development. With no singlepoint of leverage, a broad base of action isneeded that will extend throughout andbeyond the firm.

The Biotechnology Scenarios

This project was carried out after the Globalproject was complete. It focused on thecertainty that someone, somewhere will putscientific developments in areas such asbiotechnology to use and the inevitablehuman anxieties about the unknown.

It generated three scenarios, The DominoEffect, The Hare and the Tortoise and Biotrust.The scenarios explore the impact ofunintended consequences on theacceptability of a technology, the balance ofrisk and liability issues and consumer choiceon sustainable development and theconsequences of a widely acceptedbiotechnology industry.

These scenarios build on similar forces as theGlobal project and also draw similarconclusions about the importance of linking


public initiative with framework settingapproaches.

Depending on the nature of public reactionto the unintended events that newtechnology triggers, the acceptance oftechnology can vary widely. This is the storythat is explored in The Domino Effect. Thispresents a low-trust world in which eventstake a negative course, leading to heavyregulation: in the language of the Globalscenarios, FROG! leading to GEOPolity.

Apart from any such event, an industry thatgrows up around the new technology couldprosper or not for reasons that depend onfactors other than technology or sustainabledevelopment. This story is explored in TheHare and the Tortoise, a Jazz-like world inwhich new technology is not much of aplayer.

The third unknown has to do with theconsequences of a successful and widelyaccepted technology-based industry. Whatkind of world might this produce and howmight acceptance come about and beassured? This is the story of Biotrust, also aJazz-like world but with some of theframework overtones of GEOPolity. Of thethree scenarios, this is the one that achievesthe most extensive application of the newdevelopment.

These stories help focus attention onto thesources of the unpredictable and so help usappreciate what imaginative worlds it wouldbe wise to inhabit (at least for a while) if weare interested in the future of technology andwant to learn how to achieve the desiredoutcome.

Social Expectations as a Driver forSustainable Innovation

We discussed these conclusions with peopleand organizations worldwide concerned withsustainable development to learn their viewson the role of company-led innovation. Whatwe heard confirmed many of the tensionsapparent in the Global and BiotechnologyScenario studies:

• growing awareness of social values andenvironmental issues,

• rediscovery of the sense of co-dependency,

• a more determined public with differentpriorities for innovation and use oftechnology.

The results of part of this study, the 1999Regional Dialogs, are given in the Appendix.

“People are placing less value on technologicalprogress and economic growth and relativelymore value on conserving and protecting thequality of the environment in which they live.”

This quote came from a book written overtwenty years ago (see Schein, CareerDynamics) but the 1999 dialogs reinforced itsmessage that innovation is widely desired butnot always seen to be positive.

Many people perceive innovation astechnological progress creatingindiscriminate economic growth and leadingto depletion of the natural environment andincreasing pollution.

A real commitment on the part ofcorporations, rather than technology itself, isseen as the pre-requisite for creating theconditions for sustainable growth and betterquality of life. Consumers expect companiesto go beyond minimum requirements and bemain actors in realizing these conditions.

Leading companies have recognized thatresolving these tensions provides the onlybasis for their profitability in the years ahead.Put one way (by Richard Branson) “the brandsthat will be big in the future will be those that tapinto the social changes that are taking place”. Oras Roger Cowe expressed it recently(“Account-Ability”, The Planet on Sunday):

“Once a company has acknowledged it has toaccount for pollution … it is harder to deny widersocial responsibilities. And once outsiders havebeen through the gates, it is impossible to stopthem looking beyond one narrow aspect ofbusiness.


Curiously, this odd little world of social auditingthreatens to fuel a debate about the purposeand nature of 21st century capitalism which hasescaped the politicians for decades.”

The sense is that markets will increasingly becharacterized by the power of vision: to thinkthe future, imagine the future and shape thefuture. In other words, firms are beingexpected, and some are themselvesexpecting, to address sustainability by design.Examples such as Dupont’s “To Do list for thePlanet” demonstrate that this is alreadyhappening.

Checklist 1: Playing within the Well-tempered Jazz Band– Are our actions in tune with Jazz, more like the formal structures of

baroque cantatas or simply discordant? Do we really want to bechallenged to experiment and innovate, or are we accepting thesecurity of established management processes and regulatoryframeworks?

– Do we know what tune people would like us to play? Will they findour tune too hard to share? Can we play theirs?

– Are we willing to form partnerships and alliances that can create thesenew harmonies or do we join with the rest of the woodwinds (forexample, our industry association) and argue that it is the percussion’sturn to play? Have we also got the imagination and energy to buildand work within the frameworks that can move us forward?


“We have not done anything environmental thathas been a bad business decision. It is thechallenge of creating shareholder value andmeeting customer requirements that keeps meawake at night.” Bill Ford, Ford Motor Company

We surveyed around eighty firms to explorehow their commitment to sustainabledevelopment and environmental protectionhas been incorporated into their approach toinnovation management and learn about theopportunities and barriers they areexperiencing. Detailed results are given in anappendix to this report.

Where possible we approached seniorbusiness managers with responsibility foraspects of innovation, product developmentand technology management. Around onethird were heads of R&D or TechnologyDevelopment, a fifth held other seniorpositions within a business unit and the restworked within the corporate offices.

A first observation is that the commitment tosustainable development extends wellbeyond those who work in corporate offices.88% of those interviewed “strongly agreed”or “agreed” that sustainable development is akey business driver for the firm and 83%confirmed that sustainable development is anexplicit part of the firm’s mission and values.(Those that felt otherwise generally arguedthat this reflected the wider priorities of themarketplace.)

Figure 1 shows how various factors underpinthis commitment. Company image and

brand values are considered especiallyimportant; direct pressures from regulators,customers or special interest groups less so.

Most of the firms have formal processes forinnovation management and technologydevelopment. Generally these require staff totake sustainable development into account:55% expect this for both environmental andsocial matters; 28% for environmentalmatters only. Responsibility for integratingthese and other commercial considerations isconsidered to be a shared responsibilityrather than of one role such as the ChiefTechnology Officer.

One of the clearest benefits of managingsustainable development this way has been tofocus attention onto the technologicalopportunities at the firms’ disposal.Practically everyone considered thatimproved technology and better engineeringskills are, and will remain, essential tools forsupporting sustainable development. Manyof the examples in the Appendix areconsistent with this view.

Information and energy supply technologiesare rated highly: 92% and 88% of thoseinterviewed see these as important insupporting greater sustainablility. However,25% rated developments in the biosciences asneutral or indeed inhibiting progress. Thisprobably reflects the negative publicity overGMOs, which flared up around the time thesurvey was taking place.

How Companies ManageInnovation

Companies are dynamically embracing sustainable development whilesearching for ways to align corporate and customer values and behavior. Thetools are coming together but better metrics are needed, especially for socialissues.


Neutral

Agree

Stronglyagree

Contribution to reputationand brand image?

The firm’s values and principles?

New productand serviceadvantage?

Staff valuesand principles?

Competitivecostadvantage?

Regulatoryrequirements?

Pressure fromspecial interestgroups?

Pressure fromcustomers?

Figure 1: Reasons given why sustainable development is a keyobjective or business driver for the firm.

86%

83%

76%

62%

70%

Understand the business case

Make the business case

Measure improvedperformance

Existing capitalassets

Understand stakeholdersexpectations

Figure 2: Percentage “agreeing” or “strongly agreeing” that theseare key challenges that staff face in addressing sustainabledevelopment through innovation.


30% expressed neutral or negative viewsabout measurement technologies. This can beinterpreted as evidence of a movementbeyond regulatory reliance on such tools tomeasure impact and assess performance or afeeling that the ability to measure surpasseswhat is required in terms of the assessed risk.

Achieving and Measuring Progress

Figure 2 shows that a key challenge for manystaff is to understand and make an effectivebusiness case for investing into moresustainable products and services. There is anunderlying belief that customers are keen topurchase more sustainable products but willnot pay a significant price premium despiteassertions in market research that they woulddo so.

Several managers commented on this tensionbetween meeting short-term business goalsand dealing with the uncertain, longer-termnature of sustainable development. Taken

together, there is still the risk thatsustainability considerations are seen asadditional selling points “other things beingequal”.

In general, respondents also felt ratheruncertain of their ability to manage andassess the creative skills required to addressthe broader agenda of sustainabledevelopment. Other challenges, such asexisting capital assets, managing partnerships(important in a networked economy forobtaining improvements throughout thesupply chain), understanding the role ofdesign and dealing with product launchstrategies were felt to present less substantialbarriers to successful innovation.

The survey probed how close firms aretowards having a fully integratedmanagement process that places sustainabledevelopment squarely within the innovationprocess. Responses resembled a normal

Box 2: Eco-InnovationCarpet manufacturing involves potentially toxic and polluting processes,involving dye water being flushed into waste water systems, highemissions, and an end product that eventually ends up in landfill siteswhere it takes centuries to rot. Taking heed of scientific andenvironmental concerns, the management of Interface, the world’slargest manufacturer of commercial carpet tiles, vowed in 1994 to makethe entire company sustainable.

Realizing that a reduction in resource and energy use represented a costadvantage and contributed to a better quality of life, the company placedenvironmental concerns on par with production of goods and servicesand aimed to redesign their products from scratch. As a result, Interfaceconceived Solenium, a flooring product that uses a third less material and“embodied energy” than comparable products. Its European plantsweave the product, which is currently available on the American andEuropean markets, entirely through the use of renewable electricity.Instead of a nylon or PVC base, the new tiles use a new material,polytrimethylene terephthalate (PTT). PTT is a revolutionary fiber thatcreates a highly resistant textile flooring for use in hospitals, schools andairports, and can be fully recycled back into itself.

The added benefit of producing tiles instead of full carpets is to facilitateeasy replacement of the 10-20% experiencing greatest wear withoutwasting the 80-90% that still has years of useful life. Representing a hugecost advantage, the product creates a new ideal for industrial products ofthe future that greatly reduces resource use and the use of landfill.


distribution centered on “half way there”.Paradoxically, firms that had obviously madesubstantial efforts reported only modestprogress. Others, newer to the game, felt theywere further down the road. Perhaps the scaleof the task only becomes apparent once thejourney has really begun.

Most interviewees reported thatconsiderations of sustainable developmenthave helped the firm launch new productsand improve existing products and processes.They find it more difficult to demonstratethat these have improved profitability. Theyalso commented on the lack of adequatemetrics for the social dimension ofsustainable development and of ways toassess the ideas employees generate inresponse to the corporate commitment.

Differences in patterns of response betweenindustry sectors were not marked and seemedto depend largely on how the person

interviewed interpreted the questions weasked.

Those working for manufacturing firmstended to see sustainable development as aparticularly important business driver andstimulus to innovation. They also felt bestable to measure progress. In the chemicalssector, there was more emphasis on costreductions and dealing effectively withstakeholders and a lower-than-average senseof success in finding innovative solutions.Those in the service sector tended to be lesspositive about the benefits of the businessdrivers we mentioned and less focused ontechnology as part of the solution.

Regional patterns were more striking.Responses from European-based companiesfell close to the average for the survey as awhole. Asian companies saw most directconnection between their commitment tosustainable development and sales, were

Checklist 2: Sustainable Innovation Management– Does the firm view sustainable development as a strategic opportunity?

Have effective processes been put in place to identify where thisopportunity lies?

– At what stage in the development of new products/services arequestions asked about sustainability? Is this responsibility appropriatelydistributed and does it start at a sufficiently early stage in newproduct/service development?

– Are all members of staff clear when to accept a balanced approach tothe three pillars of SD and when there can be no compromises?

– Is the firm well placed to understand emerging consumer values andthen to use this understanding to create sustainable commercial value?

– Are we creating the stretch that can take the organization to a new levelof performance?

– Have staff got the space, tools and organization to be able to respond?Who fills the gaps?

– Are we placing appropriate reliance on technology as part of thesolution? Are we managing and using this technology in ways thepublic finds acceptable?

– How do we know that the public understands and supports ourapproach? What are our tools and our measures of success?


most likely to believe that sustainableproducts and services will offer competitiveadvantage and expressed the strongest sensethat corporate values are driving events.

Australian companies saw themselves in theearly stages of addressing sustainabledevelopment. North American companiesfocused on cost advantage and were less likelyto make sustainable development an expresspart of their published mission.

In conclusion, the survey demonstrates thatcompanies are in a dynamic situation ofembracing sustainable development,understanding its implications anddisseminating a leadership approachthroughout their businesses.

Several comments reflected these views.While “Sustainable development is ripe withopportunity”, “the executive suite believes in thebenefits but is still in the realm of affirmation”.Partly this is because “the benefits are long termgains” and “only the cost savings show upquickly”.

The commercial benefits of sustainabledevelopment seem more likely to come fromdriving product innovation that supportsbrand preference and improves market share,rather than from improving margins directly.

Corporations are looking for innovative waysto align corporate and customer valuestowards sustainable development. They aregenerally placing strong reliance ontechnology and believe they can access thetechnologies they will need. But they lack thetools to support other management taskssuch as measuring progress and mentoringstaff, particularly in respect of the socialdimension of sustainable development.


Box 3: Has business failed to innovate for sustainable development?

At the London stakeholder dialog, we presented the results of the surveys,then put ourselves on trial charged with “Failing to Innovate’. Thefollowing transcript illustrates how the trial brought out differentinterpretations of trends in innovation management. In a lighthearted way,it demonstrated the importance of understanding these perceptions whenrepresenting what is being attempted and achieved.

Prosecution: We claim that business thinking and practice has its origins inthe 19th century and is no longer appropriate for today’s complex world.

Witness: The model and the thinking have changed and are still evolving.Business has a long history of innovating on economic, environmental andsocial issues.

Defense: In fact, firms are surely driven by economics to create productsthat are better, produced in smaller quantities and re-used?

Witness: Indeed, consider the massive improvements achieved in the safetyand pollution emitted by the motor car.

Prosecution: But this example – the motor car – shows that innovationaffects society for good and bad at the same time. What is the responsibilityof the inventor in this respect?

Witness: In the 1980s, Dupont obeyed regulations while improving itsunderstanding of impacts on local communities. When it discovered thatsome chemicals caused harm, it set up toxicology laboratories and thendiscontinued some of its activities. Today, the company has shifted focusagain and has become interested in the potential offered by smartertechnologies.

Prosecution: In other words, biotechnology? These products will stay in theenvironment a long time, perhaps transforming and remaining inperpetuity.

Defense: We agree that impacts do need to be considered thirty or moreyears ahead, but isn’t it true that this is already happening?

Witness: Yes. For example, energy companies such as Shell and BP areadopting precautionary approaches to global warming even though manypeople are still skeptical about the science and the politics. This process isdriven by business considerations.

Prosecution: Business has a responsibility to provide systems stewardshipand to ensure there are governance structures to address these risks. Weclaim that the boardroom is not qualified to make these judgments.

…continued


Box 3 (continued)

Prosecution: Isn’t it true that Severn Trent has successfully changed itsemphasis from maximizing throughput and now sees itself managingenvironmental resources rather than using natural resources? This hasresulted in a huge change in management style. Perhaps the firm couldonly be successful because it had a mix of public sector heritage andprivate sector instincts?

Witness: Actually the transformation has been possible because of thecompany’s willingness to modify its policies according to what it sawcustomers cared about. At the same time, there has been a considerableshift away from approaches based on regulatory compliance towardsthose based on leadership. These include changes in businessrelationships, widespread use of stakeholder dialog and greatertransparency.

Defense: Business may also be obliged to respond to voices that are notnecessarily representative of the consumer at large. “Rational ignorance”means that not everyone has the time or opportunity or sees the need toget involved. In Seattle, the loud voices against trade did not reflect theviews of a majority. Will these voices end up causing change?

Witness: Future success depends on anticipating social changes. Also,technological systems stewardship includes accepting responsibility forsocial impacts. Firms are learning how to use input from socio-culturalunderstanding to meet people’s needs and wants. They are becomingmuch more open to the thinking offered by the social sciences and notjust reliant on engineering.

Prosecution: Amazing! A new group of rabid social scientists. Doeseveryone in the company understand this approach or is it just adaydream in the minds of management?


“Where is the business model that will permit usto extend top-line growth to those who have lessthan $1000 a year?” Chad Holliday, CEO,Dupont.

Developing nations seem to face desperatechallenges in addressing sustainabledevelopment, with little choice but to adoptapproaches that are less than state-of-the-art.Yet the problem is usually not the lack ofcost-effective environmental technology oreven examples of “best practice” that can becopied and improved.

Attempts to overcome the central challengeof poverty are undermined by a host ofproblems such as limited resources and skills,small and ineffective markets, poorlydeveloped legal frameworks and ourwidespread inability to learn from examplesof success.

The contributions that multinationals maketowards overcoming these problems arehighly sensitive and their records are comingunder closer scrutiny. Public attention isbeing drawn to examine the benefits ofglobalization in ways that closely interweaveissues of trade, technology and sustainability.

Companies may find it hard to respond tothis scrutiny unless they are clear that localcommunities view their presence asbeneficial. Evidence so far has often comefrom the labor standards offered by themultinational and the economic and socialcontributions it extends to the localcommunity. Increasingly, firms are beingjudged more holistically, for example on

their contribution towards improving theperformance of local businesses and attitudestowards corruption and on the relativeeconomic performance of the developingnation within the global economy.

More generally, the risks and benefits offoreign direct investment (FDI) will beinterpreted in terms of these local social andeconomic issues. In other words, the morefirms’ actions take place globally, the moretheir contributions will be assessed throughlocal eyes.

During our regional dialogs, partnerorganizations confirmed the important rolesmall and medium-sized enterprises (the SMEsector) play in getting a country out ofpoverty to become a dynamic part of theworld economy.

They told us that such firms might be far lessable than the multinationals to mitigate theirenvironmental impact but nonetheless havea wealth of practical experience andunderstanding that is not available to theircounterparts in other countries. They alsoremarked on the Western tendency to lectureothers about free trade while ignoring thebarriers around our own markets.

Technology transfer and technologycooperation

One way to contribute to faster andenvironmentally better economic growth isto improve the availability and use ofappropriate technology. Consequently, somehave suggested that governments within the

Technology Cooperation withinDeveloping Nations

Technology’s contribution to sustainable development in thesenations comes mainly through business to business transactions.In order to improve performance, key areas of focus are skill developmentand capacity building, the SME sector and project investment risk. Manygood examples show how these improvements might be obtained.


developed nations should transfer moderntechnologies to other nations as a matter ofcourse.

This approach – “technology transfer” – hasbeen widely discussed as a way to assistdeveloping economies “leap frog” overenvironmentally and economically lesseffective approaches and avoid repeatingothers’ failures.

Unfortunately, the initially highexpectations have not been met. Technologybecomes useful by being applied, whichhappens mainly within and betweencompanies and through the products andservices they generate. Governments haveneither “owned” the technology nor beenwell placed to create the skills and facilities toapply it properly.

Since technology is disseminated primarilythrough business-to-business transactions,the WBCSD and most governments nowfocus on market-oriented approaches to

technology cooperation. In this project, wehave attempted to identify the mostimportant factors in making theseapproaches successful.

Explicit and Tacit Know-how

Using technology competitively dependsboth upon having the right know-how andaccess to the right tools. This know-how hasat least two components:

• The explicit skills to assess the problem anduse the necessary tools.

• The tacit skills to solve the problemeffectively and appropriately in its setting.

Explicit skills can be taught but tacit skills arelearned through practical experience and aredifficult for either the technology-richcompany or the local community, withpractical understanding of what works anddoes not work, to record and teach.

These skills combine to provide theknowledge capital that the economy requires

Box 4: Globalization and the anti-trade lobby.The word “globalization” is a catchall for processes that have beenongoing for many years. It can be quantified as follows. During the 1990s,world output grew on average by 3% per annum; trade in goods at twicethat rate; trade in services at 8%. The real growth has been in foreign directinvestment (FDI), which averaged 14% per annum.

This upsurge partly reflects the relative ease with which productiontechnologies can now be transplanted. In some other respects such as thephysical movement of labor, globalization has hardly happened. However,personnel policies such as expatriation and the proximity provided bytelevision (and now the Internet) have led to much greater awareness ofwhat is possible and helped disseminate the skills to make use of thatawareness.

Opposition to trade liberalization sometimes reflects lobbying by vestedeconomic interests but the challenge also comes from people andorganizations that claim to speak for the poor, the consumer and theplanet. They argue vocally about the harm that is caused by the modernbusiness practices such as importing job-destroying technologies yet notdeveloping other essential technologies such as the medicines needed totreat local diseases. The politics behind these groups are increasinglycomplex and have moved beyond old adages that sustainabledevelopment is “about sustainability” in the North and “aboutdevelopment” in the South.


to grow. Unlike physical assets, many canpossess the same knowledge capital at thesame time and use it in different ways tocreate value.

Sometimes, economies have been describedas pipelines for converting raw materials intoproducts. Today, it seems more appropriate toview them as dynamic networks thattransmit learning and generate value throughconnectedness. Indeed, some describeeconomies using the language of ecology andgive similar explanations for their success andfailure.

The resources and skills that multinationalcompanies, governments and non-governmental organizations, universities andcivil society deploy within these networks areessential to sustainable development. Inorder to become and then remain successfulwithin this networked economy, people needto acquire more know-how and refresh theirknow-how more frequently.

Even within developed nations, the OECDrecently estimated that the average half-lifeof worker skills has shortened to three and ahalf years. In the developing nations, thechallenge of skill generation and skillmaintenance is magnified further by the

changing nature of technology and by theimbalance between local needs and globaltrends.

Whereas the larger companies cannot removethis hurdle by themselves, progress is likely tobe slow without their active participation.Using their economic power to strengthenand extend the connections within thenetworks helps reinforce people’s awarenessand understanding of what needs to beachieved and provides the means totransform values and local priorities intoaction.

As networks evolve, roles will also change.Increasingly, the multinationals’ commercialsuccess comes from funneling skills,technologies and sources of investmentrather than holding proprietary control of allthe key technologies and productionprocesses. This makes it particularlyimportant that they work in ways that willenhance the effectiveness and legitimacy ofthese channels.

Figure 3:.Technology diffusion matters throughout the project iceberg.


Project Investment and RiskManagement

Economic growth requires investment as wellas know-how and this investment spreadsmost easily towards projects that offer goodfinancial returns and present low risk. It maybe helpful to view the situation as an iceberg,as drawn in figure 3.

Floating above the waterline are the projectopportunities that will be successful in anycase. Below the surface are a far larger numberof potentially vital projects.

Some of these projects may be commerciallyattractive but unnoticed; others may bedesirable from the point of view of countrydevelopment but too risky for the privatesector to address.

Box 5: Electricity and Water in South AfricaOnly 30% of homes in South Africa had access to electricity in 1990. In1998, Eskom and other firms initiated a massive electrification programthat increased this to 67%. However, it is unlikely that the grid will ever beextended to the smallest isolated rural communities.The Solar Home System and its support infrastructure offer an innovativesolution in these locations. A joint venture between Shell and Eskom aimsto provide 50,000 homes – many with very little chance of ever beingconnected to the national grid – with access to electricity.This venture is a blueprint for similar markets elsewhere, demonstratingthe benefits partnerships can bring to providing a power solution forcustomers. The project provides a commercially viable way of tackling akey social issue. At a local level, it will lead to job creation, education,entertainment and a power supply that is superior in terms of quality,health and safety.The system consists of a solar panel, a charge controlled battery and asecurity and metering unit. Solar panels are supplied from the Netherlands.This is the first time that pre-paid magnetic cards have been used for a solarhome system, providing people with the opportunity to obtain solar powerwithout making a large up-front investment in equipment that they mightnot otherwise be able to afford. The cost to customers (around US$8 amonth) is roughly what they spend today on less effective fuels such ascandles and paraffin. This charge is stored on a magnetic card bought fromlocal outlets.Community workers provide education on solar energy and on thefinancial commitment. Regional branch offices are responsible for thefinance, accounting and training on installation, maintenance andmarketing. Local, community owned and operated companies will handlemarketing, installation and maintenance. Community owned and operatedoutlets will be the first place for customers to make contact.Suez Lyonnaise and the World Bank are testing a similar approach to waterdistribution in the Eastern Cape province as part of a series of initiativesaiming to bring clean water to a million residents by 2005. Pre-paidelectronic cards costing around $2 a month provide access to filteredwater. Since previously the rate of payment for water services in theTranskei was 1%, it was important to help the local population appreciatethat this was not simply a new way of taxing them. Already the villageshave seen a marked decline in waterborne illnesses.


One challenge for governments, firms andthe international community is to find waysto increase the number of projects that areactually selected for investment and progressto completion – to improve the “supply side”.This depends on reducing the risk of keyprojects “close to the water line” andgenerally raising the level of other projectsthat today lie deep below the surface.

Project risk has many components: location,choice of partners, suitable technology andmeans of finance. The market may seem toosmall or ineffectively regulated, theworkforce unskilled, intellectual assets poorlyprotected, or the restrictions on repatriatingprofits too stringent. Only some aspects canbe expressed objectively. Yet obtainingproductive investment requires finding

approaches that minimize the risks perceivedby the investor.

Smart Partnerships

Official Development Assistance (ODA),including debt write-off, has been one vitaltool for addressing the intractable needs ofthe poorest nations. Arguably, its realjustification is to deal with the socially vitalprojects deepest beneath the water line inways that also build capacity for the future.But too often it seems to be applied in waysthat do not reduce future project risk.

In the course of this work, we learned aboutthe contribution that can be obtainedthrough public-private initiatives: “SmartPartnerships” as the CommonwealthPartnership for Technology Managementdescribes them. These partnerships can

Checklist 3: Technology Co-operation and Smart Partnerships– Who benefits from the actions the firm takes and the technologies it

deploys? Will these help local economies become more successful andtheir SME sector able to operate in a more sustainable fashion?

– Are appropriate technologies already available for handling localenvironmental problems? Who ensures these get developed andadapted to suit local needs and local budgets?

– What is the best way for firms that have an international outreach towork with local governments and the local community? For example,can they transfer expertise through business support groups within thelocal community or provide management training – perhaps linkedwith the university system – about successful approaches?

– Is the firm’s approach to the management of its intellectual assetscompatible with the need to deploy technology in ways that will enablepoorer countries to develop economically?

– Who sets and who monitors the performance standards? While somestandards depend on the local community’s objectives and capacity toabsorb given technologies, others, such as safety, risk assessment andmanagement vision, cannot be relative. Are effective assurancemechanisms in place?

– Is our behavior consistent with these answers? Are we actively seekingout examples of what works and consciously modifying our approachesaccordingly? Do local communities believe that they live better lives as aresult of our presence?


operate at all scales from the skilled engineerupwards. They provide the means by whichpeople can learn from and apply thetremendous experience available in small andlarge companies, governments and civilsociety.

Combining grant-based, capacity-buildingapproaches with practical experience,education and skill development increasesboth the competence of the individual toaddress local needs and the internationalcommunity’s understanding of these needs.

Once the capacity has been created, soundlegal frameworks make it more likely that thiscan be used to good purpose and correctdecisions made about design andconstruction. This in turn helps theinternational partner complete projects moreeffectively, producing a virtuous circle thatfurther improves local capacity and makesfuture investments less risky.

The newer market instruments such as theKyoto Protocol’s Clean DevelopmentMechanism, Tradable Emissions Permits, etc.,also offer ways to increase project visibility.We feel it is useful to view these asdevelopment tools that can tip the balance infavor of cost-effective investments addressingparticular policy goals (in this case reducedcarbon emissions).

Provided it is possible to agree the rules andmodalities, these instruments can be used toreduce overall portfolio risk and shiftinvestment towards greater sustainabilitywithout constraining the investor to use pre-determined solutions. We believe thatrunning these schemes in ways thatencourage participation rather than createbureaucracy will provide substantial leverageand improve project visibility.

Points of Leverage

However committed a firm is to sustainabledevelopment, the growing concerns aboutglobalization mean that it is likely to bechallenged on its record in emergingeconomies. In working towards technologyco-operation and smart partnership, the main

messages are to focus on economicdevelopment, learn from examples of successand work in ways that will improve skills,reduce risk, foster partnership and extend thenetwork.

There is a widespread willingness (and theresources) to invest provided there are theskills, capacity and institutional frameworksto support that investment. Technologyfollows investment and when the perceivedrules of the game change, so too will people’sbehavior.

The SME sector plays a particularly crucialrole as economies develop: a hot-house ofeffort with tremendous understanding ofwhat is possible but often stretched in itsability to take up and use the tools alreadyavailable to the multinational. Without avibrant SME sector, economies do notflourish.

Finding better ways to drive this dynamic is atest of cooperative economic leadership, inwhich governments, multinationalcompanies and local businesses each have keyroles to play.


The messages we heard during this projectoffer a clear sense of both opportunity andobligation. Once the public believes (rightlyor wrongly) that corporations – specificallymultinationals – are the main actors able toinfluence the future and drive innovationand the development of technology,corporate social responsibility inevitablyextends to cover these processes.

At our London Innovation Dialog, held toexplore the work covered in this report,participants from outside the businesscommunity told us to:

• Pay more attention to how business isbeing framed and recognize that fewpeople are actually promoting the benefitsthat companies themselves consider thattechnology is providing,

• Recognize that innovation can be highlydisruptive and requires ethical guidelinesthat are fit for the time and place,

• Pay more attention to the contributionsmade by government and regulation andnot believe that a Jazz world can beachieved by industry alone,

• Learn how to structure dialog on thedifficult issues surrounding the use ofadvanced technologies to obtainchallenge without polarizing matters to apoint at which progress becomesimpossible,

• Take what we have learned and ensure itgets put into practice.

Eco-efficiency shifted the response toenvironmental impact from end-of-pipesolutions towards ways of eliminating impactat source. Its success has come fromexpressing a clear but challenging objective“to do more from less” that channels ouraspirations to find environmentally betterand more cost-effective solutions. Oncecompanies recognized this was possible, eco-efficiency became established.

Similarly, there is no future in looking atsustainable development just in terms ofcosts and obligations. This is one way to getcaught in the commodity trap. To be asuccessful, integral part of business thinking,sustainable development has to provide thefood for long-term growth and profitability.To nourish innovation, its roots have toextend deep within companies’ businessunits, not the corporate centers where theearly attention to sustainable developmenthas often been focused.

“When we looked at our publications onsustainable development, we realized that all thepeople in the photographs worked in ourcorporate office. There was no one there fromour business units.” Participant at LondonInnovation Dialog, 1999.

The nature of the challenge is apparent fromthe results of the company survey. It concernspeople and economics much more thantechnology. Individual firms, with differentspheres of business, will encounter differentaspects of this challenge.

A Management Frameworkfor Sustainable Innovation

Sustainable value creation depends upon pro-activelymanaging innovation to address both changing values and publicperceptions of risk. Attention starts in the early parts of theinnovation S-curve.


In larger companies, the required skills mayalready exist but may not be combined as ateam. For example, technology managementis often treated as an engineering taskreceiving little input from the social sciences.SMEs may be particularly strong in theirdesign skills, in science or in theirappreciation of the needs and values of thelocal economy, but weak in other importantareas.

Sustainable innovation requires us tocombine these skills without creatinginflexibility, reinforcing the on-going shifttowards dynamic, results-oriented styles ofmanagement that is already happening forother reasons.

This report has not attempted to identifywhich technologies might solve whichsustainability goals or which innovations willbe successful and sustainable. That issomething that (in general) we believe is bestdetermined through well-regulated markets.

However, we suggest that it is worthwhile forfirms to look in more depth at how they aremanaging innovation and consider whetherthis approach can respond to the challenge of

sustainable development during a period ofrapid commercial, social and technicalchange.

Managing the S-curves

The S-curve offers a useful way of presentingthe distinct stages of discovery, development,deployment and maturity of ideas andtechnologies (see figure 4). Impact starts offlow as the scope and nature of the idea ordiscovery are mapped out. It then growsrapidly after substantial investment hasmoved the idea into development, flattensoff after the idea is implemented widely, thenfalls away as replacements (developed alongtheir own S-curves) come along.

This reminded us that businesses need abalance of activities to remain profitable.What seem to be good business practices suchas focusing investments and technology onthe most profitable products currently inhigh demand (i.e. close to the top of their S-curves) can ultimately weaken the firm (seeChristiensen, The Innovator’s Dilemma). Thesame is likely to be true when addressingsustainable development.

Discovery

Development

ReplacementSubstitution

Low impact

High Technical Certainty

Public concern about the unknown

Public concern about the known

High Freedom of Choice

Deployment

Large investment

Figure 4: The S-curve illustrates the changing impact oftechnology through its life cycle.


Breakthrough innovations of whatever formare likely to be rejected by mainstreamcustomers because they cannot use them.Firms with too strong a customer focus mayfail to create the new markets for products ofthe future and become exposed to morenimble competitors. On the other hand,firms that invest too much in newtechnology fail because of the time it takes tobring these options to market.

Depending on the nature of the technologyand the degree of awareness of its potentialconsequences, public concerns abouttechnology arise at different stages in itsdevelopment and have different riskmanagement responses.

Ways of managing innovation andtechnology development to resolve thesetensions change over time.

Around 1970, many large firms separated themanagement of their R&D and businessoperations. R&D and innovation were oftenconsidered synonymous, a corporateresponsibility that involved generating newoptions for business units while keeping aneye on the scientific horizons andminimizing technology-related risk andenvironmental impact. Business units wereresponsible for understanding the evolvingmarket’s requirements and for turning theseoptions into products they could sell.

In many firms, this separation of rolesdisappeared towards the end of the 1980s.Their core technologies became mature andmarket forces required greater integration ofproduct development and technologydeployment. At the same time, innovationbecame seen as much more than the productof R&D (see Roussel et al, Third-GenerationR&D). Eco-efficiency became a priority,which large corporations were in a position toaddress cost-effectively using the technicalcapabilities at their disposal.

Box 6 illustrates this evolution in a simplifiedway and suggests how it may continue associal values and the underlying desire forgreater sustainability become importantforces driving the innovation process.

Reinforcing Trends

In determining the best approach to theirinnovation and technology management,corporations must take into account manytrends. Some are directly related to thegrowing attention given to environmentaland social performance; others may only beco-incidental. Nonetheless, we do not believethat they can be treated separately fromsustainable development.

Networking has already been mentionedseveral times. Another trend is that time tomarket has shortened dramatically in somesectors. The nature of new technologies,combined with large companies’ focus oncore competencies, has made it possible forsmall firms to take a leading role in bringingnew ideas rapidly to market. Many youngerpeople now prefer to work in these smallfirms and do not expect the certainties thatlarge corporations used to offer.

In turn, large companies now spread theirantennae much more widely to obtain thecompetitive tools they use in their businesses.The trends go together and it would not bepossible for the new SMEs to be successfulwithout strong connections to largerorganizations.

Another important development is thechanging profile of public concerns abouttechnological risk and technologyownership. When most of the life cyclehappened inside a large corporation, publicconcerns tended to arise during the later partsof this cycle (at the top of the S-curve),hopefully after companies had taken steps tounderstand and minimize the risk.

Today, concerns become visible sooner(“novelty” leading to “uncertainty”) and theextent of use of some technologies goesbeyond the scale that people can comfortablyhandle (“too big”). This means that newmechanisms may be required to ensure thatwhat is introduced is, and will remain,acceptable to the public.


Box 6: Changing Approaches to Innovation Management

technological

social

company valuevalues

a) Technology push, functional coordination (1970-1990)

Central Research generated options to address Business Units’requirements, maintaining knowledge access to appropriate (oftenproprietary) technology. Business Units determined the firm’smanufacturing and marketing focus and selected which options todevelop. Technology push ensured that the “shelf remained full”.However, lack of engagement of the business units in generating theoptions meant that some of these remained unused on the shelf.Companies adopted and extended government-defined regulations basedon expert risk assessment.

technological

social

company valuevalues

b) Market-led, business unit coordination (1990-?)

Business units incorporate research and technical functions to developproducts and services to meet consumer needs. Market pull focuses thetechnical effort and businesses marshal core competencies according tothe structure of key markets. While technology remains an importantsuccess factor, there are fewer unused options on the R&D shelf. The risk ofbeing unresponsive to changing customer needs and technical possibilitiesis dealt with in principle by the transparency provided through the market.Public awareness of complexity and risk is starting to challenge theestablished assurance mechanisms based on “sound science”.


Box 6 (cont): Changing Approaches to Innovation Management

technological

social

valuevaluesnetworks

ofcompanies

c) Values-oriented, externally driven (2005?)

Public values (some local, some global) will increasingly shape thebusiness environment for innovation. Networked businesses will operatewithin this framework in ways that ensure legitimate global outreach andlocal presence. Success will depend upon recognizing and amplifying theweak signals provided by emerging behavior and ideas and the results ofearly demonstrations of promising technology.

This will require the competence to know what is available within thenetwork and to move quickly enough to capitalize upon that knowledge.Depending on the nature of the innovation, the ability to move “out of thebox” will require the informed consent of the consumer and citizen as wellas the network partner owning the intellectual property rights. Thisconsent may be easier or harder to obtain depending on the governancemechanisms society provides and the credibility of the firm within itsnetwork.

diagramscourtesy Manzini


Achieving an effective balance to these trendsraises new questions. One way to formulatethese is to ask what corporate socialresponsibility means for companies operatingwithin a networked world. No singleapproach will apply to all firms in allsituations, but there are some clear commonprinciples.

1. Sustainable development offers anorganizing framework based onopportunity and respect for humanvalues. Innovation is about using changein ways that better meet human needs andvalues. The connection between the twoseems obvious although, in the absence ofclear market pressures and a commonlanguage, it can be hard to realize,especially since innovation can comeunexpectedly “out of left field” and havesuch uncertain consequences.

2. Some organizations respond best tosustainable development as a vision,whereas others prefer more pragmaticapproaches. Clear direction backed up byresources, management support and goodmetrics seems more likely to achieve thedesired results than reinventing businessprocesses to accommodate sustainabledevelopment.

3. Whichever approach is preferred,innovation has often been the result ofpresenting (or being presented with) acredible strategic dilemma: a shock thatcan only be resolved by developing whollynew approaches.

4. Economies are networked, social valuesare changing and environmental pressuresare here to stay. These are unavoidable butnot uncontrollable forces. Commercialsuccess depends on having the flexible,multidisciplinary skills to respond. Thisapplies as much to sustainable innovationas in any other area. Metaphorically, wemust ask ourselves whether to concentrateon stopping the tide from coming in orusing it to get where we want to go.

5. Innovation based on better design andnew technologies gives us the means to actsmarter and more sustainably. Using thesetools well depends upon understandingthe public’s expectations and concernsand being able to meet needs cost-effectively without raising further alarmsover the scale or novelty of technology.

6. The leadership task is to harness theseeconomic and social trends, capture thetremendous amount of knowledge andexperience that exists in networksworldwide and combine these in ways thatcreate value. Traction is likely to begreatest when the management approachis positioned appropriately for theorganization in its network and seen bystaff to be relevant and self-evident, if notsimple, in purpose and content.

7. Corporate social responsibility and eco-efficiency form important elements of thebusiness response. Attention to theseprinciples must be devolved throughoutthe corporation.

Shaping the Future orResponding to the Past?

Sustainable development can act as a catalyst for innovation if there is acompelling vision, consistent tools to support that vision and effective waysto measure progress. Traction can be increased by connecting the approachto trends such as networking and changing social values.


At our dialog workshop in December 1999,Professor Manzini suggested that success alsorequires new business ideas and new ideas onbusiness. He believed that these ideas wouldbe design-based, amplifying the emergingsignals from the marketplace in ways thatcannot be reduced to either a “technologypush” or a “market pull” approach.

The task force concentrated its attentionprimarily on what companies can do, but it isimportant not to overlook the role othersplay in supporting companies’ actions. Animportant role of governments is to providethe climate for sustainable innovation. Thisincludes (see Hemmelskamp, Innovation-Friendly Environmental Regulation; Dearing,Technologies Supportive of SustainableTransportation) the regulatory frameworksthat reduce uncertainty that better solutions

will succeed in the market place. In theOECD’s view, such frameworks will bedynamic and will require multiple supportinginstruments. Governments also act in waysthat can reinforce the standards of behaviorthat are sought of others, for example withinpublic procurement policies.

The financial markets have an important roleto play in funding and rewarding the moresustainable solutions developed bycompanies. They are most likely to do sowhen there is compelling evidence thatsustainable development has economicvalue. In March 2000, John Prestbo, EditorDow Jones Indexes, commented about thenew Dow Jones Sustainability Group Index:

I believe that the Dow Jones Sustainability GroupIndex will [continue to] outperform general

Checklist 4: Innovation Management in a Networked Economy– Is attention on sustainable development centralized or decentralized

within the firm? Who provides the shock – the strategic dilemma – thatis intended to take the whole network forward?

– Does the firm’s approach reflect all the implications of operating in aeconomy? To what extent do smaller firms (which are

generally not yet affected by considerations of sustainabledevelopment) provide the innovative potential we use to develop newways forward? How are we linking these efforts to support ourcommitment to sustainable development?

– Is a suitable process in place to “scan the horizon” for the trends andopportunities that can form the basis for value-based growth? Does ittreat sustainability as an important consideration and does it reflect therealities of a networked economy?

– Commercial success in the global economy depends on local andglobal public acceptance of corporate behavior. Are we clear about thebalance of responsibilities between small and large firms and how thisbalance will be achieved?

– How will networks of small and large firms respond to public concernsabout new technology? What is the appropriate balance between theadvice offered by the expert and values established by other meanssuch as stakeholder dialog, both for avoiding problems ahead of timeand for resolving them when they do happen? Do we know how to putthese approaches to good effect?

networked


market benchmarks over time. Enlightened andeffective management means sustainabilitycompanies deliver more predictable returns,which also could be articulated another way:fewer negative surprises.

It is well known among money managers thatthe easiest way to beat your benchmark is not tofind a bunch of hot stocks but simply to avoidowning the stocks that turn into disasters.Investors will seek out leading sustainabilitycompanies not for outsized performance, whichis always temporary, but for the above-averagegrowth on which they can rely.

The challenge for these companies is to findnew ways to align innovation with publicexpectations and so provide a managementframework that is based on discussing,deciding and then delivering sustainablevalue.

Leading companies have understood that thisdepends upon understanding the evolvingnature of society and redefining therelationships they want to build withcustomers, employees and suppliers, withgovernments and with the public at large.This approach involves recognizing theconnection between rights, roles andresponsibilities in society.

Dealing well with these responsibilities takestime, needs an effective view of what thefuture may offer as well as leadership, courageand measures of progress, but is essential forthe influence of the private sector to beaccepted.

Turn, turn, my wheel! All things must changeTo something new, to something strange;Nothing that is can pause or stay.

Keramos, Henry Wadsworth Longfellow.


Events that took place while this project was underway brought homesome of the underlying issues. Public concerns flared up in Europeabout food biotechnology, driven by mistrust of companies’ motives,lack of perceived need for the product and uncertainty about thetechnology. The WTO, the World Bank and the IMF faced violentprotests about globalization, a process made possible and visible byadvanced communications technologies. NASA’s probe to Marsvanished without trace while an international team of experts wasnoting that mankind knows far too little about the state of our ownplanet’s key ecosystems. Millions died of water-borne diseases and ratesof HIV infection reached 25% in some sub-Saharan countries,decimating the adult age groups on which these nations depend fortheir skill development and prosperity.

We do not believe that the dilemmas and inequities these eventsrepresent can be overcome without innovation. Without a belief inscience and a willingness to learn, improve and apply bettertechnology responsibly, sustainable innovation will not happen.However, unless innovators (which means companies) demonstratethat they have taken steps to ensure their own houses are in order, thepublic may be unwilling to accept developments that are important inachieving desired goals.

The WBCSD’s Council recognizes that this depends on maintainingstrong societal support for companies’ actions. The Innovation andTechnology Council project takes over from this task force to addressthese matters. Its goals are to:

• Deliver a set of principles and a framework for innovation,technology development and implementation that enhancessustainable development.

• Engage stakeholders on the issues surrounding information andbiotechnology and similar advanced technologies to develop anunderstanding of the expectations of corporations for the societaltransitions for sustainability.

We hope that the scouting work that this task force has carried out willhelp the new team meet these goals.

The Way Forward


This report reflects work carried out in discussion with over fifteenhundred people in a wide variety of organizations. The task force isvery grateful to these people for their insights, ideas and data that havemade the project possible. Nonetheless, responsibility for theconclusions that are drawn lies with the task force itself.

Particular thanks are extended to the following people andorganizations:

The Business Councils and the WBCSD’s partner organizations in thePhilippines, Thailand, Taiwan, Brazil and Argentina,

Andrew Acland, Pippa Hyam, Schia Mitchell and colleagues at theEnvironment Council, London,

Anne Bruggeman at The Human, Environment and TechnologyProgram Group, Forschungszentrum Jülich,

Murray Edmonds of Edmonds Consulting, Melbourne, and hisnetwork of Australian contacts,

Bas de Leeuw at UNEP, Paris,

Ezio Manzini at the Politecnico di Milano,

Nigel Roome, working at Erasmus University, Rotterdam,

Frances Smith of Consumer Alert, Washington,

Michaela Smith and colleagues at the Commonwealth Partnership forTechnology Management, London,

Per Sorup and colleagues at the Institute for Prospective TechnologicalStudies, Seville,

Candice Stevens and colleagues in the OECD’s Science and Technologyand Industry Directorates,

The staff at the World Resources Institute, Washington, and

Shell International for seconding Andrew Dearing as the programmanager for this work.

Acknowledgements


Sustainable Development and People’s Values

Amery Lovins, Hunter Lovins and Paul Hawken, Natural Capitalism,Earthscan, 1999.

Stephan Schmidheiny, Changing Course, MIT Press, 1992.

Claude Fussler and Peter James, Driving Eco Innovation, Pitman, 1996.

Richard Holme and Phil Watts, Corporate Social Responsibility:Making Good Business Sense, World Business Council for SustainableDevelopment, 2000.

Edgar Schein, Career Dynamics, Matching Individual andOrganizational Needs, Addison Wesley, 1978.

Scenarios

World Business Council for Sustainable Development, ExploringSustainable Development, Global Scenarios, 1997.

Kees van der Heijden, Scenarios: The Art of Strategic Conversation,Wiley, 1996.

Andrew Dearing, Have We the Foresight for Sustainable Development,Foresight: The Journal of Futures Studies, Thinking and Policy, 1999.

Technology Cooperation

OECD, Science, Technology and Industry Review No 25, Special Issueon Sustainable Development, Paris, 2000.

Innovation

Clayton Christensen, The Innovator’s Dilemma, Harvard BusinessSchool Press, 1997.

Philip Roussel, Kamal Saad, Tamara Erickson, Third-Generation R&D,Harvard Business School Press, 1991.

Jens Hemmelskamp, Klaus Rennings and Fabio Leone, Innovation-Oriented Environmental Regulation, Physica-Verlag, 2000.

Andrew Dearing, Technologies Supportive of SustainableTransportation, Annual Review of Energy and Environment, 2000.

Further Reading


During 1999, the WBCSD held dialogs withits regional partners within the CorporateSocial Responsibility and SustainabilityThrough the Market Council Projects. Amongthe questions discussed were “What role doestechnological and social (behavioral)innovation play in achieving sustainability?”and “Is the atmosphere in your countryreceptive to this innovation?” This appendixsummarizes the responses.

Brazil

Here, the dialog explored a balance betweenpositive benefit and caution. Participantsfrom certain sectors felt strongly thatinnovation and technology play a key role inachieving sustainability. Others felt the needfor more caution despite the potentiallybeneficial effects. There was a generalagreement that it is currently difficult forBrazil to access new technologies.

There was also agreement that society needsto be more proactive in applying andintroducing new technologies. Among thepositive examples were clean technology,water treatment, material substitutions andrecycling. However, some participants,particularly from government, felt that thefirst priority was human safety and felt thatextreme caution must be applied to avoidpremature decisions concerning theintroduction of sensitive technologies.

Some participants regarded social innovationas key. They felt that education was critical tochanging people’s lifestyles and that civilsociety and government must participate inthe creation of new educational methods.

There was a mixed reaction concerninggenetically modified organisms (GMOs).

Some felt that Brazil has been too liberal inaccepting GMO products and noted thatseveral biotech-based products forbidden inthe USA are sold freely in Brazil. Others,claiming that GMOs could have a positiveimpact, noted that acceptance of GMOproducts will depend not just on economicviability but also on local values and beliefs.

“Information is technology today. Society isbeing forced to think about the true value(beyond the purely economic value) of newideas and methods.”

“Technology can play a key role in de-linkingeconomic growth from the use of energy andnatural resources.”

“Caution needs to be applied. Insufficientqualified labor and poor infrastructures mayexpose the country to higher risk levels, such asin the production and maintenance of nuclearfacilities.”

“There is a need for investment in R&D with aview to reducing poverty and social inequality.”

“Innovation is linked to results. The market willdecide whether or not new technologies are to beintroduced. It is a function of need.”

Argentina

We heard that innovation is well received inArgentina. Participants told us about theimportant role it plays in achieving higherlevels of sustainability, provided technologiesrespond to social demands and are adapted tolocal conditions and the public is keptappropriately informed and educated onpotentials and risks.

During the period of protectionism andmilitary rule, Argentina was less receptive toinnovation. This changed during the

Social Surveys and the 1999 RegionalDialogs


liberalization of the economy in the late 80s.Most of the fears expressed surroundinginnovation came from unskilled laborers wholost their jobs (or fear the loss) through theintroduction of new technology.

“Innovation is a key factor for progress. Theopen market fosters innovation, as people canchoose and compare and competition is strong.”

“Argentina is open to innovation and theintroduction of new technologies. Controversialtechnologies such as GMOs or nuclear power arenot of concern to the general public.”

Philippines

Overall, Filipinos are receptive totechnological and social innovation but theyproceed with caution. Technology was seento be important to assure a certain standard ofliving. Social innovation was thought to bekey as people need to learn how to do thingsdifferently and in a more sustainable way.Nevertheless, there is a widespread lack ofknowledge regarding the opportunities forsocial innovation and technological choices.

There is a constitutional ban on nuclearenergy in the Philippines. The new Clean AirAct intends to ban incineration as a wastedisposal option.

Participants expressed skepticism towardssome new technologies (such as geneticengineering) and made reference to the needto apply the precautionary principle. In thecase of GMOs, some participants said thatcertain groups were not supportive of theirproduction while others would adopt theirusage if it can be shown that this is moreprofitable instead of traditional agriculture.There is a religious overtone concerned withdealing with aspects of human life. Howevermost participants felt that GMOs were not anissue and that the public as a whole was quiteindifferent to the topic.

Regarding social and behavioral innovation,many believe in a need to revert back to“more simple living” and “real” pleasures.There is a sense of needing more economicalways of living, adapting products and servicesto local needs and specific habits, and

including the situation of the poor incompanies’ decisions, product designs andoperational or infrastructural development.

“People must be cautious with innovation as itwill have a determining impact on quality oflife.”

“We need many more ‘how to’ books and othertype of self-empowerment tools, so that peoplecan better understand the values of their livesand the pleasure in more simple living.”

Thailand

In Thailand, the majority view was thattechnological and social innovation is criticalto the country’s development. Thaibusinesses are under strong pressure to raisequality and environmental standards of theirproducts to remain competitive, particularlyin foreign markets.

Thai businesses recognize that their ability toinnovate and develop more efficient ways ofoperating is particularly critical to theirsurvival, given the developing nature of theeconomy. Government is promoting foreigndirect investment with the belief that it willbring technological “know how”, capacitybuilding and jobs to Thailand. However,there was a feeling that not all “innovations”are good, particularly if only the rich andeducated benefit. Some stressed thattraditional knowledge and technology havenot lost their value and must not be forgottenin the light of new methods.

Participants proposed creating additionalcapacity-building projects in order to makethe positive effects of innovation morewidespread and better known.

“One must always ask ‘What is the valueadded?’ when introducing a new technology.”

“Traditional organic farming works well and isconsistent with Thai beliefs that respect nature. Italso represents a great potential for Thailand toenter into growing markets for organically grownfood.”


This survey was carried out between June andNovember 1999. We identified around 150firms based on their public commitments tothe principles of sustainable development orenvironmental protection. (This means thatthe survey is only representative of the part ofindustry that has already recognized theimportance of the subject.)

Around 80 firms agreed to take part, 55 ofwhich were WBCSD members. Mostcompanies offered one response, although infour cases, replies came from more than onebusiness unit. The breakdown of regional andsector responses was as follows:

Asia 17Australia 13Europe 30North America 22Latin America/Africa 4Chemicals, Pharmaceuticals 13Consumer Goods 24Energy 22Industrial Manufacturing 6Natural Resources 9Services 12

We aimed to interview senior businessmangers with responsibility for aspects ofinnovation, product development andtechnology management. Around one thirdof those who responded were heads of R&Dor Technology Development, a fifth heldother senior positions within a business unit,the rest worked within the corporate offices.Wherever possible, interviews were carriedout by telephone rather than in writing.

The following tables give a detailedbreakdown of the results. (Questions forwhich there were only a few replies are

omitted.) The first column gives the questionas asked; subsequent columns indicate thepercentage of respondents giving theindicated answer.

Where the percentages add up to less than100%, this is because not all respondentsanswered the question. The final columncontains the average response calculated byweighting these percentages on a scale of 1 toN, where N is the number of possibleresponses to the question. For example, thevalue 4.3 for the first question indicates thatthe average response was somewhat strongerthan “Yes”.

Results of the Corporate InnovationSurvey


Strong No Neutral Yes Strongno yes

Average

1. Is sustainable development a key business driver foryour firm?

0% 1% 10% 48% 40% 4.3

2. Is this because ofa. the firm’s values and principles? 0% 0% 2% 50% 36% 4.4b. the values and principles of your company’s staff? 0% 1% 15% 52% 19% 4.0c. pressure from (potential) customers? 0% 17% 31% 31% 8% 3.3d. competitive advantage through new products and

services?0% 5% 15% 44% 22% 4.0

e. competitive advantage through lower costs andbetter processes?

1% 7% 20% 43% 16% 3.8

f. the contribution to reputation and/or brand imageand value?

0% 0% 5% 45% 38% 4.4

g. regulatory requirements? 2% 14% 27% 36% 9% 3.4h. pressure from other stakeholders? 1% 14% 29% 37% 7% 3.4

3. Which drivers will increase in importance in the next 5years?a. the firm’s values and principles 0% 0% 27% 53% 20% 3.9b. the values and principles of your company’s staff 0% 0% 14% 71% 15% 4.0c. pressure from your customers 0% 2% 26% 53% 17% 3.9d. competitive advantage through new products or

services1% 0% 17% 52% 28% 4.1

e. competitive advantage through lower costs orbetter processes

1% 1% 24% 51% 22% 3.9

f. regulatory requirements 1% 7% 24% 49% 19% 3.8g. reputation and brand image/value 0% 0% 10% 53% 36% 4.3h. pressure from interest groups 0% 7% 23% 50% 19% 3.8

4. Would you say thata. factors underlying sustainable development have

fundamentally transformed the way you approachbusiness?

1% 6% 22% 56% 14% 3.8

b. your business is/will be fundamentallytransformed for environmental or social reasons inthe next five years?

1% 7% 17% 44% 29% 3.9

None <25% <50% <75% >75%(1-5)

Average

5. For what percentage of sales are environmental andsocial factorsa. a key selling point? 23% 42% 14% 9% 6% 2.3b. a secondary but not key selling point? 12% 35% 26% 9% 12% 2.7

No Yes6. Does your firm have a formal process for product and service creation and development 15% 85%


No Yes7. Is sustainable development explicit in your published mission and values? 17% 83%

Social Envir. S&E8. Are staff explicitly required to take sustainable development into account within this

innovation process?1% 28% 55%

9. Is the Chief Technology Officer (or equivalent) the person who integratesconsiderations of sustainable development as part of his job?

0% 8% 20%

Major Neg. None Pos. Majorneg. pos.

Average

10. What has been the influence of sustainabledevelopment?a. on the overall quality and standard of innovation 0% 0% 27% 43% 24% 3.9b. the culture & climate for innovation 0% 1% 29% 35% 31% 4.0c. understanding customer and potential customer

needs0% 1% 22% 47% 28% 4.0

d. understanding the role of design in addressingthese needs

1% 0% 22% 45% 22% 3.9

e. understanding technological opportunities andoptions

0% 1% 7% 49% 40% 4.3

f. your ability to manage the skills required forinnovation

0% 5% 34% 33% 19% 3.7

g. staff creativity and ability to generate and screennew ideas

0% 2% 26% 40% 26% 3.9

h. the formation and use of partnerships and otherforms of external collaboration for the purpose ofinnovation

1% 2% 22% 43% 28% 4.0

i. the definition of market, design and productstrategy

0% 0% 36% 38% 19% 3.8

j. the definition of technology and R&D strategy 0% 1% 27% 38% 29% 4.0k. decisions of which ideas to launch 0% 1% 27% 44% 21% 3.9

Strong No Neutral Yes Strongno yes

Average

11. Are technology and engineering key tools forsupporting sustainable development in your firm?

1% 0% 3% 41% 55% 4.5

Don’t A None Modest Strongknow barrier

Average

12. Which will make significant contributions during thenext decade?a. information and communications technologies 0% 5% 27% 65% 1% 3.6b. energy technologies and new energy sources 0% 8% 26% 62% 1% 3.6c. measurement technologies and sensors 1% 23% 44% 27% 1% 3.0d. developments from the bio-sciences 1% 29% 33% 29% 2% 3.0e. materials engineering 0% 14% 44% 36% 2% 3.3f. process technologies including catalysis 0% 14% 40% 42% 2% 3.3g. standards of technical and environmental

education0% 15% 43% 40% 1% 3.3


Strong No Neutral Yes StrongNo Yes

Average

13. Where is the main challenge in dealing withsustainable development?a. understanding the business case 1% 6% 6% 59% 27% 4.1b. making the business case 1% 3% 12% 44% 38% 4.1c. understanding stakeholders’ expectations 0% 10% 19% 47% 23% 3.8d. the firm’s ability to measure improved

performance0% 10% 14% 52% 23% 3.9

e. the technologies at the firm’s disposal 1% 15% 22% 38% 22% 3.7f. ability to use “best-in-class”

technologies/approaches.5% 16% 21% 34% 23% 3.6

g. the firm’s existing capital assets 5% 13% 20% 44% 17% 3.6h. customers’ willingness to purchase more

sustainable products/services0% 12% 16% 40% 31% 3.9

i. legislative and regulatory frameworks 1% 15% 21% 41% 20% 3.6

Not Not Quite Veryat all well well well

Average

14. How well does your firm measure/manage environmental andsocial criteriaa. in the way it assesses its business performance 1% 14% 70% 14% 3.0b. environmental only 1% 8% 21% 13% 3.1c. social only 6% 26% 8% 3% 2.2d. in the way it assesses the performance of staff 5% 43% 42% 10% 2.6e. environmental only 2% 14% 19% 6% 2.7f. social only 9% 21% 9% 1% 2.1

15. Have considerations of sustainable development helped yourfirm toa. launch one or more new products/services 2% 13% 50% 35% 3.2b. make major improvements to existing products/services 7% 13% 50% 30% 3.0c. establish new processes 3% 15% 53% 28% 3.1d. make major improvements to existing processes/operations 5% 15% 49% 31% 3.1e. develop new ways of doing business 8% 17% 53% 21% 2.9

Not Not Quite Veryat all well well well

Average

16. How well do you feel you cana. demonstrate that current products/services/processes are

more environmentally/socially responsible1% 9% 50% 40% 3.3

b. show how much this is worth in terms of shareholder valueor profitability

8% 33% 48% 12% 2.6

<20% 20-40%

40-60%

60-80%

>80% Average

17. How close are you towards a fully integratedmanagement process that incorporates sustainabledevelopment?

9% 27% 26% 24% 5% 48%


18. Any comments or examples you wish to share?

Á Dramatic reduction in use of greenhouse gas in electrical components.Á Production processes have reduced emissions from 71.5 in '70 to 6.5 in '98.Á Emissions trading, Clean fuels, Technology program to fund greener ways of doing things. At a strategic

level, new ways of doing business (still secret).Á Risk control surveyors offer "value added service" during visits – they spot environmental risk, costs, missed

opportunities.Á Contributing to the development of one of the most sustainable community developments in the world.

Technologies from around the world have been scouted on issues from wastewater treatment totransportation. Awaiting investor money

Á Diversified business group uses sustainable development as a screen for new ideas.Á Greenhouse gas trading scheme.Á Moving away from deep well extraction methods; Developing functional, yet biologically degradable

polymers; Developing new processes using renewable resources.Á Introduced new service to measure the extent sustainable development has been factored into regional

and governmental strategies; guidance tool.Á Formed international network of sustainable solutions for large companies, allows different regional offices

to share best practices.Á Introducing load management techniques using compact fluorescent lighting; Nuclear based power

generation technology; solar, thermal, wind.Á Development and application of best practices in power plant operation & maintenance.Á Extensive vehicle product range based on compressed natural gas fuels; electric-hybrid cars; recycling.Á Electric car is not selling well though this was a major initiative costing hundreds of millions of dollars.Á Facilitating Information Technology access & usability within the developing world; medical & analytical

technologies specifically.Á Development of environmentally sensitive lubricants; Reduction of energy usage; Emissions carried out in a

more structured manner; Process modeling employed to reduce inefficiency and waste.Á Changed the way forests are harvested; increased the % of forest allocated to reserves.Á Commenced demonstration project to build sustainable building.Á Design & construction of closed loop chemical plant generating zero hazardous waste.Á Materials sourcing now taking social concerns into decision making process.Á Developed first chlorine-free pulp which required new processes and large invest; Developed high quality

paper with 20-30% less mass.Á Genetically transformed crop seed to improve crop yield.Á Developing new enzymes which substitute for harsh chemicals reducing energy and water useÁ Forest certification that is less expensive when full environmental impact is reflected.Á Stopped copper emissions into lake before emission reached harmful levels.Á Outsourced management of water plants, aiming to offer support worldwide through internet.Á New recyclable polyester developed, picked up by another company for carpet manufacture.Á Environmental and societal impacts assessed before project decision; Working to end gas flares.Á Proactive approach to stakeholder relations regarding recent plant expansion.Á Stakeholder engagement with respect to plant expansion; Open communication with respect to

stakeholders. But consumers not willing to pay premium for environmentally more benign products, priceis still main driver.

Á Detergent powder manufacturing process redesigned to lower emissions and energy consumption; Globaleffluent emissions are now tracked to enable continuous improvement metrics.

Available from:

World Business Council for Sustainable Development

chemin de Conches 4

1231 Conches Geneva

Switzerland

www.wbcsd.org

What is the WBCSD?The World Business Council for Sustainable Development(WBCSD) is a coalition of some 130 international companiesunited by a shared commitment to the environment and tothe principles of economic growth and sustainabledevelopment. Members are drawn from 30 countries andmore than 20 major industrial sectors. The WBCSD benefitsfrom a thriving global network of national and regionalbusiness councils and partner organizations representingmore than 600 business leaders.

Building a better future -Innovation, sustainable development and techonolgy

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