Business ideas

BUSINESS-IDEAS-NEW-2

Business ideas

BUSINESS-IDEAS-NEW-2
Expanding Your Business The Green Way

At The Green Enterprise we believe that capitalism is undergoing a shift. From changing business models, to stranded asset risk and innovative ideas, we look at some of the ways businesses are evolving and the new challenges they face.

The Circular Economy

In a circular economy, growth is decoupled from the use of scarce resources through disruptive technology and business models based on longevity, renewability, reuse, repair, upgrade, refurbishment, capacity sharing, and dematerialization. Companies no longer focus mainly on driving more volume and squeezing out cost through greater efficiency in supply chains, factories and operations. Rather, they concentrate on rethinking products and services from the bottom up to “future proof” their operations to prepare for inevitable resource constraints – all the way through to the customer value proposition. This implies eliminating waste, creating step changes in resource productivity and at the same time enhancing the customer value proposition on dimensions such as price, quality and availability.

Disruptive Innovation

Technologies abound which are causing fundamental and structural changes the global economy. Innovations such as AirBNB is disrupting the hotel industry. Uber taxis is disrupting the taxi industry. And renewable energy and storage is disrupting centralised fossil fuel based energy.

Shared Value

Shared Value, as a business concept which involves making a profit but also solving social problems at the same time. It involves policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates. Businesses need to join company success with positive social outcomes. Shared value is not a humanitarian or green philosophy. It is a new way to achieve economic success and forms the core of the operation of a company. Many companies today are embracing Shared Value business approaches

For business more broadly, shared value means that to ensure their long-term economic viability, companies need to change the way they operate. The businesses for the new economy will have their business plans and processes centered around this. Read more from Harvard Business Review for more detail on Porter on Shared Value. And read this recent article about the Pilbara which was published in The Conversation.

A great  illustration of Shared Value is TOMS Shoes. They matches every pair of shoes purchased with a pair of new shoes for a child in need.  What began as a simple idea has evolved into a powerful business model helping address need, and also advance health, education and economic opportunity for children and their communities around the world’. This business model not only draws in more clients because it makes people feel good about their purchase but the product is of good quality and made of recycled material. TOMS shoes have shown how well this model can work whilst being cheaper or comparable than many of the name brand shoes. Discover more about TOMS Shoes here.

Australian companies are beginning to think about Shared Value with property developer Mirvac using the shared value model to develop a real estate project called  Mulataga in the Pilbara and prioritised environmental and social outcomes along with economic performance.

Collaborative Consumption

Collaborative consumption is really taking off with all sorts of businesses emerging that involve sharing goods that have been traditionally owned individually. From car clubs, car parking, to bike sharing to book and DVD sharing to apartment lending, this new business model is eroding market share of traditional sectors such as the hotel, parking and taxi industries.

Stranded Assets

The concept of stranded assets is not a new one. Products come in and out of fashion. New technologies supersede older ones. Or regulation changes which means a product can no longer be sold, like asbestos. Some assets become stranded before the money spent on them has been recovered through sales and investors suffer the economic loss. For people who invest in the stock market either via funds or their superannuation, stranded asset risk could have a big impact on their portfolio.

The concept of stranded assets should get business thinking about the implications of not adjusting investment in line with the emissions trajectories and climate change projections. Particularly for long range investments like superannuation, the risk of fossil fuel assets like coal becoming stranded may cause their assets to be devalued.

An example from the not-so-distant past is the Sony BetaMax. The BetaMax was in many ways a better and cheaper system than the any alternatives at the time, however it rapidly went out of fashion – to the detriment of anyone invested in it. The modern day equivalent is energy generation using fossil fuels. In light of the negative externalities of this aging technology and a rapidly changing world, coal could become then next major stranded asset. Credit rating agency Standard & Poor’s are highlighting this issue as are Carbon Tracker. Read more here or  listen to Jemma Green, Ben Caldecott and John Hewson discuss Stranded Assets on ABC Radio National here

The Dampier Port Authority: Barge innovation and doing more with less

In Western Australia, The Dampier Port Authority are focusing on sustainable solutions to their port gateway. With space at the port limited and a booming output of iron-ore from the region, the current port and methods of loading ships was not able to take on further capacity.

Rather than building a new port, the method of loading iron ore under went  a re-think all together. This led to the development of new offshore floating berths to allow barges to transfer ore to bigger carriers offshore. By implementing these methods, Dampier Port has improved their output, profitability and currently outperform all other ports in Australia.

Australian Leaders

There are a number of businesses that we think are taking on innovative approaches. The global leaders in clean capitalism include General Electric, Umicore, Bregal Energy, IBM and Munich Re. In Australia some of the leaders include Sims Metals, Wesfarmers, Hickory and Insurance Australia. In Western Australia, leaders include Psaros, Aurora Energy, New Energy and Verve Energy’s wind farm projects.

International Issues

The Green Enterprise conducted research, working with Moody’s credit ratings, to determine what would happen if mining and oil and gas companies globally had to pay for all their externalities. We also looked at the rising costs of environmental resources and what is the credit impact for companies that are intensive users of things like water and energy. As well as creators of waste and carbon (for instance – what happens if the price of water goes up for a paper mill?) This showed that companies dependent on natural resources are highly exposed to the cost of these resources rising and the likelihood of them being downgraded in the near term is high. Read more here.