Facultad de Ingeniería y Arquitectura

Curso: Tecnologías Limpias / Clean Technologies

Profesor: Dr. Ing. George Power Porto
UNIT 1: ECOLOGY AS BUSINESS STRATEGY
• Enterprise competitiveness
• Business strategy
• Ecology as a business strategy
• Industrial ecology
• Costs of non-sustainable economic growth
• Cleantech and environmental standards

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Videos to watch

Dan Barber. How I fell in love with a fish (19:30) Subt. TED Leyla Acaroglu: Why We Need to Think Differently
About Sustainability. TEDxMelbourne (17:34)
https://www.youtube.com/watch?v=4EUAMe2ixCI&t=1s
https://www.youtube.com/watch?v=5lOSIHWOp2I

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Enterprise competitiveness
• Is inefficiency. Reduction of pollution does not promote competitiveness. Once
Pollution occurred, production costs increase and there is no added value for customers.

• Reduction at origin, such as methods of substituting materials and closed-cycle

Prevention processes.

• Environment improvement by increasing productivity of resources.

Productivity

• Connection between innovation and environment improvement and resource

Innovation productivity.

• Targets root causes of pollution and helps improve resource productivity by eco
Efficient efficiency (material substitution).
innovation
Michael Porter: “Green and competitive”
(Harvard Business Review- July 1995)

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Porter Hypothesis
▪ Porter (1991) refers to the potential conflict between growth and the environment as a
‘false dichotomy’, finding that well-designed Environmental Regulations can increase
Research and Development into resource-efficient products and processes, resulting in
improved business competitiveness and profitability.

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Business strategy - Features
can be competitive
(fight competitors
and obtain
advantages)
Is centered on
improving the or cooperative (work
competitiveness of with competitors to
the enterprise’s obtain advantages)
products or services

Business
strategy

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Costs and differentiation strategies
Porter’s Generic Strategies

(Industry wide)
Cost Leadership Differentiation

Broad
Differentiation
(higher costs/ Strategy Strategy
higher prices

Target Scope
Integrated Cost
Leadership /

(Market segment)
Differentiation

Narrow
Focus Focus
Strategy Strategy
(low cost) (differentiation)

Cost Differentiation
Cost leadership
(lower costs/
Source of Competitive Advantage
lower prices

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Specific strategies and ecology

2. INTENSIVE:
Market penetration
Market development
Product development
3. DIVERSIFICATION:
Concentric (related new points)
Horizontal (unrelated new points)
Conglomerates (unrelated new
points and potential customers)

1. INTEGRATION: 4. DEFENSIVE:
SPECIFIC
Forwards STRATEGIES Cost reduction
Backwards Business sale
Towards competition
Closure of business

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United Nations’ 17 Goals for Sustainable Development

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Sustainable Development
▪ Economic growth involves the combination of different types of capital to
produce goods and services:
• Produced capital (machinery, buildings and roads)
• Human capital (skills and knowledge)
• Natural capital (raw materials extracted from earth)
• Social capital (institutions and ties within communities)
▪ How can natural capital be used and maintained in a way that sustains economic
growth and prosperity in the long-term?
▪ Declining levels of some natural assets can be acceptable as long as the decision
to deplete them reflects the real costs of environmental resources.
▪ However, some (most) environmental resources have critical thresholds beyond
which they cannot be substituted for by other types of capital.

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Some factors for change
▪ 1969: The Cuyahoga River in Ohio, USA,
catches fire due to the high concentration
of pollutants. A year later, the
Environmental Protection Agency (EPA) is
created.
▪ 1970s: After more than 30 years of
untreated wastewater dumping in the
Minamata Bay, Japan(27+ tons of
methylmercury) and the death of
thousands of people from poisoning,
Japan issues stringent environmental
standards.
▪ 2013: Beijing, China, concentration of
PM2,5 reaches 900 ppm—40 times above
WHO levels. Today China is one of the
main drivers of the Green Economy.
Source: Castro (2013)

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Costs of unsustainable economic growth in Peru

80% of population have been exposed to PM2.5 levels 4 times higher than
the minimum level documented for health damages

60% of children younger than 5 years and approx. 70% of adults older
than 25 in La Oroya have twice the maximum lead blood levels

10 million people have inadequate or no access to sanitary services

15% yearly deaths caused by environmental pollution

Environmental degradation costs the Peruvian State an estimated 4,1% of

GDP (USD 8,7 bn per year)

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Moving towards change
Traditional approach:
▪ Grow first, clean later
▪ The path to sustainable
development is for rich
industrialized countries
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New approaches:
▪ Transition to an inclusive
green economy is built
based on the national
context
▪ Development of new
paradigms and options
▪ Think together, act together,
respond together
Green Economy
A Green Economy is one that
▪ Improves human well-being and
social equity, while significantly
reducing environmental risks and
ecological scarcity
▪ Has low carbon emissions
▪ Uses resources efficiently
▪ Is socially inclusive
Source: UN Environment Programme (UNEP) 2011

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Ecology as a business strategy

Contributes
to sustainable
development

Integrates a great number of processes,

economic restrictions and safety, health
and environmental issues to optimize the
use of resources

ECOLOGY: Emerging framework adopted in manufacturing,

construction and industrial processes for providing innovative
solutions in strategic planning leading to clean operations and
production.

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Ecology as a business strategy (cont’d)

Incorporates as a
cleaner production Promotes understanding
of the impacts of
strategy and pollution industrial systems to the
prevention in industrial environment
activities

Emerging field covering

the study of physical, Must be implemented
chemical and biological at the strategic level
interactions and their and then at tactical
interrelationship between and operational levels
industrial and ecological ECOLOGY AS A within a system
systems
BUSINESS
STRATEGY

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Ecology as a business strategy (cont’d)

Emphasizes the and the need to limit Also applied at tactical and
interrelaionship between environmental impacts by operational levels helped by
natural and industrial balancing inputs, outputs and optimization of resources,
systems… the capacity of the ecosystem. energy and capital.

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Ecology as a business strategy (cont’d)
Ecology

Strategy
Higher profitability

Clean technologies aim

at reducing losses and
waste to increase
productivity

Production – losses
Total productivity of capital and manpower =
Manpower + capital

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Ecology as a business strategy (cont’d)
Accounting of the
environmental costs Flatten the
with the other organizational structure
operational costs

Integration of the
Proven methodology to Apply clean Use ecology as a
environmental and the
implement cleaner technologies in business strategy to
organizational
production operations What must increment profitability
management systems What is
needed? be done?

Selecting a leading Implement

Corporate team with knowledge organizational culture Implement process-
compromise of the organization and based on pollution based management
area operations prevention

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Industrial Ecology (IE)
‘‘The aim of industrial ecology is to interpret and adapt an
understanding of the natural system and apply it to the design of
the manmade system, in order to achieve a pattern of
industrialization that is not only more efficient, but that is
intrinsically adjusted to the tolerances and characteristics of the
natural system.
The emphasis is on forms of technology that work with natural
systems, not against them. Applied industrial ecology is an
integrated management and technical program including:
• The creation of industrial ecosystem
• Balancing industrial input and output to natural ecosystem
capacity
• Dematerialization of industrial output
• Improving the metabolic pathways of industrial processes and
materials use
• Systematic patterns of energy use
• Policy alignment with a long-term perspective of industrial
ecosystem evolution.’’ (Tibbs, 1992)

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Environmental Management Practice (EMP) terminology

Source: Asu, van Zyl (2004)

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Cleaner Production (CP) at corporate and operational level

Source: Asu, van Zyl, 2004

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Trends in Environmental Regulation

Japan, Canada,
US and Europe
Environmental
Regulation

Source: Castro (2013)

Latin America

1970 1990 2021

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Cleantech and environmental standards in Peru

2014
Standards
adoption
1990 MINEM
Local 2009 (Ministry for
environmental Rule of law of Energy and
regulations SEIA Mines)

2001 2012
Law of SEIA SENACE,
standards
adaption
MINAGRI-MVCS,
SEIA-SNIP

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Cleantech and Environmental Impact Assessment (EIA)
Main factors that influenced the development of
Environmental Impact Assessment (EIA) in Peru:
I. Investment-fostering policies started in 1990s
II. Infrastructure and extractive megaprojects, increase in
public investment
III. Economic growth and increase of gross domestic product
IV. Significant increase of social-environmental conflicts
V. International agreements
VI. Creation of the National System of Environmental Impact
Assessment (SNEIA)

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Cleantech and environmental standards - Modernization

First generation Second generation

Local Assessment through

environmental an environmental
authority (SENACE)
assessment

Local Auditing through an

environmental environmental
auditing authority (OEFA)

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Cleantech and environmental standards - SNGA
SINEFA
Environmental functions in Follow-up and
auditing of
charge of public entities is environ-
mental
organized under the National SEIA commitments SNGRH
Environmental Water
System of Environmental Impact resources
Assessment management
Management (SNGA) which is
supervised by the Ministry of
the Environment (MINAM). SNGA
MINAM
National SINAMPE
strategies Protected
natural areas
EIA
SENACE SINIA
Environ-
mental
information
Ministries EIA and research
(local Regional SINAFOR
authorities) Government Forest and
wildlife
management

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Cleantech and environmental standards - SNGA

SEIA SINEFA
Responsible
environmental
authorities
(Ministries, GOREs, OEFA
MP)
MINAM
Directing and EIA
managing Technical advisers Follow-up
institution of (SERNAMP, ANA) and update
SEIA
EFAS
Environmental
auditing offices
SENACE

Heads or proponents
Consulting firms Organized civil society

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