Circular Supply Chains (CMT.docx PDF)

**From linear to circular supply chains** Keep recourses in the loop. Inner loops on the right side more circularity potential.  **Cradle-to-Cradle circular way** Goal is to have no waste, and reuse everything. Inner loops are preferred as it keeps products as is. Sustainabl...

**From linear to circular supply chains** Keep recourses in the loop. Inner loops on the right side more circularity potential.  **Cradle-to-Cradle circular way** Goal is to have no waste, and reuse everything. Inner loops are preferred as it keeps products as is. Sustainable= not circular. Clear differences, make sure to remember when reading papers   **Supply chain management:** SUPPLY CHAIN (MANAGEMENT) Supplier Supplier Supplier upstream Carrier Carrier Carrier Carrier Manufacturing site Focal company downstream Customer Carrier Customer Distribution centre Customer Customer Carrier Customer Distribution centre Customer 14 Steps to make product and in the end get it to the customer. Looking from focal company pov. Upstream is supplier side and before that and downstream is right part. - This is a conventual/forward/traditional supply chain - Cradle to grave flow - Flow of goods one way to customer - Flow of finance one way customer to supplier/companies - Information flows both ways   Returns management is in conventional SCM - Commercial returns= linked to sales (control) - Reusable items= related to consumption (responsive) - End-of-life returns= taken back from market to avoid negative externalities (responsive) - End of use returns= product replacements, end of lease (efficient) In the last two is most focus since there is still value to obtain.   **Reverse supply chains:** - Forward supply chain= customer is at the end of the process - Reverse supply chain= customer is not at the end, it reverses\ - integration of return flows from products into the existing production network - more than „just" returns management! \- marketing and logistics, cross-functional impact: Reverse supply chain is then: "The process of planning, implementing, and controlling the efficient, cost-effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal.   - Again proper wording. Reverse logistics is not the same as green logistics. GL is part of reverse logistics, RV is more responsible for end of life/use   Thus, product returns with focus on end of life and end of use 5 key busiseness processes: product acquisition reverse logistics (+ testing and inspection) sorting and disposition recovery redistribution in sales: additional marketing efforts, new markets, alternative chains   Cannibiliazation effect= new product takes over old product.   Closed loop supply chain = integrated approach of taking forward and reverse supply chains together   **Complexities of reverse SC** - New coordination issues - Complex Trade offs - Conflict of interest actors - Intrinsic complexity - Regulations - Lack of managerial attention BUT, it can also: - Strenghten companys competitveness - Make returns profitable   Trade offs are based on the 3 P\'s: people, profit, planet. These focusses can conflict with each other.   Circularity should not be seen as a silo approach: one way looking at it from one view, but from a holistics business process, with structural changes.-\> looking from an extended supply chain view. Broader perspectives   Possible resource cycles: - Closing (x): products/resources are not lost Slowing (y): products/resources stay longer in the system Narrowing (z): fewer resources used **Circular business models and EOL product management** CHALLENGES OF CLOSED-LOOP SUPPLY CHAINS\ many types of product returns make situations complicated\ products often not circular ready, not designed for full EOL\ recovery\ focus is often on operational instead of strategic aspects/issues\ (fit with supply chain strategy)\ growing interest in US because of profitability potential\ (triple bottom line: economic incentive)\ EU: legislation gives the push\ life-cycle approach to products CHANGES OVER TIME AND CHALLENGES FOR CLOSED-LOOP SUPPLY CHAINS\ increased global competition\ broad assortments, shortened life cycles\ supply chains for consumer goods:\ most environmental impact\ consumption of primary materials in EU:\ food, construction and mobility industry\ middle-class consumers entering the market\ increase in sharing/renting economy INNOVATION IN CLOSED-LOOP SUPPLY CHAINS\ product composition and after-use collection:\ more complex and novel materials: difficult to identify and separate at EOL\ materials proliferation developing faster than separation systems and sorting,\ after-use collection methods compromise purity and quality of materials\ move to a circular economy model: radical change, requires new way of\ thinking and doing business ◊ new business models\ business model innovation and product design strategies:\ together to support the transition towards the circular economy\ relationship between new product design and recovery at EOL:\ area for further exploitation COMPLEXITIES OF CLOSED-LOOP SUPPLY CHAINS\ returns are often uncertain in quality, quantity and timing\ (return rates not constant)\ difficulties in operational issues:\ managing product acquisition, reverse logistics, testing, sorting,\ disposition, disassembly, repairing, remanufacturing\ sales & marketing:\ market development for remanufactured products, secondary markets,\ developing channels, remarketing, fear of cannibalization of new sales,\ damage brand image/identification PREREQUISITES FOR SUCCESSFUL CLOSED-LOOP SUPPLY CHAINS\ legislation often has to provide push and support\ (incentives required)\ sustainable supply chain networks required\ close supply chain collaboration with partners required **Business models for slowing loops:** 1. Acces and performance model = focussed on service, not exchanged through traditional transaction= leased, rented etc. uber/ sharebike 2. Extending product value = exploiting residual waste value of products= from manufacturing-consumer-to manufacturing. Take back systems, h&m returns, collection programs etc. 3. Classic long life = focus on delivering long lasting products of high quality. Luxury/white machines. It challenges planned obsolescence 4. Encourage sufficiency = actively seek to reduce end-user consumption through durability, service, warrantee, reparability. Non-consumerist marketing, value propostiion on long lasting, high quality, high service, encourage repair, reuse, challenges unsustainability. Eg. Patagonia **Business models for closing loops:** 1. Extending resource value = collection and sourcing of otherwise "wasted" materials or resources to turn these into new forms of value LINKING BUSINESS AND DESIGN STRATEGY\ business model innovation (e.g., extend product's life once in use)\ in combination with\ product design strategies such as design for maintenance and repair,\ upgrading and upgradability, standardization and compatibility, dis- and\ reassembly\ design for product-life extension (slowing resource loops): introduction of service\ loops, reuse of product, maintenance, repair, design for dis-/reassembly: increase\ future rate of material and component reuse\ closing resource loops by recycling\ distinguish "products of service" and "products of consumption":\ technological cycle vs. biological cycle RECOVERY OPTIONS\ Reuse\ Repair\ Refurbishing\ Remanufacturing\ Cannibalization\ Recycling\ (Upcycling)\ (Disposal: Landfill and/or incineration without energy recovery) REMANUFACTURING RELATIONSHIPS TAKE-BACK RELATIONSHIPS\ [1. ownership-based: product owned by manufacturer, operated by customer\ (e.g., rental, lease)\ ]high core control: returns often regulated by contracts\ strong relationship focus: integrating products and services\ high amount of after-sales service (maintenance, repairs)\ product given back to seller after use\ example: often related to leasing or rental e.g. forklift trucks\ 2. service contract between customer and manufacturer incl. remanufacturing\ 3. direct-order: customer returns product, product is manufactured,\ same product back to customer\ [4. deposit-based: common in automotive industry] customer obliged to return core when buying remanufactured product\ (theoretical) one-for-one take-back relationship\ match between supply of cores and demand for remanufactured products\ example: automotive industry\ 5. credit-based: return brings number of credits (discount) for customer\ 6. buy-back: remanufacturer buys used products\ [7. voluntary-based: supplier gives used product to remanufacturer] Customer voluntarily gives back the core\ control over used products: low\ mandatory for some OEMs: EU directives\ take-back system: free-of-charge return\ box\ customer more likely to purchase\ remanufactured products\ example: toner cartridges of printers **Pre-use and use phase** Product carbon footprint= total amount of carbon gasses produced throughout a products lifecycle. Includes: raw material extraction, manufacturing, distribution, consumer use, EOL 3 scopes of emissions Scope 1: GHG emissions from sources that are owned and operated by the company, all "within firm" supply chain operations, including facilities = direct emissions\ Scope 2: GHG emissions from purchased energy= indirect emissions\ Scope 3: all other indirect emissions related to the firm's supply chain (i.e., employee travel, embedded emissions in products, "downstream" supply chain emissions such as distribution, retail, use, recapture of the waste stream)= indirect emissions\ A diagram of a company\'s operation Description automatically generated Sustainable measures; - Packaging; biodegradable, minimalistic, reusable - Educating - Eco-labesl - Food safety Technologies that support waste management: Catering companies generate tremendous amounts of waste\ sensor-based Internet of Things (IoT) network technology for\ improving the management of restaurant food waste\ collection, transportation and final disposal\ positive results:\ increase in restaurant food waste collected\ better law enforcement enabled by the monitoring capabilities\ negative remarks:\ radio-frequency identification (RFID) tags need to be renewed often\ dynamic/automatic weight sensors: higher degree of error - Smart supply chains such as cold chains Posponement: postponing (delaying) of (customer) differentiation of a product or service\ moving the push/pull-boundary as far as possible towards the customer\ keeping a product as long as possible „generic"/unspecific STANDARDS AND ECO-LABELS\ increased focus on more sustainability practices\ pressure from regulators, customers, consumers, media etc.\ often hidden and difficult to observe (e.g. better working conditions for\ farmers)\ independent verification necessary to inform supply chain partners\ adoption of voluntary environmental and social standards and eco-labels\ adoption if better governed\ help to meet SDG-13 (Climate Action) eco-labels: new generation of voluntary standards\ growing demand for sustainable products and services\ information asymmetry\ governance infrastructure for certification and verification\ not to be confused with mandatory labels, such as:\ danger symbols, conformity standards (like RoHS), energy ratings etc form of sustainability\ measurement directed at\ consumers\ explosion in the numbers of different ecolabelling programs International Organization for Standardization (ISO):\ identified three broad types of voluntary labels\ TYPE I a voluntary, multiple-criteria based, third party program that awards a license that\ authorizes the use of environmental labels on products indicating overall\ environmental preferability of a product within a particular product category based on\ life cycle considerations\ TYPE II informative environmental self-declaration claims\ TYPE III voluntary programs that provide quantified environmental data of a product, under pre-set categories of parameters set by a qualified third party and based on life cycle assessment, and verified by that or another qualified third party Resource loops and circular product design Why scarcity: 1. Demand induced; population growth, consumption increase, consumptioon pattern change 2. supply induced; degradation of supply source, supply risks due to exremes 3. structural scarcity; uneven resource availability, unfair acces to resources 4. no effective substitutes; water solutions to scarcity: - resource effienciy and waste prevention (renewables, reduce resourece use, waste, promote end use strategies) - waste management (reuse, recycling) design strategies for slowing the loops 1. designing ling life products\ - design for attachment and trust\ - design for reliability and durability 2. design for product-life extension\ - design for ease of maintenance and repair\ - design for upgradability and adaptability\ - design for standardization and compatibility\ - design for dis-assembly and re-assembly Design for a technological cycle: "\...to develop products in such\ a way that the materials ("technical nutrients") can be\ continuously and safely recycled into new materials or products"\ Design for a biological cycle: "\...design with safe and healthy\ materials ("biological nutrients") that create food for natural\ systems across their life cycle\^. In a biological cycle, materials are\ biodegraded to start a new cycle"\ Design for dis-assembly and re-assembly **Industrial symbiosis systems** Industrial symbiosis engages traditionally separate industries in a collective approach to competitive advantage involving physical exchange of materials, energy, water, and by-products. Key is collaboration and synergistics possibilities offered by geographic proximity Waste= not marketable, requires further work or else its waste By-product= its a secondary output that is marketable, direct use. Both are secondary outputs, not main output of production Poor understanding of each other\'s processes is hindering the development of technical\ and non-technical interactions and exchanges among process industry companies.\ SHAREBOX aims to overcome key barriers to mainstream Industrial Symbiosis adoption\ ▪ perception among production, quality and operations managers that resource sharing involves\ trade-offs in relation to access to sensitive product or process information by competitors\ ▪ need to assure a secure and fail-safe supply of quality resources\ ▪ costly expert facilitation for IS delivery\ SHAREBOX: A secure ICT platform for the flexible management of shared process resources Economic benefit of sharebox= facilitates IS opportunity identification for waste producers and receivers. It also reducs resource purchase cost and discharge cost but TOTAL not UNIT. **4 stages of industrial symbiosis (IS)=** 1\. identification- decision support for identification of opportunities\ SHAREBOX utilizes **data-driven algorithms** to recommend potential matches and strategies for waste re-utilization, including: - **Association Rule Mining**: Analyzing patterns in data to find relationships (e.g., \"waste A is often used by industry B\"). - **Multidimensional Hierarchical Agglomerative Clustering**: Grouping entities based on similar characteristics across multiple dimensions (e.g., geographical location, waste type, or production capacity). - **Input-Output Matching Algorithm**: Aligning waste outputs from suppliers with input needs of potential receivers. - **Case-Based Reasoning**: Using past successful matches or cases to inform future decisions, drawing analogies to find effective solutions. 2\. Assesment= decision support for assessing business profitability\ SHAREBOX assesses the profitability of waste exchange systems by evaluating savings (e.g., reduced discharge and resource costs) against added costs (e.g., treatment, transportation, and transaction costs). It uses **game theory** to develop fair benefit-sharing schemes, balancing collaboration and competition between waste suppliers and receivers. The platform accounts for practical challenges like waste availability mismatches while promoting sustainable and economically viable resource use. 3\. Implementation\ SHAREBOX facilitates the **implementation and cooperation** needed for industrial symbiosis (IS) by forming networks among key players, such as **waste suppliers (A)**, **receivers (B)**, **recyclers (R)**, **third-party logistics providers (TPL)**, and **government policy-makers (G)**. It employs advanced tools like **cooperative game theory**, which focuses on how stakeholders can collaborate to maximize joint benefits and fairly share those gains, and **non-cooperative game theory**, which models scenarios where stakeholders act in their own self-interest while seeking mutually acceptable outcomes. Additionally, SHAREBOX uses **agent-based modeling**, which simulates the behavior and interactions of individual entities (like A, B, and R) to predict how the entire system evolves under different conditions and policies. These techniques help in designing **contractual schemes** and ensuring effective coordination to minimize waste sent to **landfill (L)**, reduce reliance on **primary resources (r)**, and optimize resource reuse.  4\. monitoring Agent-based modelling= studies complex systems consisting of autonomous decision-making entities. Each entity is modeled as an independent agent, which is provided with: 1 a set of goals it has to accomplish through the interaction with other agents and the environment, and 2. A set of rules of social engagement driving interactions. **environment and external factors** that influence the functioning of agents (stakeholders) within an industrial symbiosis (IS) system - Match between demand and potential supply of waste- - Quality of waste - Economic viability of IS synergies - Contractual clauses related to waste exchange   **Industrial Symbiotic Relations (Operational Dimensions)**:\ This section focuses on the practical, real-world aspects of industrial symbiosis. It explores factors such as the nature of the exchange (direct or substitution-based), the role of regulations, the presence of competitors, and the matching of supply and demand for waste.  **Industrial Symbiotic Relations (Epistemic Dimensions)**:\ This section looks at the information and knowledge-related aspects that influence decision-making in industrial symbiosis. It addresses **market observability** (the level of visibility or awareness of competitors) and **production-chain observability** (the knowledge of quantities needed or produced in the supply chain). - **Directness**:\ This theme distinguishes between the **type of exchange**: - **Substitution-based**: In these exchanges, waste is used to directly replace a primary resource (e.g., waste from one factory is used as raw material in another). - **Direct**: Here, waste flows directly between two entities (a waste supplier and a receiver), without necessarily substituting a primary resource. - **Presence of Regulations**:\ This theme addresses the impact of **regulations** on the waste exchange: - **No Regulations**: The exchange occurs without any regulatory oversight. - **Encouraging Regulations**: Regulations that actively promote waste exchanges, such as incentives or support. - **Binding Regulations**: Strict rules that mandate waste exchanges, typically with legal obligations on one or both sides. - **Presence of Competitor(s)**:\ This theme deals with the **competitive dynamics**: - **No Competitor**: The exchange occurs in an environment where there is no competition, making it simpler for companies to engage in IS. - **Competitors on One Side**: Competition exists either on the waste provider or receiver side, which may complicate exchanges. - **Competitors on Both Sides**: Both waste providers and receivers face competition, making the exchange more complex and challenging. - **Quantity Matching**:\ This theme addresses how well the **supply of waste matches** the demand from the receiving side: - **Matching**: The amount of waste produced perfectly matches the receiver\'s demand. - **Over-Matching**: The supply of waste exceeds the demand. - **Under-Matching**: There is insufficient waste to meet the receiver\'s demand. **2. Epistemic Dimensions (Green Box on the Right):** This section looks at the **information-related aspects** that influence IS dynamics. It focuses on how much the involved parties know about each other and the market. There are two key themes here: - **Market Observability**:\ This theme focuses on how visible competitors and market conditions are to the parties involved in the IS exchange: - **Perfect Information**: All participants have full knowledge of competitors and the competitive landscape, enabling more informed decision-making. - **Imperfect Information**: Parties lack complete knowledge of competitors, leading to uncertainty in decision-making. - **Production-Chain Observability**:\ This theme concerns the **visibility of production and consumption quantities** along the supply chain: - **Perfect Information**: Participants have full visibility of the quantities of resources and waste produced or needed, aiding coordination and planning. - **Imperfect Information**: There is uncertainty regarding the quantities required or produced, making the matching of waste supply and demand more difficult. **Energy based industrial symbiosis** Challenges to IS The main driver toward adopting the IS practice is the willingness to gain economic\ benefits (Esty and Porter 1998; Yuan and Shi 2009).\ υ Companies usually lack awareness on how to introduce the IS approach into business\ practice (Fraccascia et al. 2016).\ υ Wide range of factors influence the cooperation dynamics in IS\ υ Technical, operational, logistical, spatial, regulatory, market related, and environmental Energy-based IS\ υ Symbiotic synergies where a waste of one production process is exploited for energy-\ purposes by another production process.\ υ Process might belong to the same or different companies Classification of Energy-based IS\ υ 1) energy cascade= An energy cascade between two processes occurs when the waste energy (e.g.,waste heat or steam) produced by the former is used by the latter.\ υ 2) fuel replacement= υ A fuel replacement synergy occurs when waste materials are used to replace traditional fuels in existing fuel-based energy production processes (e.g., coal-based energy production). Eg= waste used as fuel, can be nonbiodegradable\ υ 3) bioenergy production= υ Bioenergy production-based IS synergies are devoted to exploiting organic wastes to produce bioenergy.-\> bio based researchers are reused for renewable energye, examlpe novalnodisc \(1) reducing the amounts of wastes disposed of in landfills;\ υ (2) reducing the amounts of fossil fuels used in industrial processes;\ υ (3) reducing the amounts of associated greenhouse gases (GHG) emitted in the atmosphere (fuel production, transport, and combustion, and avoided disposal of wastes)\ υ Attention! : Energy-based IS is case-specific and location-specific\ υ Burning wastes could produce more CO2 than burning traditional fuels, ceteris paribus (Eckelman and Chertow, 2013). Technical issues are relevant such as the replacement capability of wastes. Bioenergy production\ υ Rural areas\ υ Industrial areas\ υ Urban areas **Sustainable Business Model Canvas** Industrial symbiosis= waste as resource for another   Preservation= preserving- leaving it as it is Conservation= keeping it in a minimal way to uphold it.   Circular economy low environmental impact, minimizing waste & excessive resource use turning goods at the end of their lifespan into new resources   CE consits of 9R model: The 9R Framework. Source: Adapted from Potting et al. (2017, p.5) \| Download Scientific Diagram Weak sustainability= improving it. its interchangeable, there is overlap. Conserving the resources. Growth managed and modified Strong sustainability= preserving resources. Zero economic and population growth Business model consists of two elements: 1. Value proposition= what are you offering and to whom Reflects explicit choices along following three dimensions Target Segments: Which customers do we choose to serve? Which of their needs to we seek to address? Product or Service Offering: What are we offering to customers to satisfy their needs? Revenue Model: How are we compensated for our offering? 1. Operation model= how do we profitabely deliver the offering Captures business' choices in the following three critical areas Value Chain: How are we configure to deliver on customer demand ? What do we outsource and what we do in-house ? Cost Model: How do we configure our assets and costs to deliver on our value proposition profitably? Organization: How are we deploy and develop our people to sustain and enhance our competitive advantage? Succes of value business is innovation. And looking from a customer position. Businnes model canvas from customer pov and sustainable pov. Customer centric= delivery at minimal time, minimal costs, convenience, ease. Resources/money are not central, customer is, keeping them coming back, so happy customer. Sustainable pov= have a profitable answer without the cost of society of environment. 7 elements to a strong business model 1\. Identify your specific audience 2\. Develop a strong value proposition 3\. Establish business processes 4\. Record key business resources 5\. Determine key business partners 6\. Create a demand generation strategy- technology pull= extacting customer information for market. Marketing push= pushing product into the market without proper customer segmentation. 7\. Leave room for innovation Creation or reinvention of business itself\ Two or more elements of a business model (BM) are reinvented to deliver value\ in a new way\ BMI results from one of four objectives\ Satisfy existing but unanswered market needs\ Bring new technologies, products or services to market\ Improve disrupt or transform an existing market with better business model\ Create an entirely new market\ What is a Business Model Innovation (BMI)? BMI has four primary motivations Crisis with existing business models Adjusting, improving, or defending the existing model to adapt to a changing environment Bringing new technologies, products or services to market Preparing for future by exploring and testing completely new BM that might eventually replace the existing ones REACTIVE: Arising out of a crisis with existing BM (e.g. Nintendo Wii) ADAPTIVE: Adjusting, improving or defending the existing BM (e.g. Nokia" comes with music") EXPANSIVE: Launching a new technology, product or service (e.g. iPod/iTunes) PRO-ACTIVE/EXPLORATIVE: Preparing for future(e.g. Car2go by Daimler, Amazon Web Services) CHALLENGES Developing an appetite for new models Aligning old and new models Managing vested interests Focusing on the long term Starting Point for Business Model Innovation (BMI) SATISFY MARKET: Fulfill an unanswered market need (e.g. Tata car, Lulu.com)\ BRING TO MARKET: Bring new technology, product or service to market or\ exploit existing intellectual property (e.g. Xerox 914, Swatch)\ IMPROVE MARKET: Improve or disrupt an existing market (e.g. Dell, Ikea, Skype,\ Amazon.com retail)\ CREATE MARKET: Create an entirely new type of business (e.g. Google)\ CHALLENGES\ Finding the right model\ Testing the model before a full scale launch\ Inducing the market to adopt new model\ Continuously adopting the BM in response to market feedback\ Managing uncertainty Consists of five phases\ MOBILIZE: Prepare for a successful BMD project (e.g. Business Model Canvas\ (BMC), Storytelling)\ UNDERSTAND: Research and analyse elements needed for BMD effort (e.g. BMC,\ Customer Insights)\ DESIGN: Generate and test viable BM options, and select the best (e.g. BMC,\ Blue Ocean Strategy)\ IMPLEMENT: Implement the BM prototype in the field (e.g. BMC, Storytelling)\ MANAGE: Adapt and modify the BM in response to market needs (e.g. BMC,\ visual Thinking) Value proposition is what you do / your business idea to whom you are selling in to= business idea= on the economic layer. -\> Functional value= focal outputs of a service/product by the organization related to environment under examinitation. Quite specific The point of defining the functional value is first to clarify what is being examined in the environmental layer; and second, to serve as a baseline for exploring the impacts of alternative potential business models.-\> =social value on the social layer, Focusses on the people. Enhance quality of consumers live every day, everywhere, by offering better Developing long term value from mutually beneficial relationships How this integration of the layers help: - Visual representation - Validation tool - Creation tool   **Horizontal coherence** refers to how well the elements across different building blocks align with each other. For example, the **Value Propositions** should align with the **Customer Segments** and their needs, the **Revenue Streams**should match the monetization strategy of the value provided, and the **Key Activities** and **Resources** should support the delivery of the value proposition.  **Vertical coherence** relates to the internal consistency within each building block. For example, in the **Value Propositions** block, the specific benefits and solutions offered must directly address the needs identified in the **Customer Segments**. Similarly, in the **Revenue Streams** block, the sources of income should directly correlate with the pricing mechanisms and customer willingness to pay. it should build onto eachother, creating more external impacts and value **Green finance** Key Types of Innovation: Product Innovation: New products/services. Process Innovation: Streamlining operations. Incremental vs. Radical Innovation: Improving existing offerings vs. disruptive change. Open Innovation: Collaboration with external partners. Closed Innovation: In-house R&D and development. Aligning Innovation with Business Goals: How innovation supports strategic objectives. Importance of a Culture of Innovation: Encouraging creativity, risk-taking, and collaboration. Types of business model innovation Platform-based models (e.g., Uber, Airbnb). Subscription-based models (e.g., Netflix, SaaS). Circular Business Models: Maximizing resource efficiency (e.g., resale, recycling). Why Business Model Innovation Matters= Stay competitive, meet customer needs, adapt to market disruptions. Key Strategies for Sustainable Development Eco-friendly product design and manufacturing. Energy efficiency and renewable energy use. Circular economy principles: Recycling, reuse, waste reduction. Business Benefits of Sustainability: Long-term cost savings. Improved brand reputation. Attracting eco-conscious customers and investors Innovation as a Driver for Sustainability:\ Innovative technologies to reduce environmental impact.\ New business models that promote sustainability.\ Sustainable Innovation:\ Developing products and processes that meet social and\ environmental challenges. Focus Areas\ Innovation and Technology Management:\ How to strategically manage technological advancements to maintain\ competitiveness.\ Operations and Supply Chain Management:\ Using engineering solutions to strategically enhance supply chain efficiencies.\ Engineering Economics:\ Integrating economic theories into engineering decisions to align with broader\ business strategies.\ Organizational Behavior in Technology Settings:\ Strategically managing dynamics in tech-environments to optimize performance. Economic Aspects of Implementing New\ Green Technologies\ Scalability and Adaptability:\ Challenges in scaling green technologies across industries.\ Strategies for integrating green tech without disrupting existing processes,\ ensuring economic viability.\ Implementing green technologies requires businesses to\ Balance short-term financial strain with long-term profitability\ Risk reduction by future-proofing operations.\ Green finance and market creation can be leveraged as part of a\ broader innovation strategy, positioning firms at the forefront of\ new, less saturated, and high-growth markets Green Finance Instruments:\ Green Bonds: Raising capital specifically for eco-friendly\ projects.\ Sustainability-linked Loans: Tying financial terms to\ environmental performance.\ Impact Investing: Attracting investors focused on both financial\ returns and environmental impact. Green Finance and Market Creation\ Public-Private Partnerships:\ Collaborative funding models that combine public sector support with\ private sector innovation to drive large-scale adoption of green\ technologies.\ New Market Opportunities:\ Growth in sectors such as renewable energy, electric vehicles, and\ circular economies.\ Blue Ocean Strategy: Creating untapped market spaces with green\ solutions that have little competition. Green Finance (GF)= Financial products and investments aimed at ecological preservation. Examples include green bonds, carbon credits, and renewable energy financing. Sustainable Development (SD)= Development that meets present needs without jeopardizing future generations. GF is depicted as the financial mechanism aimed at supporting environmentally\ sustainable initiatives.\ Refers to financial products, services, and investments that are specifically\ designed to support environmentally sustainable and responsible projects,\ businesses, and initiatives.\ The primary goal is to allocate capital and financial resources toward\ activities that have a positive impact on the environment and help address\ climate change and other environmental challenges.\ Sovereign green bonds are issued by governments to raise resources to\ support climate-related or environmental projects. Key Components:\ Green Bonds: Financial instruments dedicated to funding green projects.\ · The global green bond market is worth \$2.7 trillion (and growing)\ Renewable Energy Investments: Capital allocated to solar, wind, and other\ renewable energy sources.\ Private Investments: Contributions by pension funds and insurance companies to\ infrastructure and green projects.\ Role in SD: GF enables the reallocation of financial resources to environmentally\ beneficial activities, helping balance economic growth and ecological preservation Other Concepts\ Green Loans: Green loans are similar to green bonds but take the form of\ loans rather than bonds. These loans are provided by banks or financial\ institutions to fund eco-friendly projects or investments in areas like clean\ energy, sustainable agriculture, or green building construction.\ Sustainability-Linked Bonds and Loans: These financial instruments are\ tied to specific sustainability performance targets or key performance\ indicators (KPIs). If the issuer meets the predefined sustainability goals, the\ interest rate or repayment terms may be adjusted in favour of the borrower.\ Green Equity Funds: These are investment funds or exchange-traded funds\ (ETFs) that focus on stocks and shares of companies engaged in\ environmentally sustainable businesses or industries. Investors can\ participate in green finance by buying shares in these funds. 27 Green Mortgages: Green mortgages are home loans that offer\ favourable terms and conditions to borrowers who purchase energy-\ efficient homes or make eco-friendly renovations. These mortgages\ often provide lower interest rates or reduced fees.\ Green Certificates and Guarantees: These financial instruments\ certify or guarantee the environmental attributes of a product or\ project. For example, Renewable Energy Certificates (RECs) represent\ the environmental benefits of renewable energy generation.\ Green Microfinance: Microfinance institutions offer small loans to\ individuals or small businesses engaged in environmentally sustainable\ activities, such as organic farming or clean energy distribution.\ Impact Investment Funds: Impact investment funds allocate capital to\ projects and businesses that aim to generate both financial returns and\ positive social or environmental impacts. These funds can encompass a\ wide range of sectors, from clean energy to affordable housing and\ sustainable agriculture.\ Carbon Offsets and Credits: While not traditional financial instruments,\ carbon offsets and credits are mechanisms for investing in emissions\ reduction projects or purchasing credits to offset carbon emissions. They are\ commonly used by companies and individuals to compensate for their\ carbon footprint.\ Green Insurance Products: Some insurance companies offer policies that\ incentivize environmentally responsible behaviour, such as discounts on\ premiums for hybrid or electric vehicle owners or reduced rates for\ sustainable farming practices. 29 Dynamic Link:\ The arrow from GF to SD represents how financial initiatives improve\ sustainability by funding green projects and reducing environmental harm.\ The reverse arrow shows how SD drives the evolution and expansion of GF by\ creating demand for sustainable investment options.\ Key Insights: It highlights that the relationship is not static but varies over time,\ influenced by global events, policies, and market conditionsA diagram of a company\'s financial benefits Description automatically generated Rolling-Window Analysis and Its Dynamic\ Insights\ Powerful statistical tool used to study time-varying\ relationships between variables.\ Unlike static methods, which provide a single, overall\ relationship valid across the entire sample period, rolling-\ window analysis captures how relationships evolve\ over time.\ Useful when working with financial, economic, or\ environmental data where the underlying dynamics may\ shift due to structural changes, external shocks, or\ policy interventions. 35 Data Division into Sub-Windows:\ The time series data is divided into overlapping or non-overlapping\ sub-windows of a fixed size (e.g., 3 years or 36 months).\ Each sub-window represents a snapshot of the relationship during\ that specific period. Concept of Rolling-Window Analysis\ Dynamic Calculation:\ Within each sub-window, the chosen statistical or econometric\ method (e.g., correlation, regression, causality test) is applied.\ The window is then \"rolled\" forward by one time step (e.g., one\ month or quarter), and the analysis is repeated for the next period.\ Capturing Evolution:\ The rolling process continues across the entire dataset, allowing\ the calculation of metrics like causality, coefficients, or\ correlations to be visualized over time. Rolling window identifies where structural changes occur(thus dynamic), provides localized view of relations, identifies when interventions are effective + when relationships are strong/weak Temporal variations refer to the changes in a variable or a\ relationship over time. These variations can occur due to external\ influences, evolving conditions, or inherent dynamics within the\ system being studied.\ Unlike static analyses, which provide a snapshot at one point in\ time, exploring temporal variations helps us understand how\ patterns and relationships evolve.\ Key Features of Temporal Variations\ Time-Dependence\ Relationships or phenomena are not constant but change over time.\ Example: The relationship between green finance and sustainable development\ can strengthen or weaken during different economic cycles.\ Influence of External Factors\ Temporal changes often reflect external shocks, such as policy changes,\ technological innovations, or economic crises.\ Patterns Over Time\ Trends (long-term increases or decreases).\ Cycles (repeating patterns over periods).\ Irregularities (unexpected deviations due to anomalies). SD's impact on GF may fluctuate due to varying external conditions like\ economic cycles, regulatory environments, or global market trends. For\ example, during economic downturns, even if SD goals are prioritized,\ funding for GF initiatives might slow due to financial constraints.\ Time-Varying Relationships:\ The interaction between SD and GF is subject to temporal variations. For\ example, during heightened awareness of environmental crises (e.g.,\ after major climate summits), SD might strongly drive GF. Conversely, in\ periods of reduced focus on sustainability, this impact might diminish.\ -\> this can be unequal do to differences in priorities from state level **LCA** LCA is a technique to assess environmental impacts across a product\'s lifecycle, from raw material extraction to end-of-life treatment. **Purpose**: Supports decision-making in business and policy, improves environmental performance, informs eco-labeling, and facilitates comparison between products. **2. Lifecycle Perspectives** - **Cradle to Gate**: Covers the lifecycle up to the factory gate. - **Cradle to Grave**: Includes production, use, and disposal. - **Cradle to Cradle**: Focuses on closed-loop recycling and reuse. LCA assists in: environemental perfromance, strategic planning, indicators, marketing Why LCA: analyse problems, comparing improvements, choosing between comparable products **Four Key Stages of LCA** 1. **Goal and Scope Definition**: - Define the purpose, audience, and system boundaries. - Identify functional units for fair comparisons (e.g., per kg of product). 2. **Inventory Analysis**: - Quantify inputs (materials, energy) and outputs (emissions, waste). - Address challenges in data collection and ensure consistency. 3. **Impact Assessment**: - Classify and evaluate environmental impacts (e.g., global warming, toxicity). - Normalisation: The goal of this step is to establish a common\ reference (dimension) to enable comparison of different\ environmental impacts. To achieve this aim, a reference quantity is\ used to make the data "dimensionless - Grouping: Relating different impact indicators in terms of factors such as location,\ local, regional or global. - Weighting: Where a ranking and/or weighting is performed of the different\ environmental impact categories reflecting the relative importance of the impacts\ considered in the study. 4. **Interpretation**: - Analyze results to draw conclusions and recommendations-\> inform decision makers, implement policies, trade-offs (economic/environ) - Include checks for consistency, completeness, and contrbutution, perturbation, and sensitivity analysis. - Perturbation analysis: Study of the effects of small changes within the\ system on the LCA results;\ ▪ Sensitivity & Uncertainty analysis: Understand how the uncertainty\ in the outputs of an LCA system can be divided and allocated to\ different sources of uncertainty in its inputs.\ ▪ Global Sensitivity Analysis: quantifies the importance of model inputs\ and their interactions with respect to model output. It provides an\ overall view on the influence of inputs on outputs Consistency check: to determine whether the assumptions,\ methods, models and data are consistent;\ Completeness check: all relevant information and data for\ interpretation are available and complete (usually by an LCA expert\ & technical expert); Contribution analysis: overall contribution to the results of the various factors Summary: - LCA helps understand environmental impacts - Tool to inform decision makers - Combined with other decision aspects to make well balanced decision - Identifies improvement opportunities. - Compares alternative products or designs for eco-friendliness. - Helps in green procurement and consumer decision-making. - Supports strategic planning in industries and policy development. **5. Advanced LCA: Consequential vs. Attributional** - **Attributional LCA (ALCA)**: Focuses on static lifecycle impacts of a specific activity. - **Consequential LCA (CLCA)**: Considers broader system changes and economic effects over time. **6. Challenges** - Complex and iterative process. - Requires high-quality, precise data. - Results can vary depending on assumptions and scope.