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Posts by Ramon Arratia

Technology coupled with clever product standards policy is the answer

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SitraThis week I’m in Finland at a Chief Technology Officer’s forum organized by SITRA, the Finnish Innovation Fund.

After talking to some CTOs at these very innovative companies, you realise that technology has most of the answers. Today I’m very optimistic about the task ahead, a feeling I never get when coming out of conferences full of sustainability wonks or brand/marketing folks talking empty stuff…

Some lessons…

* The main learning was confirming that technology, supported by strong product performance standards, will be a key part of the fight against climate change.

* I saw a presentation from KONE, an elevator maker, who says their new volume elevator models launched in 2012 consume 70% less energy in Europe, 60–75% less in Asia and 40% less in the US compared to the typical KONE elevator configuration from 2008. To put that in perspective, 40% of global energy is due to buildings and between 2% to 10% is related to elevator and mechanical stairs. Imagine if we came up with legislation similar to the car industry eg. Minimum energy performance, more taxes for elevators that consume more energy, more taxes for building that consume more energy…

* I also saw a new company called Eniram who has pioneered a system to reduce fuel consumption in cargo ships by collecting intelligent data to monitor vessel performance and then suggest a number of optimization actions such as going at the optimum speed, when the hull should be cleaned or using optimizing the engine. The global emissions of shipping are double the ones from aviation. $20m is the annual cost of fuel per year per cargo vessel. In this case, costs savings are already a great incentive and this technology is expanding. But if strong cargo vessel efficiency standards or taxation of fuel were more stringent, then the technology would be adopted immediately.

* Another interesting company is ST1 - a petrol retailer that is investing heavily in bioethanol from waste sources such as out-of-date bread, organic waste or food containing starch and sugar. Their next big project is making ethanol from saw dust. Again, these innovations have a strong business case but the reason why there are successful is due to mandatory blending of ethanol with gasoline. Again, a product standard regulation. Their blends high on bio ethanol have a carbon footprint of 80%-90% less than gasoline. Why would that fuel pay the same tax?

* I heard a mining company complaining that they know technologies that could cut the energy in mining by 40% but their customers won’t pay the price difference. Do you think that all these losers working on sustainable marketing would convince this mining company’s clients to self flagellate themselves and pay a premium or will product standards and best available technology regulation have to fix it?

* Another company, Tamturbo produces gearless, durable, high efficient turbo compressors. Around 10-12% of industrial energy consumption is used to make compressed air, so strong energy standards for compressors is key to drive innovation and product performance.

Caverion gave a great presentation - a company that follows a full life cycle business model by designing, building, operating and maintaining buildings that are user-friendly and energy-efficient. They have a contract with the Swedish municipality of Kalmar, Sweden where they have guaranteed, to its town hall customer, savings of €21 million during 20 years of building upgrades. Here again, if we had policy to push local government towards more efficient buildings, these types of projects would not be anecdotes, but daily business.

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620m Africans live without access to electricity

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I recently came across this shocking report about the growing issue of access to electricity in Africa.

More than 620 million sub-Saharan Africans live without access to electricity, more than in any world region and nearly half of the global total, the new IEA Africa Energy Outlook reports. While more than 99% of North Africa’s population has access to electricity, Sub-Saharan Africa is also the only region in the world where the number of people without it is rising.

The rate of access across sub-Saharan Africa rose to 32% in 2012 from 23% in 2000, led by Nigeria, Ethiopia, South Africa, Ghana, Cameroon and Mozambique. But the number of people without electricity rose in 37 countries in the region, as rapid population growth keeps outpacing the many positive efforts to provide access.

The central scenario of Africa Energy Outlook, part of the 2014 World Energy Outlook series, sees nearly one billion people gaining access to electricity by 2040 – but because of population growth, more than half a billion people remain without it.

Africa Energy Electricity

More info, download the report.

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Our Progress Towards Zero Impact

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“True, carpeting is not as sexy as, say, electric cars, Big Data or space travel. But, we were assured, there is plenty of excitement to be had for those who decide to push from the ‘Old’ order to the ‘New’.”

Here is an excerpt from the case study written by John Elkington titled ‘Interface, the untold story of Mission Zero in Europe‘. In this piece he details some of the challenges, and visualises real progress made towards Mission Zero.

Interface Europe - Mission towards zero

“… a critical task has been to find and develop a suitable business case, both for internal and external use.

“The business case is a possible show-stopper,” admitted Ton van Keken, Senior Vice-President for Operations. But the company has often pushed well beyond the business case. Indeed, that has been a key part of the drive that resulted in the three recent zero-based announcements.

Asked why they did this, we were told that the business case took Interface much of the way, but where there were gaps to be bridged, “we did it for Ray.” When we interviewed senior Interface executives, it became clear that they see at least four areas where the business case is now much stronger than it was when Anderson kick-started the process. Rarely have we encountered a company where the ambitions have been set so high and so consistently.

There was no doubting the level of commitment we found. “In all areas of its activity People, Profit, Planet, Product and Process, Interface has seen excellent improvements since embarking on Mission Zero,” said Ton van Keken, Senior Vice-President for Operations. “I’m hoping to continue this trend, so that in 2020 our mission to have no negative impact on the environment will be accomplished.”Over and again, the mood was upbeat. “The word ‘impossible’ is no longer attached to Mission Zero,” said Richard ter Steege, Controller of the European division. But we were also reminded of the gap between where we need to be and where the European carpet industry currently finds itself.

Interface Europe, for example, has the capacity to recycle approximately 600,000 square metres of carpet a year compared with the 10–11 million square meters produced by Interface Europe and the 450 million square meters produced across the region annually. Clearly, there remains a vast gap between the aspiration and the reality. One key to closing that gap will be wider transparency across the sector. “If you’re the only one disclosing,” explained Rob Boogaard, Senior Vice-President, Sales and Marketing, EMEA, “customers don’t have much to compare you with.”

Interface is first to publish Environmental Product Declarations (EPDs), committing in 2010 to publish EPDs for all their products by 2012. Now there are more than 700 EPDs for Germany, with growing number of countries joining in. Luckily, there is a push for European harmonization, so EPDs done in one country are standard and can be used in another country. We have also been developing a standardisation agreement between Europe and the USA.

And what about the longer term vision? “Interface wants to be ‘off-oil’,” explained Rob Boogaard, Senior Vice-President, Sales and Marketing, EMEA. But the key thing to remember across all of this, noted Nigel Stansfield, Vice-President & Chief Innovation Officer, is that breakthrough innovation “is not just ideas. It is something that has to be commercialized, something that has value that the customer is willing to pay for.”

Download the full case study here.

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56 big brands push for strong climate legislation

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We 56 companies, funds and associations representing more than 4.5 million employees across worldwide each acknowledge responsibility for a sustainable economic future for Europe. Timely decisions about the cornerstones of EU’s energy and climate policies beyond 2020 will substantially support confidence for the important investments. We would like to contribute towards a modern, resource-efficient and low carbon growth as a central driver for Europe’s economic recovery and competitiveness agenda, energy security aims, and delivering sustainable growth and job creation for decades to come.

We remain increasingly concerned at the costs, risks and impacts associated with delayed action on climate change on our markets, supply chains, resource costs and upon society as a whole. We therefore urge you to agree at the European Council on 23rd and 24th October 2014, a robust 2030 energy and climate policy framework and energy security strategy that is fully in line with Europe’s long- term climate objectives and that can deliver a global climate change agreement at the 2015 Paris CoP. Planning security is vital for sustainable investments. We further call for an early structural reform of the EU ETS.

3M, Acciona, Águas de Portugal, Aldersgate Group, Alstom, Barilla, BDEW, Bilfinger Power Systems, BWE, Carbon Markets and Investment Association, Carbon Capture and Storage Association, CEZ, Climate Change Capital, Coca-Cola Enterprises, Dansk Energi, Dong Energy, Doosan Power, DSM, Electricité de France, Ecover, Eneco, E.On, Eurogas, EURELECTRIC, EUGINE, EUTurbines, EnBW, Energie Nederland, EnergiNorge, Ferrovial, Fortum, GDF Suez, General Electric, Gorenje Surovina, GSK, Institutional Investors Group on Climate Change, IKEA Group, Interface, International Emissions Trading Association, Kingfisher, Mirova, Novo Nordisk, Novozymes, Philips, Shell, Skanska, SSE, STF, SWM, Tesco, The Climate Group, The Prince of Wales’s Corporate Leaders Group, Unilever, Vattenfall, VELUX Group, VERBUND.

56 companies urge eu on climate

Via CLG

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Interface wins ‘Best Business / NGO Partnership’ Award

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Net-WorksExceptionally proud that Interface has been recognised for our Net-Works initiative in conjunction with the Zoological Society at this year’s Responsible Business Awards.

The category was – BEST BUSINESS/ NGO PARTNERSHIP

Nominees for this category included:

* Marks and Spencer and Good World Solutions – Leveraging mobile technology for real-time supply chain transparency
* Shell and the Global Alliance for Clean Cookstoves
* Woolworths and WWF-SA partnerships: Sustainable business initiative
* Barclays and Care and Plan UK - Banking on Change
* Interface and Zoological Society of London – Net-Works: delivering social, economic and environmental benefits to the Philippines
* Central England Cooperative and Saffron Lane Neighbourhood Council - The Saffron Acres Project
* Starwood Hotels & Resorts and UNICEF – ‘Check Out for Children’
* B&Q and BioRegional and The Sylva Foundation - Good Woods
* Turk Telekom (TT) and Bogazici University GETEM and Assistive Technology and Education Laboratory – Books on the phone
* SM Prime Holdings – Sensory Friendly Movies

The judges were looking to the same criteria as in B2B Partnership. The only difference here was that the partnership should have taken place between a company and other entities (i.e. NGOs, governmental body, charity or other).

Having perhaps, the longest list of nominees, this category was one of the hardest to choose from. Nevertheless, judges selected a partnership between Barclays, Care and Plan UK with their project Banking on Change as highly commended, stating:

“A unique savings rather than credit-led approach that allows increasing individual savings and financial literacy in undeveloped areas.”

The winner was Interface and Zoological Society of London – Net-Works: delivering social, economic and environmental benefits to the Philippines. The judges gave it the highest appraisals:

“It’s a real social business project, economically successful and one that creates a truly sustainable business model.”

More on Net-Works

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How much does the UK Govt. Spend each year on…

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Big BenThere is a fascinating spreadsheet (If such a things is possible) available to download here that lists the annual costs to the UK government for various aspects of our social spend.

A few interesting items I’ve pulled out:

* Taking a child into care costs £65,000 per person for each child/year

* Unemployment costs us each £10,000 per jobseeker per year

* Youth offending – £21,000 for each first time entrant/year

* Elderly care – £29,000 per person/year

* Homelessness – £8,000 per person/year

* Drug Misuse – £4,000 per addict/year

* A single prisoner costs each of us £39,000 per year

Sources: www.data.gov.uk/sib_knowledge_box/toolkit and http://neweconomymanchester.com/stories/832-unit_cost_database

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The 7 fronts of ‘mount sustainability’

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An excerpt from the publication – Interface the Untold Story of Mission Zero in Europe which details our sustainability journey:

As noted, Interface’s approach is built around the notion of Mount Sustainability, a towering challenge with seven fronts to be scaled. So how were the seven fronts identified?

“They were created from a combination of frameworks that had been developed by some of Ray’s most influential sustainability advisers,” explained Buddy Hay, Assistant Vice-President, Sustainability Strategies, “a group he often referred to as the ‘Eco Dream Team.’ This included Karl-Henrik Robèrt of the Natural Step, Paul Hawken with his focus on the redesign of commerce, and Janine Benyus with her extrapolation of biomimicry to set out the conducive conditions for life.”

By the time of his death, in 2011, Ray Anderson estimated that Interface had travelled 60% of the way to the top of Mount Sustainability, but he warned, “there’s tough terrain still ahead.”

Mount Sustainability

The Seven Fronts are:

1 Eliminate Waste Remove all forms of waste in every area of business.

2 Zero Problem Emissions Eliminate toxic substances from products, vehicles and facilities.

3 Switch to Renewable Energy Operate facilities with renewable energy sources: solar, wind, landfill gas, biomass, geothermal, tidal, low-impact/small-scale hydro or non-petroleum based hydrogen.

4 Close the Loop Redesign processes and products to close the technical loop using recovered and bio- based materials.

5 Use Resource-Efficient Transportation Move people and products efficiently to reduce waste and emissions.

6 Sensitize Stakeholders Help build a culture that integrates sustainability principles and improves people’s lives and livelihoods.

7 Redesign Commerce Create a new business model that demonstrates and supports the value of sustainability-based commerce.

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Interface – the Untold Story of Mission Zero in Europe

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Mission Zero John Elkington BookJohn Elkington, a global authority on corporate responsibility and sustainable development, has authored a case study entitled ‘Interface the Untold Story of Mission Zero in Europe’. Commissioned by us to celebrate our Mission Zero anniversary, he charts the Interface journey over the past 20 years highlighting the systems changes we have engineered into the core of our business.

 “We were very excited to get this level of access to senior executives at Interface,” says John Elkington. “And we conclude that, twenty years into Mission Zero, Interface is well positioned to break through in a number of critical areas—including climate change, water and waste.”

The case study is available for download and I’ll publish excerpts here on Cut The Fluff. This section highlights some of the sustainability leaders across multiple industries, and where we fit in the broader picture.

“To get a better sense of the significance of recent achievements, it helps to know a bit about the history of Interface and about the nature and scale of its current operations.

The story of what would become Interface, Inc. began in 1973, when founder Ray Anderson recognized the need for flexible floorcoverings for the modern office environment. He led a joint venture between Carpets International Plc. (CI), a British company, and a group of American investors to produce and market modular soft-surfaced floorcoverings.

Aside from Anderson, always a larger-than-life figure, the other main actor in the story was the apparently unexciting carpet tile. This had been invented in the 1950s at what is now the Interface factory in Scherpenzeel, the Netherlands. Anderson came across this innovation and promptly adopted the tile concept as the core of what Interface would do. In the process, he helped disrupt the traditional broadloom carpet market, particularly in the office sector.

Vital Statistics

On its first day of operation, CI had just 15 employees, including Anderson. And it faced significant challenges from sharply rising petrochemical costs, since most raw material in the carpet industry come from oil. Happily, its use of advanced cutting and bonding technology sustained the company, enabling it to meet the needs of the office-building boom of the mid-1970s. Modular carpet tiles grew in popularity and by 1978 Interface sales had reached US$11 million. The company went public in 1983.

In 1987, Interface acquired Heuga Holdings BV, based in Scherpenzeel. This company had pioneered the carpet tile. Interface had already some sales offices and manufacturing operations in the UK, Canada and the United States but acquisition made Interface become an increasingly global company.

We have tracked Interface for quite some years. Their reputation in the sustainability community has been fairly consistent—as shown in Figure 2, based on GlobeScan’s polling of experts in the fields of corporate social responsibility (CSR) and sustainability.”

Many thanks to John Elkington and Volans. John can be found on Twitter @volansjohn 

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A dozen points on the EU’s climate and energy efficiency package

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2030 Climate Energy Framework1. At Interface we strongly support the idea of promoting energy efficiency. At our European division we have been able to cut our carbon emissions by 90% since 1994 and we continue to drive them down. Improvements in energy efficiency have been responsible for 60% of these cuts, with the remaining 30% coming from converting to green electricity and, more recently, to biogas.

2. Our experience is that improving energy efficiency is the most effective, easiest and cheapest option available to businesses and governments that wish to reduce their carbon emissions. If, for instance, we had managed to achieve 60% of our carbon emissions since 1994 by converting to renewable energy, then that would have been much more expensive.

3. Interface has been supportive of the European Union’s climate and energy efficiency package, and we are pleased that the EU is now looking at putting more effort into promoting energy efficiency across the continent. But we believe the time is right for a more radical approach. Just setting modest targets will not deliver the rapid change that we need. Instead the EU must come up with a proper energy efficiency package supported by updates of several relevant directives.

4. We think the most effective way of encouraging energy efficiency improvements is through regulation that concentrates on the product level. A great example of this has been the EU’s work with the car industry, where it has defined a performance metric on tailpipe emissions (gCO2/km) for manufacturers, set out an average target for companies to meet (90gCO2/km by 2020) and introduced regulation that forces the publication of that metric in advertising and at point of sale. These measures have been supported by national and local governments, which have introduced tax breaks and penalties that have reinforced the drive towards lower carbon cars.

5. We need a similar roadmap for other industry areas. If we take buildings, for instance, the EU could pick two performance metrics: kWh/m2 for energy in use and kgCO2 for embodied carbon in new construction. It could then introduce strong European targets for new buildings, mandate all public and company buildings to show their energy efficiency levels and, at national level, encourage governments to link energy efficiency performance with stamp duty and with local council taxes.

6. If we want to make real progress on energy efficiency the EU needs to adopt a similar approach sector by sector, preparing a battery of actions for each sector at product performance level. It needs to regulate energy when it is consumed, not when is generated.

7. The EU has been also successful in implementing performance standards and labels for energy using products such as fridges and washing machines. But it’s time to get much more radical and get those companies to compete much more fiercely in obtaining the lowest energy consumption. Let’s find a way to reward those companies who will come with the best innovations instead of having a minimum common denominator approach. We also need to expand that approach to more energy using products.

8. Some argue that the EU should be wary of improving energy efficiency across the board because this will distort the Emissions Trading Scheme (ETS), but we reject that analysis. The ETS does not in any case deliver a proper price for carbon. We cannot put off action any longer due to fears that such action will damage an already broken system. The primary goal for EU climate policy must be an aggressive pursuit of energy efficiency. Once that has been undertaken, we can adjust the rest of climate policy to accommodate the primary goal of decoupling Europe from energy consumption.

9. It is also a fallacy to say that pursuing better energy efficiency costs too much. European Commission research has shown that across Europe we can achieve a 2.6% reduction in imported gas for every 1% increase in energy efficiency. According to the European Alliance to Save Energy, if all computers were switched off when not in use, that would save 360m euros per year in the UK and Germany alone, and if every company PC in Germany was fitted with energy saving software, the national economy there would be 1.9bn euros better off.

10. The product thinking used for cars or energy using products can be equally effective on products with high embodied energy. A building can be design to have radically less embodied energy by using different raw materials or by designing in a smarter way. That applies for a sofa, a diet, a plastic bag, a toy, a chemical, carpet or cement. The first step is mandating product transparency through either EPDs (Environmental Product Declarations) or developing magic metrics for each product category.

11. If there was an EU regulatory regime that rewarded companies for redesigning their products to save embodied energy, then the gains could be even more impressive. For example, for a little more cost Interface can design a carpet with 50% less embodied energy, saving a huge amount of energy in the supply chain. But there is no financial incentive to do so. If, however, a carpet with 5kgCO2/m2 was subject to lower VAT than a carpet with 20kgCO2/m2, then we would have an incentive to convince more customers to buy those products., instead of just appealing to a good cause. The same would apply for all kinds of physical products, from plasterboard to plastics. The only way to incentivise product design is through the same battery of policy initiatives that were targeted at the car industry.

12. In summary, huge and relatively cheap gains on energy efficiency can be made across industry by focusing regulation on product design. What we need are directives allied to performance metrics across all sectors, an average target for companies to meet, further regulation that forces the publication of those metrics, and the support of national and local government tax policies to reinforce these measures. If we move down this path, then dramatic change can be achieved. Carrying on with the current mindset, where only general EU-wide headline grabbing targets are set with little regulatory back-up, will deliver too little, too late. We urge the EU to take this unique chance that we have to move in a new direction as soon as possible, given that both energy security and climate change are back in the headlines for a period of time.

Let’s take this opportunity in front of us right now.

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