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Sustainable leadership means engaging honestly with your stakeholders: VW failed the test

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Volkswagen fitted 500,000 VW and Audi diesel cars with code that tricked regulators into under-recording noxious emissions. The turbodiesel engine cars had been marketed as “clean diesel” automobiles. This action – which has negatively affected all European auto companies which produce cars with diesel engines and plummeted VW’s share price by 20% – also causes problems for regulators, consumers and the environment. IMD Professor Reacts: Francisco Szekely on the Volkswagen scandal

Europe has always favored the use of diesel engines as an “environmentally-friendlier” technology. As a result, 75% of all diesel car engines have been sold in Europe. While it is true that diesel engines emit less carbon and are more energy efficient, they have other environmental problems that make them undesirable. Diesel engines generate higher nitrogen oxide emissions (NOx). Accordingly, Government authorities have established stringent standards on nitrogen oxides because these pollutants – in combination with volatile organic compounds and sunlight – cause smog, respiratory illness and increase the chances of death from heart and lung diseases. Children, people with respiratory diseases such as asthma, and people who work or exercise outside are particularly susceptible to adverse effects of smog such as damage to the lungs.

Sustainability is a topic that lies at the heart of business strategy. Manipulating sustainability performance data to achieve greater market share is not only highly unethical but it has a significant impact on the business performance of a company. The case of Volkswagen – which might affect up to 11 million of its vehicles – proves this. VW faces criminal charges in the US which will impact the economic performance of the company. In the first three months of 2015, VW had surpassed Toyota as the number one car maker in the world. Today VW said it would set aside 6.5 billion euros – the equivalent of half a year’s profits – to cover the cost of making the cars comply with pollution standards.

The impact of this failed leadership goes beyond VW since shares in European car makers such as Daimler, Renault, and BMW also fell on September 22nd. A number of governments have reacted by immediately launching investigations. Besides the US, Germany, and France have started investigating VW. Mexico – which hosts the second largest VW plant in the world in the city of Puebla – has demanded an immediate investigation on all Jettas and Golfs made from 2009 -2014 to make sure that VW has not cheated on its environmental standards.

Martin Winterkorn, VW chief executive, produced a video where he says that he was “endlessly sorry” and that the misconduct was a result of “the grave errors of very few” employees. But this is a leadership issue and Winterkom resigned on Wednesday September 23rd. How could VW’s senior management have allowed the installation of a technology designed to mislead regulators and its own costumers as well as create greater damage to the environment with higher levels of pollutants? Consumers don’t want false promises about the environmental performance of companies. They expect honesty and want the truth. In fact, companies such as Patagonia – far from giving false promises admit that they have important sustainability challenges that they are actively trying to resolve – earn the trust of consumers and regulators and have better economic results over the long-term.

“No company should be allowed to evade our environmental laws or promise consumers a fake bill of goods,” said New York Attorney General Eric Schneiderman.

Sustainability stakeholder engagement means more than promises to consumers. It means honesty and transparency. And that is the meaning of long-term sustainable success for business.

Francisco Szekely is Professor of Leadership and Sustainability at IMD and Director of IMD’s Global Center for Sustainability Leadership (CSL).

Economy

A Good Look At How Homes Will Become More Energy Efficient Soon

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energy efficient homes

Everyone always talks about ways they can save energy at home, but the tactics are old school. They’re only tweaking the way they do things at the moment. Sealing holes in your home isn’t exactly the next scientific breakthrough we’ve been waiting for.

There is some good news because technology is progressing quickly. Some tactics might not be brand new, but they’re becoming more popular. Here are a few things you should expect to see in homes all around the country within a few years.

1. The Rise Of Smart Windows

When you look at a window right now it’s just a pane of glass. In the future they’ll be controlled by microprocessors and sensors. They’ll change depending on the specific weather conditions directly outside.

If the sun disappears the shade will automatically adjust to let in more light. The exact opposite will happen when it’s sunny. These energy efficient windows will save everyone a huge amount of money.

2. A Better Way To Cool Roofs

If you wanted to cool a roof down today you would coat it with a material full of specialized pigments. This would allow roofs to deflect the sun and they’d absorb less heat in the process too.

Soon we’ll see the same thing being done, but it will be four times more effective. Roofs will never get too hot again. Anyone with a large roof is going to see a sharp decrease in their energy bills.

3. Low-E Windows Taking Over

It’s a mystery why these aren’t already extremely popular, but things are starting to change. Read low-E window replacement reviews and you’ll see everyone loves them because they’re extremely effective.

They’ll keep heat outside in summer or inside in winter. People don’t even have to buy new windows to enjoy the technology. All they’ll need is a low-E film to place over their current ones.

4. Magnets Will Cool Fridges

Refrigerators haven’t changed much in a very long time. They’re still using a vapor compression process that wastes energy while harming the environment. It won’t be long until they’ll be cooled using magnets instead.

The magnetocaloric effect is going to revolutionize cold food storage. The fluid these fridges are going to use will be water-based, which means the environment can rest easy and energy bills will drop.

5. Improving Our Current LEDs

Everyone who spent a lot of money on energy must have been very happy when LEDs became mainstream. Incandescent light bulbs belong in museums today because the new tech cut costs by up to 85 percent.

That doesn’t mean someone isn’t always trying to improve on an already great invention. The amount of lumens LEDs produce per watt isn’t great, but we’ve already found a way to increase it by 25 percent.

Maybe Homes Will Look Different Too

Do you think we’ll come up with new styles of homes that will take off? Surely it’s not out of the question. Everything inside homes seems to be changing for the better with each passing year. It’s going to continue doing so thanks to amazing inventors.

ShutterStock – Stock photo ID: 613912244

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Economy

IEMA Urge Government’s Industrial Strategy Skills Overhaul To Adopt A “Long View Approach”

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IEMA, in response to the launch of the Government’s Industrial Strategy Green Paper, have welcomed the focus on technical skills and education to boost “competence and capability” of tomorrow’s workforce.

Policy experts at the world’s leading professional association of Environment and Sustainability professionals has today welcomed Prime Minister Teresa May’s confirmation that an overhaul of technical education and skills will form a central part of the Plan for Britain – but warns the strategy must be one for the long term.

Martin Baxter, Chief Policy Advisor at IEMA said this morning that the approach and predicted investment in building a stronger technical skills portfolio to boost the UK’s productivity and economic resilience is positive, and presents an opportunity to drive the UK’s skills profile and commitment to sustainability outside of the EU.

Commenting on the launch of the Government’s Industrial Strategy Green Paper, Baxter said today:

“Government must use the Industrial Strategy as an opportunity to accelerate the UK’s transition to a low-carbon, resource efficient economy – one that is flexible and agile and which gives a progressive outlook for the UK’s future outside the EU.

We welcome the focus on skills and education, as it is vital that tomorrow’s workforce has the competence and capability to innovate and compete globally in high-value manufacturing and leading technology.

There is a real opportunity with the Industrial Strategy, and forthcoming 25 year Environment Plan and Carbon Emissions Reduction Plan, to set long-term economic and environmental outcomes which set the conditions to unlock investment, enhance natural capital and provide employment and export opportunities for UK business.

We will ensure that the Environment and Sustainability profession makes a positive contribution in responding to the Green Paper.”

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