The Wedding Cake Model Seeks to Solve Fundamental Environmental Issues
New keywords stand out in recent business. In "Word FOCUS", we ask experts to explain the notable words that are useful for business if they are remembered. This time, we will focus on SDGs (Sustainable Development Goals) and take up (1) Wedding Cake Model, (2) Social Impact Bond, and (3) Green Value Chain Platform.
wedding cake model
Yuichi Tanaka, who worked at Sumitomo Bank (currently Sumitomo Mitsui Banking Corporation) and founded the Social Entrepreneurship University of Business, is vice chairman of the Public Interest Capitalism Promotion Council. As a premise for this, he points out, "Many companies find goals that apply to their businesses from among the 17 goals of the SDGs and publish them. However, few people may know the relevance of the 17 goals."
The “wedding cake model” was created to structurally explain the relationship between goals. "The 17 goals are classified into three layers: the biosphere, the social sphere, and the economic sphere, and the three-layered structure looks like a wedding cake," explains Tanaka.
At the bottom of the three-layer structure is the biosphere, above that is the social sphere, and above that is the economic sphere. In other words, Mr. Tanaka explains that society exists on the foundation of living organisms (the global environment), and that an economy exists to generate funds based on that. “In other words, it is not enough to just solve economic problems. We must solve social problems such as poverty and education, as well as fundamental environmental problems such as water shortages and climate change. All goals are closely linked. is not achieved individually.” This is the key point.
Wide-ranging collaboration is required for the realization of a sustainable society
Mr. Tanaka points out that another important point is that Goal 17, "Let's achieve the goals through partnerships," is placed at the top of the three-layer structure. He said, "In order to create a sustainable society, it is essential that people, companies, and nations around the world work together to achieve their goals." Mr. Tanaka says that as this model spreads, he hopes that "partnerships with companies and countries will advance beyond national borders and cultures, and that we will move closer to the realization of a sustainable society."
Social impact bonds are useful for businesses that solve social issues
Mr. Tanaka cites (1) the selection of social issues for which the system can be used, (2) the appropriate selection and standardization of evaluation indicators, and (3) the high level of expertise required for risk management, etc., as issues for the spread of social impact bonds. He points out, "It is becoming important to develop intermediary organizations that can select, evaluate, and manage social issues."
Green value chain platform
Professor Minoru Eto of Osaka University, who has worked at Matsushita Electric Industrial Co., Ltd. (now Panasonic Holdings) and NTT DoCoMo, cites "green value chain platform" as a word of interest. He explains, "It is an information platform operated by the Ministry of the Environment and the Ministry of Economy, Trade and Industry that supports corporate alliances aiming for decarbonized management with the goal of efficiently reducing greenhouse gas emissions throughout the entire supply chain." .
According to Eito, the platform defines two indicators for decarbonized management. One is to be certified as a company aiming for science-based targets (SBT), and the other is to become a member company of RE100 (Renewable Energy 100%). “What is important for society is the reduction of carbon dioxide (CO2) emissions across the entire supply chain. Supply chain emissions are the sum of Scope 1 to Scope 3 emissions,” he said.
Scope 1 refers to direct emissions of greenhouse gases by businesses, such as through the combustion of fuel. Scope 2 is indirect emissions associated with the use of electricity, heat, and steam supplied by other companies, and other indirect emissions are Scope 3. “Reducing supply chain emissions cannot be completed by our own efforts alone. Scope 2 requires selection of energy sources, and Scope 3 requires energy consumption by various business partners, from procurement of raw materials to disposal of unnecessary items. As a result, environmental value will be taken into consideration when selecting business partners, which will lead to efforts by society as a whole,” explains Mr. Etoh.
Environmental responsiveness throughout the supply chain has become an important issue for companies
The other "RE100" is an international initiative to procure 100% renewable energy for the energy consumed in business activities. In terms of SBT, it can be considered a goal of zero carbon emissions in Scope 2. Many major US IT (information technology) companies are also members. Data centers account for the majority of energy consumption in the US IT industry. Renewable energy is becoming the main source of electricity for these data centers. Companies purchase electricity together with a "certificate to prove that it is derived from renewable energy." Mr. Etoh said, "Even though it is expensive, we are now in an era where electricity is colored green by buying it because it has environmental value. The ability to buy and sell green electricity is a big step toward achieving a decarbonized society led by the private sector. It's an opportunity," he stresses.
On that basis, he said, "In order to achieve SBT and RE100, it is necessary to shift to energy sources with high environmental value, improve energy procurement and production technology such as CO2 separation, and evolve energy utilization technology to optimize the supply chain." says. “Decarbonized management is not just a matter of virtue. It will itself contribute to society in the form of a new business. Europe’s wind power generation technology is becoming the world’s mainstream. Furthermore, new technologies are about to be born in the fields of transportation, information communication, agriculture and food.” Based on these, he said, "I have high hopes for the success of Japanese industries, which have the custom of thinking as an industry as a whole."
(Nikkei Sangyo Shimbun Deputy Editor-in-Chief Susumu Muramatsu)
= Nihon Keizai Shimbun conducts analysis to extract keywords that indicate the latest trends in business and technology from consulting company reports and technical websites. We will post from time to time.
