Innovating: sustainability as a competitive factor

The sustainability brought by innovation and increasingly demanded by customers and partners is here to stay and will increasingly be a  competitiveness factor, with an impact on the entire product chain: from raw materials to design, to its durability and where it ends up at the end of its life cycle.

The paradigm has changed, and it is not a matter of fashion or the momentary mood of consumers. The sustainability of products and their production is already, and will increasingly be, a decisive factor in accepting what is on offer. And it is not possible to talk about sustainability without talking about innovation.

A consensus around the concept is beginning to take shape, but how do you put concepts of sustainability into practice? How do you include sustainability in innovation in the supply chain? Which alternative materials can provide the highest productivity and cost-benefit ratio throughout the product’s life cycle? On the consumer side, is there already a greater propensity to prefer and pay for a product produced in a sustainable way? Is the case of fraud in food products with sustainable / organic certification affecting consumer confidence? How do you guarantee transparency in the production chain? Can these alternative materials be treated in recycling systems?

These and other related issues were the focus of the 9th SME Innovation Meeting, organized by COTEC Portugal in partnership with the Póvoa de Varzim City Council. In this edition, which focused on the discussion on sustainable sourcing as the next priority for innovative SMEs and enshrined the entry of over 24 companies in the SME Innovation network, the big winner was Inovafil, which received from Isabel Furtado, president of COTEC Portugal, the COTEC-BPI SME Innovation award. The textile company, dedicated to the production of smart yarns for fashion and technical textiles – who exports to more than 20 markets – was founded in 2011 and uses the latest technology in the processing of natural, artificial and synthetic fibres.

The concept of sustainability is simple to talk about but complex to implement, because it touches all areas of a company and, of course, its products. At the centre of everything is, as in so many other changes today, the digital transformation. Digitalization is not an end in itself but an essential tool on the path to an increasingly greater sustainability. With a programme rich in themes and speakers, the event had as its main conclusions this need and the discussion of the “state of the art” of this path for various companies and sectors.

Three aspects of this path can be identified. The first part is in the design, in the origin of the product itself; the second area is innovation in the chain, one of the strong themes of the event through a panel dedicated to ‘sustainable sourcing’, that is, the care and sustainable nature of the choice, collection and treatment of raw materials; and on a third point, we have the added responsibility of the producer, consisting of internalizing all the risks and costs of the product life cycle within the company. In other words, for the company, the product does not die when it reaches the hands of the retailer or the consumer: the final destination of the packages, for example, is the responsibility of the producer and has to enter the equation from the beginning, namely the conception and design of the product itself which will be placed on the market. And here is another point to note: durability – linked to design, manufacture and the raw materials used – rises in the scale of importance, allowing, in fact, competition more linked to value than necessarily to price. On the other hand, within the value chains themselves, those who do not make the road to greater sustainability risk losing their place.

In addition to the awards and recognition of the projects that stood out throughout the year, the meeting also served to talk about the circular economy and the holistic approach that companies must adopt in order to be competitive, innovative and sustainable. The motto was launched by João Pedro Matos Fernandes, Minister of Environment and Climate Action, who warned of the need for innovation to be a convergent process and an end in itself that must be applied in the daily lives of companies. “Portugal has reduced its carbon emissions by 25%, but the [environmental] situation is still worse than it was a few years ago. This is an extraordinary opportunity for the economy, for companies, for the creation of wealth and for innovation ”, he said, pointing out the elimination of waste as a fundamental factor to close the circle of an economy that should be detached from the linear model. “We cannot put on the market products whose final destination we don’t know when they are no longer useful”.

The end of the fossil era is just around the corner
If the concepts mentioned above are easy to understand, it is not enough to stop there, because there are concrete examples of their application in practice.

The condition of circularity is closely linked to alternatives to fossil energies, and it was this point that Kirsi Seppäläinen, vice president of Stora Enso, a Finnish company that operates in the pulp and paper sector, highlighted: “We have to find alternatives to create materials, everyday products, new modes of consumption that do not depend on fossil energy. I am not just talking about the product, but about new business models of a circular economy supported by an organic approach”.
In the case of Stora Enso, which produces solutions for a large number of industries based on the use of wood and biomass energy, forests are the means to achieve this end: “Everything we do today from fossil fuel we can do tomorrow with trees. Sustainable forest management is the basis of everything, not only from an environmental perspective, but also for the health of our businesses”.

In Portugal, the theme of the forest is also fundamental in cork-producer Corticeira Amorim’s business, a world leader in the sector. Gisela Pires, the company’s sustainability coordinator, explained how the company makes full use of cork, through its integrated and vertical business model. “From the one we extract from the trees, the best – about 30% – goes to corks, responsible for generating 70% of the business volume. The rest is distributed to other units, such as the insulation or composite unit. ” Cork powder is used as an alternative energy source, with 65% of the company’s energy needs already being met through this natural route. “It is important not only to sell more, but to produce knowledge about the product, valuing and defending it”, she argued. Furthermore, the cork oak has environmental advantages due to its high capacity to capture CO2.

Legislation, synthetic biology and waste reduction
Another important area in the creation of sustainable and competitive alternatives is that of synthetic biology in which the Portuguese company SilicoLife operates. “Biotechnology is a good in-between among more and less sustainable production methods. Through it we can design yeasts and bacteria creating a biological, natural and scalable process”, defended Simão Soares, CEO of the company born in 2010 in Braga, giving as an example fragrances, flavours or the conversion of CO2 into molecules of energy interest as areas where synthetic biology can be an asset.
As for the reduction of waste, plastic was one of the targets that generated the most discussion. Carlos Ramalho, sales director at United Biopolymers, pointed out the lack of global information as one of the main problems in the way this issue is being managed: “Plastic is not bad in itself, it depends on its rational use and the end of the life cycle”.. Carlos Bernardo, full professor at the University of Minho, goes further: “If we focus excessively on plastics we are forgetting the main problems that are knocking on our door, which are global warming due to excessive consumption, the reduction of natural resources as a result of the explosive growth of humanity and the search for higher standards of living ”. And here, more durable products naturally mean a longer life cycle, that is, less need for production and consumption.

Nor are bio plastics, an alternative to traditional plastics, a solution in themselves, often bringing added problems, as Luís Simões warns: “If bio plastics enter the yellow container, they contaminate everything else”. For the head of Soditud, a company that converts disposable products into sustainable content, one of the paths to the problem of plastic is to develop alternative materials that can be reused or return to nature.

This is an equally sensitive issue for the Sonae group. Pedro Lago, director of Sustainability and Circular Economy Projects, highlighted, among other measures, the development of the Continente Responsible Plastic project. “We don’t want to go the easy way, we want to go for the best”, he said, leaving some warnings regarding bio plastics: “As retailers, we don’t want to use agricultural soil to produce plastics instead of food; secondly, some of the bio plastics on the market are not completely biodegradable under natural conditions, ”, referring also to the risk of contamination of plastics in recycling containers by bio plastics.

While competitive and sustainable alternatives are slow to take hold, legislation has been playing an important role in promoting changes in behaviour and increasing new consumption patterns. Ana Cristina Carrola, director of the Waste Department of the Portuguese Environment Agency, warns of this, giving as an example the new community waste package, to be transposed to Portugal by 2020, and which has already led to legislative actions in the national circular economy plan, such as a deposit and delivery system for plastics and metal in exchange for a return to the consumer, the incentive to replace light bags in retail, fruit, bread and vegetables, and the search for reduction or total elimination of single-use plastics in catering and retail.

Is organic synonymous with sustainable? In the two conversation sessions, everyone agreed that, more important than thinking about the short-term environmental benefit, it is necessary to reflect on a logic of lasting sustainability. Especially because, as they warned, the organic seal is not always synonymous with sustainability.

Ana Silva Tavares, director of the Sustainability department at Tintex, used the example of the company in the textile industry to support this vision. “We work with several fibres, one of which is cotton. In relation to organic cotton, a lot of water is spent on its production and part of it is not totally consumed by the plant. Is it really more sustainable just because pesticides are not used? There is a lot of water and energy that is wasted, just because it is organic does not mean it is more sustainable”.

Simão Soares, on the other hand, brought the example of vanilla to the discussion, “the most used flavour in the world”. Vanillin, 99% produced by chemical synthesis, is the compound responsible for the development of this flavour which, although associated with a process with a greater environmental footprint, does not cause as much social impact as the exploitation of natural vanilla in Madagascar, the largest producer in the world. “What is happening in Madagascar today is what happened in Colombia in the 1990s”. In fact, vanilla has seen its price escalate in recent years, to the point that it has surpassed the value of silver, thus raising a wave of organized crime unmatched in the country’s history.

More than business, it is important to define the companies’ values Consumer choices bring constant challenges to companies, which have to be perceptive in reading and adapting the business model to market demands, standing out for transparency and social, environmental and economic activism. “Companies must be able to develop the products that consumers want in a sustainable way, using less and less chemicals, with transparency in their supply chains and in an economically efficient way”, pointed out Miguel Barbosa, commercial director and projects at Amyris Bio.

Alexandra Abreu Loureiro drew attention to the examples that come from below, from the younger generations, but also from above: “Companies have to get more and more involved with society beyond what is their business, they have to show the values ​​to which they are committed. We, as entrepreneurs, need to contribute not only to employment, but to the space where we live”. And the consumer, what is his role in this chain? For the Brunswick partner, it is important that people start considering their purchase options: “If this costs just two Euros I have to ask: Who was it made by? Where? How? All this counts”. The same applies to environmental education and literacy. As Carlos Ramalho, sales director at United Biopolymers, stressed, “We have to be aware that the product is not magic. The culture has to be changed and we all have to work together to make it happen ”.
In the end, the word comes from consumers and partners in any value chain. And both are more demanding on a more sustainable path from which there will be no turning back in the future.

Kirsi Seppäläinen, Vice President of the Biomaterials and Strategic Projects Division at Stora Enso

“We want to use trees as efficiently as possible”

The raw material removed from the forests, the main activity of the Finnish Stora Enso, may come to replace the energy produced from fossil fuels. There are still several challenges in the transition to a greener economy

Kirsi Seppäläinen believes in a future in which trees play a key role in the circular economy. The head of Stora Enso participated in the 9th SME Innovation Meeting, held by COTEC Portugal in Póvoa de Varzim, where she showed the path that the company, based in Helsinki, traces in the field of innovation and development of new products from wood, fibre cellulose and biomass. In an interview, the director explained the challenges of the new green business models and highlighted the cooperation between the various economic agents in the different links of the product value chain as a structuring point in this new business paradigm.

Stora Enso argues that everything that is done today from fossil energy can be done tomorrow from a tree. How can these energy resources be applied?

We want to use the raw material from the trees in the most efficient way possible, so that we can apply it to different products, such as building materials, cellulose, paper, cardboard, sawdust, etc. Energy transformation is the last option and only taking advantage of the parts without any use. At the same time, the transformation of wood into cellulose fibres generates more energy than what is used in the operation and, for this reason, we sell it as electricity or fuel for heating nearby communities. In the future, we hope to innovate even more so that biomass solutions can replace what is currently done from fossil energy.

You said that working with biomass is not the same as working with fossil energy, that there are different timings and business approaches. What implications are associated with this transition?

With biomass there are always natural variations to take into account. Raw materials depend on the territory where they are planted, where they grow, when they are harvested and other factors. These variations have to be taken into account in the production optimization process to ensure uniform quality and to achieve similar or even better results compared to the fossil production we want to replace. Another important factor, when dealing with products generated from biomass, is the reflection on different business models. We have to think about our position in the production chain and what partnerships we can design so that each agent takes on a specific role in that same chain.

Do partnerships reinforce the values ​​of the circular economy? What results and conclusions does Stora Enso draw from these initiatives?

These cases of close collaboration are beginning to emerge, so it is too early to draw any strong conclusions. However, we believe that these types of initiatives are the only way to make the circular economy move faster globally.

What is the contribution of technological innovation to the circular economy and green innovation?

New technologies and new business models are very important for managing circular economy models, as is the promotion of new partnerships and collaborations between different stakeholders. In this way, we can actually put this model into practice.

In her presentation, she warned that a lot of intelligence is needed when setting the price, given the value associated with the product chain beyond its function. But, even if aware of sustainability, the buyer tends to choose the lowest price that meets his needs. How is it possible to be sustainable, respect the values ​​of the circular economy, and at the same time be competitive?

In this respect, it is crucial to understand what value the product adds to the consumer. Normally being green or circular is not enough, the product needs to perform better, it has to bring something new to the consumer. Here we can define a new path in consumption habits, moving from a perspective based only on the purchase and possession of the product, to one of use and loan. The end of life of the product can also be a decision factor, since the consumer can, as soon as they no longer needs to use it, reuse the product for another function.

Is the circular economy a concept compatible with economies of scale?

It is still too early to proceed with a definitive statement on this matter, as many of the  circular economy models are still in an embryonic phase. In addition to these models, it is also necessary to develop new waste treatment methods and new ways of processing different materials. It should also be noted that in many cases it is necessary to change the legislation so that it is possible to apply waste to other production processes.

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