Turning environmental issues to business advantage

Farsighted companies can turn many of the current environmental problems to their commercial advantage. For many years, the problems which politicians, scientists and the business sector have been focusing on have involved climate issues. To establish the commercial opportunities stemming from these environmental issues, companies need to know how society’s reactions to climate change affect the conditions for their own business operations.

SKF is an internationally well known producer of ball and roller bearings.

Rising temperatures can cause more severe droughts, increased precipitation and storms, all of which can have economic consequences. In some countries, the forestry industry can look forward to increased forest growth, but also significant infestations of harmful insects. Various measures aimed at reducing climate change also affect the economy. The price of grain, for example, has risen as the demand for the raw material required for the production of ethanol as fuel has increased.

These effects at industry level have an impact at national level which, in turn, spreads to individual companies. Security policy is also facing changing conditions. And what is the impact on Sweden’s own and EU-wide environmental legislation? It is very difficult to provide a detailed analysis of this.

Many industries have also started to react to the changing conditions they face as a result of climate change and the policies surrounding this issue. Banks are reviewing the risk of granting credit for construction in climate-sensitive areas. Insurance companies are looking for methods which they can use to cover climate-related risks in their premiums. The automotive industry is investing huge amounts in producing fuel-efficient cars and vehicles which can operate on alternative fuels. For the aircraft industry, the problem of reducing emissions is an enormous challenge, but progress is being made.

The winners from a warmer climate may be environmental con- sultants and cleantech companies who see commercial advantages in the increasing demand for solutions aimed at slowing down climate change. But the same is true of traditional industrial operations, provided that they are sufficiently farsighted and quick on their feet. Companies are being forced to sharpen their climate analysis.

Products are never fully developed

Svenska Kullagerfabriken, the Swedish Ball bearing Factory (SKF), is one example of companies which produce a type of product which has been around for a long time, and which continues to change through technical development. According to the company’s CEO, Tom Johnstone, it is possible to continue to improve the products and create better performance. In most cases, improved performance means reduced environmental impact by extending the life of the products, reducing the need for maintenance, and ensuring that they generate less noise and vibrations. Since its inception more than 100 years ago, SKF has been working on reducing friction in many different industrial processes and in the transport sector. A ball bearing reduces rolling resistance, which in practice also reduces the amount of energy required.

The most important markets for SKF are manufacturing industry and the transport sector. Together, they consume two-thirds of the total energy used in the world.

To many of SKF’s customers, climate issues are, therefore, an important driving force. They feel the impact of increasing demands for greater energy efficiency and are looking for energy-efficient components for technical equipment and vehicles. This is regarded as a business advantage by SKF. The company’s new series of ball and roller bearings can generate energy savings of up to 30 percent, according to the company. The bearings are standardised and can be used in many different applications. The energy saving potential is, huge. One application for bearings is in the gearboxes of wind power plants. If the traditional bearings in all the world’s wind power plants were replaced with new ones, there would be an energy saving in the region of 770 million KWh. This is equivalent to the monthly energy requirement of one million Swedish households.

This article was first published in Advantage Environment printed in February 2008