Archive for May, 2010
Sunning with Dr. Seuss
Carol Singer Neuvelt
Last week, I sat down to read to my son and came across a story we hadn’t read in a while. It was the Dr. Seuss book about the Lorax, who speaks “for the Trees for the Trees have no tongues.”
As a reminder for those less familiar with Dr. Seuss, or who are not in that stage of your life in which he is considered required reading, The Lorax is the story of one man’s entrepreneurial quest that depletes the earth and leads to the demise of his business and the surrounding community. It’s perhaps one of the best books about environmental sustainability for children, and reminded me that that my own environmental values were formed very early on.
As I recited the words of the Lorax, I remembered listening to my dad read these same words to me — some million, gazillion years ago, when I was six, five or four; and he knew, oh he knew, how to make me laugh on the floor — recalling the impression that this book had made on me as a child.
In asking around at NAEM, I discovered that for many of us, our concern for the environment also has been influenced by books, TV shows, or movies, and it was amusing to hear which ones: The Journey of Natty Gann, Captain Planet, Lord of the Rings, Waterworld, My Side of the Mountain, FernGully, WALL-E, and of course, the latest box-office sensation, Avatar.
Many of us in the EHS & Sustainability professional community share an interest in nature, conservation, and an appreciation for the outdoors. It’s one of the great common denominators that I’ve experienced at NAEM.
As you get ready to kick off your summer, I encourage you to share a chuckle and your fond memories with us. Please tell us the most impressionable cartoon, book or movie that left you with an environmental message?
And don’t forget this weekend – as you are popping your beverage and sunning with shades, remember the good “Dr.” had something to say: “Unless someone like you cares a whole awful lot, nothing is going to get better. It’s not.”
Have a safe, fun Memorial Day weekend!
Learning from the volcano
Alex Pollock
While recently holed up in Amsterdam for five days due to volcanic ash from Iceland, I added another scenario to my “predictable surprises” folder…airborne volcanic ash.
When I left Michigan expecting to reach Glasgow, Scotland some 12 hours later, I never thought I would be part of travel history. I saw first-hand that things go well until they don’t. Chaos quickly descended as travelers realized that they were stranded and airline officials ran for cover from the questioning horde. With Icelandic volcanoes having a history of “disrupting weather and history since 1783,” why was the airline industry caught speechless — and without a plan?
On a professional and personal level are we really any better prepared for the winds of change that might disrupt our tranquility at any time? How can we “ash-proof” what we deeply care about?
- What should we be doing as EHS professionals to “ash-proof” our careers? (I read recently that our well-being actually recovers more quickly from the death of a spouse than it does from a sustained period of unemployment. More on this in my next blog.)
- What should we be doing to “ash-proof” those EHS programs/initiatives that we’ve labored so long and hard for? (Change of boss coupled with budget cuts can be a deadly combination.)
I could ask many more questions but by now you’ve grasped my theme. Please share with us your “ash” stories, what you learned from them and lessons you’d like your EHS colleagues to take away from your experiences. Let’s learn from each other!
AEP: Shining a light on what’s possible
Carol Singer Neuvelt
There are pockets of EHS & Sustainability excellence in almost every company NAEM works with, and Sandy Nessing’s work on American Electric Power’s integrated corporate accountability report is an example of that excellence. It represents one environmental manager and her success in articulating the value of meeting stakeholders, being transparent and encouraging the company to look beyond its current paradigm.
This is no small feat.
While many thought-leading companies have provided sustainability reports for about a decade now, few have taken the next step by combining these reports with their annual report. AEP’s report, which merges these two statements is a giant leap forward and a great example of the kinds of “improved sustainability communications” Dan Esty recently challenged companies to do. Not only did AEP put itself in the hot seat by going out and talking to the full range of stakeholders — whether they’re skeptics or supporters or folks who believe in corporations or not – but Sandy developed a thoughtful process through which the company leadership communicated its values to the outside world.
The utility industry is often the center of attention in the current discussions about climate change yet we are dependent on the utilities for the quality of life we enjoy in this country. There is a disconnect, therefore, between our expectation for utilities to limit their impact on the environment and our need for the electricity they produce. So what makes AEP’s report so groundbreaking is that it begins to bridge that gap between what we want and what we need.
Change doesn’t happen overnight, though. As the demand for greater transparency grows, companies need to enhance their communications to reflect their environmental and social performance in the reporting that goes to Wall Street. In return, the investment community needs to become more knowledgeable and conversant about the kind of information that truly measures a company’s environmental and sustainability progress. So what’s great about AEP is that it created an opportunity for investors, the government and the public to participate in this conversation.
Following in their footsteps, what are some examples of ways in which you could have a material impact on your company’s environmental and sustainability communications?
Carol Singer Neuvelt is the Executive Director of NAEM.
Putting it all together: Why AEP published its first combined CSR and Annual Report
Sandy Nessing
Last month, American Electric Power published its first integrated report that combines the traditional Annual Report to Shareholders with the annual Corporate Sustainability Report. It was a bold decision and one that few others have made, but I think we’re on to something big. For the last four years, many of our stakeholders have been pressing the company to go this route. The idea is that your financial success is intertwined with your environmental, social and governance (ESG) performance and reporting one without the other doesn’t give you the full picture. Makes sense, right?
The fact is that investors, customers and other stakeholders have been increasingly asking us for more information on a broader range of issues. What we weren’t doing well enough was framing the whole picture by tying the financial aspects of our performance together with our policy positions, environmental compliance, safety performance, work force development and technology investments. At the same time, investors are taking a closer look at ESG factors that can add value or mitigate risk across an entire institutional investment portfolio. A 2008 study conducted by SustainAbility and KPMG confirmed what stakeholders want – integrated reporting, seamless access to information through all mediums and sustainability elements embedded in business goals that are linked to business strategy.
To find out if that was really what investors were asking for, I went to our Investor Relations team. They told me that beyond the numbers, which they get through SEC filings, investors were hungry for some of the non-financial data that we were reporting in our Corporate Sustainability Report. In particular, they wanted to know about how we are managing risks associated with climate change and changing environmental regulations and our positions on public policy. They were asking for information that is voluntarily reported through the Corporate Sustainability Report but not necessarily found in the 10K. Consequently, our IR team took the Sustainability Report to their investor conferences – not the Annual Report. That was the revelation I’d been waiting for so I built a business case for it and this time it was an easy sell to management.
Last week, during the Ceres conference in Boston, our approach was validated. NGOs, investors and other companies are taking a closer look. I think many were waiting for someone else to take the plunge first. And while the feedback so far has been positive, we know there is room for improvement and we expect our reporting will improve year over year. My plan this summer and fall is to tag along with our IR team to hear, first hand, what investors of all stripes are saying and asking for. That, and continue to keep my ear to the ground for any other new issues that are coming around the bend. It’s going to be a busy year!
Sandy Nessing is the Director of Sustainability & ESH Strategy & Design for American Electric Power. She wrote and published AEP’s first Corporate Sustainability Report in 2007 and in 2010 published AEP’s first integrated Corporate Accountability Report, a combination of the annual sustainability report and Annual Report to Shareholders. Follow her on Twitter at @Watts4U.
Spill, Baby, Spill
Stephen Evanoff
My father was fond of saying, “Learn from other people’s mistakes.” I think there are lessons about effective risk communication that EHS managers can learn from the off-shore oil drilling disaster we are witnessing in the Gulf of Mexico. The initial reactions by the Coast Guard spokeswoman, politicians, the news media and the public suggest to me a general under-estimation of the risks associated with outer continental shelf oil extraction.
The situation takes me back to the conclusion drawn by Nobel Prize winning physicist Richard Feynman when he served on the Rogers Commission investigating the Space Shuttle Challenger disaster in 1986. During his investigation, Feynman learned that the project engineers had estimated the risk of a catastrophic failure on launch in the range of 1-in-100, whereas the top managers had estimated the risk of catastrophic failure in the range of 1-in-10,000 and 1-in-100,000. Feynman famously concluded in his report, “NASA owes it to the citizens from whom it asks support to be frank, honest, and informative, so that these citizens can make the wisest decisions for the use of their limited resources. For a successful technology, reality must take precedence over public relations, for nature cannot be fooled.”
What should EHS managers learn from this latest disaster about communicating EHS risk to management and the public?
Stephen Evanoff is active on NAEM’s Board of Directors and leads EHS for Danaher Corporation. He resides in Denver, CO with his son and wife, and can regularly be found on his days off skiing, hiking, or being dragged around the neighborhood park by his Great Danes, Natasha and Neala. You can follow him on Twitter at @SteveEvanoff.
Catastrophe prevention begins with valuing compliance
Carol Singer Neuvelt
As the BP disaster continues to unfold before our eyes, the inevitable finger pointing has begun. There are some who point to Wall Street for demanding profit at any cost, while others point to the government for not enforcing the existing regulations. Mostly, though, everyone’s pointing to BP and Transocean for not anticipating this scenario. While it’s clear there’s plenty of blame to go around, the oil spill in the Gulf is only the latest reminder that because all corporate behavior carries the risk of unintended consequences, compliance needs to come first.
Within the last few months, we’ve seen the tragic results of compliance failure repeated in several different ways. First it was Toyota, whose President publicly apologized for failing to remain vigilant about quality control during the company’s rise to the top. Then it was Massey Energy, whose repeated safety violations resulted in the deaths of 25 miners in West Virginia. What these examples have in common is that the systems these companies had built to prevent these kinds of incidents became vulnerable to the drive for higher profits.
While the cost of basic compliance is not insignificant, those regulatory thresholds are almost arbitrary because society expects companies to do much more than the bare minimum. Thus said, the cost to go above and beyond the minimum requirements is expensive — much more expensive than basic compliance itself. So during periods of economic downturn, when companies naturally start looking for ways to cut costs, the EH&S infrastructure often is the first budget to go. On the face of it, this seems to be okay because we’ve been in a period of compliance, but really, it merely leads to greater financial and environmental risk.
Every day these kinds of cost-benefit decisions are being made in C-suites across the globe. Not every decision will result in a catastrophe on the scale of the Deepwater Horizon spill, but collectively lots of small decisions can have dramatic impacts. While we understand that businesses operate in a complex decision-making environment driven by competing priorities, companies still need to have basic values that govern how they act. Compliance needs to be one of them. Corporate leaders need to promote strong compliance through robust environmental health and safety budgets, fully staffing the departments and giving EH&S managers the support they need to be effective.
Ultimately, environmental health and safety programs are about much more than just complying with regulations. They are about valuing the preservation of our natural resources, the well-being of employees and a responsibility to society. And that is something you can’t legislate, you can’t regulate and you can’t see reflected in the price of the stock.
Carol Singer Neuvelt is the Executive Director of the NAEM, a non-profit professional association dedicated to advancing EHS and sustainability practices in corporations worldwide. Prior to NAEM, Ms. Neuvelt served as the Deputy Director for the US EPA Office of Public Liaison under Administrator William Reilly. She also worked in the White House during the Reagan Administration as the Congressional Affairs Officer for the United States Trade Representative.
GHG emissions reporting requires a strategic approach
Mike Banville
In today’s competitive business environment, enterprises are under increasing pressure to enhance growth and earnings while simultaneously reducing costs and risks associated with greenhouse gas (GHG) emissions reporting. In response, some companies are addressing GHG reporting and compliance requirements with tactical and manual approaches. Industry leaders, however, are taking a more strategic approach. They are implementing GHG emissions information management solutions that are part of integrated enterprise-level software platforms for environmental, health and safety (EHS) compliance and sustainability in order to achieve broader efficiencies, business benefits and to manage risk.
Best practices for managing GHG and other environmental emissions suggest that measurements should be taken at the asset or operating-equipment level. When companies aggregate data from hundreds of spreadsheets at the cost-center level, it can be difficult or impossible, to trace specific emissions back to their source. Detailed tracking at the asset level ensures traceability and accountability by reducing the risk of material reporting errors and enabling the company to take corrective measures, if needed.
Yet many organizations are trying to manage this massive influx of GHG emissions data in the same way that they have dealt with other types of EHS data through the years. Air, water, waste, refrigerants, and now GHG data – as well as chemical or material data, worker safety information and more – are all being collected, processed and delivered via manual processes and spreadsheets. These labor-intensive processes add unnecessary risks, costs and complexity to business operations.
Forward-thinking companies are meeting this challenge by implementing comprehensive EHS and sustainability solutions that include world-class GHG emissions management capabilities. Integrated enterprise software platforms help manage GHG data from emissions inventories to the trading floor while also fulfilling a host of other EHS compliance requirements. Operational complexity, risks and costs shrink as duplicate systems and redundant work processes are eliminated. In addition, the systems generate valuable EHS business intelligence that executives can use to make informed technical and economic decisions on projects and investments to reduce their environmental footprint and drive growth.
We believe that this strategy of meeting GHG emissions management demands within a broader EHS compliance and sustainability strategy offers businesses a unique opportunity to transform a looming burden into a real competitive advantage.
Michael R. Banville is Vice President for Climate Change and Clean Energy at IHS. Prior to joining IHS CERA, Mr. Banville was the Director of Marketing at PowerSteering Software and served as the head of the financial services conference division at the Center for Business Intelligence. He has a BA from Boston College and an MBA from Babson College.
Where do you get the best recipe for corporate sustainability?
Carol Singer Neuvelt
In today’s world, where it seems like everyone is selling you their recipe for sustainability, I am convinced that the best recipe still comes from a trusted network of professionals who are earnestly going through the process and can teach you what works and what doesn’t.
In effect, it’s like when I learned how to make chicken soup: After I consulted the cookbooks and tried it a few times on my own, I called my grandmother to ask what made hers taste so good.
This is what NAEM’s Sustainability conference in Palo Alto, Calif. last week was all about. No matter the industry sector or size of the company, we learned that there are some ingredients that remain the same, such as the need to define the business case, collect data and assemble teams to execute the strategy. But from that basic recipe, several variations quickly emerge, and it was fascinating to hear first-hand how individual companies are solving the problem for themselves.
We started the day with Bruce Klafter, head of corporate responsibility and sustainability for Applied Materials. As a producer of sophisticated equipment for the high-tech sector, the key question his company asked was, “How do we frame sustainability within the larger business supply value chain?” So for them, sustainability not only meant risk mitigation, energy-efficiency and pollution prevention, but also offered new business opportunities in the area of product design.
For Kaiser Permanente, on the other hand, the process of defining sustainability within a health context articulated the link between environmental stewardship and human health, according to Joe Bialowitz, project manager for environmental stewardship. What Kaiser said was, “Although we’re the largest non-profit health system in the country, our mission is really about making people healthy. And healthy people exist in healthy environments.” So in addition to addressing energy usage and LEED certification, Kaiser’s recipe also involved reducing waste, minimizing patients’ exposure to toxins and improving the quality of food in the cafeterias. Their focus on organic food, interestingly, extended their efforts beyond their own walls in support of an ecologically and economically sustainable food system.
When NAEM began some 20 years ago, our members got together to talk about RCRA, TSCA, or how to comply with the Clean Air Act. What we’re talking about today is how do we develop programs that ensure better risk management of our operations, while also adding value to the business entity?
Although the dish we’re making today may be different, the way we learn to cook remains the same. It’s still about connecting with others, sharing ideas and discussing the challenges of implementation. For me and everyone else at last week’s meeting, hearing others explain the process of developing their own recipes was, in the end, as valuable as learning how the dish actually turned out.
