Posts filed under ‘Climate Change’
Cultivating a culture of green: An interview with Andrew Winston
Each year the keynote speakers at the NAEM Forum inspire attendees with their mix of practical insights and leading-edge thinking. This week Forum committee chairman Steve Walker spoke to Andrew Winston, author of “Green Recovery” and the opening keynote at this year’s conference, about how companies can cultivate a culture of green.
Andrew Winston
SW: What does this recession mean for the greening movement? Do companies still need to think about going green?
AW: Many companies slowed their green initiatives in the downturn; this was a big mistake. It’s a common misperception that green equals cost. Combine that with a recession that has slashed everyone’s spending and budgets, and you get a seeming logic to stop all environmental activities. But going green doesn’t raise costs, it lowers them. Seeing your business through an environmental lens drives innovation as well. But on top of that, nearly all of the driving forces behind the green wave of pressure on companies have not slowed down. The greening of the supply chain has accelerated, with companies like Wal-Mart taking the lead. Consumers have continued to evolve and grow more ‘conflicted’ about purchases. Weather/climate-related events have exacerbated an already short supply of almost all basic commodities. The cost of doing business is rising. In short, this is an amazing opportunity to go green NOW: It will save money (if done right) and prepare a company for a much more resource-constrained, environmentally concerned future.
SW: What are the five areas where a business can get lean and save money fast?
AW: In recent years, it’s become the norm for companies to deal with tight times by laying off people first. In the fourth quarter of 2008, before the recession hit a lot of companies directly, we saw massive layoffs, nearly guaranteeing the recession. But in most industries, we’re discovering that we have enormous opportunities to get lean on energy, waste and water. In a shrinking economy, you can’t save every job, but some people could be re-purposed to pursue sustainability goals and find ways to get leaner.
In Green Recovery, I focus on five areas of the business where companies find very quick paybacks:
- Facilities (heating, cooling, lighting)
- Information Technology (IT) systems
- Distribution and
- Fleet, waste, and telework/communications (the upside of more IT)
The examples in each are rampant:
- Hotel chain IHG changed 250,000 bulbs and saved $1.2MM in energy, a 4 month payback.
- Many of the big IT companies are tackling the heat buildup in data centers by simply venting hot air instead of expensive energy-intensive cooling schemes.
- Trucking and shipping companies like Conway or Maersk have discovered that slowing down a bit can save big on fuel.
In all these areas, companies can meet internal hurdle rates easily. These quick wins can help drive buy-in by showing that green pays, and they can help fund the larger, longer-term investments in innovation and green energy that we need.
SW: How can businesses systematize their green innovation?
AW: Innovation can come in many forms, the most radical of which is what I call ‘heretical innovation’. This is a way of thinking that challenges the fundamental nature of the business or process. Imagine asking whether you can operate without fossil fuels, or in the case of car companies, whether cars can be sold as a service rather than a product only.
In terms of creating a culture of green innovation, there are a number of approaches companies can take to make it a normal part of the business process. First, making it someone’s job and sole focus can help (and ideally this is someone in research and development, not sustainability). Companies also can set aside time for green innovation, much like 3M and Google do, when they ask employees to spend about 20 percent of their time on whatever they want. Additionally, setting big goals for innovation or revenue from green products can help. GE’s ecomagination targets are a good example.
Andrew Winston advises some of the world’s leading companies on how to profit from environmental thinking. He is a globally recognized expert and speaker on the business benefits of going green. Andrew is the author of “Green Recovery“ and co-author of the international best-selling “Green to Gold”. He will be the opening keynote presenter at this fall’s 19th annual EHS Management Forum in Tucson, Ariz.
Steve Walker is the Manager of Environmental Sustainability at Burt’s Bees Inc. and chair of the 19th annual EHS Management Forum. For more information about the Forum or to register, please visit http://ehsforum2011.naem.org/.
A delicious way to green your diet
Take a bite out of your carbon footprint with today’s “at home” tip from NAEM’s Green Tips Guide, an employee engagement handbook:
http://www.youtube.com/NAEMorgTV#p/u/28/Oc0QzAyshvk
How to green your ride…safely
Cut your carbon footprint with today’s transportation tip from NAEM’s Green Tips Guide, an employee engagement handbook:
http://www.youtube.com/NAEMorgTV#p/u/29/kYmh1hNnf0A
Progressing beyond the current ESG reporting system
Sandy Nessing
“Survey season” is here and environmental, health and safety (EHS) and sustainability leaders are already finding new rules for reporting on sustainability progress. This week, we caught up with Sandy Nessing, Managing Director of Sustainability & ESH Strategy & Design for American Electric Power Co. to learn more about some of the challenges and opportunities for public environmental, social and governance (ESG) reporting.
GT: What are some of the challenges of reporting sustainability metrics?
SN: One of the biggest challenges is not having standard industry metrics. For example, in the electric utility industry there is no universal metric (yet) for measuring environmental performance. Now we measure it based on internal metrics that include numbers of significant environmental enforcement actions, compliance with National Pollutant Discharge Elimination System permits, opacity and oil and chemical spills at our power plants. These are internal metrics that are tied to compensation but there is no way to compare our performance to our industry peers because no two companies have the same metrics. How can you get to best in class when there’s no standard you can compare yourself to?
The Global Reporting Initiative (GRI) covers some of this, but because not all companies use this framework or report on the Electric Utility Sector Supplement, there is still a void on comparability.
GT: What do you think could be improved about the current reporting system?
SN: Two things. First, more companies need to report their sustainability performance and put it into context with their financial performance. That is the future of reporting, but I’m afraid it will take a while to get there. There are still so many companies that are not reporting at all. However, once we achieve a higher level of transparency and integrated reporting, the investment and financial communities will have no choice but to start paying greater attention to the linkages when rating companies or weighing credit-worthiness or investment potential.
While there is an International Integrated Reporting Committee (IIRC) working on this, it is not expected to have a framework in place for some time. GRI is just beginning to develop G4, which should be a bridge to the IIRC’s work. For companies like mine, that have already started down this path it’s a challenge. This year, South Africa began mandating that any public company listed on the Johannesburg Stock Exchange must produce an integrated report – or explain why not. They put together a framework for doing it and it’s a great guide for any company intending to head down this path.
Second, we have to find a better way for research firms to analyze and rank sustainability performance other than sending companies surveys every year. There should be standard agreement that such firms first search out the information on the company’s website first and populate the surveys as best they can before requesting additional data. These surveys are valuable but they consume enormous resources within companies. There has to be a better approach.
What role could stakeholder dialogue have in improving the current system?
Having the right people at the table and a willingness to have a candid discussion about the challenges and benefits of the rankings would be very useful. We need a forum to listen and learn from each other and, hopefully, come away with a better understanding of expectations and ideas to help us manage the process more efficiently.
Sandy Nessing will be speaking about sustainability reporting as part of NAEM’s “Measuring Corporate Sustainability: Understanding the Metrics that Matter” event on May 4 in Fort Lauderdale, Fla.
Let’s talk about metrics
Carol Singer Neuvelt
After an exciting week in San Antonio talking about environmental, health and safety (EHS) management information systems (MIS), I’ve been thinking a lot about what an impressive feat data collection and management really is. All I can say is ‘Bravo.’
Perhaps nothing drives home the enormity of this task more than hearing EHS managers describe the process for mapping work flows or hearing Mark Stoler recall how he managed to get General Electric’s approximately 300,000 employees to adopt a single, global EHS tracking system.
Without this kind of peek under the hood, it might seem as though comprehensive data like this is easy to come by. It isn’t.
Beyond the initial challenge of figuring out how to document internal processes, though, identifying and reporting metrics is often just as laden with obstacles. While most of the information is intended to enhance internal decision-making or track performance, there is, of course, a growing interest in a company’s EHS and sustainability metrics by outside entities as well.
And when it comes to external requests for data, the burden of responding usually falls on the EHS function. In our recent ‘Green Metrics that Matter’ survey of the NAEM Board of Regents, 74 percent of those who responded said the corporate EHS manager took the lead role in external reporting. For 17 percent of respondents, these requests took up as much as one-quarter of an employee’s time (and we expect these numbers to jump as we survey our full membership).
With the amount of time EHS folks are spending, it’s not surprising that about half of respondents said they were fairly dissatisfied with the current state of EHS/environmental, social, governance (ESG) disclosure.
There must be a better way.
In the latest installment of SustainAbility’s ‘Rate the Raters’ research, the firm identified the following steps ratings firms should take to improve their influence and make the process easier for corporate leaders:
- Improve transparency: Transparency leads to trust, according to the researchers. “We find that the stronger ratings in our selection are the most transparent. When raters provide strong disclosure of their methodologies and results, they give companies clear blueprints for improving performance in the future…This also gives clients, ratings users and other stakeholders a sound basis on which to decide whether to use rating information when making decisions (which drives ratings adoption or uptake).”
- Start engaging stakeholders: It’s time for ratings firms to do the same kind of stakeholder engagement that sustainability-oriented companies now do, the study found. “The majority of ratings today are based on arms-length assessments of performance,” the report stated. “Going forward, we believe that every rater can and should spend more time with the companies they assess, and that there are myriad benefits to doing so (e.g. gain stronger understanding of their businesses, verify publicly-reported information, help companies understand ratings and improve sustainability performance).”
As a step toward improving the reporting process, NAEM will host a collaborative dialogue on May 4 for EHS and sustainability decision-makers, as well as representatives from research firms, investor relations departments and NGO’s. The purpose is to help attendees better understand one another’s objectives and concerns, which we hope will help improve the consistency, clarity and value of corporate sustainability efforts.
As we put together the program for the day, what are the kinds of issues would you like us to address? What questions do you have for ESG research and ratings firms?
Understanding Renewable Energy Certificates
Steve McDougal
Renewable energy certificates are a vital tool for offsetting a company’s carbon footprint, but there is still plenty of confusion about how best to use them.We caught up with Steve McDougal, Executive Vice President of Marketing and Business Development for 3Degrees Inc., and asked him to shed some light on the subject.
GT: What is a renewable energy certificate (REC)?
SM: A REC is proof or verification that one megawatt-hour of renewable energy has been created and delivered to the grid. Power is traded like a commodity, undifferentiated from fuel sources, and a REC is like a claim check that corresponds to electricity generated from renewable resources. It’s purchased separately, however, so the buyer of that REC knows that they’re funding (or helping to fund) the same amount of renewable energy going into the grid as what they pull out of the grid.
GT: Who uses RECs?
SM: RECs are used by a variety of organizations. They’re used by utilities to meet state government renewable energy compliance regulations; they’re used by organizations on a voluntary basis to meet sustainability goals and by green building professionals to earn Green Power Credit points towards LEED green building certification.
GT: What kind of premium could a buyer expect to pay for energy from a renewable source?
SM: For a voluntary buyer purchasing a REC that is sourced from anywhere in the United States, the premium is about 1 percent.
GT: How do RECs help companies reach their sustainability goals?
SM: While businesses may do their best to reduce their electricity usage, at the end of the day, all organizations still need electricity to operate. Unfortunately, there is a significant environmental impact associated with the electricity that they use. The purchase of RECs mitigates this impact, while helping improve the profitability and return on investment of renewable energy projects, thereby driving more of those projects forward.
GT: When should a company use a REC versus a carbon offset?
SM: If you want to “green” your electricity, RECs are the way to go. But they are not meant to be used as a carbon offset for Scope 1 or Scope 3 greenhouse gas emissions, primarily because RECs are not a precise way to measure greenhouse gas emission reductions. They’re a proof of one megawatt-hour of clean electricity, but they are not designed to balance out the greenhouse gas emissions or mitigate the environmental impact of energy use other than electricity. Everything else outside of electricity use, from driving your car to burning some natural gas to putting another log on the fire, that’s what you want to use carbon offsets for.
GT: How do you demonstrate value/metrics for those who buy these credits?
SM: The U.S. Environmental Protection Agency’s calculator provides one look at the environmental impact RECs can have. You can enter the amount of megawatt-hours that you’re buying and it will convert it to a measure that shows the amount of greenhouse gases that would have been generated using traditional electricity generation. It then tells you how these greenhouse gas emissions correspond to the amount of greenhouse gases produced annually by an average car, or absorbed by an acre of forest in a year. Many companies also measure themselves by setting a percentage goal and increasing the amount of RECs they use over time.
GT: Can REC’s totally offset a company’s carbon footprint?
SM: One should always look at RECs as a complement to energy efficiency and conservation efforts, realizing that it’s not one or the other. The best approach is to say, ‘We’re going to reduce our energy use, costs and environmental impact as much as possible,’ using energy efficient technologies and conservation. But even if we do our best, we will still use some electricity from the grid, which will have an environmental impact. And a comprehensive environmental sustainability effort can mitigate this impact by supporting the generation of the same amount electricity from renewable energy sources as the electricity you use from the grid.
Steve McDougal is Executive Vice President of Marketing and Business Development for 3Degrees Inc. and a member of NAEM’s Affiliates Council. You can hear him speak more about renewable energy credits during the upcoming webinar “Understanding the Business Value of Renewable Energy Certificates” Jan. 13 from 1:00-2:15 p.m.
Throwing away the dumpster: How Burt’s Bees achieved zero waste to landfill
Steve Walker
In 2007, Burt’s Bees set out to achieve zero waste status by 2020. Three years in, the company has achieved zero waste to landfill and reduced its waste stream from 344 tons in 2006 to 66 tons in the twelve months ending last June. Steve Walker, Manager of Environmental Sustainability, is responsible for helping the Durham, N.C.-based company reduce its waste across its headquarters, manufacturing and distribution operations. We spoke to him last week about how he got started and the systems he’s using to make this goal a reality.
Q: How does Burt’s define zero waste?
SW: To make our products, there will have to be a certain amount of water and energy use, but we want to be as efficient as we can to ensure that any energy we put in is going directly to adding value to the customer. So when we say zero waste, it’s 100 percent efficient in the processes. Our true aim, however, is not only to get to zero, but to have a net-positive impact on the environment and on society.
Q: When you started at Burt’s, the company had already outlined its zero waste goals. How did you get started?
SW: We began by setting a baseline. We went back and got our water history use, energy use and landfill data, and then starting measuring our by-products. At Burt’s, we define ‘by-products’ as literally everything that leaves one of our buildings other than a person or a finished good. This broad definition runs the gamut from scrap metal to hazardous waste to used batteries to typical recyclables like plastic, cardboard, and paper.
To measure our by-products, we bought industrial floor scales and began weighing everything. The data goes into Excel spreadsheet, which I use to monitor how we are doing by by-product type as a whole, and how are we doing in using our internal by-product hierarchy.
Q: What is a by-product hierarchy?
SW: We’ve established a hierarchy for how we deal with our by-product, ranging from landfilling it (the least preferred method) to reducing it altogether. (The sorting guide has not yet been updated; landfill has now become waste-to-energy.)
Q: What were the next steps?
SW: Starting at the bottom of the hierarchy, we worked hard to reduce our waste to landfill. Back in April 2008, we held a Dumpster Day. We took two weeks’ worth of trash from our manufacturing and administrative sites, dumped it into the parking lot, and sorted it into three piles: what should have been recycled (material that we already recycled); what could be recycled if we found an outlet for it; and everything else, or the stuff that we needed to eliminate.
We immediately saw an additional 50 percent reduction in waste to landfill as a result of this employee engagement exercise. That drove a cost savings for us, as we reduced our service frequency from weekly, to every other week, to only once per month. That ended for our manufacturing site in October 2009, when our service provider took the trash compactor away for good.
Now there’s no going back. It’s not like we just put caution tape over the trash compactor and said, “Don’t use it.” There’s no place to throw this stuff out. We have to figure out where we’re going to send it other than landfill.
Q: The next step in your by-product hierarchy is waste-to-energy conversion. How do you designate which materials belong in that category?
SW: These are the materials that are left over after we’ve reused, composted or recycled everything that we can. The stream includes break room materials like Styrofoam carry-out trays, potato chip bags, and plastics that aren’t numbered. We also have some raw packaging, such as 50-pound bags comprised of plastic and paper. We’re continuing to address those through reduction and substitution efforts.
Q: How does waste-to-energy work?
SW: Our waste-to-energy story is a little different than most. Many companies that are zero waste to landfill send their materials to a facility that burns them to generate electricity or steam. The problem is, up to 20 percent of what goes in comes out the back end as ash or non-combustibles, which typically still wind up in a landfill.
To avoid this scenario, we work with a waste-to-fuel firm, who takes our materials, shreds them up and blends them with materials from other companies. The resulting fuel has a heat value equivalent to that of coal, which cement manufacturers can use in their process. The real key for me is that the ash from our materials is incorporated into the cement itself — a truly zero landfill process.
Q: How does recycling fit into your by-product management process?
SW: An overall challenge with recycling is having enough volume to find a suitable outlet. Because we’re a relatively small company, the trick for us is finding others with similar materials so we can put them together and reach the volume necessary to enable the financial side of the equation.
For the past three years we have worked with a professional total by-product management (TBM) firm that does just that. By connecting us with other TBM customers, they’re able to deliver the entire volume to their network of recyclers across the country. This allows Burt’s Bees to play much larger in the market and affords us additional professional resources to support our TBM efforts without increasing our internal headcount.
Q: So is Burt’s Bees out of the landfill and incineration categories on the by-product hierarchy altogether?
SW: Yes with respect to landfill. We do continue to generate some waste from our R&D and quality labs that must be incinerated per the U.S. Environmental Protection Agency’s rules. The ink and solvents used to put the date codes on many of our products are also regulated. We’ve minimized the hazardous waste stream to a few hundred pounds per year and continue to explore substitution of other laboratory reagents along with alternate date coding options.
You can hear Steve talk more about Burt’s Bees’ zero waste journey in the upcoming webinar, “Zero Waste and Beyond,” on Dec. 2, 2010. To register, visit www.naem.org.
Toward sustainability: Interface Inc.’s ‘Mission Zero’ journey
In 1994, Ray Anderson, founder of Interface, Inc., outlined an ambitious new vision for his company: to achieve sustainability by 2020. Lindsay Stoda, a Senior Business Analyst with the company, spoke at the recent EHS Management Forum about the metrics Interface uses to measure its sustainability progress. This week, we caught up with Lindsay to learn more about the company’s Mission Zero goals.
Lindsay Stoda
Q: Where did the Mission Zero goal come from?
LS: Sparked by questions from customers and the ideas he encountered in Paul Hawken’s book, “The Ecology of Commerce,” our founder Ray Anderson realized that business and industry were part of the larger system that was damaging the environment and that it was not going to be a sustainable future if business continued in that direction. And realizing that it was someone’s job to lead industry down that path, he decided to ask his company and his employees to be that leader.
Q: How do you measure success against your Mission Zero Goals?
LS: We’ve always followed the “What gets measured gets managed” philosophy, so our way of being able to track and ensure that we’re making progress is through four different measurement platforms:
- Eco Metrics: Measure environmental impact
- Socio Metrics: Measure social impacts
- Quest program: Measures waste elimination
- Ecosense: Measures the activities on a plant-level that contribute to our sustainability goals
Q: How did Mission Zero change the work of Interface’s EHS department?
LS: Prior to Ray’s epiphany, we had a more traditional manufacturing environment, health and safety (EHS) department focusing on safety and compliance. Today, it’s typically the same folks because the tracking of that kind of information all kind of overlaps with the sustainability roles, except that people’s EHS roles developed a sustainability-minded focus.
Q: Can you tell me about some of your efforts toward creating closed loop products?
LS: We have a strong push to create closed loop products using recycled and bio-based raw materials. This process basically involves returning the materials in used finished product back to raw materials.
For carpet tile, there are two main components: There’s the face fiber and the fluff — the surface that you walk on — and then there’s the backing, which is different from residential carpet in that it’s a vinyl backing and it’s heavier, to hold the tiles to the floor and give them dimensional stability.
We had previously been able to cut the fibers off the front, take the backing, crumble it up, melt it down and return it to backing. But now we’re able to take the nylon fibers from the face of the products, shave them off and return them to our fiber suppliers to create new face fiber with post consumer recycled content.
We bring back both our carpet as well as competitors’ products through ‘ReEntry’—our recycling program. We collect used product back from the marketplace, run it through our process, and return backing to backing and fiber to fiber. Since the program began, we have diverted more than 100,000 tons of material from landfills.
Q: One of the goals you’ve identified is providing Environmental Product Declarations (EPDs) for all of your InterfaceFLOR products by 2012. What does that entail?
LS: We have used life cycle assessment (LCA) for several years now as we’ve tried to evaluate different materials and processes for manufacturing our products. The Environmental Product Declaration is a 10-15 page summary of the life cycle assessment results, everything from global warming potential to toxicity to resource use throughout the entire life cycle of the product. There is a lot of different environmental information out there and we thought the most useful thing for our customers would just be to give them the facts they need to make the decisions about what type of products they’d like to purchase. So it’s really the good and the bad. It’s just the facts. We collect the data and have it third-party verified to ensure it is complete and accurate.
You can hear Lindsay talk more about using metrics during “Defining the Metrics that Matter,” part of NAEM’s Best of the 2010 Forum webinar series, on Tuesday, Nov. 16. To register, visit www.naem.org.
Ensuring the credibility of sustainability reporting
Sandy Nessing
As the end of the year approaches, companies are gearing up for their next round of sustainability reporting. What will be different about the next crop of reports in 2011?
I suspect quite a bit.
Under pressure from stakeholders for more transparency of, and accountability for, business strategy, operations and performance, companies are facing a new imperative: How accurate, trustworthy and credible is the information that is being reported? How is it represented in the context of risk management, cost initiatives and decision-making?
This shift is forcing more and more companies to seek some type of assurance of their reporting. At American Electric Power Co., Inc. (AEP), we took that step in 2010 by inviting our internal auditors to audit our Corporate Accountability Report. It was painful for the organization, largely because the voluntary nature of sustainability reporting means there are fewer systems in place for data tracking where compliance is not involved. It remains a challenge, but investors, analysts and other stakeholders now have a greater degree of assurance that what we’re reporting is accurate and relevant.
This type of reporting may be voluntary today, but the tipping point is approaching. The Securities and Exchange Commission (SEC) opened the door earlier this year with its guidance on climate risk disclosure. Transparency is clearly a priority. Those companies with more robust voluntary reporting will be in a better position to meet the challenges under new regulations and mandates.
Many companies already seek third-party assurance of their sustainability reporting. While some advocate for it, I’m not entirely sold on its value, especially since there is no universal set of rules like there is on the financial side. Although I believe it will become necessary as we move toward integrated reporting, we’ve only taken baby steps in that direction and I think it’s too soon to force the same rigor as financial reporting without similar reporting requirements. For now, I think the internal audit review, coupled with our partnership with risk management and external stakeholder reviews of our reports, are more than sufficient.
What do you think about this approach? What are you doing in your company to verify the accuracy of your sustainability reports?
Alcoa’s Bill O’Rourke discusses EHS and sustainability policy
Bill O’Rourke
Vice President, Environment, Health, Safety and Sustainability
Alcoa Inc.
