Posts filed under ‘Corporate Social Responsibility’
Transparency Begins with Data Management
Connie Prostko-Bell
Meeting the demands of new product regulations requires better data management solutions. We sat down this week with 3E Company’s Connie Prostko-Bell to learn more about this emerging issue and to find out what companies are doing to provide greater supply chain transparency.
GT: Why do companies collect MSDSs and other product data from their suppliers? What is this information used for?
CPB: Operational risk and compliance management is increasingly focused on environmental issues across the supply chain. As companies strive to deliver sustainable ongoing improvements in compliance and risk management, they are closely scrutinizing the management of products in the enterprise, especially chemicals and other hazardous materials, with a special emphasis on fulfilling requirements in environmental, health and safety (EHS) regulatory compliance. A comprehensive view of compliance performance and risk management throughout the supply chain and product life cycle is necessary to promote and sustain ongoing improvement.
This vision is fueled by accurate and comprehensive content, including environmental, health and safety (EHS) product data, such as Material Safety Data Sheets (MSDS), which can be leveraged to ensure that the products that are incorporated into finished goods meet legal, regulatory, industry and self-imposed standards. Leveraging this type of data helps communicate to a company’s stakeholders that externally sourced processes and materials do not introduce legal, financial, ethical or market access risks to the company. Furthermore, it gives organizations an opportunity to advance their own value-based agendas by leveraging buying power to enforce desired practices.
GT: What trends are driving the management of supplier-sourced product data?
CPB: Manufacturers with complex supply chains are struggling under the burden of spiraling global EHS regulations. More often than not, they possess neither the requisite internal methodologies nor the necessary personnel to collect, analyze, share, and distribute key information related to supplier compliance and corporate risk across the various functional groups within the organization. Compliance issues such as GHS, REACh, RoHS and Frank-Dodd are driving the need for a common source of product data.
The shifting regulatory landscape also burdens suppliers, who often need help gaining access from suppliers and understanding the global EHS laws with which they must comply. Companies are increasingly recognizing supplier compliance as a critical component of business continuity efforts.
GT: A company’s efforts are only as strong as the quality of its data. How can companies ensure data quality, especially when they are dealing with a multitude of suppliers?
CPB: The number of suppliers can vary wildly from company to company. Generally speaking, it is safe to say that the larger the organization, the more suppliers it will have. Many factors influence this number such as geographical diversity of operations and customers, the complexity of the product line, and availability of the required raw materials. It is certainly not uncommon for a large company to have tens of thousands of suppliers. However, regardless of whether the company has hundreds or thousands of suppliers, managing supplier data can be a very challenging task. Finding, maintaining and acting on data is difficult and painstakingly time-consuming.
It is important that companies use documented, best practice methodologies and direct relationships to gather, refine and maintain data.
When it comes to sharing the information, you should choose an easy-to-use and practical system that meet each customer’s specific needs. The data should be broad, dynamically updated, and of the highest quality and accuracy. Substance- level regulatory data and product level MSDS data should be integrated together to provide a view into the impact of regulatory changes across inventories in the enterprise.
At the product level, from its inception to the present day, the vendor supplied product MSDS has evolved into a document that goes far beyond its original purpose, now serving as a source, foundation and clearinghouse for a range of safety and regulatory compliance data, including classification, transportation, environmental, ecological and disposal considerations. MSDS product-level data should be continuously updated with information and search technologies, documented best practice methodologies and through direct data obtainment relationships with raw material and other chemical product manufacturers.
Connie Prostko-Bell is a Senior Solutions Manager with 3E Company. She has 16 years of EH&S and chemical industry experience, spanning the project management, product safety and product stewardship sectors. She will share strategies for getting accurate supplier data during NAEM’s webinar on the topic Feb. 16.
How a New Design Revolution will Change Supply Chain Management
Howard Brown
Stories about Henry Ford’s genius with manufacturing abound, though it’s rarely clear which ones are actually true. One of my favorites is his insisting that parts manufacturers deliver their products to his plants in wooden crates of his design, which he then dismantled and used as floorboards in his cars.
Supply chain management has grown in sophistication and importance since Ford’s time. The quality movement, just-in-time manufacturing, corporate responsibility initiatives, enterprise-wide information systems, environmental impact analyses like life-cycle assessments, and growth in transparency and public access to information have all brought about major changes in supply change management. Now a new design revolution is about to create an even bigger change in supply chain thinking. The change will come both from new materials and products and from new manufacturing technologies.
Radical new materials and products (such as the ones we feature in the dMASS Insights newsletter) will themselves disrupt traditional supply chain relationships. For example, there are composite materials that exhibit behaviors with the potential to replace mechanical appliances, tools, and other machinery – even entire factories. There are materials that can be used to generate electricity by movement, temperature differences and solar energy conversion. Others have the ability to interfere with the growth of harmful bacteria, actively transfer heat or emit light with minimal energy subsidy. The cumulative effect of new materials and products will be shorter and simpler supply chains.
New manufacturing technologies will be at least as disruptive as the products themselves. Nano-scale manufacturing technologies such as Additive Layer Manufacturing (including 3D printing) and bio-manufacturing (the growing of products) stem from recent advances in the scientific understanding of how nature organizes itself at the most fundamental levels of matter and energy. Similarly, biomanufacturing stems from new discoveries in the fields of genetics and micro-organisms. The common thread among each of these technologies is a growing knowledge of nature’s tendency to self-organize, and an ability to leverage this knowledge.
Three-dimensional (3D)printing, in particular, has the potential to drastically cut resource demands, costs and dependence on resource-intensive supply chains, as well as pollution and waste. Advanced computer-aided design (CAD) systems bring design down to the level of individual molecules. The entire downstream supply chain for a 3D-printed product can be a set of printer cartridges containing different chemical elements. When laid down in precise proportions, the atoms arrange themselves into material structures with the desired characteristics. Printing can often be done in small shops, portable facilities, or even in the home. There is little or no need for high-temperature smelting in parts manufacturing, high-speed grinding or stamping that produces manufacturing scrap, or glues, adhesives, staples, rivets and other parts to hold separate pieces together.
Henry Ford’s tactic saved resources a century ago by creatively taking advantage of existing supply chain resources and harvesting value from waste. Nano- and bio-technologies will radically transform supply chain management in a new way. Business success will increasingly require understanding these technologies and taking advantage of the changes they will bring about.
What are your thoughts? Have you begun to experience supply chain changes due to commodity prices or supply problems, or due to the availability of new materials, products, or technologies?
Howard Brown is a noted entrepreneur and the founder of dMASS.net, an organization focused on helping businesses improve resource performance. For more than 20 years, he was CEO of the consultancy RPM Systems, Inc. (Resource Planning and Management), where he worked with companies such as International Paper, Mobil, BP, Duracell, Avery- Dennison, Whirlpool, SaraLee, and Wrigley, earning a worldwide reputation for developing practical strategies that merge environmental and business goals. To learn more about dMass, visit: http://www.dmass.net/wordpress/
Meet the NAEM Board of Directors: What are the EHS and sustainability trends to watch in 2012?
As part of NAEM’s 2012 Member Appreciation Week celebration, we sat down with members of the NAEM Board of Directors to talk about the EHS and sustainability trends to watch in 2012. Featuring Michael Miller of Dean Foods; David Newman; Mark Hause of DuPont; and Verne Shortel of NRG Energy.
Meet the NAEM Board of Directors: What are some of the lessons you learned in 2011?
In honor of this week’s 2012 Member Appreciation Week celebration, we sat down with members of the NAEM Board of Directors to talk about trends in EHS and sustainability management. Featuring Deb Hammond of Abbott Laboratories; Stephen Evanoff of Danaher Corp.; Bruce Karas of The Coca-Cola Co.; and Minda Sarmiento of Shaw Environmental Inc.
Emerging Leaders Series: How WESCO Turned on the Savings with LEDs
Billy Grayson
For the past few months, I’ve had LEDs (light-emitting diodes) on the brain.
At WESCO, we sell a LOT of lighting, and have seen tremendous sales growth in more energy-efficient fluorescent bulbs, ballasts and fixtures.
There are a lot of factors driving this growth in fluorescent sales: Companies are looking to cut energy costs, and even without incentives an upgrade to T5 or T8 lighting from T12 or metal halide [1] often has a payback of three years or less. Companies are also looking to take advantage of state and federal incentives. In some areas, this can reduce the payback on a lighting upgrade from three to five years to 18 months.
Federal regulation is driving investment as well. In July 2012, most T12 technology will no longer be available (even if Congress does stop the 100-watt incandescent phaseout). Companies that do not upgrade their lighting may not be able to buy new bulbs by the end of the year.
So the business case for a fluorescent lighting upgrade is compelling, but with stories like Wired’s August 2011 cover feature on LED bulbs, stories like Wal-Mart, Denny’s and Starbucks investment in LEDs, and even some recent big WESCO LED projects (including streetlighting with Pacific Gas & Electric Co.), there are many wondering if they should make the jump to LEDs now, rather than make a short-term investment in a better fluorescent technology.
There really is no “right” answer in the debate over LEDs vs. high-efficiency fluorescents: The choice depends on a number of factors. Below are some of the things that are making LEDs look more and more attractive:
- The price of LEDs is coming down: Over the past two years, the price of many types of LEDs has come down significantly, more than 50 percent in many applications.
- LEDs are becoming more flexible: New entries to the market include LEDs that plug into existing ballasts, LEDs that provide easy upgrades as chip technology matures and LEDs that are “smarter,” with dimming and occupancy capabilities well beyond the traditional electronic ballast fluorescent.
- The price of fluorescents is going up: With recent spikes in the price of rare earth metals, the price of fluorescent bulbs rose more than 30 percent in 2011. Although the price has recently come down a little, it is possible that challenges in obtaining these materials could spike the price again.
- LEDs save a LOT: LED’s use less energy, last longer and require less maintenance than fluorescents.
- LEDs have a lighter footprint: Even outside of energy savings, LEDs are arguably better for the environment, as they require less materials to manufacture, ship and install, and they do not have the challenges associated with mercury disposal that fluorescents do.
- LEDs are much “cooler”: There’s a lot of new lighting options available with LEDs, and many of them are arguably more aesthetically pleasing than traditional fluorescents.
With all the arguments for LEDs, why would anyone make the shift from T12 to T8?
For WESCO’s internal lighting upgrades, it all came down to dollars and cents. For our portfolio, a switch to 25 and 28-watt T8s had an average payback after incentives of 1.9 years and a five-year return on investment (ROI) of 225 percent. For warehouse lighting, LED payback was slightly longer than five years.
What’s right for WESCO is not necessarily what’s best for other companies. We’ve recently completed LED lighting upgrades for companies ranging from utilities to food distributors to retail food chains. For these customers, the payback on LEDs was more compelling than a short-term move to fluorescents. Some of the factors for these customers included:
- Running their lights all the time: For companies ranging from food distributors to 24-hour mini-marts, LED investments can pay back faster than flourescents. Where a 40-hour-a-week facility may save $1,000 a year with fluorescents and $2,000 a year with LEDs, a 24/7 facility would save more than four times as much in annual electricity costs.
- Pricey power: WESCO’s LED business is strongest across the board in Hawaii. Why? $.25-$.40/kWh. When you pay that much for power, the deeper the energy savings the more compelling the business case.
- Long-term commitment: The federal government has become a strong customer for LEDs. With a 10-20-year investment horizon, LEDs make great business sense – even now most LED investments will outperform efficient fluorescents over periods longer than 10 years.
- Companies for whom image means a lot: A number of companies are willing to forego the short-term ROI of a fluorescent upgrade for the aesthetic and reputational benefits from a big LED investment. As I mentioned before, positive public relations and prettier store and restaurant lighting may trump straight payback and ROI calculations for some companies.
At WESCO, we’ve decided for the time being to put most of our investment in a fluorescent upgrade. But even in our portfolio there are places where LEDs make sense. We are upgrading parking lot lighting in a number of facilities to LED this year (the lifetime ROI on these investments beat our metal halide and HPS). We are also setting up some conference room and warehouse LED demonstration projects in Charlotte, North Carolina; Chicago; Los Angeles and Pittsburgh, Pa., artly to provide a showroom for our customers, and partly to act as “guinea pigs” for some of the cutting-edge technology being brought to market by Philips, CREE, and others.
Billy Grayson is the Director of Corporate Sustainability for WESCO Distribution, where works with both the marketing and operations teams to help the company “Go Green” – a program to reduce energy consumption and improve environmental performance and communicating WESCO’s energy and environmental achievements to customers, suppliers, and other stakeholders. Before joining WESCO, Mr. Grayson was a Senior Associate at ICF International, working with public and private sector clients on greenhouse gas mitigation, energy efficiency, and other environmental mitigation projects.
[1] For those not familiar with common lighting types, Philips has a good calculator to help you get started at http://applications.nam.lighting.philips.com/ecocalculator/
Sustainability Strategy and Long-term Performance
Kimberly Gladman
At the NAEM conference in Fort Lauderdale last May, I spoke about recent academic research on the link between corporate responsibility—in particular, positive environmental policies—and stock price performance. (For a review of the studies I talked about, see my paper, “Ten Things to Know about Responsible Investing.” ) I promised NAEM staff that I’d stay in touch and keep them updated when I heard of additional research that might be of interest to the membership. A paper just out from Harvard Business School definitely fits the bill.
In “The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance,” Professors Bob Eccles, Ioannis Ioannou and George Serafeim began by identifying companies that disclosed a set of environmental and social policies in 2003-2005. They then conducted over 200 interviews with corporate executives to ascertain which companies had already begun to implement these policies internally in 1993.
Once they had a set of 90 early adopters, they created a matched sample of companies that had few sustainability policies, but were otherwise similar to the first group in terms of size, sector, growth stage and capital structure. Comparing shareholder returns for the two groups, they found that the high-sustainability group outperformed its low-sustainability peers by an annualized 2.3 percent on an equal-weighted basis,between 1993 and 2011.
The authors also demonstrated, based on a statistical analysis of keywords in analyst calls, that high-sustainability companies are more likely to discuss long-term trends and non-financial matters with investors. They study ownership and show that high-sustainability companies attract longer-term investors with more concentrated holdings. They also show that high sustainability companies also are more likely to have a board oversight of sustainability, to incorporate sustainability metrics into executive compensation, and to disclose non-financial performance. (The full study can be found at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1964011).
While the study’s performance numbers may be welcomed by corporate environment, health and safety (EHS) managers as evidence that sustainability pays, it would be interesting to know the relationship between a company’s survival rate and its sustainability activities. For example, does management of social and environmental issues acts as a kind of insurance policy, making a company more likely to be around long-term?
NAEM members would probably have valuable opinions on this question. They would also be able to offer useful perspectives on one of the study’s key follow-up questions: What ensures that companies stay the long-term course in terms of sustainability culture? Why do some companies’ programs fall apart if a key manager leaves, while other firms seem to have environmental consciousness baked into their “DNA”? These questions are just part of the lively discussion this paper is provoking.
What do you think?
Dr. Kimberly Gladman is the Director of Research and Risk Analytics at GMI, a leading provider of corporate governance, accounting, environmental and social research and ratings. Before joining GMI’s predecessor, The Corporate Library, in 2008, Dr. Gladman managed a team of associates researching global corporations at Domini Social Investments, a prominent socially responsible investment fund manager. She also served as Lead SRI Analyst for Domini’s European equity fund, and spent several years participating in the firm’s shareholder advocacy on social, environmental, and governance issues.
She began her career in academia, focused on interdisciplinary research and teaching. She earned a B.A. from Yale University in 1990, and a Ph.D. from New York University in 2001. Dr. Gladman also holds the Chartered Financial Analyst designation.
Can engaged employees transform the U.S. economy?
Alex Pollock
Now that the world population has surpassed the seven billion marker, the “sustainability” word is getting lots of play once again. The call-to-action bugles are again warning us of a pending global catastrophe. What could suddenly create “worldwide peace, global well-being and extraordinary advancement in human development?”
In a new book, “The Coming Jobs War,” author Jim Clifton says a solution is the appearance of a whopping 1.8 billion “good” jobs. These are jobs that provide at least 30 hours of work per week and a steady pay check. Clifton believes that the country that can best achieve job growth coupled with GDP growth will be the dominant world force.
Can the United States be this global force?
Clifton believes the explosion of entrepreneurship that GDP growth requires won’t happen here until the country doubles its number of “engaged” employees: those who are using their talents every day, yielding great results, emotionally committed and are working consistently with high energy and enthusiasm.
This number currently stands at 28 percent nationally. Going from 30 million to 60 million engaged workers will “change the face of America more than any leadership institution, trillions of stimulus dollars, or any law or policy imaginable,” Clifton argues.
But as long as “one in five U.S. managers are “dangerously lousy,” these “high-energy workplaces” will elude us, Clifton says. “Fire all lousy managers today” is an imperative, he argues, because nothing fixes bad managers: not coaching, competency training, incentives or warnings. In his experience “bad managers never get better.”
What’s your reaction to his analysis? Clearly there is an opportunity for each of us is to contribute to the creation of these attractive “high energy workplaces” where we willingly give our best every day. We just can’t just afford to be a passive observer on this one.
