Corporate

Sustainability
Practices
M Manjunath Shettigar
Business Case for Sustainability
 To reduce costs
 To preserve resources
 To comply with legislation
 To enhance reputation
 To differentiate
 To attract quality employees
 To satisfy customer needs
 To meet shareholder expectations
 To attract capital investment
 To capitalize on new opportunities
 To increase transparency

(source: The Sustainable MBA)

Corporate Sustainability Tools
 Cleaner production
 Design for environment
 Eco-efficiency
 Energy efficiency
 Environmentally-conscious manufacturing
 The four Rs - reduction, reuse, recycling and recovery
 Green procurement
 Performance contracting
 Pollution prevention
 Zero-emission processes
 By-product synergy and industrial ecology
Cleaner Production
 Used in conjunction with other elements of environmental management,
cleaner production is a practical method for protecting human and
environmental health, and for supporting the goal of sustainable
development.
 Cleaner production activities include measures such as pollution prevention,
source reduction, waste minimization and eco-efficiency. They involve better
management and housekeeping, substitution of toxic and hazardous
materials, process modifications, and reuse of waste products. At its heart,
the concept is about the prevention, rather than the control, of pollution.
 The concept of cleaner production questions the need for a particular
product, and looks at other ways to satisfy the demand. It is a slowing down
of the rate at which we use resources, and a gradual shift from linear to more
circular processes, similar to those found in nature. The eventual goal of
clean production is to achieve a 'closed loop' operation in which all excess
materials are recycled back into the process.
Cleaner Production
 The four elements of cleaner production are:
 The precautionary approach - potential polluters must
prove that a substance or activity will do no harm;
 The preventive approach - preventing pollution at the
source rather than after it has been created;
 Democratic control - workers, consumers, and
communities all have access to information and are
involved in decision-making;
 Integrated and holistic approach - addressing all
material, energy and water flows using life-cycle
analyses.
Cleaner Production
 The benefits of cleaner production include decreased waste, the recovery of
valuable by-products, improved environmental performance, increased
resource productivity, increased efficiency, lower energy consumption, and an
overall reduction in costs.
 Implementing cleaner production can be as straightforward as adopting better
housekeeping practices, or it may involve more complex measures associated
with processes and products.
 The more sophisticated options may include switching to renewable energy
sources, increasing material efficiency, and re-using and recycling by-
products. The product itself can be designed to reduce consumption of
resources, to prolong its useful life, and to allow disassembly and recycling of
its component parts.
 Cleaner production requires a new way of thinking about processes and
products, and about how they can be made less harmful to humans and the
environment. For successful implementation, the concept must be effectively
communicated within the organization. Employees at all levels, including
senior management, should be actively involved.
Cleaner Production
 The following guidelines can be used to implement a cleaner production
approach:
 Identify the hazardous substance to be phased out, on the basis of the
precautionary principle;
 Undertake a chemical/material flow analysis;
 Establish a time schedule for the phase-out of the hazardous substance in the
production process, as well as its accompanying waste management technology;
 Implement and further develop cleaner production processes and products;
 Provide training, technical and financial support;
 Actively disseminate information to the public and ensure their participation in
decision-making;
 Facilitate substance phase-out with regulatory and economic incentives;
 Facilitate the transition to cleaner production with social planning, involving
workers and communities affected.
Cleaner Production
 The cost of complying with environmental legislation can be significantly
reduced by companies that adopt cleaner production techniques. The latter
are often more cost-effective than control technologies. The costs of dealing
with wastes are reduced, and there is potential for new markets to be
discovered through innovations or the sale of by-products.
 Cleaner production can reduce environmental risks and liabilities and lead to
greater competitiveness. By demonstrating a commitment to cleaner
production, companies can also improve their public image and gain the
confidence of consumers.
Design for environment

 'Design for Environment' (DFE) is an umbrella term describing techniques used

to incorporate an environmental component into products and services before
they enter the production phase.
 DFE seeks to discover product innovations that will meet cost and
performance objectives while reducing pollution and waste throughout the
life-cycle.
Design for environment

 'Design for Environment' (DFE) is an umbrella term describing techniques used

to incorporate an environmental component into products and services before
they enter the production phase.
 DFE seeks to discover product innovations that will meet cost and
performance objectives while reducing pollution and waste throughout the
life-cycle.
Design for environment

 A wide variety of techniques are available, and they fall into two broad
categories:
 1. Techniques that are used to identify the environmental impact of a product
throughout its life cycle such as life-cycle assessment;
 2. Techniques that help designers improve the environmental performance of
their products.
 Analysis tools can be used to identify broad environmental issues, but
improvement techniques are needed in order to solve any problems
identified.
Design for environment

The most common DFE practices used include:

 design for recycling;
 design for disassembly;
 design for energy efficiency;
 design for remanufacture;
 design for disposability;
 hazardous material minimization.
Design for environment

 Design plays a crucial role in the innovation of environmentally responsible

products. That function can take the form of either DFE strategies or concept
demonstrators.
 DFE strategies are sufficiently broad to be used at the product planning and
problem definition stage of the design process. Concept demonstrators, on
the other hand, are a tangible vision of the possible product of the future.
Eco-Efficiency
 The term 'eco-efficiency' was coined by the World Business Council for
Sustainable Development (WBCSD) in its 1992 publication 'Changing Course'.
It is based on the concept of creating more goods and services while using
fewer resources and creating less waste and pollution.
 The WBCSD is a coalition of 150 companies worldwide that are united by a
commitment to the principles of economic growth and sustainable
development. Members are drawn from 30 countries and from 20 major
industrial sectors, and include Nestlé, Royal Philips Electronics, AT&T, Kodak,
3M, Sony and Toyota.
 Through the WBCSD, member companies exchange their experiences in
implementing eco-efficiency and share their ideas with the business
community worldwide.
Eco-Efficiency

 The 1992 Earth Summit endorsed eco-efficiency as a means for companies to

implement Agenda 21 in the private sector, and the term has become
synonymous with a management philosophy geared towards sustainability.
 According to the WBCSD definition, eco-efficiency is achieved through the
delivery of ' ...competitively priced goods and services that satisfy human
needs and bring quality of life while progressively reducing environmental
impacts of goods and resource intensity throughout the entire life-cycle to a
level at least in line with the Earth's estimated carrying capacity'.
 This concept describes a vision for the production of economically valuable
goods and services while reducing the ecological impacts of production. In
other words eco-efficiency means producing more with less.
Eco-Efficiency

According to the WBCSD, critical aspects of eco-efficiency are:

 A reduction in the material intensity of goods or services;
 A reduction in the energy intensity of goods or services;
 Reduced dispersion of toxic materials;
 Improved recyclability;
 Maximum use of renewable resources;
 Greater durability of products;
 Increased service intensity of goods and services.

The reduction in ecological impacts translates into an increase in resource

productivity, which in turn can create competitive advantage.
Eco-Efficiency

 Eco-efficiency is part of a broader concept called 'sustainable production

and consumption' (SPC). This concept involves changes in production and
consumption patterns that lead to sustainable use of natural resources.
Businesses play a key role, both as consumers of raw materials and as
producers of goods and services.
Energy Efficiency

 Improving energy efficiency is a valuable near-term step along the road to

sustainability. It can deliver increased productivity, a reduction in pollution
(associated with fossil fuels), lower consumption of natural resources, and
improved financial performance - all this without affecting the benefits that
are derived from energy use.
 In 1973, high oil prices and concerns over the security of oil supplies made
energy efficiency a high priority. In the first decade of the 21st century we are
facing other problems: resource depletion, climate change, and a growing
demand for energy.
 Simple, low-cost energy efficiency measures include turning off equipment
and lights that are not in use, switching to compact fluorescent/ LED bulbs,
and using more fuel-efficient vehicles.
Energy Efficiency
Following is the list of measures for improving energy efficiency:
 Get a commitment from senior management. Support your energy efficiency
coordinator, invite employees to participate in your program, and reward them
for suggestions that your company implements.
 Immediately implement low-cost efficiency measures. These are easy to do,
give you an immediate sense of accomplishment, and help you realize big
dividends.
 Conduct an energy audit, to highlight where your business wastes energy,
what it costs, and where you can make improvements. Explore what the
most appropriate form of energy is for each job - electric, gas, oil, solar, wind,
or cogeneration.
 Create an energy management plan based on the audit. Analyze costs and
benefits of short-term and long-term actions, then prioritize and schedule
them for implementation. Find ways to measure progress, and update your ROI
requirements and equipment specifications.
Energy Efficiency

 Energy efficiency can be implemented through a method called 'energy

performance contracting'. Here, an energy service company helps an
organization improve its overall energy efficiency through energy analyses,
engineering design, construction, training, and even financing.
 Energy efficiency makes sense both environmentally and economically. It
can increase profitability and competitiveness by lowering the cost of doing
business. Most energy efficiency retrofits produce a good return on
investment, while at the same time reducing carbon dioxide emissions.
Environmentally conscious manufacturing

 Environmentally conscious manufacturing (ECM) is a new way of thinking

about manufacturing which focuses on the most efficient and productive use
of raw materials and natural resources, and minimizes the adverse impacts on
workers and the natural environment. In its most advanced form, a product's
entire life cycle is considered, from design, raw material and natural resource
use to end use and disposal.
 In order to reach this goal, tools like life cycle analysis (LCA) may be used.
Concepts like pollution prevention, energy efficiency, material substitution
and maximization of recycled content guide the process.
The 4Rs - reduction, reuse, recycling and
recovery

 Businesses are being forced to change the way they manage waste. Faced
with regulations, public pressure, landfill shortages and the need for
increased resource efficiency, companies are moving away from the waste
treatment approach and towards waste prevention.
 A number of waste prevention techniques are available, and they are
commonly summarized as the so-called 4Rs: reduction, reuse, recycling and
recovery.
 Reduction, reuse and recycling are known in the industry as the 3Rs.
Companies sometimes focus only on the first three in resolving waste
management problems. In more innovative companies, 4Rs solutions often
emerge as a result of industry benchmarking or technological breakthroughs.
The 4Rs - reduction, reuse, recycling
and recovery
 Under the 4Rs philosophy, the waste management hierarchy as follows:
1. Wherever possible, waste reduction is the preferable option.
2. If waste is produced, every effort should be made to reuse it, if practicable.
3. Recycling is the third option in the waste management hierarchy. Although
recycling does help to conserve resources and reduce wastes, it is important
to remember that there are economic and environmental costs associated
with waste collection and recycling. For this reason, recycling should only be
considered for waste which cannot be reduced or reused.
4. Finally, it may be possible to recover materials or energy from waste which
cannot be reduced, reused or recycled.
The 4Rs - reduction, reuse, recycling
and recovery
Empirical evidence suggests that by practising waste prevention, reusing products,
recycling, and making environmentally conscious purchases, businesses can cut
costs and increase profits. Cost savings take the form of:
 Lower waste disposal costs;
 Lower waste treatment costs;
 Lower energy costs;
 Savings on materials and supplies;
 A reduction in regulatory compliance costs;
 Lower storage costs;
 Cost recovery through the sale of recyclable materials;
 Cost recovery through sales of 4Rs technologies.
Green Procurement

 Environmentally responsible or 'green' procurement is the selection of

products and services that minimize environmental impacts. It requires a
company or organization to carry out an assessment of the environmental
consequences of a product at all the various stages of its lifecycle. This means
considering the costs of securing raw materials, and manufacturing,
transporting, storing, handling, using and disposing of the product.
 Green procurement is rooted in the principle of pollution prevention, which
strives to eliminate or to reduce risks to human health and the environment.
It means evaluating purchases based on a variety of criteria, ranging from the
necessity of the purchase in the first place to the options available for its
eventual disposal.
Green Procurement

 Consumers, investors, shareholders and regulatory agencies are increasingly

demanding that organizations behave in an environmentally responsible
manner. Practising green procurement demonstrates an organization's
commitment to considering and minimizing the environmental consequences
of its activities. It thus makes both environmental and economic sense.
 Green products are generally produced in a manner that consumes less
natural resources or uses them more sustainably, as with sustainable forestry.
They may involve less energy in their manufacture and may consume less
energy when being used, and they generally contain fewer hazardous or toxic
materials.
Green Procurement

 Green products are also generally designed with the intention of reducing the
amount of waste created. For example, they may contain recycled material
or use less packaging, and the supplier may operate a 'take-back' program.
 Green procurement can also offer cost savings. In particular, buying 'green'
usually involves products that are easily recycled, last longer or produce less
waste. Money is therefore saved on waste disposal. In addition, green
products generally require fewer resources to manufacture and operate, so
savings can be made on energy, water, fuel and other natural resources.
 Moreover, green products generally involve fewer toxic or hazardous
materials, reducing associated expenses such as permit fees, toxic materials
handling charges and staff training.
Green Procurement

 Organizations often require a green procurement program as part of their

environmental management systems, as certified under the EMAS and ISO
14001 regimes. In addition, new regulations increasingly require the adoption
of green procurement practices
 Meeting these and other environmental regulations is easier for organizations
that already practice green procurement.
 Green procurement also has benefits for health and safety, both of
workplaces and of the wider community.
 Organizations that practice green procurement will also be recognized as
good 'corporate citizens', and influence those around them. As markets
gradually change, the availability of green products will increase and prices
will fall.
Green Procurement

Challenges to Green Procurement:

 1. Price:
 2. Lack of corporate commitment:
 3. Insufficient knowledge:
 4. Availability:
 5. No acceptable alternative:
 6. No specifications:
 7. Purchasing habits
Green Procurement

Implementing a green procurement programme:

 1. Organizational support:
 2. Self-evaluation:
 3. Set goals:
 4. Develop a strategy:
 5. Run a pilot project
 6. Implementation:
 7. Sustainment:
Pollution Prevention

 Pollution prevention, or P2, shifts the emphasis from controlling pollution

once it has been created to preventing its creation in the first place. The
origin of P2 can be traced to the US manufacturer 3M, which in 1975
instituted a program called 'Pollution Prevention Pays' (3P) in an effort to
eliminate pollution at source. Between 1975 and 1999, the scheme has saved
3M an estimated $827 million, and eliminated more than 800,000 tonnes of
pollutants.
 Since then, the concept has been endorsed by a large number of companies
worldwide. In practice, P2 programmes concentrate on replacing expensive
end-of-pipe solutions with approaches that avoid creating waste in the first
place. They include waste minimization, recycling, energy recovery and zero-
emission processes. In addition, P2 encompasses waste treatment and
remediation measures.
Pollution Prevention

 There are several definitions of pollution prevention. The Canadian

government defines it as the use of processes, practices, materials, products
or energy sources that avoid or minimize the creation of pollutants and
waste, and reduce the risk to human health and the environment.
 In the US, the Pollution Prevention Act of 1990 and Executive Order 12856
define pollution prevention as any practice which reduces the amount of a
hazardous substance, pollutant, or contaminant entering any waste stream or
otherwise released into the environment.
 Pollution prevention represents the first step in a hierarchy of options for
managing waste, ranging from the most to least desirable.
Pollution Prevention
 Both large and small companies can prevent pollution through operational or
technical changes. The techniques available can be divided into four
categories:
Pollution Prevention

 Good housekeeping - including efficient operation of machinery, monitoring of

raw material flows, segregating waste, and training staff;
 Materials substitution - such as phasing out CFCs, and switching from solvent-
based paints to water-based alternatives;
 Manufacturing modifications - including cutting the number of processes or
switching from chemical to mechanical, and introducing closed-loop
processing;
 Resource recovery - for example re-using pollutants in the same process, and
selling waste by-product as raw materials in other industries.
Pollution Prevention

 Shifting from managing to preventing pollution can be good for both the
environment and the bottom line. Companies are realizing that pollution is a
symptom of inefficiency, and that waste is often valuable raw material. The
growing costs of waste disposal and remediation make a compelling case for
improvement.
 When products and processes are designed to avoid pollution and waste,
tremendous savings are possible. For example, the 400-employee Norsk Hydro
magnesium production facility in Quebec invested $200,000 in effluent probes
and computer monitoring equipment, and has saved more than $5 million to
date in raw material and effluent treatment costs.
Zero-emission processes

 The concept of zero emissions is based on improving technologies and

processes to the point of maximum resource productivity and virtually no
waste. This goal can be approached in a number of ways, including
technological innovation, pollution prevention, cleaner production, by-
product synergy, or industrial ecology. All of these are ways of eliminating
wastes or turning wastes into profitable resources, while preventing harm to
environmental and human health.
 Zero emissions may appear an unrealistic objective, yet it is a proven and
profitable goal.
Zero-emission processes

 The 'Zero Emissions Research Initiative' (ZERI), developed at the United

Nations University in Tokyo, has as its goal 'zero global emissions, zero water
waste, zero solid waste, and zero waste in the air'. This can be done by using
nature as a model for process and product design, and by increasing resource
productivity through industrial 'clustering'.
 The concept of zero emissions has been developed into a methodology that
can be applied to any industry sector.
Zero-emission processes
 The ZERI methodology, as proposed by United Nations University, is as follows:
 1. 'Total throughput'
 A review of the industry identifies opportunities to minimize inputs and maximize outputs.
The aim is to make full use of all the inputs; i.e. total throughput. If this cannot be achieved,
the next step of the methodology is applied.
 2. Output-input models
 An inventory is created of all 'wastes' - i.e. outputs not consumed in the final product or in its
process of manufacture. An active search is then initiated to identify industries which could
use these outputs, or modified versions of them, as inputs.
 3. Industrial clusters
 The output-input models are used to determine potential candidates for industry 'clustering'.
The next step is to identify optimal clusters in terms of size and number of participants.
 4. Breakthrough technologies
 In cases where current engineering expertise and process technologies are not able to secure
effective and economical coupling of outputs and inputs, research into 'breakthrough
technologies' or system designs is initiated.
 5. Industrial policy
 The identification of suitable industry clusters, and of the breakthroughs required, must be
accompanied by appropriate government policies. Where sectors with no previous history of
working together are combined, collaborative efforts involving policy makers, industry
representatives and academics are needed.
Zero-emission processes

 This methodology has been applied to over 50 sectors of the economy, ranging
from beer to coconuts, textiles, steel scrap, vegetable oils, pulp and
electronics. The first commercial application of the ZERI methodology was in
a brewery in Namibia.
Performance contracting

 Performance contracting is a means of raising money for investments in

energy efficiency that is based on future savings. It enables money that will
be saved as a result of the introduction of a new energy-efficient technology
to be used to offset the cost of financing, installing, operating and operating
that technology. By definition, the future savings must be greater than the
costs.
 (Two other forms of savings financing are 'vendor financing' and 'savings
reinvestment'.)
 Performance contracting, also known as 'third party financing' or 'contract
energy management', can be used to pay for measures to reduce energy costs
and waste disposal costs, or to recover materials.
 A third-party contractor designs, installs, finances and, if required, operates a
new technology. The contractor is then paid according to the savings achieved
- i.e. the performance.
Performance contracting

The benefits of a performance contract for a business include:

 Reduced risk - the contractor takes on the risk of not achieving savings;
 Turn-key services - the performance contractor provides all required services;
 The business or institution needs less internal expertise;
 Project financing can be 'off balance sheet' and not affect debt load;
 State-of-the-art products and services are used;
 Savings are normally much higher than if the business or institution carries
the work itself;
 Additional improvements to environmental performance can be paid for out
of the savings.
Performance contracting

 Companies that provide performance contracts and energy services are called
energy service companies, or 'contract energy management companies' or
'energy management companies'.
Parties to a performance contract
 There are normally two or three parties to a performance contract:
 The business or institution requiring the services;
 The performance contractor providing the services;
 A financial institution providing financing for the services.
 The contract arrangements between these parties will depend on the type of
performance contract and the sources of financing used. Other important
considerations include savings guarantees, project size, method of savings
verification, and handling of risk and insurance.
By-product synergy and industrial ecology

 The principle underlying by-product synergy is that one industry's waste

stream can be used by another as a primary resource. It is a simple idea, but
one which has enormous potential for reducing waste volumes and toxic
emissions to air and water, as well as cutting operating costs.
 In order to facilitate an exchange of materials and resources, businesses need
to work together to determine what unwanted by-products exist, and what
their potential applications are. The resources can then be exchanged, sold,
or passed free of charge between sites, creating a by-product synergy.
 By-product synergy has been defined by the World Business Council for
Sustainable Development and the US Environmental Protection Agency as 'the
synergy among diverse industries, agriculture, and communities resulting in
profitable conversion of by-products and wastes to resources promoting
sustainability'.
By-product synergy and industrial ecology
By-product synergy and industrial
ecology
 By-product synergy is the principle which underpins the concept of 'industrial
ecology' - a holistic view of industry in which organizations exchange energy
and material between one another, rather than operating as isolated units.
Industrial ecology promotes a shift away from traditional open, linear systems
towards closed loops and inter-dependent relationships of the kind found in
nature.