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Published on February 11, 2008

Author: Bianca

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Supporting materials were developed to aid in internal communications.:  Supporting materials were developed to aid in internal communications. Supporting Materials Cement Industry Implications Strategic Questions Sustainable Development The Business Case for Action Strategies and Tools Global Trends Population increases Natural systems decline Constraints and opportunities Stakeholder expectations Scenarios Questions raised by trends SD definitions New approaches needed Why act now? Eco-efficiency Industrial ecology Design for environment Natural Step Stakeholder engagement/ dialogue Key performance indicators Sections can be used individually or in combination and tailored as appropriate to your company’s situation. However, please note that these sections are intended as a resource to supplement internal presentations, rather than as the sole basis for the creation of such presentations. Outline:  Outline Global Trends Cement Industry Implications Strategic Questions Sustainable Development The Business Case for Action Sustainable Business Strategies and Tools CEOs of major corporations recognize the importance of sustainable development to business. :  CEOs of major corporations recognize the importance of sustainable development to business. I think it’s fair to state the case in rather stark terms that in the future, companies that are not sustainable—in the fullest sense of that term—will not be operationally or financially successful. It is doubtful they will even survive. William S. Stavropoulos, President & CEO, Dow Chemical The challenge of sustainable growth is not a philosophical issue. It is a nuts-and-bolts business reality. We made it the primary objective of our company, because we believe sustainable growth will be the common denominator of successful global companies in the 21st century. Chad Holliday, Chairman and CEO, DuPont Sustainability – or the capacity for continuance – is a concept of critical importance to all of us... Business has the skills, resources and knowledge to make a difference. The challenge is to grasp the opportunities it presents, openly and responsibly. Paul Drechsler, Executive Director of ICI PLC & Chairman and Chief Executive of Quest International Global Trends The challenge of sustainable development arises from these two major converging trends.:  The challenge of sustainable development arises from these two major converging trends. Decline in resource availability and ecosystems Impact = Population x Consumption x Technology Diminishing margin for action Sustainability Global Trends World population is increasing to unprecedented levels.:  World population is increasing to unprecedented levels. Global Trends Massive flows of material and energy are used to meet the needs of this expanding population.:  Massive flows of material and energy are used to meet the needs of this expanding population. Source: USGS 1900 1960 1920 1940 1980 1995 0 500 1,000 1,500 2,000 2,500 3,000 Millions of Metric Short Tons Raw Materials Consumed in the US -More than all previous societies combined Global Trends Graph of population growth These trends are leading to a decline in the health and capacity of natural systems worldwide.:  These trends are leading to a decline in the health and capacity of natural systems worldwide. Biologists: greatest extinction rate in 63 million years Global 50% drop in freshwater available per person 13 out of 17 fisheries collapsed or endangered Forest losses equal to area of UK/year, plus reduced diversity, acid rain etc. 30-80% topsoil losses significantly reduce diversity, absorptive capacity, and agricultural productivity Global Trends Atmospheric carbon dioxide (CO2) emissions are rising.:  Carbon Emissions from Fossil Fuel and Cement 0 1000000 2000000 3000000 4000000 5000000 6000000 7000000 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 Million Metric Tons of Carbon Central and South America Africa Far East Centrally Planned Asia Middle East Centrally Planned Europe Oceania Western Europe Germany North America Source: CDIAC Atmospheric carbon dioxide (CO2) emissions are rising. Surface temperatures have warmed over the past century.:  Surface temperatures have warmed over the past century. WORLD RESOURCES INSTITUTE Global Trends At the same time, millions of people worldwide are struggling to meet their basic needs.:  At the same time, millions of people worldwide are struggling to meet their basic needs. 1.3 billion people live in absolute poverty, with incomes less than $1/day (World Bank) 841 million people in developing countries suffer from basic protein-energy malnutrition (UN Food and Agriculture Organization) Nearly 1 billion people either cannot work or are employed in jobs where they cannot support their family (International Labor Organization) 11.7% 2.3% 1.9% 1.4% Richest Fifth Poorest Fifth (UNDP, Human Development Report 1992) 82.7% Distribution of Total World Income Global Trends Outline:  Outline Global Trends Cement Industry Implications Strategic Questions Sustainable Development The Business Case for Action Sustainable Business Strategies and Tools These trends can create strategic business opportunities.:  These trends can create strategic business opportunities. Cement Industry Implications But these trends can also create business constraints.:  But these trends can also create business constraints. Environmental & Social Impacts Legal/Market Constraints Business Implications Actual Constraints Water shortages Increasing toxicity Deforestation Water contamination Landfill shortage Lack of employment Lack of housing Income disparity Regulation Insurance/banks Consumer/NGO pressure Water shortages Waste disposal overloaded Political unrest Economic recession Cost increases New compliance requirements Unpredictable energy/ raw material supply Reduced consumer demand Volatile markets Cement Industry Implications Like other extractive, energy-intensive industries, the cement industry is not on a sustainable path.:  Like other extractive, energy-intensive industries, the cement industry is not on a sustainable path. Major industry aspects are arguably unsustainable: Quarrying impacts Depletion of minerals Energy use (quarrying and production) Carbon dioxide emissions The market for cement could be influenced by emergence of “preferred” alternative construction methods and materials. The large energy requirements of cement production will become untenable in the face of rising costs and global warming concerns. Vast emerging markets in Asia may not follow the same consumption patterns as the developed nations. Cement plant expansion initiatives face increasing resistance from local communities as well as NGOs and other stakeholders, so that maintaining “right to operate” is more costly and time-consuming. Cement Industry Implications Societal expectations are changing regarding how global business affects these trends and its responsibilities to address them.:  Societal expectations are changing regarding how global business affects these trends and its responsibilities to address them. Poll of 25,000 adults in 23 countries in 1999 found: 90% want companies to focus on more than profitability 73% say companies should be responsible for protecting the environment 56% judge companies on 'social responsibilities' Over 60% in Europe and America consider punishing companies who are not socially responsible We cannot wait for governments to do it all...you, in business, labor and civil society organizations, have skills and resources that are vital in helping to build a more robust global community. Kofi Annan, UN Secretary General Poll conducted by Environics Cement Industry Implications Each company is embedded in a web of relationships that can create pressure for action.:  Each company is embedded in a web of relationships that can create pressure for action. Government Agencies Organization Suppliers Universities/ Schools Banks Investors Insurance Companies Consultants Trade Assoc. The Courts NGOs The Press The Community Employees Financial Resources Industry Norms Legitimacy Products Buyers Customers Competitors Material Inputs Source: Hoffman, Competitive Environmental Strategy Cement Industry Implications The cement industry has stakeholders at each facility and as an industry.:  The cement industry has stakeholders at each facility and as an industry. Facility focus Community residents and local businesses Local, regional, and federal government officials Public interest groups Labor unions Local, regional and national media Employees Industry-wide scope Suppliers Related industries Customers and specification authorities Cement and other industry associations Lenders and investors Global NGOs Shareholders Cement Industry Implications Stakeholders interests are becoming increasingly important to address to ensure a license to operate.:  Stakeholders interests are becoming increasingly important to address to ensure a license to operate. Local communities are gaining sense of empowerment. In response, companies are seeking open engagement and dialogue to better manage environmental and social impacts. Stakeholder engagement involving risk perception arouses deep emotions, but can provide valuable insights. Events that trigger engagement of stakeholders include facility siting, expansion, modification, or release of regulatory information. Public meetings are key opportunities to build trust. Likelihood of opposition depends on both community and plant characteristics. Cement Industry Implications Stakeholder dialogue sessions conducted during the WBCSD study identified stakeholder expectations of our industry.:  Stakeholder dialogue sessions conducted during the WBCSD study identified stakeholder expectations of our industry. Brazil Portugal/Spain Thailand Egypt Public and media are unaware of industry efforts to clean up its operations and support nearby communities Cement industry has a ‘dirty’ image Citizens want to preserve Thailand’s natural beauty, reduce emissions and avoid degradation of natural resources. Acknowledge there is constant trade off between economic growth and natural preservation. Stakeholders appreciate jobs provided by cement plant. Participants expressed strong, divergent views about co-incineration of wastes in cement plants: Public is concerned about health effects Industry feels safety is well documented This illustrates unfortunate lack of early stakeholder engagement in regulatory decisions. Stakeholders feel major challenges confronting the industry are not being addressed: Environmental regulations are not enforced Cement plants not all held to same standards Because trust is weak, stakeholders want industrial plants to be isolated from populated areas and monitored by an independent organization Cement Industry Implications Stakeholders raised concerns about a variety of issues. :  Stakeholders raised concerns about a variety of issues. On Societal Issues Concerned about health effects, worker safety, degradation of aesthetics and natural resources, noise, dust, road damage, landslides. Appreciate jobs, tax revenue, and improved infrastructures On Environmental Impacts Concerned about depletion of limestone, fuel, and other minerals AFR raises concerns about dioxin releases and accumulation of heavy metals Concerned about air pollution, water contamination, natural habitat destruction, loss of green spaces, and climate change On Transparency Concerned about lack of ongoing communication and engagement Changing demographics have weakened community relationships On Commitment Responsible companies should set an example, led by CEO; should consider the whole supply chain and reduce lifecycle impacts Governments, banks, and lenders should play stronger role in fostering sustainability by providing incentives and reducing barriers Efforts to educate consumers and foster innovation are inadequate Cement Industry Implications How might these trends affect the cement industry and our company and how can we react strategically? :  How might these trends affect the cement industry and our company and how can we react strategically? Climate change/global warming More environmental activists Growth in international trade Raw material depletion Interest in “green” buildings Fuel costs Legislation/regulations Waste Global Trends “Not in my back yard” Local impacts from dust, noise, traffic Community concerns regarding investment, jobs, quarry restoration Transportation impacts Local Issues Business Trends Others? Cement Industry Implications Photo of cement plant Considering alternative scenarios of the future is an effective way to address trends and develop a viable strategy.:  Considering alternative scenarios of the future is an effective way to address trends and develop a viable strategy. Scenarios: Provide alternative and plausible stories about the future Recognize limitations in forecasting the unpredictable Are concerned more with strategic thinking than strategic planning Are tools for long-term strategy development WBCSD has created three scenarios for 2000 - 2050 that can be used to develop flexible and robust strategies Cement Industry Implications Outline:  Outline Global Trends Cement Industry Implications Strategic Questions Sustainable Development The Business Case for Action Sustainable Business Strategies and Tools These trends raise some important strategic questions.:  These trends raise some important strategic questions. How can we make decisions that are strategic in the face of uncertainty about environmental risks? How can we make investment and other decisions that reduce our risk of hitting environmental and societal barriers? How can we find new business opportunities? Are we listening to the right signals from the market, customers, and other stakeholders (regulators, communities, and investors)? Are we asking the right questions? Strategic Questions Outline:  Outline Global Trends Cement Industry Implications Strategic Questions Sustainable Development The Business Case for Action Sustainable Business Strategies and Tools This discussion is framed under the term Sustainable Development, which can be defined several ways.:  This discussion is framed under the term Sustainable Development, which can be defined several ways. Meeting the needs of the present without compromising the ability of future generations to meet their own needs The simultaneous pursuit of a triple bottom line: Economic prosperity Environmental quality Social equity A better quality of life for everyone now and for generations to come Sustainable Development Companies evolve in how they manage environmental and related issues.:  Companies evolve in how they manage environmental and related issues. Environmental Compliance Risk Management Sustainable Development “End-of-pipe” Limit impact of current activities Pollution prevention; Management systems Redesign to eliminate impacts of activities Strategic integration Change activities and design of industrial system Sustainable Development Given the scale and nature of environmental problems, we need new mental models and ways of thinking to solve them.:  Given the scale and nature of environmental problems, we need new mental models and ways of thinking to solve them. Problems cannot be solved within the mindset that created them. Albert Einstein Sustainable Development Developing strategies to pursue sustainable development requires new approaches.:  Developing strategies to pursue sustainable development requires new approaches. Compartmentalized thinking - focused on parts in isolation Traditional Approach Sustainable Approach Systems thinking - focused on interdependence of parts and optimizing whole system Environment/social implications addressed by staff specialist after strategic decisions made Environmental/social implications considered by decision-makers in designing strategy Forecasting: where are we today- how do we improve 5% Backcasting: what would sustainable world look like in 30 years – how do we get there? Company’s position is the way Stakeholder engagement to understand diverse points of view to find better solution Sustainable Development Redesigning our industrial system to be sustainable requires a shared framework to understand how nature works.:  Redesigning our industrial system to be sustainable requires a shared framework to understand how nature works. What are the root causes of why our industrial systems create environmental degradation? Where might these environmental trends create a barrier or problem for our business in the future? Understanding these issues can contribute to creating a strategy that avoids these problems and finds the growth opportunity. Sustainable Development An organism’s survival depends on two critical functions from its environment: provision of resources and absorption of wastes. :  An organism’s survival depends on two critical functions from its environment: provision of resources and absorption of wastes. Organism Source Sink Provide resources: Water Clean air Nutrients Absorb wastes and by products The same principle applies at larger scales, e.g., to an company, industry, or economy. Environment Sustainable Development To maintain the integrity of these valuable services, we need to understand how nature works.:  To maintain the integrity of these valuable services, we need to understand how nature works. No Waste Nature works in cycles There is no waste - what is unused by one species becomes nutrients for the next The sun’s energy drives the process: Green celled plants using photosynthesis create net concentration and structure Sustainable Development In contrast, our industrial system functions primarily in a linear fashion. :  In contrast, our industrial system functions primarily in a linear fashion. Take Make Waste Only 6% of material flow in ends up in products Source: Hawken, Lovins, Natural Capitalism Take “natural capital,” structured valuable material, and process it into unusable waste Sustainable Development This industrial system, operating on an ever larger scale, is embedded in and affecting nature’s cycle.:  This industrial system, operating on an ever larger scale, is embedded in and affecting nature’s cycle. Sustainable Development The impact of our expanding industrial system on the environment affects both sources and sinks. :  The impact of our expanding industrial system on the environment affects both sources and sinks. Forests Fisheries Topsoil Groundwater Freshwater CO2 NOx Synthetic compounds (CFC’s, DDT) Urban development Deforestation Desertification Sustainable Development These impacts can create unexpected barriers for business.:  These impacts can create unexpected barriers for business. 3M decided to phase out production of Scotchguard (2% of annual sales) after finding trace amounts in blood samples of people and wildlife worldwide, even in countries where the product was never sold or manufactured. ($1 million charge against earnings in 2000) An activist group has convinced 250 major companies to commit to phasing out all purchases of old growth forest products. At BHP’s large copper mine in Papa New Guinea, mine tailings have drained into a river for 15 years. This has led to class action legal claims and public scrutiny. Shell faced NGO outrage and consumer boycotts of its gas stations over its decision to dispose the Brent Spar oil platform at sea. Sustainable Development Where is our company potentially vulnerable when considering these impacts?:  Where is our company potentially vulnerable when considering these impacts? Sources Sinks Are we dependent on a threatened or sensitive natural resource? What “sinks” are we dependent on that may reach capacity, for example: Global atmosphere? Local air quality? Human/wildlife capacity to absorb toxic substances? Sustainable Development How can our company find the opportunity for business growth by reacting proactively to these impacts?:  How can our company find the opportunity for business growth by reacting proactively to these impacts? How can we help customers who may be facing a “sink” or waste limit, e.g., using waste as alternative fuels? How can we use more closed-loop production processes to save energy, water, or materials? How can we collaborate with other industrial partners to operate our industrial system in a cyclic way? How can we increase productive land area and improve biodiversity? How can we be strategic about using emission trading schemes to gain business advantage? Sustainable Development Other barriers for business can arise when people feel their needs are not met or they are being treated unfairly. :  Other barriers for business can arise when people feel their needs are not met or they are being treated unfairly. Global human rights groups and labor organizations are focusing increased attention on corporate practices. The Internet can be used to quickly disseminate information about corporate practices worldwide. Shell was the subject of condemnation and boycotts by NGOs associated with its operations in Nigeria. It was viewed as having complicit involvement in the violations of human rights by state security forces and the lack of economic benefits of oil production for local communities. Sustainable Development Redesigning our industrial system to be sustainable also requires consideration of business’ role in meeting human and societal needs.:  Redesigning our industrial system to be sustainable also requires consideration of business’ role in meeting human and societal needs. How does our company contribute to the health of the communities it operates in? What are the social responsibilities of our business and how effectively are we fulfilling these? How can our business find opportunity in serving markets where basic human needs are not met? How can our company differentiate itself in how it treats it workers to attract and retain talented employees? Sustainable Development Outline:  Outline Global Trends Cement Industry Implications Strategic Questions Sustainable Development The Business Case for Action Sustainable Business Strategies and Tools The strategic response a company develops based on these trends needs to be based on a compelling business case.:  The strategic response a company develops based on these trends needs to be based on a compelling business case. Improve asset utilization Increase revenues Maintain right to operate and expand Increase worker productivity/morale Decrease operating costs Avoid liability, unplanned expenses Balance Sheet Revenue Expense Net Income ### Strategic Benefits Create flexibility and options for future Maintain positive corporate image The Business Case for Action Business value creation can include several types of value.:  Business value creation can include several types of value. Quantifiable value (financial) Strategic enterprise value (e.g., image) measurable in non-financial terms Future potential value (e.g., option value) over a long time horizon Examples Reduce costs through more efficient resource utilization (e.g., AFR). Increase revenue through developing new products or new markets. Reduce cost of capital through effective leveraging of capital assets.   Customer loyalty, employee satisfaction, right to operate Reducing energy needs allows better control of costs if future regulation on CO2 Use of alternative fuels creates options - less dependent on one fuel source Type of Value Another perspective is to identify where there can be value creation for stakeholders that creates enterprise value.:  Another perspective is to identify where there can be value creation for stakeholders that creates enterprise value. Access to education & health care Social equity and justice Cultural preservation Ecosystem protection Natural resource conservation Biological diversity Poverty alleviation Business opportunity Economic growth and prosperity Employee well-being Right to operate Eco-efficiency Resource productivity ROI EVA etc. Societal Ecological Economic The Business Case for Action Business Case Example: Quarry Restoration:  Business Case Example: Quarry Restoration Community satisfaction Ecosystem preservation Productive use of land Stakeholder value Enhanced corporate image Enterprise value Society Ecology Economy The Business Case for Action Avoidance of potential environmental litigation Business Case Example: Alternate Fuels & Raw Materials:  Business Case Example: Alternate Fuels & Raw Materials Reduced solid waste burden Decreased resource depletion Stakeholder value Increased eco-efficiency Increased revenue Increased worker productivity Reduced cost of inputs Enterprise value Society Ecology Economy The Business Case for Action Business Case Example: Worker Education:  Business Case Example: Worker Education Improved community relationship Increased community prosperity Stakeholder value Increased workforce productivity and loyalty Enterprise value Society Ecology Economy The Business Case for Action Outline:  Outline Global Trends Cement Industry Implications Strategic Questions Sustainable Development The Business Case for Action Sustainable Business Strategies and Tools New business models and tools are emerging that will help companies shift to sustainable practices. :  New business models and tools are emerging that will help companies shift to sustainable practices. Eco-efficiency Industrial Ecology Design for Environment The Natural Step principles of sustainability Stakeholder Engagement/Dialogue Key Performance Indicators Sustainable Business Strategies and Tools Leading companies are using eco-efficiency to integrate sustainability considerations into their business.:  Leading companies are using eco-efficiency to integrate sustainability considerations into their business. Definition Delivering competitively priced goods and services that satisfy human needs and bring quality of life… while progressively reducing environmental impacts and resource intensity throughout the life cycle… to a level at least in line with the earth’s estimated carrying capacity. Key Dimensions Reduce material intensity of goods and services Reduce energy intensity of goods and services Reduce toxic dispersion Enhance material recyclability Maximize sustainable use of resources Extend product durability Increase the service intensity of products, e.g., shared use, easily upgraded Source: DeSimone, Popoff: Eco-Efficiency Sustainable Business Strategies and Tools Slide52:  The original design of the clinker cooler at kiln no. 3 was optimized. Benefits Increased clinker production by 6%, from 3,300 to 3,500 metric tons per day Reduction of specific thermal consumption at the kiln by 30 kcal/Kg clinker, representing 34,492 Gcal/year Reduction of maintenance costs Savings of US$ 350,000 per year for investment of US $430,000 for the project Reduction of 33,000 metric tons of CO2 per year CEMEX Philippines optimized the design of the clinker cooler resulting in higher operating performance, lower emissions from the system, and cost savings. Sustainable Business Strategies and Tools Slide53:  CEMEX Colombia installed roller press technology and dryer system for natural cement additives that resulted in higher operating performance and lower emissions from the system Roller press technology with a dryer system was installed to allow the use of residual hot air, increase production, and reduce energy consumption at the cement grinding system and atmospheric emissions at the clinker cooler system Benefits Increased cement production by 20% Reduced energy consumption by 12.5% -from 40 to 35 Kw-h/metric ton of cement, representing 5,400 Mw-h/year Reduced dust emissions by 15% Increased use of natural additives (puzzolane) which allows CEMEX to produce ecoefficient cement Reduction of 53,000 metric tons of CO2 per year Savings of US$ 700,000 per year based on investment of US$ 2.5 million for the project Sustainable Business Strategies and Tools Conserve – Case Studies :  Conserve – Case Studies Sustainable Business Strategies and Tools DuPont’s sustainable growth strategy is focused on how to provide more customer value with less environmental impact.:  DuPont’s sustainable growth strategy is focused on how to provide more customer value with less environmental impact. Mexico City Plant Almost at zero waste and emissions When local air quality alerts occur and industry shut down, they stay open DuPont Canada Struck deal with Ford customer to get paid for number of cars painted vs. gallons of paint Ford realized cost savings of 35-40% while VOC emissions decreased 50% For DuPont, lower volume of paint sales was offset by improved efficiencies Source: Tomorrow Magazine, Nov. 2000 Sustainable Business Strategies and Tools Industrial ecology looks at the industrial system like a biological system, where “waste” from one process is input for another. :  Industrial ecology looks at the industrial system like a biological system, where “waste” from one process is input for another. Definition Taking a systems view of an industrial system in which one seeks to optimize the total materials cycle… from virgin material, to finished material, to component, to product, to obsolete product, to ultimate disposal. Factors to be optimized include resources, energy, and capital. Source: Allenby, Industrial Ecology Industrial Ecosystem at Kalundborg, Denmark Asnaes Power Station Statoil Refinery Novo Nordisk Fertilizer Lake Tisso Kemira Greenhouses Gyproc District heating Fish farming Cement: roads Sludge Water Water Water Steam Gas Cooling Water Waste Water Steam Fly Ash Heat Gypsum Gas Heat Heat Sustainable Business Strategies and Tools Chaparral Steel realized greater profits by developing synergies between its steel recycling operations and an adjacent cement plant. :  Chaparral Steel realized greater profits by developing synergies between its steel recycling operations and an adjacent cement plant. Chaparral, a division of TXI, generated a slag by-product, which was sold to the road construction industry Plant staff collaborated with a neighboring TXI cement plant to develop a patented process that adds slag to the cement raw material mix Lower-grade iron slag is fed into kilns as a limestone substitute Benefits Reduces energy requirements 10-15% and overall CO2 emissions Value of slag is increased 20x compared to road construction value Cement plant realized several million dollars of pretax income in 1995 on an investment of less than $1m TXI is working to license the process to other producers Source: IISD web site Sustainable Business Strategies and Tools Slide58:  CEMEX Mexico invested US $1.6m to burn 100% alternative fuels in its calcination process, saving the company $2.3 million annually. CEMEX decided to burn 100% petcoke, a by-product of the refining process with a lower sale price than fuel oil, at kiln no. 4 in the company’s Torreon Plant Benefits Increased clinker production by 15.7% - from 2,550 to 2,950 metric tons per day- without expanding plant capacity Reduction of specific thermal consumption at the kiln by 11.3% -from 885 to 785 kcal/Kg clinker- representing 96,907 Gcal/year Reduction of specific power consumption at the kiln by 13.7% -from 46 to 39 Kw-h/Kg clinker- representing 6,105,172 Mw-h/year Reduction of emissions: CO2 6%; CO, 96%; NOx, 35.7%; HCl, 70%; SO2, 87.5%; Hydrocarbon (HC), 61.1% Operational stability and 50% reduction in time to reach the maximum production Savings of $ 2.3 million per year Reduction of 15,000 metric tons of CO2 per year Sustainable Business Strategies and Tools Design for environment (DfE) integrates decisions about how to minimize environmental impacts into early design stages. :  Design for environment (DfE) integrates decisions about how to minimize environmental impacts into early design stages. Definition DfE = An engineering perspective in which the environmentally related characteristics of product, process, or facility design are optimized. Source: Allenby, Industrial Ecology Concept Schematic Design Design Pilot Operations Environmental Considerations Sustainable Business Strategies and Tools Slide60:  A basin with a capacity of 15.8 million of gallons was constructed to allow for the capture and reuse of storm-water in the industrial process. Benefits Reduction in the company’s consumption of municipally supplied potable water An assured supply of water for the company’s production processes Savings of 132 million of gallons of potable water available for community use per year (community had water shortage) By investing US$ 300,000 to use storm-water instead of potable water in its production processes, CEMEX has improved optimization of a nature resource, saving US$ 860,000 CEMEX Spain constructed a basin to collect and treat storm-water for use in the process’s cooling system, which provided additional potable water for the community. Sustainable Business Strategies and Tools The Natural Step principles define the end point of what is sustainable, which can be used to develop action plans.:  The Natural Step principles define the end point of what is sustainable, which can be used to develop action plans. Improve energy efficiency Limit transportation impacts Recycle metals How might we systematically decrease our economic dependence on... Undermining the physical basis for the earth’s productive cycles and biological diversity? Using fossil fuels and metals? Using persistent synthetics produced by society? How can we meet human needs efficiently and fairly? Eliminate/minimize toxic substances Use biodegradable substitutes Maintain synthetics in closed loop systems Redevelop quarries - promote biodiversity Minimize resource use Reuse materials Invest in communities Work with customers to identify ways to help ultimate customer be environmentally sound Sustainable Business Strategies and Tools Collins Pine, a forestry company, used The Natural Step (TNS) principles in training employees and creating action plans. :  Collins Pine, a forestry company, used The Natural Step (TNS) principles in training employees and creating action plans. Company had achieved sustainable forestry certification for its forests; wanted strong environmental performance at its mills Conducted 1-day TNS training for 30 executives and staff; then implemented a train-the-trainer program to train all mill employees Developed goals in focus areas, such as point source emissions, purchasing, renewable energy, and community support Used a decision-making matrix for capital projects that incorporated TNS principles Benefits Energy efficiency measures resulted in $152,000 in annual energy savings Replaced six generators with one, saving $118,000 annually and allowing removal of hazardous chemicals Conservation contest at one site resulted in water savings 525,000 gal./year; another site reduced by 2m gal./year Eliminated a landfill New product offering with certified forest products Sustainable Business Strategies and Tools Stakeholder engagement is an effective way to understand stakeholders’ concerns and use this to inform the company’s response.:  Stakeholder engagement is an effective way to understand stakeholders’ concerns and use this to inform the company’s response. The goal of engaging stakeholders is to build relationships with them and understand their issues and concerns with the company. Companies organize workshops or forums where they invite a range of stakeholder representatives, for example from: Non-governmental organizations (NGOs) Universities Investors Customers The media Labor groups Churches Sustainable Business Strategies and Tools Suncor’s extensive stakeholder dialogue process led to faster regulatory approvals. :  Suncor’s extensive stakeholder dialogue process led to faster regulatory approvals. Company planned to expand its Oil Sands mine operation in Alberta Government and community demanding environmental improvements Suncor had open dialogue with key stakeholders, including local aboriginal groups Incorporated ideas and concerns into planning Benefits Stakeholders wrote regulators in support of project Consultation effort led to approval of the mine without need for a public hearing The speed of approvals put the project ahead by 2 years, helped reduce construction costs, and allowed quicker increase in production Sustainable Business Strategies and Tools Lafarge has entered a partnership with the World Wildlife Fund (WWF) to promote biodiversity worldwide.:  Lafarge has entered a partnership with the World Wildlife Fund (WWF) to promote biodiversity worldwide. Through the partnership, they will: Develop a strategy for ecological restoration of quarries, emphasizing restoration and increased biodiversity Reinforce Lafarge’s environmental policy Encourage ecological reinstatement of forest ecosystems through WWF’s “Forests Reborn” program Use communication drives to heighten environmental awareness. Lafarge can use a Conservation Partner logo in its communications. Sustainable Business Strategies and Tools Traditional business performance indicators need to be supplemented to measure progress on the triple bottom line.:  Traditional business performance indicators need to be supplemented to measure progress on the triple bottom line. Organizational effectiveness Products and services Energy consumption Material consumption Impacts on water Atmospheric impacts Waste generation Land use/biodiversity Suppliers and transportation Workforce Community development Workplace conditions Human rights Categories of Indicators of Sustainable Development Performance Source: WBCSD cement industry substudy 5 Sustainable Business Strategies and Tools A recent survey of best practices in sustainability performance measurement identified four key principles.:  A recent survey of best practices in sustainability performance measurement identified four key principles. Address both resource consumption (e.g., materials, energy, land) and value created (e.g., profitability, reduced pollution) Include economic, environmental, and social aspects Systematically consider each stage of the facility life cycle (construction, operation, upgrade, closure) and the product life cycle (quarrying, manufacturing, distribution, use, disposition, recovery) Develop both leading (measure internal management practices) and lagging (results/outcomes) indicators Source: Fiksel, 2000 Sustainable Business Strategies and Tools DuPont’s key performance indicator for sustainable growth is shareholder value added per “environmental footprint”.:  DuPont’s key performance indicator for sustainable growth is shareholder value added per “environmental footprint”. Shareholder Value Added Environmental Footprint (pounds of depletable resources consumed) Accomplish through: Creating high-value offerings based on new technology Providing knowledge and service with the offerings Driving productivity of operations Sustainable Business Strategies and Tools TransAlta, a Canadian utility, used an internal emissions trading scheme tied to individual performance incentives to decrease CO2 emissions.:  TransAlta, a Canadian utility, used an internal emissions trading scheme tied to individual performance incentives to decrease CO2 emissions. Committed to the voluntary goal of returning greenhouse gas emissions to 1990 levels by 2000 in action plan submitted to the government Created internal CO2 emission costing and trading scheme, tied to individual performance incentives Business managers found creative, innovative ways to reduce CO2, often at less cost than anticipated Benefits By 1999, TransAlta achieved a 13% reduction over 1990 levels for its Canadian CO2 emissions, despite an 8.7% increase in generation. The vast majority of internal efficiency projects passed TransAlta's requirements for return on investment Sustainable Business Strategies and Tools

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