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What does it mean to be green?
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21/01/2009
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Economic sustainability is tough enough. Does industry really have to saddle itself with
environmental sustainability as well? John Dwyer finds outWith each passing day's bad news, the idea that sustainability or any other corporate social responsibility (CSR) nice-to-have should be anywhere near the
top of the manufacturing agenda seems more laughable. One November report from Atos Consulting concluded: "The economic downturn has already driven CSR down
the business agenda... This is disappointing. Sustainability should simply be business as usual... More often than not, the sustainable option will deliver
savings."
As firms rush to sheer-survival mode, just how realistic is this? What business drivers justify persisting in sustainability and, if any, how do you meet
them without crippling your business?
Choice would be nice. At the Chartered Institute of Purchasing and Supply (CIPS), senior procurement specialist Helen Alder says the pressure for
sustainability takes three forms: regulation; waste elimination to cut costs; and investment in the reduction of future risk. And the greatest of these is
regulation.
As the new Climate Change Act (CCA) commits government to an 80% reduction on 1990 greenhouse gas emission levels by 2050 and at least a third by 2020,
businesses might as well get used to regulation, says Alder. "it's only going to go one way. Whether you're sceptical about climate change or not, it
doesn't matter. Legislation is going to clobber people who ignore the need to reduce their carbon." Some companies, she adds, are taking on carbon reduction
"to get ahead of the game".
Manufacturing and other businesses will soon have to report their energy use and carbon footprint as part of their annual reports, says energy conservation
engineer Tom Fidell of consultancy EnergyTeam, which has advised Havelock Europa, Metflex, Victoria Carpets and others in energy reduction.
Legislation "isn't going to stop arriving," says npower's business energy manager Steve Fitzsimons. But CSR is underestimated as a competitive weapon:
"Staying ahead of the competition is just as relevant when times are tight as when times are good and there's more fat in the business."
British Gypsum (BG) managing director Mike Chaldecott agrees. BG has to survive in the hard-hit construction industry and hasn't been unscathed. It recently
had to lay off 22 at its Eden Valley, Cumbria, plant. But Chaldecott argues that, since you have to comply with regulation, being first to do it is a
competitive advantage: "There's a certain amount of regulation we have to comply with. We're the first [gypsum] business to have all [six] of our plants
complying with ISO 14001. We're not doing that because of government requirement or legislation. We're doing that because it's good business sense and also
it's good for our customers."
Ah yes, customers. Being sustainable helps to win business with companies who want green credentials. Housebuilders welcome the easy compliance with the
code for sustainable homes from using a 14001-compliant supplier like BG: "it's easy points for them to win," says Chaldecott.
Alder points to steadily rising landfill tax as one example of the penalties government will increasingly impose on waste of all kinds. She expects a tax on
consumables: "Anything that's thrown away, not just packaging but products – like disposable razors."
The government is already working on cradle-to-grave road maps for certain products, says Chaldecott, especially plasterboard and glass. BG is part of the
St Gobain glass group: "There are challenges and it does stretch resources to make sure you've got high quality people represented and lobbying on our
behalf to make sure that this is done in a sensible and pragmatic way."
Alder points to car makers, who in the US have been told they can't have bail-out funding unless they reinvent themselves. In Europe car manufacturers are
leading the drive for green technology, says Alder, and in the UK they have the opportunity to create new jobs.
BMW's launch of the all-electric Mini E seems to make her point, and the government is fully behind such initiatives. In October, the Department for
Transport launched a scheme to provide 100 electric cars in towns and cities to give drivers a taste of the electric experience – whether the National Grid
is up to recharging all the electric cars on the horizon is another matter.
Matching sustainability driver two, waste management, often amounts to reducing energy consumption. According to Roger Salomone, author of the EEFOs new Low
Carbon Report, the supply and demand fundamentals show that "despite effects of the current economic slowdown, the long term energy scenario is for higher
prices".
Npower wants to sell energy, but it wants its customers to use it effectively, says Fitzsimons: "We run a business, yes, but we want our customers to be in
business, too." Lower energy costs mean higher profitability for them.
The energy bill for BGOs plants is over £40m a year: "Anything we can do to reduce that is good environmentally and also in terms of costs," says
Chaldecott. Even a 5% energy reduction is worth £2m. Which is why BG has set up a dedicated team to chase continuous energy reduction: "They're controlling,
regulating, turning things off, reducing the amount of compressed air that's required, optimising the way the gas burners are set up so we're not wasting
energy. We're being as efficient as we can," says Chaldecott.
EnergyTeam's Fidell acknowledges that many manufacturers are in survival mode at the moment. But, he argues, "many things can be done [to save energy]
without spending a lot of money". The first step is to develop an energy policy, set energy reduction targets and make someone responsible three or four
days a month for managing them. "The good company will have someone whose job it is to maintain and target that energy use every month, to find out if it's
gone astray and to take action."
He suggests an energy sub-committee of department heads or their delegates to meet once a month, report the energy used, identify divergences from target
and put them right. Regular reports should go up on notice boards and in company newsletters: "Employees should be made to feel they have a part in reducing
energy on that site." Then you can look at specifics like heating, lighting, refrigeration and other consumption. Procurement is a major source of new
efficiences, says Fidell.
Fitzsimons says investment in new plant and machinery should be made with the same care over energy costs as you would check the MPG of a new car when
petrol prices were at their height. The legislative picture means you have to pay ever closer attention to your carbon footprint. "The energy price and
carbon are one and the same thing, to some extent," says Fitzsimons.
Alder says developing good relationships with suppliers is critical when times are tough. She acknowledges that some businesses are switching to "let's just
keep going for the next few months' and forget about the long term. "But if you keep switching to spot buying, what do you do when that spot buy is
finished, especially if you have ditched your long term supplier to dash for the cash? It can be much more damaging."
Alder adds that waste elimination is about more than energy. it's also about, "increasing efficiency – switching lights off, switching PCs off – and not
running lorries around half full of stuff".
Third party logistics company Wincanton says businesses used to prefer lorries and warehouses emblazoned with their own brand. But the lower costs and
environmental impact of shared-user warehousing and distribution vehicles are winning the argument.
BG is trying hard to reduce the number of HGVs on the road, says Chaldecott. By putting more output on to rail, "we've managed to reduce the number of lorry
miles by 2.3 million per year... that's 80% more carbon efficient than sending it up by road.
"We try to do this as cost neutrally as possible, but it's great that when we can do that we can reduce the carbon footprint, and the local village where
those factories are is delighted that it's got less lorries going through."
Over the last five years BG has reduced the amount of manufacturing waste it sends to landfill by 95% as output rose 30%. BG recycled nearly 41,000 tonnes
of construction plasterboard waste into new products last year, a four-fold increase since 2002. More than 75% of all the UK's post-consumer plasterboard
waste reprocessed into new plasterboard goes through BGOs plasterboard recycling service. And 80% of BGOs plasterboard is made from recycled gypsum,
including waste from coal-burning power stations. All the power stations' gypsum now goes either to BG or its competitors.
A 95% reduction in landfill must, surely, have meant an awful lot of low-hanging fruit? "There was some in terms of, firstly, don't produce the scrap in the
first place." Again, as part of its world-class manufacturing effort, BG employed process engineers to make sure the processes were correctly set up to
continuously increase the net saleable yield – the ratio of saleable output as a proportion of raw material input for given quality levels.
"That was key. The second step was to install process equipment so that we could recycle any waste that we weren't able to minimise back into the process,
treat it and granulise it so that we could then put it back into the product without any detriment to its quality." Each plant used to have its own landfill
site. Now, after a sizeable investment – and a determination to spread world class lean practices – all the plants can now handle and process all the waste
they produce on site. All the landfill sites have closed.
BG is also examining wind power, combined heat and power, and electricity generation from vegetable oil. These alternatives are not only green, says
Chaldecott, but "they reduce our exposure to fluctuations in the oil price". It is replacing electrostatic precipitators with bag-based systems.
BG has also been thinking hard about the need to replace inefficient plant with equipment that uses less energy. It has invested in systems to monitor its
use of compressed air and electricity: "We're putting in more detailed meters round sites so we can monitor better, more accurately, by machine and by area
where the electricity is being used and then focus on those areas to tackle any wastage."
All this is a considerable investment, but "you have to do that if you want to carry on doing business," says Chaldecott. "We've got to be sensible about
costs because we want to keep manufacturing strong in the UK and to do that it's got to be cost effective."
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Author
John Dwyer
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