20 June 2012
Doing well by doing good
Is it possible for sustainability and profitability to march together? Annie Gregory finds out
Most companies want to be seen as green. Today it's not enough to be efficient or innovative or lean – you need to be sustainable, too. Nothing wrong with that – except that there's a lurking suspicion that a fair few of us, including our political leaders, are hard put to say what sustainable actually looks like. Leaving aside obviously questionable candidates, like rainforest ripped up to grow biofuels or the shaky economics of onshore windfarms, there are some easy green assumptions that need deeper, more informed scrutiny.
Take packaging, for example. I can't have been alone in believing that Europe struggles under a mountain of packaging waste. Yet apparently the amount going to landfill has fallen by 57% in the past decade and it accounts for only about 3% of total waste. That may still be 3% too much, but it's far too simple to blame packaging industries for supposedly pandering to unthinking consumerism. As Linpac Packaging's director of innovation Alan Davey points out,
wasted food is an even more serious environmental problem. Davey's response is, of course, predictable but that doesn't make it wrong. A staggering one-third of the world's food currently goes to waste while one billion people are hungry. What's worse – mountains of rotting food, most of which still creates methane and leachate in landfill, or CO2 in incineration? Or the use of innovative, recyclable packaging that uses more than 50% post-consumer recycled content, keeps the food longer, makes it lighter to transport, and ultimately means more is actually eaten rather than thrown away? In assessing sustainability, there are no easy solutions and the trade-offs are rarely simple either. But surely responsible pragmatism has its place when the Big Answer eludes all but the arrogant?
There are so many strands to sustainable manufacturing but it boils down to one simple precept: understand the impact of every part of your operations and then focus on progressively doing more with less. It's ethical but – done properly – it can also be good business, too. And to support the argument that no business can justifiably consider itself exempt, let's look at some of the achievements of manufacturers who certainly work at the more difficult end of the sustainability spectrum.
First of all, Saint-Gobain Glass UK (SGGUK) whose plant at Eggborough in Yorkshire regularly earns green awards and has twice been a winner in the Best Factory Awards. Glass making per se is not an environmentally-friendly process; it depends on furnaces sometimes heated as high as 1,600ºC and it emits large quantities of CO2. But, says MD Pierre Lucien-Brun, "while we recognise that glass manufacture is an energy-hungry process, we have been able to pinpoint many areas that can be managed more efficiently and have implemented innovative energy-saving solutions".
An essential start point for setting reduction targets is a full lifecycle assessment which evaluates the environmental impact generated by a product at each stage of its life: from raw material extraction to end-of-life via all manufacturing processes. Measured in accordance with international standards, the assessment gives a clear analysis of CO2 emissions, energy and water consumption, and air pollution. Saint-Gobain was the first glass manufacturer to do this.
Among the first results was its cullet return scheme. Remelting cullet (crushed waste glass) uses far less energy than starting with virgin raw material, but collecting it efficiently posed problems across the glass industry. SGGUK devised and promoted a scheme which actually let its customers get rid of their waste glass and make money with minimal effort. It provided the collection bag, the technical support, the pick-ups and even took away other manufacturers' products. Customers were paid each month by weight of glass collected. Today, SGGUK uses 30% recycled material in the manufacture of its float glass – more than any other producer. This saves landfill, leads to fewer empty lorries on the road (the equivalent of 745,000 miles of haulage) and uses less energy as well as fewer raw materials in the manufacturing process; all of this, in turn, produces less CO2 emissions. For every tonne of cullet recycled this way, emissions are reduced by 255-300 kg and 1.2 tonnes of raw materials are saved. Annually 38,000 tonnes are recycled from customers in the UK and Ireland. Just do the maths. And SGGUK scored a second success by developing a way of including coated and mirrored glass, previously off limits for recycling.
Now let's look at a company where sustainability has driven the business for nearly 20 years: Interface. It's an unlikely stance for the world's largest manufacturer of carpet tiles – a process that traditionally uses oil-based raw materials in heat-based processes which can produce some pretty unpleasant emissions. Yet it made a serious commitment in 1994 to achieve a zero environmental footprint by 2020. It is now over half way to its goal, despite the death of Ray Anderson, its founder and the visionary behind its environmental focus. Its achievements are stunning: since 1996, per unit of production, it has achieved an 88% reduction in waste to landfill, a 34% reduction of greenhouse gas emissions, an 84% reduction in global water use, and 44% of its total raw materials are recycled or bio-based. Its performance has won it a host of environmental awards. Yet it remains a growing, profitable and commercially hard-nosed international business. So how does it reconcile the two? Is it possible to make sustainability pay?
Lindsey Parnell, president and CEO for EMEAI at the manufacturer, says it's difficult to write it straight to the bottom line. A sophisticated waste reduction measurement system accounts precisely for how much water, power and virgin raw material the company has cut out of its operations since 1996. It adds up to savings of $440 million. "We are a billion dollar company so it's a huge amount of money for us," he explains, "and I can truthfully say we haven't spent anywhere near $440 million to do it. So we have a clear net gain. But I can't tell you precisely how much we have spent on waste reduction because some changes that may be driven by sustainability in the first place then acquire a life of their own."
Take, for example, a concept that came out of a workshop where designers and a biomimicry expert played with ideas to mirror the colours and patterns of the natural world. The result was a new, random product range which produced some predicted advantages and even more unexpected ones. With no two tiles the same, they could be laid in any direction. It made installation much faster, in the process cutting the fitter's waste by two-thirds. But it also meant, for the first time, production batches didn't matter so customers could renew tiles at any time. There were big manufacturing advantages, too. Minor imperfections didn't show and orders could be fulfilled by mixing tiles not just from different batches but from different manufacturing sites. "The range was the top seller in US in two years and – 10 years later – it still constitutes 15% of my region's total sales," recalls Parnell. And it gives him great satisfaction that the competition has found it very difficult to copy: "It gave us longer to get a good ROI."
Its latest product, Biosfera, is its first to be made from 100% recycled yarn from a mix of pre- and post-consumer material from sources that include its own products. Some of the yarn comes from fishing nets – one of the easiest volumes of clean nylon thread. This is supplemented by reclaimed tiles collected via an Interface service called Re-Entry which bears some similarities to SGGUK's cullet recycling scheme. Interface has developed a process that lets it separate yarn from its backing and return it to a yarn manufacturer. It was a tough nut to crack – nylon is extremely difficult to recycle but customers' specifications demand it. But the difficulties and economics involved illustrate only too clearly the tough trade-offs in the pursuit of sustainability.
Parnell outlines just a few of the difficulties: "If you are not careful in recycling, you can make a bigger carbon footprint than you would using new material. To make it viable, it has to be financially and carbon effective – so you have to solve the technical constraints. Logistics are the most difficult part. Tiles are primarily commercial, not domestic – developers traditionally throw them into a skip for landfill. We had to persuade the flooring contractors to work with us instead." Originally Interface handled its own collection but it has recently partnered with waste specialist Sita. "We pick up from the installation, deliver to hubs and Sita transports it further, often right the way across northern Europe," explains Parnell. He says it was simply not viable to do it locally as they used to: "Taking it across frontiers was tricky and it needed a set up beyond a company of our size. So we found a good partner."
On longevity, he is adamant: "You have to balance sustainability with the bottom line – if you don't, it won't last two minutes. You can't just throw things at it, using the word 'recycle' as a bit of marketing veneer and then expect a return on it. You really have to embed it in the way you do business." Undoubtedly, it makes normal processes tougher. It's not enough for his engineers to come up with a money-saving idea; they have to show an improvement in carbon footprint. If not, they are asked to go back and try again until they've got something that brings both financial and environmental benefits. "But that's when it really begins to count because, as soon as you use less energy or send less material to landfill, you begin to save money."
There are some inescapable realities: today, Interface could buy virgin yarn more cheaply than recycled yarn. "But at some point you have to take a principled decision," says Parnell. "There may be a short-term price you pay but we are prepared for that and there are real advantages in being an early mover. At the moment raw materials are cheap. But we are doing the research work up front on the assumption that prices will eventually rise. And there are a lot of yarn suppliers all over the world who will copy this and when they do, the price will come down."
Parnell is certainly not saying that sustainability is easily achieved: "You neeed to have a driving force to make progress and you have to work through the hard bits. For many years we got no market recognition or benefit for doing this. But we did find a way of accounting for it to show how much money we'd saved and that was a real motivator internally." He enjoys doing the right thing while also being able to show it makes business sense. In the early years,
Interface took flak for its principles, especially from Wall Street. Now people actually visit to study how they do it. "We have found a balance between principles and a good business model. We are the biggest, most successful and probably the most profitable business in our sector. Is there a connection? I think so. And probably the most powerful persuader that we are right is that the majority of our competitors are trying to follow suit."
Mean to be green
"If you tinker round the edges you will get bored in a year. Ask how much is this costing us and stop doing it."
"The whole recession globally has slowed down the impetus for sustainability – when it started biting in 2009, a lot of people moved into survival mode. But the crisis will end and then – because global warming won't go away – it will come back to the forefront."
Lindsey Parnell, Interface
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