5
Environmental sustainability

This chapter defines the structure, functions, and typical goals of a corporate environmental department at a high level and outlines methods for integrating environmental management with corporate responsibility.

Keep close to Nature’s heart … and break clear away, once in a while, and climb a mountain or spend a week in the woods. Wash your spirit clean (John Muir).

Similar to my own experience, many people who migrate into the field of corporate responsibility have a background in the environmental field. For these people, this chapter will be too basic. The concept underlying this chapter is to provide the information needed for the corporate responsibility manager to effectively interface with the company’s environmental team. So, rather than delving into all of the details around environmental management, this chapter will establish a framework and provide practical tips for integrating environmental sustainability into corporate responsibility.

The term “sustainability” has become synonymous with environmental issues, but its roots are much broader. As defined in Chapter 1, environmental, social, and economic issues are the three pillars of sustainable development – the so-called triple bottom line – also known by the alliterative phrase, “people, planet, profit.” In practice, however, most people associate the word sustainability with environmental protection. Let’s start this chapter by identifying where the people with control over your company’s environmental footprint live.

Where environmental groups live

Depending on the business model of your company, environmental management responsibilities are typically split between these four business units:

Manufacturing

This is the most common home for environmental professionals. The primary responsibility for these folks is compliance with environmental laws and regulations. In many companies, this role has expanded to include cataloging and managing the company’s “environmental footprint.”⁵⁴

The manufacturing group is the natural home for environmental professionals because manufacturing facilities tend to have disproportionately large environmental impacts and regulatory liabilities. In many companies, this discipline is housed together with the health and safety disciplines into the environment, health, and safety department (EHS). The people in the environmental department usually have technical backgrounds and fairly tactical responsibilities. For example, your company’s environmental staff might fill out permit applications, collect and record the data from pollution control devices, or calculate your company’s carbon footprint.

Facilities and real estate

As the name suggests, this team is responsible for all of your company’s buildings and building services. While their level of expertise is not as technical compared with the manufacturing group, the people in this group control much of your company’s environmental performance. For example, the facilities group is usually responsible for buying or building new structures and thus controls green building standards such as Leadership in Energy and Environmental Design (LEED). This group also controls building services such as utilities (including green energy), heating and cooling, water use, lighting, landscaping, cafeteria maintenance, transportation, and other functions that have a significant impact on environmental performance.

Product design and quality

As the focus of environmental management has expanded, stakeholders are increasingly focused on the impacts of your company’s products. For example, regulations to ban lead and other toxic materials in electronics, mandatory take-back laws for products, and restrictions on product packaging are all focused on products as opposed to the factories that made the products. Along with these new regulations, there has been an increased corporate focus on “green marketing” of products covering everything from energy efficiency to reduced packaging.

In some companies the people who deal with product-environmental issues are grouped together under a “product stewardship” department. Most often these responsibilities are divided between the engineering (environmental product design), product quality departments (regulatory compliance), and marketing (green advertising).

Purchasing, procurement, or supply chain

As companies continue to outsource the production and manufacturing of their products, the environmental footprint of the supply chain has become a major focus. For example, in the area of climate protection, many companies are accounting for the climate impacts of their suppliers in their overall carbon footprint.

Some companies manage the environmental impacts of their suppliers within the procurement organization, while others hand this off to the facilities or manufacturing environmental department. Often the procurement and EHS departments form a partnership on these issues because the procurement team owns the relationships with suppliers and the EHS team has expertise on environmental issues. It is important to note that many companies have yet to embark on a program to account for and/or manage their suppliers’ environmental impact. We explore the area of supplier responsibility in the next two chapters.

Another environmental management role within your company’s purchasing department deals with “green procurement.” Examples include everything from buying recycled paper to organic food offerings in the company cafeteria. In addition, the purchasing department may control the consumption of basic resources such as water, electricity, or raw materials. The people in these jobs can have a pivotal role in any conservation effort or in establishing the specifications for purchasing of environmentally preferable products.

There are a wide variety of roles within a company that have significant leverage on your overall environmental footprint. Within each of these departments there can be a number of sub-specialties. For example, EHS departments often include experts on air quality, climate protection, waste management (hazardous and non-hazardous), water quality, water conservation, wastewater treatment, pollution control, pollution prevention, energy management, and others. Each of these roles can be highly technical, and the people working in these jobs are experts in the regulatory requirements, engineering, and equipment associated with their niche.

Engaging on environmental issues

To engage on environmental issues, the first step for the CR manager is to understand the organizational structure, roles, and responsibilities of the environmental staff. Similar to the other program areas under the CR umbrella (e.g., diversity, ethics, etc.), your role is to represent the accomplishments and plans of this group in your CR communications and to form working partnerships to influence improved performance. As you engage with your environmental team, there are a few overarching tips that can serve as a guide for the partnership between corporate responsibility and environmental management:

Match your effort to the opportunity

Each company’s environmental footprint is different. Work with your environmental staff to understand the scope and distribution of your company’s environmental impacts. This inventory should serve as a guide for you to prioritize where to invest your time and effort. For example, when AMD transferred major manufacturing assets to a joint venture, the company’s carbon footprint decreased approximately 75%. Until the transfer, these manufacturing plants were the primary focus of the corporate responsibility program. Today, with the factories no longer in the mix, AMD is focusing on the environmental impacts from its suppliers and products; a terrific segue into the next topic.

Think lifecycle

Sometimes the biggest environmental impacts are not the most apparent. “Lifecycle assessment” is a process that examines all of the environmental impacts of a product from raw materials through manufacturing/production, distribution, consumer use, and final disposal. This kind of analysis often produces surprising results. For example, Levi’s conducted a lifecycle assessment of its jeans, which demonstrated that the majority of the environmental impact came from washing the jeans after they were sold. This finding broadened the company’s priorities. While Levi’s continued to make improvements in the manufacturing process, after the lifecycle assessment it began to invest in new programs to reduce post-sale impacts by encouraging customers to wash their jeans less often, wash in cold water, or with fewer detergents.

A similar example comes from my own experience at AMD. When the company looked at the lifecycle carbon footprint of one of its new computer chips, the study showed that about 80% of the overall carbon emissions stemmed from the use of energy by the chip after it was installed in a computer. Like the Levi’s case, AMD continues to manage the manufacturing-related environmental impacts, but this finding raised awareness of the importance of mitigating the energy consumed (and carbon generated) by a computer chip in use.

These examples illustrate that the bulk of the environmental impact of a product or process can be outside of your company’s direct control. While Levi’s controls how the jeans are made, after they are sold it is the customer who decides how to wash them. The techniques for managing issues outside of your company’s direct control can range from a redesign of the product to raising consumer awareness. In the Levi’s case, the company partnered with Whirlpool Corporation (makers of high-efficiency laundry machines) to increase public awareness about how to wash clothing with less environmental impact. In the AMD case, the company is designing energy-efficient chips for real-world workloads and continuing to work on ways to better manage the power used by PCs, servers, and game consoles.

Engage employees

In recent years, many large and small companies have started green teams. These eco-minded volunteers are focused on helping the company become more sustainable. I have helped launch three different green teams at Intel, Apple, and AMD. Each of these teams took on similar roles, such as reducing cafeteria waste, increasing recycling, and conserving energy and water. As a corporate responsibility manager, you may be called on to launch or support your company’s green team. You might also be in the role of liaison between your green team and your facilities department because they often propose ideas that require funding or approval. By supporting and nurturing your company’s green team, you can build a “reserve army” of talented people to help you achieve your company’s environmental goals. Also, as will be discussed in Chapter 11, green teams are correlated to overall employee satisfaction and engagement.

Motivating green

An example of how to unlock employees’ energy to improve the environment comes from my work at Intel. A couple of years into my job as the corporate environmental manager, I started a program called the environmental excellence award. The idea was to recognize employees for their individual and team contributions to improve the environment. We worked with the employee communications team to publicize the nominations process across the entire company and the response was amazing. We had far more nominations than expected, making selection of the winners a tough job. A senior executive presented the awards and the coverage of this event went out to all 100,000 employees. Nominations continued to soar in subsequent years, and soon we had to establish more award categories and a team of judges (who were recruited from the green team). Employees in every department submitted projects, ranging from personal initiatives like bicycle commuting, to corporate-level actions such as reducing the use of hazardous chemicals in manufacturing processes. Over the following years, this award was a significant engine of environmental improvement for the company, all stemming from a grassroots effort.

Environmental goals

Because environmental issues are important to the public, this area is often the primary metric used to judge the effectiveness of your corporate responsibility program. If the environmental team in your company has not established goals and/or systems to track their progress on carbon, water, or other environmental indicators, setting goals should be the first thing you work on with them.

Start the process by establishing your company’s current baseline of pollution and resource consumption. Once you have the baseline in place, you can work with the EHS team to establish improvement goals for each of the priority environmental issues. Typically, the EHS team will forecast the resources required, and will have a reasonable degree of certainty that they can achieve the goals, before announcing a public commitment.

If it is not possible to set quantitative goals for your company’s environmental performance, establishing qualitative goals is a good alternative. For example, if the company has not yet established systems to track carbon emissions, you could commit to filing a carbon footprint analysis with the Carbon Disclosure Project (www.cdproject.net) by a certain date.

There is a wide variability in corporate environmental goals, ranging from pollution prevention, hazardous waste reduction, recycling, land conservation, protecting underground water sources, and many others. Your company’s goals should correspond to its top environmental impacts. Below are a few environmental goals that are often reported by companies:

Carbon footprint

One of the must-have goals for any modern environmental program is reduction of your carbon footprint. Inherent in the development of a carbon reduction goal is the development of a full carbon inventory (or footprint) for your company. There are three categories of greenhouse gas emissions that will be tallied in your company’s carbon footprint:

• Scope one: Direct emissions of greenhouse gasses from your company’s operations to the atmosphere

• Scope two: Indirect emissions created by the energy used by your company

• Scope three: Other indirect emissions stemming from activities such as logistics, travel, employee commuting, supply chain, etc.

Many company carbon footprint assessments are limited to only scope-one and scope-two emissions because it is difficult to accurately account for scope-three emissions. Once you understand your carbon footprint, the next step is to establish climate protection goals. Since most companies are focused on growing, carbon reduction goals are often expressed as a function of the company’s production. These are called “intensity goals” because they are based on reducing the amount, or the intensity, of greenhouse gasses released for each unit of production. Some stakeholders are opposed to intensity-based goals because, even if the carbon per product is reduced, the overall emissions to the atmosphere could continue to increase as production grows.

In contrast to intensity goals, some companies have established absolute reduction targets. For example, the 2010 Coca-Cola Sustainability Report included an overall cap on the company’s carbon footprint: “Grow our business but not our system-wide carbon emissions from our manufacturing operations through 2015, compared with a 2004 baseline.” Climate protection goals can also be broken down into sub-goals that focus on particular aspects of the company’s carbon footprint. AMD has established an intensity-based goal for its remaining manufacturing sites, as well as an absolute carbon reduction goal for non-manufacturing sites. In addition, some companies have made commitments to purchase renewable energy or buy carbon offsets⁵⁵ as a way to mitigate their carbon impact. For example, Starbucks established a goal to “purchase renewable energy equivalent to 50% of the electricity used in our company-owned stores by 2010.” While offsetting your company’s carbon emissions through green energy or carbon offsets is a fine strategy, it is not sufficient. Environmental stakeholders will hold your company accountable for its emissions and will demand to see significant progress in making absolute reductions.

Water footprint

There is an increasing awareness of freshwater scarcity as a top environmental issue for companies. The importance of water as an environmental concern for your company is proportional to the relative amount of water the business consumes. Even if your business is a small water consumer relative to other companies in your industry, you still need to understand your company’s water usage and conservation goals. For example, if some of your company’s facilities are in locations with scarce or fragile water supplies, water conservation will likely become a top priority in your corporate responsibility program regardless of your relative water consumption.

Like carbon, a water reduction goal starts with a good inventory of all the water used by your company. The goals can be either intensity-based or absolute use reduction. For example, AMD established an intensity-based goal of 20% water-use reduction per employee in non-manufacturing sites, whereas Starbucks has set an absolute water reduction goal to “reduce water consumption by 25% in our company-owned stores by 2015.”

Waste goals

Another common corporate environmental goal is waste reduction and recycling. In contrast to the intensity-based format for carbon and water, waste goals are often expressed as a percentage of the waste that is diverted from landfill. Diversion goals are useful because they encompass all of the company’s waste reduction and recycling efforts into one measure, which is the amount of waste kept out of landfills.

Perception is reality

Last, but certainly not least, it is critical to take into account stakeholder views and expectations when establishing your company’s environmental priorities. The purists would prefer that environmental priorities be determined by a scientific assessment of risks or regulatory compliance requirements. In the real world, it is not so black and white. The outrage that external stakeholders may feel about the environmental risks posed by your company does not always track with scientific risk assessment. It is essential, however, that your program includes these perceptions in its decision-making and priority setting.

Peter Sandman is a leader in the field known as risk communication. The central thesis of risk communication is that the perceptions of stakeholders trump scientific calculations of risk.⁵⁶ While the environmental scientist will tell you that “Risk = the level of the hazard multiplied by the level of exposure,” Sandman will tell you that “Risk = the perceived hazard multiplied by the level of public outrage.”

What this means is that the perception of the threat dominates the discussion and must be factored into your program’s response.⁵⁷ We won’t cover the many reasons why the perception of risk does not reflect the scientifically calculated odds, but a simple example makes the point: People are very comfortable driving in cars, which carries a relatively high risk of death or serious injury, yet the same people would be extremely uncomfortable if they were told that the ground-water near their homes had been polluted even if they never drink the water.

Years ago, Dr. Sandman conducted a training seminar at Intel’s New Mexico facility after consistent and escalating concerns over the impact of environmental emissions in the surrounding community. The message from this training was that, no matter how much data and scientific information Intel presented, the public near the facility would remain outraged. In fact, presenting more analyses and data might further enrage the public because they would perceive it as a smokescreen. It did not matter if the data showed the risk to be infinitesimally small; Dr. Sandman taught the group that reasonable people can, and often will, react based on their perception of risk, which can be orders of magnitude different than the calculated risk. Once the team understood this message, the dialogue with the community switched from an argument over whose view was more valid, to listening to the public and taking actions to mitigate their concerns.

Conclusion

Corporate environmental management is very a technical topic, the full breadth and depth of which is beyond the scope of this book. As with all the programs covered by your company’s CR program, you need to understand the fundamentals but you do not need to be an expert. By understanding the structure, functions, people, and goals of your company’s environmental program you should be able identify the big risks and opportunities and develop a plan to efficiently and effectively interact with this team.