Monday, July 30, 2012

The "S" word, Part I

Social impacts in sustainability

At the end of our last posting … were starting to make a connection between resiliency and some of the societal dimensions of sustainability. As we start looking into some of the less technical aspects, like consumer response/acceptance, we get into these more esoteric aspects of green and sustainable manufacturing. Our next topic - societal dimensions of sustainable design and manufacturing - the other "S" word.

To the extent that larger civil systems are involved in manufacturing supply chains or labor responsiveness, enhancing manufacturing resilience to disruptions and disasters is not a purely technical problem, but involves societal dimensions.

In perusing my latest copy of Fortune magazine I noticed an article under a discussion on "What will the Global 500 look like in 2021" (the Global 500 are the top 500 companies internationally.) The article stated that "scarcity will be the new normal" and claimed that "three billion new people will join the global middle class in the next two decades. The resulting consumption boom will drive natural-resource prices higher, opening space for companies that learn to use resources more efficiently." You can find this online at the CNNMoney site.  Their angle is, of course, that this will offer opportunities for companies in businesses like "reducing food waste, deploying efficient irrigation systems, and improving the energy efficiency of buildings."

And green manufacturing and supply chains?  In addition to food and shelter this global middle class is going to be clamoring for all the usual ornaments of that new status - refrigerators, automobiles, televisions, etc. etc.

Recall the IPAT equation I've been bandying about in several blogs and first introduced back in the September 2009 posting? The basic impact equation (or IPAT, in terms of environmental damage, consumption, etc.) which is simply:

  Impact = Population x (GDP/person) x (Impact/GDP)

(and hence the acronym IPAT: I = P x A x T or  Impact = Population x Affluence x Technology)

I commented then that population grows with time and most countries strive to improve GDP/capita since that drives living standards, etc. The rate of consumption or environmental impact per unit of GDP is the "rate of damage" done as a result of the technology driving the growth in GDP and is really the only "knob" we can adjust to reduce impact.

I noted that engineers are most effective at changing technology that affects Impact/GDP. To the extent we can reduce that impact we are, effectively, greening the process. And that means we are reducing the impact.

The "business opportunities" in the Fortune article cited above are addressing this also … but for food production and shelter effectiveness per unit of energy consumed.

I also noted in a later blog that not everyone agrees that affluence is a good measure of well-being nor that the GDP/capita is a good measure of either! However, I assume the folks at Fortune would be comfortable with this definition.

In a later posting we started to wade into motivated by a short discussion about "energy of labor." In that post, the "triple bottom line" of sustainability - economic, societal and environmental was elaborated on.

You'll recall that the "triple bottom line" term was apparently originally mentioned by John Elkington in 1994 (he called it the 3-P's: profit, people and planet) and the "people" part referred to "a measure in some shape or form of how socially responsible an organization has been throughout its operations." Because what you measure is what you are likely to pay attention to, one needs to think carefully about what metrics actually capture the social impact. And, it is only when companies actually and correctly measure their social and environmental impact will we see more socially and environmentally responsible organizations.

The accurately measure part is the tricky bit - specially for social impact.

There is the concept of Gross National Happiness (also discussed in the energy of labor posting) that was comprised by a number of logical components as:

1. Economic Wellness: economic metrics such as consumer debt, average income to consumer price index ratio and income distribution
2. Environmental Wellness: environmental metrics such as pollution, noise and traffic
3. Physical Wellness:physical health metrics
4. Mental Wellness: mental health metrics such as usage of antidepressants and rise or decline of psychotherapy patients
5. Workplace Wellness: labor metrics such as jobless claims, job change, workplace complaints, etc.
6. Social Wellness: discrimination, safety, divorce rates, complaints of domestic conflicts and family lawsuits, public lawsuits, crime rates
7. Political Wellness: political metrics such as the quality of local democracy, individual freedom, and foreign conflicts

How to characterize these in a practicable way is always the challenge. And, then, how to connect them to some aspect of the design, production, distribution, operation and end of life of our products or systems is even a bit more challenging.

Companies are trying already to become more socially and environmentally responsible organizations. Take Walmart for example. An excellent article on GreenBiz back by Marc Gunther in April of this year titled "How much of a difference can Walmart really make?" goes into some detail on the activities, and impact of those, on sustainability of one of the world's largest companies (it just got bounced out of the top position, based on sales, by two oil companies!) Based on a careful read and analysis of their recent sustainability report some of Walmart's highlights listed are:

- Reduced waste by 80 percent
- Expanded locally grown produce (up by 97 percent)
- Pledged to source $20 billion from women-owned businesses in the U.S.
- Saved customers $1 billion on fresh fruits and vegetables
- Announced a “Great for you” icon that will help shoppers identify healthier food items.

The article goes on to say that with respect to waste "Walmart’s doing very well, largely because eliminating waste makes business sense. As the new report explains: In 2011, Walmart U.S. prevented 80.9 percent of the waste generated by its stores, clubs and distribution centers nationwide from going to the landfill. This has the potential to prevent more than 11.8 million metric tons of CO2 emissions annually, the equivalent of taking more than 2 million cars off the road. The zero landfill waste program returned more than $231 million to the business last year through a combination of increased recycling revenue and decreased expenses."

Henry Ford would have been pleased. Recall that he said that waste costs you twice … once when you buy the original product or material and the second time when you pay to get rid of the left overs.

According to the "happiness" list above some of these clearly have social impacts.

So, the question remains - what are the best (or at least most practicable) social measures and how do we link them to manufacturing (either process improvements for reduction of impact or leveraging for product improvement) and product design?

And, what about trying to influence consumer behavior? Where does that fit in? It doesn't necessarily mean less profitability! (I recall this as I sip my $3.50 latte from Peet's Coffee!)

We intend to explore all this in the future postings in this series.

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