The "S" word, Part V

Who should share the responsibility for all this?

Almost two years ago exactly, December 2010, this blog addressed the different changes in our collective thinking that might usher in a sustainable world. It was argued that this depended to a great extent on folks "getting it" with respect to how people view sustainability and their responsibility (personal and corporate - although I understand some believe corporations are individuals!). 

I quoted Lester Brown and his observations on this. He compared the change in thinking needed relative to sustainability (and sustainable development, industry, products, etc.) as the realization of the notion that the earth revolves around the sun and not the other way around. Mr. Brown noted that we used to consider the environment as part of the economy but it is really that the economy is part of the environment. Wikipedia quotes his speech in 2008 stating " 'indirect costs are shaping our future,' and by ignoring these, "we're doing exactly the same thing as Enron- leaving costs off the books. Consuming today with no concern for tomorrow is not a winning philosophy.' "

So, it boils down to, first, accepting the idea that there are indirect costs associated with the environment, second, identifying these indirect costs in a comprehensive way, third, assessing the "ownership" of these costs to the appropriate stakeholders (the "term du jour" for those involved in the process or benefitting/suffering from the outcome; or, according to Merriam-Webster - "one that has a stake in an enterprise or one who is involved in or affected by a course of action") and, fourth (the tricky bit), getting the stakeholders to accept responsibility, or pay in some cases, for their part of the indirect costs.

In the older blog posting referenced above, I also cited Hawken and Lovins, in "Natural Capitalism" (Little Brown, 1999), commenting that “The best solutions are based not on tradeoffs or “balance” between these objectives [economic, environmental and social policy] but on design integration achieving all of them together - at every level, from technical devices to production systems to companies to economic sectors to entire cities and societies.”

Achieving the economic, environmental and social policy objectives all together across all sectors from producers to consumers.

Great concept. How can we do this?! 

In Berkeley, I pay for the removal of my waste each week - divided into three containers - compostable waste (i.e. lawn waste and food products), trash (nothing recyclable left - at least recyclable as defined by the City of Berkeley) and recyclable waste - glass, plastic and metal recyclables. Regardless of where the contents of these three containers was generated (at the farm, as packaging for a product I purchased or had sent to me from an on-line retailer, end of life items,etc.) I pay to have them removed from my household. If the producer creates a product with a larger or smaller carbon footprint (or environmental damage) I see no difference in my waste bill. I do pay, probably, more in property taxes, etc. to cover the cost of environmental impacts on my fellow citizens who need special treatment due to air, water or soil problems associated with production, use and disposal of products. On a national level I am sure I am covering this cost for many who rely on the resources of their governments to help them if they are not able to, or don't have, coverage for such problems. And, to the extent that the manufacturer (if located in the US) or the distributor or local retailer pay fees and taxes and to the extent some of those go to support such services, they are paying something as well. 

If I want to impact what I pay for waste/recycling removal my recourse is to consume less, chose manufacturers who package efficiently, use less. And I do. But this is hardly enough.

These costs are not seen on the bottom line of the business as clearly linked to their product or service and its "sustainability."

In the earlier blog I had referred to California's introduction of "cap and trade" as one possible approach to accommodating these indirect costs. This might be one way to "rethink the structure and reward system of commerce" to bring the external costs firmly into play. 

I was thinking about this over this holiday period as part of the preparation for this posting. I am an avid reader of the New Yorker (ok, first the cartoons, then the articles). In the comment section under "The Talk of the Town" (sort of an opinion piece at the beginning of the magazine) in the December 10th issue was a column written by Elizabeth Kolbert, a staff writer for the magazine titled "Paying for it" and dealing with, this issue. If you are not a New Yorker reader bear with me a bit ... it is worth it!

Ms. Kolbert's piece begins with a short review of a work by Arthur Pigou, a British economist, titled "The Economics of Welfare" first published in 1920. In this work, Pigou develops the concept of externalities in some detail and uses their existence as a justification for government intervention. The article starts out relating an example from Pigou about a man in a bar. After ordering a couple of drinks he staggers out drunk. Pigou describes this scenario as follows: the man gets plastered, the bar owner gets the man's money, and the public will be on the hook for any expenses related to the police finding this drunk in the bushes somewhere and escorting him home or, worse, to an emergency room for treatment. The government may attempt to tax this product (alcohol here) and use some of the money to offset the public cost of such scenarios. In the words of Ms. Kolbert "The idea is to incorporate into the cost of what might seem to be a purely personal choice the expenses it foists on the rest of society."

In the rest of the article, she reasons that one way to think about global warming (where in general the results of one set of actions of producers, etc., driven to a great extent by another group disconnected from the first set, the consumers, but for which the full costs resulting from the extraction of resources, conversion of resource, distribution of products manufactured from these resources, and consumption of the resources including the "end of life" disposal, is not covered by the consumer but, ultimately the public at large) is like our friend at the bar. She replaces "bar" with "gas station", "downing a few rounds" with "filling up" our vehicle, and "staggering out" with "driving off." The gas station and oil company got its money for its product, the consumer got "his tank full" and the public at large got stuck with the carbon it took to refine and distribute the petroleum now in the atmosphere and is now spewing out of the tailpipe of the car when combusted. If this carbon builds up to sufficient levels (and adds to that from other sources of course) the atmosphere warms, sea levels rise and storms get more disastrous and "once again, it's the public at large that gets left with the bill." 

Ms. Kolbert observes that the "logical, which is to say fair, way to make the driver absorb the cost of his slice of the damage … could be achieved by a new … tax on carbon." The rest of the article goes on to comment about various political initiatives in DC and elsewhere to address the idea of putting a cost on carbon.

Obviously, the other element here is that, to keep competitive, the companies making and selling the automobiles will try to make them as fuel efficient as possible to offset the additional cost of the carbon from the auto operation. Hmmmm, like hybrids? Or the high efficiency diesels in Europe?

Now, lest you all think I am some sort of closet socialist (my Berkeley connection notwithstanding!), I want to assure you that I consider this healthy thinking and the prominence of such discussions about externalized costs is heartening and, in fact, is more broadly considered than one might think - even by the business community.

Some of it is pure competitiveness. A blog back in August of 2010 addressed some of the issues associated with carbon trading. An article in the New York Times about the recent auction of CO2 allowances and the "new cost of CO2 in California" describes the recent auction of carbon credits in California and another Times article mentions how the basis for a company's carbon footprint is determined. The article states that, with respect to those worried that this will make the companies less competitive if this additional cost is factored in,  " … such a cost-centric analysis ignores the jobs and economic activity that the law could generate. Emission and efficiency standards for cars, buildings and appliances in California over the last four decades have succeeded in cleaning the air, making residents’ per-capita energy use rate among the lowest in the country and spurring innovations and new industries, like the one that arose around catalytic converters."

More to be said about this for sure. But, to me at least, including all the costs of a product into the price the consumer pays insures that everyone pays their "fair share" and encourages innovation. 

And that's what engineers do - innovate. What better task than to innovate to create greener manufacturing?!

Final note - Our book "Green Manufacturing: Fundamentals and Applications"  written by the researchers in the Laboratory for Manufacturing and Sustainability (LMAS) at UC Berkeley is now available. It can be found on Amazon. The book introduces the basic definitions and issues surrounding green manufacturing at the process,machine and system (including supply chain) levels. It also shows, by way of several examples from different industry sectors, the potential for substantial improvement and the paths to achieve the improvement. Additionally, this book discusses regulatory and government motivations for green manufacturing and outlines the path for making manufacturing more green as well as making production more sustainable. You can preview the book online at Amazon and see the table of contents. This also makes a perfect new year's gift! 

Don't forget to follow us on Facebook Green Manufacturing - Berkeley for more frequent comments and insights.

Happy New Year!

The "S" word, Part IV

Sustainable capitalism

As part of the discussions on the interrelationship between sustainability and economics referred to in the last posting an interesting report, titled "sustainable capitalism" popped up. The report was prepared in early 1012 by Generation Investment Management, LLP, a UK firm and can be accessed free at their corporate link. One must always read such reports prepared by folks with a particular view toward industry, capitalism and investment, carefully. But, it is interesting and, for sure, we all have "our views!"

To quote directly from the executive summary of the report:

"The challenges facing the planet today are unprecedented and extraordinary; climate change, water scarcity, poverty, disease, growing inequality of income and wealth, demographic shifts, trans-border and internal migration, urbanisation and a global economy in a state of constant dramatic volatility and flux, to name but a few. While governments and civil society will need to be part of the solution to these massive challenges, ultimately it will be companies and investors that will mobilise the capital needed to overcome them.

To address these sustainability challenges, we advocate for a paradigm shift to Sustainable Capitalism; a framework that seeks to maximise long-term economic value creation by reforming markets to address real needs while considering all costs and stakeholders.

The objective of this paper is twofold. First, we make the economic case for mainstreaming Sustainable Capitalism by highlighting the fact that it does not represent a trade-off with profit maximisation but instead actually fosters superior long-term value creation."

They go on to recommend five specific actions that they suggest will accelerate the "mainstreaming of Sustainable Capitalism" by the end of this decade.

These are (summarized from the report):

1. IDENTIFY AND INCORPORATE RISKS FROM STRANDED ASSETS - they define "stranded assets" as "those with a value that would change dramatically, either positively or negatively, under certain scenarios such as a reasonable price on carbon or water, or improved regulation of labour standards in emerging economies."

2. MANDATE INTEGRATED REPORTING - this is intended to allow more comprehensive insight into companies which is now lacking in spite of increases in the volume of information made available by companies and the frequency with which it is produced.

3. END THE DEFAULT PRACTICE OF ISSUING QUARTERLY EARNINGS GUIDANCE - it has long been argued that relying on quarterly earnings statements creates incentives for short term management at the expense of the longer-term, more meaningful measure of sustainable value creation.

4. ALIGN COMPENSATION STRUCTURES WITH LONG-TERM SUSTAINABLE PERFORMANCE - since most current compensation schemes reward  short-term actions disproportionately they fail to hold corporations accountable for the ramifications of their decisions over the long term. Financial rewards should instead be paid out over the period during which these results are realized, and

5. ENCOURAGE LONG-TERM INVESTING WITH LOYALTY-DRIVEN SECURITIES - This practice encourage long-term investment horizons among investors and facilitate stability in financial markets, therefore playing an important role in mainstreaming Sustainable Capitalism.

Wow.

These actions would substantially change they business climate around the world if carried out. What the likelihood of this happening is not known. But to start, the report goes on to describe these ideas in greater detail and includes additional "broader ideas" among which are "integrating sustainability into business education at all levels."

Of course, if one accomplishes that, it will be up to the product designers and manufacturers to execute the business functions at the production level to make this work.

That is, of course, if the company actually "makes something."

The service industry or other non-manufacturing sectors generate less than one dollar of economic activity for every dollar of sector output - unlike manufacturing and agriculture which return more in economic activity than the sector output alone - see the US Government's Bureau of Economic Analysis for more data. Manufacturing and agriculture return $1.35 and $1.20, respectively, in economic activity for every $1 of sector output. Construction, transportation, info tech, finance, etc are less than $1 and as low as $.55 for the retail trade sector.

So, if you want to "leverage" the economy to drive sustainable capitalism - start with manufacturing and agriculture!

Now, if you'd like another perspective including a view of the past and and how we got where we are today and how to become sustainable, I suggest you check out this link to a UK company called RSA Animations. In this animation, titled "300 Years of FOSSIL FUELS in 300 Seconds" a lecture with some very clever animation outlines some ideas for a sustainable world (in spite of capitalism!) I recently came across a number of very interesting animated lectures by RSA while visiting a friend and attending a conference in Brazil. The one I first saw was on capitalism and you can see it by googling RSA Animation and capitalism.

Finally, the Green Manufacturing Facebook page associated with this blog is constantly updated with tidbits on the topic of green manufacturing, anecdotes, examples and stories of interest - check it out too!

The "S" word, Part III

The economic angle.


We've been discussing aspects of social impacts and sustainability in the last few blog postings. I've recently come across some excellent discussions on the interrelationship between sustainability and economics. The gist of the discussions is that there is not a trade-off between a sustainable business model or sustainable manufacturing and profit - one can minimize the impact to the environment and maximize profit at the same time.

Now, I am not an economist and I am cannot attest to the validity of all the arguments. But, the ones we will review here are logically put forward and seem, to me, reasonable. You can be the judge!

Back in September of 2009 in a posting I referred to a MIT Sloan School- Boston Consulting Group Study on "business cases for sustainability." 

In that report the results of a survey of corporate executives was presented listing, in order of importance, the "sustainability-related issues" that companies believe will impact their business organization. These included:

- government legislation

- consumer concern

- employee concern

- concern over environmental pollution

- depletion of resources (non-renewable and renewable, like water)

- societal pressures

- global political security

- population growth

- climate change

In fact, in the figure below, from the report, it is clear that economic/business issues are the main drivers for sustainable business plans, starting with improved brand image reputation and increased competitiveness. 

A second graphic from the report, below, shows which sectors in which employing sustainability related strategies are seen to be most essential to be competitive. Not surprisingly, the "core industries" like automobiles and commodities are leading with services lagging.

So, companies are paying attention to this! 

I recently read an interesting whitepaper by some folks at Enviance. This was forwarded to me by some folks at Enviance I ran into at a meeting on campus. And, one of my former PhD students (Dr. Corinne Reich-Weiser) works with them. Her work for her PhD was featured in a blog posting some time ago as part of a discussion including a "map" of spatial and temporal levels of design to manufacturing to distribution/enterprise effects - this was part of the "low hanging fruit series."

The folks at Enviance sent me a paper entitled "Bridging the Gap: A financial approach to sustainability (http://www.enviance.com/resources/wp-bridging-the-gap.aspx). The paper  "explores the gap between sustainability and business goals and how to bridge this gap by leveraging financially oriented analytics to make environmental issues relevant to finance and sales professionals." This seems like a great idea to me. Putting some numbers on the link between sustainability and business. The paper begin with a description of the problem which they state as - why is sustainability "still so often dissociated from core business goals relevant to a CFO, a Head of Procurement, or a VP of Sales -- addressing common roadblocks faced by sustainability professionals." The paper then proposes a stratify to bridge the "gap" with a financial approach to sustainability. They present an example of a leading aerospace & defense manufacturer.

I am not going to summarize the whole paper here - download it and read it! 

But, there are a few key items worth repeating here.  They review a set of "common roadblocks"
that prevent most companies from managing sustainability without having a clear picture of the things that matter environmentally and financially. These include: 

1. Lack of Analytic Capabilities - challenges with having "visibility into ... true environmental impacts, costs, and risks." 
2. Knowledge creates liability - thinking one is better off not knowing what their impacts are "in case it might create an obligation to act." (wow!) 
3. Too Busy to Think - understaffing and "drowning in hundreds of existing initiatives" and
4. We Already Know 

If any of these sound familiar, I encourage you to read the paper!

The example, which I will not discuss here, offers some illustrations on how to address, with careful collection and analysis of pertinent data, a view of what's important and what is not and who is responsible for it. The image below is from Figure 1 of the whitepaper.

The environmental impacts on the vertical axis of the figure displays the organizational impact on the environment expressed here in monetary terms based on an emission of some number of tons of CO2 equivalent and the price that environmental economists might assign to that on a per ton basis (for example, from a cap and trade program). The paper describes this in detail as well as environmental costs and environmental risk assessments. The categories of impacts range from CO2 through particulates, toxic metals  and to carbon monoxide.

Overall a very comprehensive discussion of linking environmental performance to business costs and value - an important step in sustainable manufacturing.

Next time we'll discuss an equally interesting topic related to this "sustainable capitalism."

And, a reminder to check out our Facebook page for Green Manufacturing!

Green Manufacturing on Facebook

Green tidbits from time to time

This is a short posting to announce the arrival of Green Manufacturing on Facebook! 

I've decided to add that communication medium to the blog so that short and less complicated notes, comments and information can be distributed to those who wish to keep connected. And I really don't see myself "tweeting"!

Our Facebook "handle" is GreenManufacturingBerkeley (or for completeness - http://www.facebook.com/GreenManufacturingBerkeley if you want to paste this into your browser).

I'll try not to have too much repetition. 

The blog will continue, soon, with the next posting in the series on our Sustainability discussion.

But, in the meantime, please visit the Green Manufacturing Facebook site and check it out! If you like the idea...then "like" us! 

Thanks!

GreenManufacturingBerkeley

The "S" word, Part II

Frustrated with life

This posting could as well be subtitled: Green, Manufacturing and Education

I woke up this morning to read about a riot at a Foxconn factory in China where, according to the New York Times, the state-run media in China had reported that some 5,000 police officers were called to the factory complex to respond to "a riot that began as a dispute involving a group of workers and security guards at a factory dormitory." The article quotes an interview with an employee who had posted images of the disturbance on line as indicating that it started as a disagreement between workers and security personnel …  “But I think the real reason is they were frustrated with life.”

Frustrated with life. There's a social impact of manufacturing for you!

The cause of some of this frustration is, apparently, rooted in concerns about promises made to workers, often migrant workers from long distances in China arriving to find that the pay package they were promised is not what they are getting. Roll in a bit of different cultural traditions linked to the different provinces the workers come from and it can be a volatile mix of social issues and different style/customs.

Is this the future of manufacturing?

In the part I of these postings on social impacts in sustainability we were speaking about resiliency and some of the societal dimensions of sustainability. I introduced the concept of Gross National Happiness relating to things such as:

- Economic Wellness
- Environmental Wellness
- Physical Wellness 
- Mental Wellness
- Workplace Wellness
- Social Wellness, and
- Political Wellness

I mentioned that trying to characterize these in a practicable way is always a challenge - but, at least for the workplace wellness and mental wellness, perhaps the Foxconn employees have offered a view to this. 

If we look at some of the issues gripping the US at the moment we might also suggest they stem from "frustration with life." Joblessness, specially among certain segments of the population and in the manufacturing sector, debt (personal and governmental due to the downturn and unsound investments), maybe even "too much information.!" Thanks to the internet, twitter, cable TV, blogs (!), etc. we can now share everyone's pain and perceptions of reality. Are we better off?!

So, where does green, manufacturing, and education come into this?

Not surprisingly, as an educator and working for a university, I have a strong belief in the power of education to make people's lives better. I would certainly expect that, for Foxconn, education of the workforce along with  attention to the other "happiness" elements above, could swing some of these folks back to feeling more optimistic about life.

Wouldn't that be a good metric of social impact? Is what I (or my company, or my boss, or my government, or my **fill in the blank**) am doing making anyone else to feel more optimistic about life? And, I hasten to add, I don't mean the kind of optimism that advertisements pitch to make you buy a product of service. I mean real optimism.

As an educator I feel optimistic. That may seem odd given the budget cuts, dis-interest in science, technology, engineering and math (the so-called STEM subjects) of grade and high school students, the loss of employment in manufacturing, the bad rap teachers get in some places, etc. But, education can do something.

Take manufacturing for instance. I speak to a lot of companies about their employment needs. All of them are concerned about increasing productivity, improving or controlling quality, insuring they are flexible enough in their production to respond to the rapidly changing consumer needs (and how the supply chain yanks their company around in response) … and being energy and material efficient and sustainable. That is, green.

Their workforce, in increasingly automated factories to get the productivity, quality, re-configurability, needs to be increasingly well educated. Or, at least, educated with some technical competence in metrology, machine control, automation, geometry/math, etc. That's what education does - educate people to have these basic capabilities - and more.

So, what about the green angle? The companies who are working hard to be proactive making quality products and responsive to the customer/re-configurable are doing this for a number of reasons, competitiveness, etc. but also to make money. And cutting expenses is part of making money. And reducing energy consumption, increasing yield, increasing material utilization efficiency, minimizing waste all add to the bottom line. They also define strategies of green.

We need to add to this basic education on energy, earth abundant materials, and green and sustainable technologies to the suite of other subjects. 

It is education that offers a future … one that the individual can have more control of. It is education that makes individuals competitive in any field, including manufacturing. It is education in manufacturing that offers a career to a wide range of individuals and not just those "on the coasts" making apps to engage in and keep track of our social network.

And it is application of this education to manufacturing in the US that offers real optimism. Make sure that education addresses both the core needs of business (throughput and productivity, quality, and flexibility) but also insures those core needs are met with lowest impact and most efficient use of resources. 

We need to keep reminding those around us who don't want to support education (at any level) that a core element of sustainability is to insure future generations have the same opportunity as we do. If you don't like that, follow one of the many versions of the "golden rule" that permeate most religious beliefs. I talked about that back in March of 2011 in a blog about avoiding "environmental tsunamis". This is good for US, good for manufacturing and good for the planet.

The overwhelming desire for education and the impressive "leverage" it offers to the future keeps me optimistic and will insure we are effectively doing the most to reduce the "impact/GDP" that the IPAT equation reminds us is a goal. 

And that's the future of manufacturing!

All hands on deck!

EDF Climate Corps

This is the first in a few postings drawing from the annals of the Environmental Defense Funds Climate Corps activities. The Environmental Defense Fund (EDF) has been active in a number of areas for many years  to work in partnership with business to provide solutions, scalable, to address issues that impact the environment - things like energy consumption, global warming, etc. The EDF website gives all the details. They are about as independent as one can be as their work is not funded by the companies they work with. As stated on their website (and in my conversations with their representatives) they "… take a nonpartisan approach to smart policy, supplying analysis and advice to decision-makers on key issues."  The environment is their only client -- "we accept no funding from our corporate partners."

Their approach is novel - they try to work with companies rather than in opposition to them and their practices and their website illustrates a number of successful partnerships including McDonalds, FedEx and Walmart.

Let me add, at the front, I am not in any way associated with EDF (although I am a member) and I am including this information below only because it is pertinent to green manufacturing and the topics we've been discussing over the many postings.

We focus here specifically on an EDF program called the "EDF Climate Corps". This program is based on an " … innovative summer fellowship program that places specially-trained MBA and MPA students in companies, cities and universities to build the business case for energy efficiency."

I'll work on them to think about something involving engineers in the future - they probably know something about energy efficiency too!

The results of this program have been impressive (if you accumulate all the savings identified and addressed by the corp since 2008 when it was introduced.) The website lists the following statistics:

"… fellows have uncovered efficiencies in lighting, computer equipment and heating and cooling systems that can:

    - Cut 1.6 billion kilowatt hours of electricity use and 27 million therms of natural gas annually, equivalent to the annual energy use of 100,000 homes;
    - Avoid over 1 million metric tons of CO2 emissions annually, equivalent to the annual emissions of 200,000 passenger vehicles; and
    - Save $1 billion in net operational costs over the project lifetimes.

To date, companies report that projects representing 86 percent of the energy savings identified by EDF Climate Corps fellows are complete or underway."

I was contacted by EDF about this program and its results, specially as applied to industry/manufacturing, and offered the opportunity to show some of the results in this blog. I have never re-posted anything substantial from another source (other than the usual web links, quotes and images) but this seems specially pertinent - so I agreed!

Here is the first. I cannot vouch for the accuracy of the data or claims presented but I am more than comfortable in their procedures and record and believe these to be accurate. The "handbook" that describes the EDF Climate Corp activities is online also and can be downloaded. The handbook focusses on identifying, analyzing and prioritizing energy efficiency investments in commercial buildings - but the examples are broad enough to include manufacturing, as you will see. I think you will find this very interesting.

Specific details on the results of the program can be found on line.

The first example covers the development of an "Energy Management Scorecard" for Cummins, Inc (a multinational engine manufacturing company). The details are reproduced below but you can find the original posting on line also. This is repeated verbatim from EDF.

Fellow: Michael Norbeck, 2012 EDF Climate Corps fellow at Cummins Inc., MPA Candidate at Indiana University School of Public and Environmental Affairs

Opportunity: Energy use and CO2 emissions from a global portfolio of over 600 facilities

Summary: You’re a multinational engine manufacturing company that has set ambitious enterprise-wide targets for energy intensity and CO2 emissions reduction. Facilities are a key component of your energy footprint, and therefore your carbon footprint as well. How do you drive the energy management performance you need to meet your targets? Start by understanding how your facilities are using energy, and why.

As a 2012 EDF Climate Corps fellow, I developed an energy management scorecard for Cummins that will provide site-level energy and performance data for Cummins facilities all over the world. It also provides standardized metrics for analyzing that data, helping to track site-level energy use and drive progress toward Cummins' recently-adopted energy intensity and greenhouse gas reduction goals.

Challenges

Cummins takes energy management seriously, keeping careful records of energy expenses and related greenhouse gas emissions at its sites. Specific information on how its sites are using energy, however, is hard to get, often because the right people or tools aren’t in place.

Cummins has also compiled a wealth of information on standards and best practices in facilities energy management, but it's unclear if this backlog of knowledge is factoring into the energy management decision making.

The company's scope and scale are also challenges in this project. Cummins operates in countries across the globe, from Australia to Zimbabwe, in sites ranging from 50-staff office buildings to manufacturing plants employing thousands.

Solution

I developed an energy balance framework and accompanying scorecard to tackle data collection and best practice implementation. I also worked with my manager to convene an interdisciplinary team of company experts to provide critical input as we refined the tool, ensuring buy-in from key stakeholders now and their cooperation when the tool is rolled out.

The facility energy balance tool I created is an adaptable, user-friendly interface that will help sites large and small identify their major energy users and improve their energy management. Site managers simply plug in energy meter data or energy use estimates and the tool produces metrics on greenhouse gas emissions, cost and aggregate energy use, all categorized by operational process or equipment category.

The scorecard will help Business Unit and Corporate-level decision makers understand how effectively sites are managing their energy use and shed light on site-level personnel or funding gaps. These services will provide a roadmap for future capital allocation, driving site progress toward key performance standards.

These results will play a key role in moving Cummins toward its aggressive energy intensity and greenhouse gas emissions reduction goals.

Key Takeaways

This project yielded a number of valuable lessons, but I found that asking this question and following these mantras streamlined my work at nearly every turn:

    Can employees use the tool and see its value?
    What are the stakeholders you're trying to work with already accountable for, and how much will your tools add to their workload? How can you maximize their value per unit of time spent using your tools?
    Don’t reinvent the wheel.
    How can lessons from the successes and failures of similar, past projects be applied to your own? How can existing structures and content be leveraged effectively?
    Synchronize with existing tools to reduce redundancy.
    Is company culture driven toward quantifiable results and performance assessment? Cummins culture certainly is! How can you structure your tools to tap into resources already available at your company?

End of example.

You can find more info, including hot links to some of the above, and other EDF Climate Corps postings on line at EDF.

I'll repost others from time to time!

Next time…back to our discussion about social impacts in sustainable manufacturing.

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.