Corporate Sustainability Initiatives Can Change The World

I have just finished reading Bruce Piasecki’s excellent book, World, Inc., in which he points out that corporate leaders can change the world through their sustainability initiatives, and may be the only ones who can do so. Bruce has been a consultant to Fortune 100 companies for more than twenty years, and he has seen a big shift in their attitudes toward sustainability. So have I. Corporations are now taking leadership on sustainability instead of merely complying with government regulations. And sustainability is part of larger governance, risk and compliance (GRC) boardroom-directed initiatives. Suddenly, there is a business case for corporate social responsibility. It’s a must-have program, not a frill.

This, Bruce says, is part of a new, socially responsible capitalism that he sees in companies like HP and Suncor, among others. After all, EHS issues don’t exist in a vacuum — they never have –and now sustainability is seen as necessary for recruiting and keeping top talent, for attracting and retaining institutional investment, and for participating in a global business environment that seeks to establish high standards for development. Younger workers do not want to work for companies they can’t be proud of. And pension funds are divesting their portfolios of polluters. Ultimately, money talks.

The themes of Bruce’s book are the very same themes I hear as I encounter clients and partners and other EHS decision makers both in the US and internationally. I’m looking forward to speaking at his conference in June.

Add comment May 31st, 2007

Environmental Issues in Asia Spark Legal Actions

In the Thai province of Ang Thong, pollution of a river by waste from a nearby factory caused a mass die-off of fish, affecting hundreds of fishermen. Rather than put immediate pressure on the offending factory, the government diverted other budget money to repay the grim-faced farmers who raise fish in floating baskets on the river. But the farmers don’t have the economic means to bring suit against the factory if this happens again, so the National Health Foundation funded a study to find a solution to these kinds of environmental problems, which occur frequently as Asian economies industrialize.

The Ang Thong study recommended the creation of an Environmental Court, in which polluters could be held responsible for their actions. Local judges hope that the establishment of the court will help raise awareness about the need for environmental protection. In Thailand, according to the Bangkok Post, it is acknowledged that both government agencies and the private sector are slow to obey environmental regulations.

However, like everywhere else I traveled on my recent trip to Asia and Australia, this could be about to change. For example, Australian citizens already have the right to file lawsuits against polluters. And in Hong Kong, a lawsuit has been filed to protest perceived failure by the government to live up to its environmental commitments.

The part of the recommendation that’s most interesting to those of us who help companies concentrate on environmental health and safety is the new right of a citizen to file suit against a project he merely suspects will harm the environment. To protect against these lawsuits, companies will have to be vigilant in their data monitoring to make sure they are able to defend themselves.

Add comment May 31st, 2007

Corporate Execs Are Promoting Investments in EHS Software

So what enterprise-wide investments is your organization making to help your people execute your strategic initiatives in environmental stewardship, regulatory compliance, health & safety, sustainability, and GHG emissions management?

This has traditionally been a difficult issue for corporate decision makers. I recently had a discussion with a corporate vice president for marketing who was reluctant to promote their investments in EHS software… One of their concerns was always that this might be perceived in the public eye as having done something wrong and buying software to fix it.

But I said I think the tide is turning, and the U.S. Climate Action Partnership program participants and our global deals with Caterpillar, Duke Energy, Alcoa, and BP (all USCAP members) are indicators of a shift in the way these organizations view these kinds of investments.

They now want to project leadership in this area. In fact, we have been told that the CEO of Koppers is using his investment in our solution (including Essential Performance Manager™) to show his commitment and leadership in social responsibility.

I like to think of our clients as early adopters, at the beginning of an overall rapid growth spurt in the market for our enterprise software platform when the mainstream jumps on board.

Fear is turning into leadership.

It will be exciting and fulfilling when our customers are the ones pushing to get the press releases out the door!!

Add comment May 25th, 2007

Asian Companies Spark Emissions Initiatives with Hybrid Cars

After a month on the road, all my news and interests are still focused on Asia. There is a tremendous amount of discussion in the Asian media about emissions and what to do about them, which is why I find it so easy to meet with global companies that have an Asian presence. But one of the emerging problems in Asia is relatively new: emissions from automobiles that contribute to global warming.

Automobiles have grown in both popularity and affordability in Asia over the past two decades. In China, where everyone used to ride a bicycle, and in India, where there are still cows in the road, a growing middle class is becoming addicted to the automobile as we in the U.S. have always been.

Asian companies are trying to take a leadership role, however, in controlling their emissions, and one of the best efforts has been made by an automobile manufacturer who has actually ridden to greater popularity on the heels of emission control initiatives. Toyota, the Japanese auto manufacturer, upended the automobile market when it released the hybrid Prius, which gets 60 miles per gallon, according to the company. Toyota sold 300,000 Prius models last year and plans to sell a million a year by 2010.

Toyota also released a hybrid version of its Lexus SUV last year, a hybrid Toyota Highlander, and has just extended its product line to a hybrid Lexus luxury sedan.

The Lexus buyer is the man (woman) at the head of his (her) company, not the person who can’t afford rising gas prices. The hybrid luxury cars sell because at the top of every enterprise is someone who understands the issues involved in climate change and has the responsibility to shareholders for governance, risk and compliance. This person is moving toward personal lifestyle changes. Toyota expects to sell 7,000 hybrid luxury sedans next year worldwide – 4,000 of them in Japan.

What will this do to the rest of the automobile industry? In America, we seem to be counting on ethanol, but if every ear of corn in the U.S. went to make ethanol, we would not meet 20 percent of our needs for fuel. When are YOU planning to switch to a hybrid vehicle?

Add comment May 17th, 2007

Going Beyond Regulatory Compliance

Environmental compliance suddenly has become a hot topic, especially as businesses try to better manage their operational risks. Compliance risk has emerged as a subset of governance, risk and compliance, with a definition all its own: the risk of impairment to the organization’s business model, reputation and financial condition from failure to meet laws and regulations, internal standards and policies, and expectations of key stakeholders such as customers, employees and society as a whole.

This definition, put forward last year by Price Waterhouse Coopers, means that you can damage your business with behavior that can be legally defensible, yet not socially acceptable. The global executives surveyed by PWC agreed that compliance with government and exchange mandated rules is less important in avoiding risk to reputation than internal codes of practice.
Yes, one has to adhere to the law, but that’s not enough. The task of protecting stakeholders, including the environment as a whole, is much more onerous than just what the law requires. And that’s because the regulations are always a little behind when something becomes unacceptable to society.

Thus, what is thought of as sharp practice by informed customers today can become the subject of regulation tomorrow. Businesses that want to be regarded as socially responsible need to go further than existing mandates to establish their own internal codes and practices, and to develop a culture of compliance that comes out of attitude and desire rather than solely out of regulation. Following existing rules is not enough. Modern enterprises also must develop a sense of stewardship.

The compliance department alone cannot resolve the inherent conflict of interest between the desire for profit in an organization and its duty to wider stakeholders including the community in which it lives. Both outside regulations and internal rules are meaningless if there is a culture of noncompliance in an organization.

Developing a culture of compliance means using a sense of stewardship to look ahead, and make organizational changes from within BEFORE the outside rules change. Make them out of a desire to put the long term well-being of the larger society first, rather than only because the regulators say so. Interestingly, many of our customers seem to be doing this —— implementing EH&S policies that are ahead of those government mandates. They would rather be viewed as trend setters than reactors.

3 comments May 14th, 2007

Security is a Major Concern for Energy Company CEOs in Asia

I have just come home from a month-long road trip to Australia and Asia. While I was traveling in Southeast Asia, I found a common issue was dominating the minds of responsible individuals and leaders in these organizations: Terrorists in Thailand, the Philippines and Indonesia have been targeting oil and gas industry assets more frequently in those countries. So are the Tamil rebels in Sri Lanka. Once again, I am struck by the serendipity of our product development. Before I took the trip, I was glad we included a real time emergency response component in Essential Suite, but I never predicted how it might be most effectively used.

Now I know first-hand that not only do these organizations need to minimize operational risk, but much more critically, they have to deal with the risk of terrorist activities shutting down their facilities and with the potential for massive environmental exposure
from successful attacks. Security has become the biggest issue for them, and a real time emergency response is a real requirement for EH&S and Crisis Management systems all over Asia.

Earlier this week, the Tamil Tigers bombed two fuel facilities in Colombo, forcing the partial shutdown of the airport as major carriers decided only to fly there in daylight or not at all.

Here’s the story from Reuters Net Alert:

This security issue is a big concern of both local and multinational oil and gas companies and energy companies operating in Southeast Asia. I heard it repeatedly from CIOs and EH&S executives on this trip.

1 comment May 3rd, 2007