Savvy Businesses Taking Integrated Organizational Approach to GHG

Al Gore has received his Nobel Prize and is on his way to Bali to monitor the talks on climate change, which appear to be going well. No nation would like to be seen as the sole impediment to averting a planetary catastrophe. News of the environment is all over the media. All the focus on climate change has led to a rush of businesses to monitor greenhouse gases and lower their carbon footprint. While this is a good thing to do, in some cases organizations are taking a reactive approach that takes a narrow view of one issue while ignoring the interrelationships of GHG emissions to all other environmental issues. This has the risk of becoming a knee-jerk reaction that obscures the view of an integrated enterprise wide strategy that deals effectively with the complexity and impact of all environmental risk to the organization. GHG management is a problem that can and should be incorporated within the holistic and strategic framework of risk management that aligns the organization with their overall environmental stewardship and sustainability goals. Forward thinking businesses understand that managing these issues effectively is an integral component of their ability to achieve and maintain leadership in their given industry now and in the future.

Best of class organizations are taking an integrated organizational approach rather than taking a singular and tactical approach to GHG. An integrated systems approach will allow businesses to more effectively organize their people, processes and technology in a manner that will allow them to compete now and into the future.

We see this reflected in our own business. Our customers are not only interested in their carbon footprint, they’re interested in everything else that might impact the sustainability of their organization. Long before that set of buzzwords became popular, they have had the capability to monitor, predict and avert catastrophes that are perhaps equally as important as the emission of greenhouse gases: chemicals, hazardous wastes, fugitive emissions, waste water, industrial hygiene and regulatory compliance. These risks are more than compliance risks. They are operational risks inherent in business and they all must be monitored and managed.

Taking a holistic systems approach also requires implementing an IT technology strategy that aligns with the organizations enterprise wide strategies. As far back as 1999, we decided that enabling an organization to execute on their corporate initiatives for environmental stewardship, compliance, health & safety and sustainability is best accomplished through an integrated technology platform. The reason we believe in the integrated technology platform rather than a fragmented single application for each environmental issue is the concept of the interrelationship and common data elements between all of these issues. Every business I have talked to over the past 20 years wants to have an effective system in place to minimize all of their environmental risks. The reality is that it is very difficult to take an enterprise wide holistic approach to managing environmental risk when you have to rely on a multitude of single disparate applications that don’t talk to each other. If you do integrate them and try to roll up the information for management purposes and stakeholder reporting, it is costly to build and maintain the integration points between applications and the integrity of the data at a corporate level has and additional layer of risk. Each of these stand alone disparate applications actually becomes part of the risk. Why manage risk with a risky technology strategy and platform?

As a result, over the years we have chosen the integrated modular path over the “individual application” path. Our modular solutions are all excellent, but as a whole they are more than the sum of their parts. They enable the management and leaders of the organization to view their entire business from a sustainability perspective and to look at sustainability itself in the most complete possible way.

As I read in a recent AMR report, businesses need to take a hard look at three dimensions (business strategy, organizational processes and enterprise architecture) when assessing the right technology. They need to be intertwined so that businesses don’t just change their business strategy; they also change the technology and organization to match for maximum value. Called the Performance-Driven Business Network (PBN), this new business model is about synchronizing business strategy, organizational principles and enterprise architecture not just within a company, but up and down the greater business network with suppliers, customers and other partners to better compete—no, to compete at all—in the new global economy. They need to stop being project driven and become performance driven, in which change is a constant, and people, technology and business processes are changed in concert for the betterment of the business.

The result: Faster, predictable response to business shifts, a performance-driven collaborative culture, risk and compliance management embedded into operations, extended influence beyond traditional ecosystems and much better use of assets, including information and knowledge, technology, internal and external human capital, facilities and returns on invested capital.

In Bali, governmental representatives and NGOs are meeting. Again, this is good. But I guarantee that what will come out of those meetings has already been factored into a sustainability initiative by any enterprise that wishes to compete and survive. I see it every day because for almost two decades we have been on the front lines.

Add comment December 10th, 2007

Wal-Mart Leads Retail Shift toward Sustainability Brand

If you deal with Wal-Mart in almost any way, you probably already know that the company has changed its brand from “Everyday Low Prices” to “Save Money, Live Better.” Can you imagine how much it must have cost the company to re-brand in order to include some sustainability projects in its brand? I’m sure it’s a big number. But Wal-Mart basically bet the farm on sustainability, health and wellness, community, economic opportunity and value as its five key initiatives.

Health and wellness kicked off with $4 prescriptions. In conjunction with its huge sustainability initiative, Wal-Mart recently held a conference in which it brought together CEOs from all over the country and announced that it was going to green its supply chain. That means if your company is a Wal-Mart vendor, or if you want to be one, first you must meet the company’s sustainability objectives.

That’s huge because Wal-Mart interacts with 80 percent of the households in the U.S. Anything Wal-Mart does affects most consumer brands and most manufacturers. For example, Wal-Mart now sells a reusable shopping bag for $1 that is made from 85 percent recyclable materials, carries the same weight as a plastic bag and replaces 50 plastic bags in its lifetime.

Six months ago Wal-Mart launched the “Live Better Index” to track its efforts.
The index charts the habits of American households in five major areas, including sustainability. At the six-month mark for the index, Wal-Mart reported that Americans had already purchased 100 million compact fluorescent light bulbs for a $1.5 billion savings on their electricity bills.

Why is this so important? Because Wal-Mart has already found that sustainability is not only cost effective, but it saves consumers money. And now they have decided that they are also going to save themselves and their supply chain money by extending their sustainability initiatives rather than drawing back from them.

The example of Wal-Mart is why I believe the enterprise will lead the way to solutions that go significantly beyond the nuts and bolts of GRC and into the important territory of innovation.

Add comment November 8th, 2007

Service-Oriented Architecture Goes Corporate Mainstream

Web 2.0 (user-generated content) has come to the enterprise in a big way. Far from merely looking the other way while employees spend time on Facebook, Web 2.0 for the enterprise means companies are creating internal social networks for employees, customers, and vendors and customers are taking a larger and larger role in product development.

The buzzword for all this is SOA (service-oriented architecture), which actually has little to do with software design, and everything to do with listening to the customer and involving customers in how applications are developed.

For now, the ideal application architecture is SOA. All corporate application developers want Web 2.0 and business process management (BPM), along with SOA in order to satisfy the short-term and long-term needs of their clients.

Thus, it’s critical to understand that SOA is a term of art that applies not only to software development, but to customer relations as well. It involves making the entire enterprise aware of the customer at every moment.

ESS has a long history of asking its customers to participate in the design of its products. In the early days of the company, we actually sent our customers faxes on a weekly basis, asking for their input! We then moved our efforts to the quickly-emerging Internet. So it isn’t surprising that we are now a leader in rolling out SOA and creating a platform that takes advantage of the insights and needs of our customers.

We are implementing SOA now and are on a five-year plan to continue rolling it out in the technology development of our software. SOA enables us to take information from our customers about emerging issues and problems in their businesses and produce the right solution. This is our strategy to maintain industry leadership and our commitment to enable our customers to solve their real world GRC and EHS problems.

1 comment October 25th, 2007

New PetroChina Oil Reserves Expected to Generate Increased Profits

The Chinese stock markets have been on fire this year, producing a new class of affluent Chinese investors. This is unusual for a country in which all businesses were formerly owned entirely by the government, and all jobs provided by the government.

Among the companies about to go public in China is PetroChina, whose shares are already traded on the New York Stock Exchange and the Hong Kong Exchange, and now they will also be traded on the more mainstream Shanghai Stock Exchange.

PetroChina expects to undertake six new projects with the proceeds from the offering, all of which will help it boost output of both oil and gas.

The company believes that a recent oil discovery at its Jidong Nanpu oil field, off China’s northeast coast in the Bohai Bay, could be found to have considerable reserves, the state-run newspaper China Daily reported:

“We estimate that eventually, we could have proven reserves of as much as 1 to 1.6 billion tons (oil equivalent) from the offshore blocks of our Jidong Nanpu oilfield in the Bohai Bay area,” Jia Chengzao, vice-president of PetroChina and academician at the Chinese Academy of Sciences, told the China Oil and Gas forum on Saturday.

“Including reserves from onshore, the ultimate proven reserves of Nanpu oilfield are expected to hit around 2 billion tons.”
The Jidong Nanpu oilfield has combined proven, probable and possible reserves of 1.18 billion tons of oil equivalent, the Ministry of Land and Resources certified in August. The present proven reserves are certified at 445 million tons oil equivalent.

PetroChina has been preparing its facilities for global scrutiny for quite some time now; it has deployed our enterprise software throughout the country. The company is working to become a model of corporate social responsibility and environmentalism.

The company has demonstrated its leadership by deploying a corporate wide software platform that consolidates all of their environmental, health and safety-related data in a single database across all of the operating facilities in China. The system provides senior managers with full visibility of their progress toward meeting performance goals through company wide metrics and key performance indicators. This is a good move on their part, as stakeholders all over the world have pinpointed sustainability criteria as an important aspect of any investment they make.

1 comment October 22nd, 2007

Key Elements of Change Management: Standardize, Centralize, Simplify

I just read an interview featuring Bob Otto, the retiring CIO and CTO of the U.S. Postal Service in CIO Insight, and it excited me because I just know he is right on the money. If you want people to accept new technology it must be standardized, centralized and simplified.

After a discussion of the pace of change in technology during Otto’s tenure, interviewer Brian Watson asks him how he gets his people to accept change:

“I have three guiding principles—principles I’ve used since I was young. First, standardize everything. If you find a process you like, standardize it. Second, centralize everything you can. If you have services in five different places and you can centralize them, you will have reliability, predictability. Third, simplify. The computer has taken over your life, so I want it to be intuitive [for people to operate and manage]. I also test my own dog food. Everything we build has to pass the “Bob” factor. I put myself in the place of the lowest common denominator, of someone who might not have a high school degree. I look at how people could be intimidated by technology, and I don’t want them to have a hard time.”

I like the part about testing his own dog food; I’ve always tried to do that as well. Those are the same guidelines we use when we develop our enterprise software. We are aiming for a centralized information repository that enables our customers to look at a global enterprise from one dashboard.

Meanwhile other organizations are learning to standardize, centralize simplify when managing change based on new technology. Last year, ESS went into a Fortune 500 company and replaced 67 separate applications that were being used to monitor environmental health and safety, crisis management, waste and emissions. Replacing all those disparate applications with our integrated GRC platform, thereby standardizing and centralizing the operation, saved the company $1.5 million in support costs, upgrade costs and other direct costs associated with deploying those applications.

In addition, the company was able to redeploy 200 people who had previously been engaged merely in supporting those applications.

It goes without saying that the company was thrilled, but as I was driving home from the office yesterday it occurred to me that we had also minimized their risk.

How? It’s simple. All those applications prevent a company from having a holistic view of its business risk. Every silo of data is viewed separately, without the strategic overall perspective the company really needs.

What’s more, every separate application actually increases the risk involved in data integrity. When all that data is imported into a tool that does give an overall view, how do C-level managers know whether the data has become corrupt on its journey through the applications to the dashboard?

So I’ve come to the conclusion that our unified platform is itself a risk manager — preventing the corruption of data by giving the enterprise a way to look at all its data through the same lens.

So standardize, centralize and simplify works.

Although I am technical, much of our software is deployed at the plant level by people who do not have time to struggle with new technology and would rather ignore change if it doesn’t simplify their lives. They are busy. Ease-of-use is a must. What good is an all-in-one dashboard if the relevant information can’t be accessed by the guy in the plant as well?

2 comments October 8th, 2007

Savvy CEOs Respond Quickly to Corporate Crises

Lately the headlines seem to be full of corporate crises. Mattel and Graco have been forced to recall products, pharmaceuticals have been withdrawn from the market. CEOs seem to be constantly apologizing to customers for potential product liability issues. Or even for untimely price cuts, as Steve Jobs did when angry customers protested on the Internet about price cuts on the iPhone.

Some of these crises could have been averted, but most could not. However, they can all be monitored and responded to in a timely fashion that lowers the risk for the company and preserves its image with stakeholders.

Notice how fast CEOs have to respond these days. Years ago, when Johnson & Johnson found that some bottles of its product Tylenol had been tampered with, the company made its crisis a case study through the swiftness of its response. The company responded within days, recalling the product and getting out information to its customers.

But that was before the widespread emergence of online communities. Companies no longer have days to respond to a health and safety crisis, whether inside their own companies or externally for their products. A crisis plan must be in place. It must allow for immediate response, and it must respond within the new parameters of sustainability and stewardship.

For this reason, it’s a good idea to have integrated software systems with the ability to monitor, predict, and communicate potential problems. In our own company, we are working hard to make our products more predictive, proactive, and analytic rather than merely responsive.

It’s imperative that we control risk as best we can, and when we can’t, we must have the quickest, most effective response.

Add comment September 28th, 2007

“Green” Values Aren’t About Branding: It’s About Survival

There’s a new blog called 21st Century Citizen that explores what the true values should be for those who are living in this century. This is very different from the Environmental Leader blog that’s discussing where your company’s brand will be when the “green” fad ends. One is deeply felt and strategic, while the other marks a trend. Enterprises must make the strategic choices, rather than branding through “quick fixes.” That never works.

Having been around in the ’70s when there was an earlier “green” movement, I know that all issues have a life cycle shaped like a bell curve. Al Gore has now made environmental issues hot (no pun intended) by talking about global warming. Indeed, we will come to a compromise system of carbon trading and emissions efficiencies, regulations and compromises, and then environmental issues will be off the table as emergencies once more.

But 21st Century Citizen asks the question “should you ride or bike?” and comes to grips with some of the complexities involved in that decision. To bike, many people would have to move closer to their jobs. Or change jobs. Or work from home. Or move closer to the grocery store. The long and short of it is that we have to re-examine not one choice, but all of our life choices as individuals in order to create sustainability. I think the purpose of this new blog is to start the discussion about the future.

And corporations are pondering some of the same decisions, as well. It’s not just your greenhouse gases that you have to track. It’s your chemical waste. It’s the components of your supply chain, and the byproducts of your manufacturing process. Environmental issues may disappear and re-appear from the radar screen per se, but the safety issues posed by environmental contaminants around people will always be an issue for employers. The world is round, not flat, which means we have finite resources available to meet our ever increasing population’s demand. The thoughtful management of these resources as well as our waste and pollution byproducts will continue to become ever more critical for sustainability.

This round of environmental initiatives isn’t about branding. It is about survival.

1 comment August 1st, 2007

Groups Affirm Need to Address Climate Change

This has been the hottest summer in Arizona for quite a while. In the meantime, rivers have been flooding in Texas, and San Francisco saw rain for the first time in July. In Mumbai, people were swept away in main streets. So it is no wonder that governments and businesses are now in a race to meet or exceed the Kyoto protocol, promising new methods for controlling greenhouse gas emissions.

The Toronto City Council voted 37-0 this week to adopt a plan that aims to cut greenhouse gases in the city by 6 per cent by 2012, 30 per cent by 2020 and by a full 80 per cent by 2050. It will involve retrofitting buildings and exploring geothermal energy for large public buildings.

On almost the same day, the Business Roundtable, an association of 160 chief executive officers of leading U.S. companies, announced a new policy statement on climate change, acknowledging that climate change poses a serious risk and that the time for action is now. You can download the entire document.

Because ESS has been in the business of reporting on emissions for more than ten years, we know that the enterprise has been taking the issues of sustainability more and more seriously. This year, clearly we have reached a tipping point. Business leaders have even asked for a better national registry for emissions tracking, because they are building benchmarks and measurable objectives into their plans, much as a the City of Toronto has done.

Once numbers are assigned to these goals, business will achieve them — you heard it here first.

1 comment July 19th, 2007

Companies Serious About How They Impact Environment

I’ve been asked to write a chapter on environmental issues as part of a book on corporate governance and ethics, so I’ve been thinking a lot lately about what constitutes real corporate social responsibility. I can remember when corporations first embraced the concept, but it really involved philanthropic efforts, like supporting schools and donating to charitable organizations. The first corporation I can remember that took an environmental issue as a mark of corporate social responsibility was the ice cream maker, Ben and Jerry’s, when they decided to raise money to save the rain forest by naming one of its flavors “Rain Forest Crunch” and donating a percentage of the profits to charity.

Fast forward about thirty years, and the environmental questions have grown beyond a small, image-oriented part of the enterprise and into a position front and center — the boardroom. Now corporate governance involves more and more the question of “how does our company and its industry impact the environment?” Following that audit (because that’s what it is, and we help companies do those audits) comes the strategic question: “how do we create a sustainable business model that does not deplete resources faster than it creates them?” With these questions, “corporate social responsibility” becomes a big piece of all corporate ethics policies, and is at the heart of every company’s governance.

Add comment July 13th, 2007

Overseas Companies Looking for Health & Safety Solutions

I’m back in Asia, having meetings during the past week with customers and potential customers in the Philippines. I have found that companies that are not ready to tackle environmental problems are quite interested in health and safety solutions, especially software that is integrated with emergency management modules. Most executives had no idea that EH&S solutions existed that were part of a single platform devoted to Prevention, Mitigation, and Performance, appearing on their portals as unified data. The emergency management piece, which is part of our Mitigation offering, drew particular attention.

One of the most pressing issues around emergency management is the coordination of communications, and we were told repeatedly about needs in this area. I’m glad we’ve got something good to offer.

This is a long way from compliance, which is where we started building our software. We are now into the larger areas of operational risk, as part of governance, risk and compliance. When I look back, I have seen that our horizon has been expanding over the past ten or twelve years.

We are just following the lead of our customers who have begun to see their needs from a more strategic perspective. This week I learned from an article in the New York Times that many large corporations are now including a CSO (Chief Sustainability Officer) in the executive suite. The compliance officer reports to the CSO. I predict that this move from Compliance to Sustainability will be a fast-growing trend.

1 comment July 5th, 2007