Chinese Energy Companies Showing Leadership in Sustainability

While I was in Asia last week, I met with the CIO of PetroChina and China National Petroleum Company (CNPC) and learned of his desire to expand on our great success consolidating all applications in the Environmental Health and Safety arena into one platform for efficiency and centralized reporting. I was really impressed when he told me they have more than 70,000 users.

This has to be the largest EHS sustainability platform ever deployed. He also told me it was the first and “only” software within PetroChina and CNPC that has been deployed across the entire company. We want to enhance our value to their business users by providing tools like role-based Key Performance Indicators to help them improve performance within their specific business units.

I also met with the CIO of China Light and Power (CLP) in Hong Kong. This is meaningful because CLP is followed and benchmarked as best of breed throughout Asia for its best practices in using information technology to enhance business value. He gave me a tour of the company’s technology center, which was quite impressive, and we spent a good deal of time talking about translating technology investments like ESS software into real business value.

These CIOs are true thought leaders and our plan with them in the area of GHG emissions management and corporate responsibility reporting will set the standard not only in Asia but across the world. For those of us who think our companies are in the vanguard of sustainability, here’s a word of caution: Look out. You may just find yourself following leaders from Asia.

Add comment September 25th, 2008

Oracle Honors Alcoa with Award for Sustainable Operations

Oracle’s OpenWorld is underway, and the conference started out with a bang for our client, Alcoa, which was recognized with Oracle’s Empower the Green Enterprise award during a luncheon ceremony.

Oracle Board Chairman Jeff Henley and CIO Mark Sunday presented the award to Alcoa, which is being honored for adopting green business practices, including effective use of advanced information technologies in order to protect the environment, reduce costs and risks and enhance operational efficiency. Alcoa was one of 15 organizations selected to receive the award. We are so proud today, both of the enormous steps they have taken toward sustainability, and of our own part in supporting their achievement.

Oracle chose Alcoa for the award based on its successful implementation of ESS enterprise software, installed on Oracle 10, as its unified platform for EHS sustainability management throughout the company’s global operations. By using ESS and Oracle systems, Alcoa has been able to:

• Simplify ISO 14001 compliance to reduce workload and ensure continued certification.
• Improve its data analysis capabilities for improved decision making and reduced emissions.
• Move from annual to daily data evaluation of emissions reporting.

In addition, Alcoa officials gained tighter control over the company’s chemical usage and inventory storage.

When a company receives recognition like this for a job well done, it’s an impetus for other organizations to do the same. Alcoa’s leadership has generated significant momentum for sustainable operations worldwide. That’s why they are a worthy recipient of Oracle’s Award. We salute Alcoa for its outstanding accomplishments as a sustainability leader.

Add comment September 23rd, 2008

ESS Attends Oracle OpenWorld to Promote Enterprise Sustainability Issues

I’ve just returned from a trip to China, where there are some new developments taking place in that market. I’ll be sharing details with you later; but for now, I’m really pleased to be in San Francisco to attend Oracle OpenWorld this week. Oracle is doing some exciting things at this year’s user conference, including launching an enterprise sustainability program called the Green Room. There is an entire track of Green Room sessions exclusively focused on sustainability, environmental stewardship and the business of green. ESS will be participating in several Green Room activities.

Here’s a list Green Room programs, including:

• The Green Room
• The Green Marketplace
• Empower the Green Enterprise Awards
• Ready. Set. Connect.

But wait, there’s more. Tomorrow, I am going to participate in a pair of presentations with Oracle senior executives on important sustainability issues: I’ll join Ed Abbo tomorrow morning to present a session entitled, Empowering the Green Enterprise; after lunch I’ll co-present with Hardeep Gulati on Environmental Health and Safety in the Context of Enterprise Applications. We’re pleased for the opportunity to share the stage with these respected IT experts.

Also, I’ll be on hand this afternoon to attend the inaugural “Empower the Green Enterprise” Award ceremony, where Oracle executives will recognize organizations that have successfully used information technology to achieve sustainable operations.

Finally, ESS is going to make a big announcement at OpenWorld on Tuesday. I’ll be blogging about the details shortly after the announcement. Suffice to say it’s a big deal and we’re all pretty excited about sharing the news with you.

If you are attending OpenWorld, I encourage you to stop by ESS’ exhibit booth at Oracle’s Green Marketplace at the Yerba Buena Center for the Arts, adjacent to the Moscone Convention Center. We look forward to seeing you here.

Add comment September 22nd, 2008

Regulations Pose Potential Risks to the Enterprise

We have provided our customers with important updates to help them stay on top of key regulatory activities that could impact their operations. It’s worth noting that there has been increased activity recently, focused on GHG management, and not all of those proposals are coming from environmental regulators. Here are three examples, courtesy of Jeff Ladner, Director of ESS’ Climate Change Solution Practices:

Binding requirement to disclose climate risk for energy company

• “Under a first-ever binding and enforceable agreement with New York’s Attorney General Andrew M. Cuomo, Xcel Energy will have to disclose the financial risks that climate change poses to its investors in its annual SEC filings.” The deal also commits Xcel to a broad array of climate change disclosures including: projected increase in CO2 emissions from planned coal-fired power plants; strategies for reducing emissions; and corporate governance actions related to climate change.
• Important tip for you: This agreement is expected to set a precedent for climate risk disclosure requirements from the SEC.
• On a related note, 70 institutional investors are following up on earlier petitions to the SEC. The institutional investors are driving the requirement to disclose climate change risk for all public companies.

FASB proposing new standard for disclosing loss contingencies, including environmental liabilities

• The proposed accounting standard seeks to modify the rules currently governing loss contingencies [financial reserves]. The new amendment reflects the growing pressure that large investors are placing on FASB to force companies to come clean about their liabilities in the name of increasing transparency.
• If the rule remains unchanged, it will become effective for annual financial statements issued for fiscal years ending after December 15, 2008.

Climate related shareholder proxies

• You can now track climate/environmental related proxies demanding improved disclosure and transparency. Numerous companies with whom we are actively engaged are involved in addressing shareholder issues THIS YEAR. The file for the proxies is available for download.

Although we’ve been talking about these issues for many years, they seem to be accelerating, and the regulatory environment is changing daily. That’s why we continue to remind decisions makers that integrated information technology is an essential tool for companies that want to successfully navigate through today’s complicated regulatory environment.

Add comment September 12th, 2008

China Adopts Law Promoting Sustainable Economic Growth

Prior to the Olympics, some experts were concerned about whether the Chinese government would withdraw from its commitment to addressing climate change once the games ended. However, Chinese officials recently made good on their pledge when the National People’s Congress (NPC) passed a law, signed by President Hu Jintao, that is expected to boost sustainable development through energy saving and emission reduction measures.

The law, which takes effect Jan. 1, contains provisions including tax breaks, special spending and other measures to promote sustainable economic growth.

Chinese officials will conduct closer monitoring of resource-intensive and heavily polluting industries such as steelmaking, non-ferrous metal production, power generation, oil refining, construction and printing, according to Xinhua, China’s official news industry.

Much of China’s pollution is caused by the use of coal as a power source; China consumed 1.16 tons of coal every 10,000 Yuan of GDP in 2007, down 3.66 percent from 2006, and the government has set a 2010 target of reducing energy consumption per unit of GDP by 20 percent and major pollutant emissions by 10 percent from 2005 levels.

The law will also encourage industries to adopt water-saving technologies and use cleaner sources of energy such as natural gas and alternative fuels and promote recycling of waste materials such as straw, livestock waste and farm by-products to produce marsh gas.

The pollution control portion of the law is especially important for slowing the impact of further climate change. Studies by American scientists at the National Oceanographic and Atmospheric Administration have revealed that pollution from manufacturing, as well as cooking and heating in Chinese homes could create summer hot spots in Europe and the U.S. by mid-century.

Add comment September 9th, 2008

Dow Chemical Leverages Unified Sustainability Platform to Save $2 Million

The enterprise is not known for frivolous initiatives. Not to take anything away from the “green” movement, but it wouldn’t last long if it didn’t result in lower operating costs in addition to meeting regulatory compliance mandates.

That’s why I’m delighted to tell you that one of our best clients, Dow Chemical, is using ESS’ unified platform for EHS sustainability as the foundation for its Environmental Reporting Project, which was launched in 2004 to promote regulatory compliance. I mentioned the company’s success in a previous blog post a few months ago when ESS announced that Dow was the “Best of the Best” winner of the ESS Excellence Award program. Now I want to share why the project was so successful.

The project’s innovative new work processes and unified software platform enabled Dow to eliminate more than $2 million in redundant legacy reporting systems and they leveraged existing enterprise information systems that interoperate with ESS enterprise software across all implemented sites. The new platform improves reporting efficiency and accuracy, and enables all of the company’s U.S. facilities to use a common reporting process. Dow’s integrated software platform has the potential to save an additional $2 million over time by eliminating redundant work processes and supporting resources.

The project delivered a standardized solution for Dow’s U.S. sites through the implementation of ESS’ enterprise platform, with applications for chemical inventory management, waste, air and water emissions management, on time and on budget. Dow’s Environmental Reporting Project work processes, procedures and training are housed and accessible on a single Web site. Standard business rules, work processes, material properties, calculations and tools allow for consistency and standardization of multimedia reporting results across the sites and businesses.

To safeguard Dow’s investment, a centralized support organization has been institutionalized. Leveraging centralized resources eliminated the need for a support organization at each site. Use of the global Management of Change process across all reporting sites ensures that the standard configuration is maintained and adapted consistently. A control plan has been put in place to further ensure compliance with the system standardization and work processes.

1 comment September 3rd, 2008

Lower Health & Safety Incident Rates Buoyed by Information Management Tools

Access to better data and crisis management tools in the enterprise have begun to make a real difference in Environmental Health and Safety (EHS) results. Zero work-related injuries and illnesses is the benchmark standard for any organization, for both ethical and business reasons. It would seem obvious that it’s in everyone’s best interests to keep both processes and products as safe for the worker as possible.

And yet in the past, that was difficult to do, especially for large organizations engaged in important industries like power generation, chemical manufacturing or oil exploration.

Whether your business goals target cost reductions, business growth or risk management, every employer has a social and/or a legal obligation to provide and maintain a safe and healthful workplace for employees. It makes business sense: the cost of a lost workday injury is substantial. For every dollar spent on the direct costs of a worker’s injury or illness, much more is spent to cover the hidden costs. When good information enables managers to make fast, critical decisions on behalf of workers, the situation is always win-win.

So when the U.S. Bureau of Labor Statistics (BLS) announced a decline in worker fatalities in 2007, we at ESS know that better information management systems, empowering managers with faster ability to react, contributed to that effort. Department of Labor Secretary Elaine L. Chao said, “This is continued evidence that the initiatives and programs to protect workers’ safety and health, designed by and implemented in this administration, are indeed working. In addition to a decline in the overall number of fatalities, the rate for 2007 declined to 3.7 fatalities per 100,000 workers. This is the lowest fatality rate in recorded OSHA history.”

And why was that? The continued advance of EHS software technology, like our Incident, Audit, and Industrial Hygiene software solutions, which help clients worldwide improve their worker health and safety programs.

Am I totally objective? Probably not. But am I right? Probably more than many people at OSHA or the BLS know.

Add comment August 27th, 2008

ESS Announces Publication of “Executive Ethics”

This is the first time we’ve been asked to contribute to a book, and the reason I said “yes” is because it’s a book on corporate ethics, which has always been one of the most important subjects in my life. In fact, when I started the company I did so out of a concern for the ethics involved in preventing refrigerant emissions from releasing CFCs into the ozone layer. That sure seems like a long time ago, in the environmental Dark Ages. Or maybe it’s better to call it the beginning of the Renaissance of a concern for sustainability.

At any rate, I’m pleased to announce ESS’ contribution to the recently-published book, Executive Ethics: Ethical Dilemmas and Challenges for the C-Suite.

Recognized subject-matter experts and business leaders were invited to provide commentary on topics that apply various aspects of business ethics to executive decision making. I was honored to contribute the chapter on environmental ethics, which summarizes social and political movements and events that transformed environmental concerns from a stakeholder concern to a matter of business ethics. Issues like major industrial accidents, conversion of atomic (and later, nuclear) power from military to commercial use and the development of EHS information technology, like ESS software, helped drive greater awareness of and benefits from incorporating corporate responsibility strategies into executive decision making.

The book, published by Information Age Publishing, is now available from leading retail and online booksellers, including Amazon, Barnes and Noble and Borders.

Our participation has already paid dividends for our company, as the book’s worldwide acclaim has provided a new forum for ESS - already acknowledged as the global industry leader - to be recognized as a thought leader.

We run our business with the conviction that what we are doing is not only good business, but good for everyone around us. We’re a cog in the great machine that can create and preserve global sustainability.

Add comment August 20th, 2008

CSR Report Shows Marathon’s Commitment to Reduce Emissions

With oil companies in the headlines every day and people understanding as little about how the oil business works as they do, I thought I’d read the 2007 Marathon Oil CSR Report and see what an oil company has to say about its environmental stewardship activities. Especially one that has just bought our software. Naturally, we think companies invest in the tools they need for more than just corporate responsibility reporting. Executives are looking to manage the company’s overall business risk and measure its progress toward true sustainability.

Once again, I’m struck by how these reports have changed. This one is full of real data. For oil companies, a principal measure of environmental performance is oil spills, because they have a big impact on the environment. The 2007 report is full of facts and data showing that the company, over a five-year period, has reduced the number and volume of oil spills equal to or greater than one barrel, and reduced both its upstream and downstream spill rates. Marathon also is using a Gas-to-Fuels technology at a demonstration plant built purely to explore the potential for turning natural gas into transportation fuel.

Since 1999, Marathon has invested $450 million in technology to reduce emissions. It’s going to invest another $30 million through 2008 and Q1 2009. In all, capital investments for environmental projects totaled $199 million last year, which was about 4 percent of total capital expenditures. It’s a clear indication that Marathon is committed to address emissions management concerns.

On the Health and Safety side, Marathon has developed metrics for incidents and near misses and leading indicators to track and improve process safety performance. The company is expected to use the data in next year’s CSR report, where there will be better measurements of success.

Eyes glazed over by data? That’s good. Marathon has shown that it’s serious about controlling its emissions, preventing spills and accidents and doing more than just giving lip service to corporate responsibility reporting.

Add comment August 7th, 2008

Report Tracks Growth of Corporate Sustainability Reporting

What are the implications when an organization forms solely to research and analyze sustainable investments? It means that institutional investors are requiring corporations to present sustainability performance data in their corporate responsibility reporting. If you haven’t already heard of the organization, meet the Sustainable Investment Research Analysts Network (SIRAN), which has just issued a report on the corporate responsibility initiatives of the S&P 100 companies.

According to the report, more than half of the U.S.’s largest publicly traded companies now report on their sustainability efforts. Over a third integrate elements of the Global Reporting Initiative (GRI) sustainability reporting guidelines. The GRI guidelines establish a standard for what should be in a sustainability report. Clearly this group puts pressure on the rest of the S&P 400 to “belly up to the bar.”

To me, the existence of a group like this demonstrates the extent to which sustainability initiatives have graduated out of Environmental Health and Safety departments into the corporate boardroom. Companies are being watched for their efforts to become sustainable and judged based on publishing real metrics, not glossy photos.
Out of the 100 companies:

• 86 have corporate sustainability sites, a 48 percent increase from 2005
• 49 produced a sustainability report in 2007, up 26 percent from 2005
• 41 incorporate GRI standards, a 71 percent increase from 2005
• 34 include a GRI Index in their report, up 70 percent from 2005

The SIRAN study says a sustainability report must include data covering three or more areas of corporate responsibility performance or execution on corporate governance initiatives.
What does this mean? It means your organization’s EHS data needs to be defensible in front of an industry analyst if it courts both institutional and individual investors.

Add comment July 23rd, 2008