Outside In Exploring corporations’ voluntary integration of “sustainability” into business...

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Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing atmospheric concentrations of greenhouse gases
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Page 1: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Outside InExploring corporations’ voluntary integration of

“sustainability” into business discourse and operations as a potential force for stabilizing atmospheric

concentrations of greenhouse gases

Page 2: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

By Susan Russell

[email protected]

Page 3: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Today’s Presentation

• Corporations as potentially powerful forces in fight against climate change

• Overview voluntary corporate adoption of “sustainability” discourse, performance and disclosure agenda

• Sustainability and GHG reduction– Examples: Smithfield Foods and BP

• Wrap up

Page 4: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Harnessing Powerful Forces for Positive Change

“Businesses are among the world’s most influential institutions. As society’s mechanism for production and consumption, their decisions have significant environmental effects.”

- World Resources 2002-2004, Decisions for the Earth, Balance, Voice and Power.

Page 5: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Harnessing Powerful Forces for Positive Change

Reach: Corporations are “glocal” citizens: multi-national, cross-cultural, multi-lingual

Page 6: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Harnessing Powerful Forces for Positive Change

Reach: Corporations are “glocal” citizens, multi-national, cross-cultural, multi-lingual

Corporations constitute 51 out of world’s 100 largest economies

Page 7: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Harnessing Powerful Forces for Positive Change

Reach: Corporations are “glocal” citizens, multi-national, cross-cultural, multi-lingual

51 out of world’s 100 largest economies Corporations house unique business-specific

expertise Transform impacts into opportunities

Page 8: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Harnessing Powerful Forces for Positive Change

Reach: Corporations are “glocal” citizens, multi-national, cross-cultural, multi-lingual

51 out of world’s 100 largest economies Corporations house unique business-specific

expertise Transform impacts into opportunities

Needs of corporations can shape policy decisions

Page 9: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Defining Sustainability

• “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

– Brundtland Report, 1987

• “Forms of progress that meet the needs of the present without compromising the ability of future generations to meet their needs.” – World Business Council for Sustainable Development

Page 10: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

And One More …“Triple bottom line” business agenda and

performance: improved integration of concepts of economic prosperity, environmental regeneration and equity to achieve win-win-win situations.

– John Elkington, Chairman of SustainAbility, Author of

Cannibals With Forks and The Chrysalis Economy

Page 11: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

A Definition of Its Own: Internal Corporate “Sustainability”

• Trend: Corporations making sustainability meaningful within unique business context– Mind-set that gets threaded into business – Various sustainability “value propositions”– Finding the language that works as an

organizational concept

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A Definition of Its Own: Internal Corporate “Sustainability”

• Sustainability by other names:– Environmental, health and safety

performance– Sustainability– Corporate Social Responsibility– Stewardship– Global Citizenship– Etc., etc., etc.

Page 13: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Voluntary Adoption of Sustainability: A Brief History of Disclosure

• Since early 1990s voluntary environmental reporting– Majority viewed as “green washing,” PR

efforts, very little credibility– All the “positive” things

Page 14: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Voluntary Adoption of Sustainability: A Brief History of Integration and

Disclosure• 1990s to present:

– Trend toward increased accountability and transparency of companies across all levels, functions, operations

• Currently– 1999: 35% of Fortune global top 250 companies

producing reports – 2002: 45% of Fortune global top 250 companies

producing reports – Still small fraction of all companies.– Improved information

• Good, bad and the ugly; more credible, balanced

Page 15: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Adoption of the Sustainability Performance Agenda and

Disclosure

• Trends and Drivers:– External stakeholder pressure and informational

demands• Communities• NGOs• Governments

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Sustainability Performance Disclosure

• Trends and Drivers:– Shareholder pressure, resolutions

Page 17: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Sustainability Performance Disclosure

• Trends and Drivers:– Business value from improved performance

• Top and bottom-line value• Reputation• Risk reduction

Page 18: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Sustainability Performance Disclosure

• Trends and Drivers:– Growth in investment

indices and rating firms

• E.g., Dow Jones Sustainability Index, Innovest, FTSE4Good

• Lengthy questionnaires

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Value of Disclosure: Company

• Issuance of public report helps drive evolution of concept and improvement of performance – Process stimulates integral exploration of nebulous concept – Reporting drives accountability for performance and desire to

improve – Process important part of the learning within the corporation as

well as for gathering relevant information– Potential to speak first on key issues– Economies of information– Top-line value– Bottom-line value– Reputational value

• Industry leader• Preferred supplier

Page 20: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Value of Disclosure: Public

• More information about the corporation is publicly available

• Transparency promotes dialogue

• Informed decision-making– Improved democracy

• Improved accountability

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Energy Strategy: Important Part of Sustainability Commitment

• Energy and CO2 reduction strategies standard part of most sustainability commitment

• Create tangible bottom and top-line value

Page 22: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Two Companies: Smithfield Foods and British Petroleum (BP)

• Rationale – Both produce an abundance of gas– Both have integrated “sustainability” in a manner fitting for their

company– Both have a commitment to voluntary public disclosure– Both are performance leaders in their respective industries– Both are global corporations

• Caveat:– Will only do BP if time permits

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Company Profile

• World’s largest pork producer and processor• 2004

– Sales: $9 billion– Hogs produced by 650 company-owned

farms and 1,800 contract growers worldwide

– U.S. Operations:• Produced 14 million hogs

– 1750 Contract farmers and 450 company-owned farms

• Processed 24.7 million hogs• Processed 2 million cattle

Page 25: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Defining “Stewardship”

• The “ongoing efforts to protect the natural environment, the safety of our employees and the welfare of the animals we raise … stewardship is not just an ethical responsibility. It’s also a critical investment for building trust with our stakeholders and positioning our company for responsible growth now and in the years to come.”

• Transforming respect for employees, the animals raised for food production, the environment and stakeholder into a driving force for performance improvement, innovation and value creation.

• Disclosure– Annual Stewardship report– Web site– Stakeholder engagement

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Environmental Management Systems

• First in industry to implement ISO 14001-certified systems in U.S. production and processing operations.– Basis for compliance, pollution prevention, continuous

improvement.– ISO 14001: systematic method for managing aspects and

impacts of facility• Annual audits by third-party accredited auditors• Identification of eco-efficiency opportunities

Page 27: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Stewardship Challenge and Opportunity: Waste-to-Energy

• Key environmental aspects– Hog manure– Wastewater residuals– Animal fats– Vegetable oils

• Key energy-related business opportunities: – Process innovation– Waste-to-energy technology investment– Unique ventures for renewable fuels– Exploring partnering opportunities and policy change

Page 28: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Process Innovation:Patrick Cudahy

• Adapted boilers and employed leading-edge system technologies.

• Allows meat processing plants to supplement fuel needs by recycling animal fats and other byproducts captured during wastewater treatment process

• Extraction of 175,000-200,000 gallons of grease for fuel– Environmental and business benefits

• Offsets purchase of natural gas for same purpose.– Cheaper source of fuel

• Burning of animal grease for reuse as fuel compared to natural gas

– Lower nitrogen oxide– Lower sulfur dioxide

• Reduced disposal costs• Conservation of landfill space

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Process Innovation: Moyer Packing Company, Southern PA

• Specially adapted boiler technology– Powered by animal fats and

vegetable oils from rendering operations

• Benefits– Cheap, renewable source of fuel– Cleaner burning fuel:

• Reduction of NOx and SOx

Page 30: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Investment in Hog Waste Management Technologies

• 2000: Smithfield Voluntary Agreement with North Carolina’s Attorney General’s Office– $15 million– Program pursued by team at NC State

University– Investigating roughly 18 technologies– A number of these are waste-to-energy– Smithfield piloting some technologies

Page 31: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

www.bestbiofuels.com

Page 32: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Business Ventures: BEST BioFuels, LLC

Livestock waste to biogas ASTM-standard biomethanol biodiesel

Page 33: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Business Ventures: BEST BioFuels, LLC

• Major partner in BEST BioFuels, LLC– Invested $20 million

2003 in building waste collection system and central treatment complex at Circle Four Farms, southwestern Utah

Page 34: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Business Ventures: BEST BioFuels, LLC

• Utilizes Biomass Energy Sustainable Technology (BEST)

• Environmentally superior technology that Smithfield helped pioneer and pilot

• How it works:– Separates hog waste into partially

purified liquid and solid material– Solid material transported from

farm to centralized processing facility

– Technology transforms solids into various forms of energy, methane, and methanol

– Ash produced can be used as fertilizer

Page 35: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Business Ventures: BEST BioFuels, LLC

– Circle Four Farms:• 23 Circle Four Farms produce livestock waste

– High concentration of animals (144,000 head of finishing hogs)

• Waste is piped to central location through 40 miles of pipe and concentrated at four centrally located digesters

• Concentrated waste is heated and anaerobically digested to yield biogas

• BEST converts biogas to biomethanol, using patented thermo-catalytic process

Page 36: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Business Ventures: BEST BioFuels, LLC

• Key benefits: – Reduces waste volume – Captures methane– Creates valuable commodity

• Potential commercial uses– Biodiesel, clean-burning

renewable fuel typically blended with conventional petroleum diesel at 20/80 ratio

Page 37: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Business Ventures: BEST BioFuels, LLC

• Next Steps …– BEST BioFuels produces 2,500 gallons of

biomethanol from 500,000 gallons of hog waste per day

– 2005, anticipates work will be completed on biodiesel manufacturing facility in Texas

• Biodiesel generation

Page 38: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Increased Biogas Usage

• 2004 overall biogas usage increased 19 percent over 2003 usage– From 247,111 to 293,862 Decatherms

Page 39: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Partnering to Promote Renewable Energy Demand

• Participation in North Carolina Green Power– Independent nonprofit program that uses voluntary

contributions to purchase electricity generated from renewable resources to NC

• Energy to be purchased by homes/businesses in NC

– 2004: • Among seven energy producers who signed agreements to

provide renewable sources– Small, tax-deductible premium

• Methane from hog waste converted to electricity through microturbine at waste collection site

Page 40: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

BP Profile

• Leading global energy company– Sales and other operating revenues

“turnover” $285 billion

• Reputation as global sustainability leader– Dow Jones Sustainability Index

• Many firsts:– First internal emissions trading– Achieved industry’s lowest rates of gas

flaring

Page 41: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Sustainability at BP

“For us, ‘sustainability’ means the capacity to endure as a group by renewing assets, creating and delivering products and services that meet the evolving needs of society, attracting successive generations of employees, contributing to a flourishing environment and retaining the trust and support of customers, shareholders and communities.”

• Disclosure– Annual sustainability report available online at www.bp.com– Detailed information on science of climate change and search

for solution– Verification of reporting information by third-parties

Page 42: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Sustainability and Climate Change

• Provides access to overview of the issue and science of climate change

• 1997: first in industry to publicly state precautionary action justified– Set initial target for 2010: GHG emissions from operation 10%

lower than 1990 emissions• Achieved target in 2001

• 2003 BP engaged in more focused inquiry on what is required to stabilize GHG concentrations and further work to minimize emissions from own operations

– Set new target for 2012: No increase in net emissions from 2001

levels by 2012

Page 43: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Actions on Climate Change

• Emissions reduction strategies– Emissions trading– Strategic energy management

• Improved operational efficiencies• Technological innovation

– Investment in renewable energy technology business• BP Solar is one of the world’s largest solar

electric companies• BP’s renewable energy business• Growth goal: 25% per year

– Product innovation– Research partnerships

Page 44: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Emissions Trading

• Jan. 2000: launched first global emissions trading system for all 150 corporate business units to participate – First year: 2.7 million metric tons of CO2 equivalent exchanged

at average price of $7.60 per metric ton

• Active promotion of/participation in market mechanisms– Helped develop existing UK emissions trading scheme– Involved in helping to develop European Union Emissions

Trading Scheme – Largest and first international market for CO2– Voluntary schemes in United States

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Products and Innovation

• Emissions from products roughly 15 times higher than operational emissions

• Product innovation 2003:– 2003: BP Ultimate fuels compared with standard fuels “twice the

cleaning power of normal fuels”• 14.5% reduction in CO compared with traditional fuels• 5.3% reduction in NOx emissions• 2.2% reduction in CO2• 5.6% reduction in unburned hydrocarbons

– Lower-sulfur diesel and liquefied natural gas– Hydrogen production and demo projects

Page 46: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Research Partnerships– Princeton U, Massachusetts Institute of Technology

• Carbon Mitigation Initiative• Identifying technology applications to mitigate climate change

– Stanford U• Three-year, $2 million agreement• Public policy aspects of modern energy markets

– Initiated Carbon Capture Project• Industries first large-scale project to develop tech for

capture/storage CO2– Clean Energy Facing the Future

• $10 million, 10-year program, project with the Chinese Academy of Science and Tsinghua University

• Studying implications of clean energy technologies for China– Royal Academy of Engineering, Imperial College London,

Princeton University

Page 47: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Wrap Up

• Voluntary adoption of sustainability performance and disclosure potentially power force for reducing GHGs

• Concept of sustainability within corporations:– Improves performance, – And promotes commitment to disclosure/corporate transparency, – which promotes internal and public access to information, – which promotes accountability, – which promotes overall environmental performance

improvement,– which includes valuable strategies for reducing GHGs and

responses to climate change,– which promotes value to business and multiple stakeholders.

Page 48: Outside In Exploring corporations’ voluntary integration of “sustainability” into business discourse and operations as a potential force for stabilizing.

Questions?

Thank You