Integrating Sustainability Principles in a Small Chemical Company
In spite of their size, small chemical companies bear as much responsibility to conduct their businesses in a financially, socially, and environmentally responsible way as large manufacturers do. Because of their smaller size, these manufacturers can find the thought of integrating sustainable development activities overwhelming. A myriad of benefits, including reduced costs, make the effort worthwhile. Commitment from top management and a thoughtful and practical approach can enable smaller companies to successfully transform their organizations. By Cynthia A. Challener
What Is Sustainable Development?
The most often quoted definition of sustainable development (SD) is the Brundtland definition from 1987, which says that SD is “development which meets the needs of the present without compromising the ability of future generations to meet their own needs.” The Agenda 21 (report on 1992 United Nations Conference on Environment & Development (UNCED)) explains SD in these terms: “the right to development must be fulfilled so as to equitably meet development and environmental needs of present and future generations.”
In essence, sustainable development goes beyond environmental management and incorporates social and financial responsibility as well. The term ‘corporate social responsibility’ (CSR) is often associated with sustainable development. The severe poverty in many parts of the globe, the ever growing number of people that do not have access to clean water, food and shelter and the continued destruction of important ecosystems underscore the need for companies operating under the principles of sustainable development.
Companies must be concerned with the “triple bottom line,” a term coined by John Elkington, the founder and current chair of SustainAbility, a consultancy which assists companies in understanding how to address the challenges of sustainable development in their businesses.
For smaller chemical companies, as with larger companies, SD begins with an understanding of the impacts of the firm’s products and processes on current and future populations and ecosystems, according to Jeff Erikson, SustainAbility’s US Director. Dan Fiorino, Director of the National Environmental Performance Track Program of the Environmental Protection Agency adds that smaller chemicals need to focus on economically viable operations that afford the least impact on the environment. Companies with sustainable operations are highly efficient in their use of energy, have active pollution prevention and water use management programs and continuously work to reduce their overall environmental footprint. These companies also make responsible products, are good neighbors and act to address issues affecting the community.
“Overall,” says Mr. Erikson, “sustainability is a more holistic way of thinking. It is about expanding a company’s vision laterally — to include environmental and social aspects as well as financial – and longitudinally – looking long term to the next generation, not just at short term impacts.” Businesses need to demonstrate what they have to contribute to their community and also show that they are operating in a safe and responsible manner.
Key principles of sustainable development include transparency, accountability and engagement. These principles apply to all impacts, not just traditional, immediate and direct ones. Transparent companies, no matter what their size or business sector, operate under the assumption of disclosure, and only withhold information from the public for which there is a solid business rationale (such as privacy, legal issues, competitive intelligence, etc.). Firms that listen to outside voices and ask for and consider seriously the opinions of various stakeholders are better prepared to manage business risks and capitalize on opportunities. Lastly, organizations that go beyond the legal and regulatory requirements placed upon them to ensure their products are safe, their operations have a minimal impact on the environment, and social issues are addressed are likewise better equipped to manage changing societal expectations and capture market opportunities.
Benefits
Aside from having the knowledge that the company is working towards a sustainable future, integrating the principles of sustainable development into its business operations can provide other tangible and intangible benefits. Reduction and elimination of inefficiencies and waste leads to direct cost savings for companies of any size. “Putting a different lens on product development in order to design more inherently safe products and processes often unleashes creativity as well,” says Mr. Erikson. Companies that have adopted the principles of SD also have reduced risk.
For smaller chemical companies, there are additional potential benefits to be considered. “When companies use less hazardous raw materials, they often produce less hazardous waste,” says Mr. Fiorino. Chemical manufacturers that operate in an environmentally responsible fashion also have reduced problems with regulators. “Often rimes regulators will recognize companies with good performance records and clear sustainable development activities by allowing them more flexibility in meeting their compliance obligations,” he adds. Furthermore, companies with SD programs can have healthier employees and reduced legal issues (and associated costs) with their communities. There is also a potential for obtaining reductions in insurance coverage costs according to Mr. Fiorino.
“Smaller companies tend to be more agile and can change their business models more quickly than larger companies,” says Mr. Erikson. “They can move further faster with less inertia to deal with, and are much better suited to capture market potential and respond to market opportunities and threats,” he adds. “Therefore, they can realize the impact of sustainable development efforts on the bottom line much sooner.”
In addition, smaller companies are more likely to find niche products that meet emerging societal needs and be able to capitalize on them so that they contribute a significant amount to the organization’s profitability. These companies with a strong commitment to sustainability and emerging products and technologies often appear exciting to new entrants to the workforce. “These graduates want to work for companies that will enable them to do something good and right in addition to earning a living, notes Mr. Erikson. “Recruitment and retention of the best and the brightest talent can be a direct benefit for smaller companies that have integrated SD principles into the business operations.”
Chemical companies that produce safer and more responsible products will be able to better meet the needs of consumers in the future. The demand for goods that are made responsibly has been increasing and greater pressure is being placed on manufacturers. Currently there is a distrust of chemicals by consumers, but as yet no strong connection has been made between the chemicals and end products. Consumers will inevitably make that connection, and chemical companies operating sustainable businesses will be far more prepared for that day than those organizations that continue to operate under traditional business models.
Challenges for the Small Company
Companies that have made a commitment to Responsible Care® have often addressed many of the safety and environmental components of a good sustainable development effort. Therefore, these organizations will have a good head start. The focus must then be on transparency, accountability and engagement, as these are the essential components of sustainability and are necessary for any attempt at integrating principles of sustainability into a business to be successful.
A major challenge for all companies looking to incorporate sustainability into their business operations is that SD requires change in behavior. Companies must provide incentives to get their people to change. It is not enough to put the SD principles in place. The difficulty is making everyone in the business and throughout the supply chain buy into the principles and make them part of the way business is routinely done. Any sustainable development effort must originate from top management and be driven down through the organization to all employees at all levels.
Smaller companies in particular face the basic and on-going challenge of competing financially. “It can be costly to integrate some sustainable development activities,” says Mr. Fiorino. “A good company will identify the operations and activities that can be improved and find a way to do them that allows the firm to remain profitable,” he continues. In addition, smaller companies have fewer resources and consequently less expertise in the broader-ranging components of sustainable development. Smaller firms also tend to have fewer resources available to develop and maintain robust management systems and less efficient processes. As a result, they can have higher risk associated with them both for the short and long term.
Many smaller chemical companies have little or no pressure placed on them to demonstrate progress on environmental and other issues — from the public, regulators, or non-governmental organizations (NGOs). This is often perceived as a benefit by smaller company. But in fact there is a down side to this lower profile. Because there is sometimes little external pressure, smaller firms may not be as vigilant with regard to changing societal expectations. The lower visibility also means there is less opportunity for positive news to be disseminated and for the company to make a significant market impact.
Batch manufacturing, often the major production method for smaller chemical companies, poses its own difficulties. According to Mr. Fiorino, permits can limit the ability of batch manufacturers to respond to their customers and make it more difficult for companies to be as competitive as possible. Small chemical producers are also often custom manufacturers, providing production services and therefore don’t always participate in the design of the products they make or the processes used to make them.
Start Simple
Despite these challenges, there are numerous SD activities that a smaller chemical company can pursue. The first step is to conduct an audit to identify where the company can make improvements in its performance. One of the most important actions for any company to take is to reduce energy consumption and green house gas emissions, which will have a direct positive impact on the bottom line.
For chemical companies, additional activities include looking for investments in process improvements to reduce emissions and discharges that will improve the economics of the processes as well, according to Mr. Erikson. Simple pollution prevention activities can result in reduction of waste disposal costs. Considering pollution issues when designing new products and processes can save on costs for the entire life of a product, adds Mr. Fiorino.
The use of ‘green chemistry’ is in fact a significant aspect of sustainable development. Green chemistry encompasses the use of smaller quantities of materials and less hazardous chemicals, production of safer products (less toxic, degradable, etc.), use of renewable feedstocks, design of more efficient processes with fewer byproducts, use of catalysis, inherently safer chemistry, and production of less hazardous waste and/or waste that can be re-used or recycled, among other practices.
As for the social component of sustainable development, smaller chemical companies can invite the public in to initiate a dialogue. Many companies are already involved with their communities to some extent for emergency planning purposes. That involvement can be taken a step further by these companies if they really seek out the opinions of other stakeholders with regard to the risks that their plants and products pose to the community. The end result with be strong relationships with the community.
Mr. Erikson suggests that all companies can find ways to positively impact local communities. For example, companies with in-house medical staff could share their medically trained personnel with a local hospital or clinic that isn’t capable of meeting the needs of the community. “Even small companies can identify a need in the community — health, education, food shelters, for example — for which they can provide assistance. They should develop a plan to address that need in a way that contributes to the company’s business goals as well.”
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Cynthia A. Challener is principal consultant at C&M Consulting. C & M Consulting offers technical writing, editing, and research services to the chemical and allied industries. Services include the development of marketing brochures, technical bulletins, presentations, and feature articles. In addition to her work for ChemAlliance, Dr. Challener has provided services to a wide variety of chemical industry clients, including Chemical Market Reporter, ACS, and SOCMA.
This article has been reprinted courtesy of ChemAlliance.
