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Hector R Rodriguez, CIH, CSPDirector, Global EHS & SustainabilityBiogen Idec

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Objectives of this Talk – An Overview of…

What is Sustainability?

What is Sustainability Management?

Process to develop and implement a Sustainability Strategy

And potential implications to the EHS professional

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Challenges of this DefinitionDoes not address resource consumption issues, nor the distinction between

renewable resources and non-renewable resources. Does not really answer the question of what sustainability means and also leaves it to our imagination to

determine which “needs” are legitimate and which ones are not. 2

Part I - What is Sustainability?

Traditional DefinitionSustainable development is development that meets the needs of the

present without compromising the ability of future generations to meet their own needs.1

Philosophically, Sustainability could be thought of as the goal and Sustainable Development one of the requirements needed to achieve it…

1. “Our Common Future.” World Commission on Environment and Development. Aug. 1987. 2. “Re-Casting the Triple Bottom Line.” Center for Sustainable Innovation. Jun. 2007

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Addresses questions such as: 3

A Better Definition of Sustainability…

1. Is it possible for the rate of human use of renewable resources to exceed the rate at which such resources are renewed or replenished?

3. Daly H., Beyond Growth: The Economics of Sustainable Development. 253 pp. Boston: Beacon Press, 1996.

2. Is it possible for the rate of human use of non-renewable resources to exceed the rate at which renewable replacements for such resources are developed?

3. Is it possible for the rate of waste emissions by humans to exceed the rate at which the environment can assimilate such wastes?

4. Is it possible for the rate of human, social, constructed and economic needs to exceed the rate at which they are being created?

YES… Freshwater… fisheries… clean soil

YES… e.g. Mineral replacements…

YES… e.g. Superfund sites…

YES… Healthcare in Africa… Education system in the US… Infrastructure in Mexico…

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As the answers to the questions on the previous slide can be yes, we can say that the

human activities associated with them are unsustainable.

A Better Definition of Sustainability… (cont)

In order to be sustainable, we must therefore address the impacts of human activity on the quality and sufficiency of vital capitals (renewable, non-renewable and societal) in the world.

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What is Capital?

“Capital” is a stock of anything that yields a flow of valuable goods or services to people who need them.

Sustainability must therefore address and manage the impacts of human activity on the quality and

sufficiency of vital capitals in the world…

Linking Vital Capitals and Well-Being…

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This is the capitals-based theory of sustainability, the foundation for most of what passes for mainstream practice in Sustainability Management.

Vital Capitals and Well-Being

Economic Capital

Social Capital

Environmental Capital

Available flows of beneficial goods and services

Appropriated by individuals and collectives

Resulting in levels of individual and collective well-being

CAPITAL FLOWS

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Environmental Capital

Is the extension of the economic notion of capital to environmental goods and services. Environmental capital is thus

the stock of natural ecosystems that yields a flow of valuable ecosystem goods or services into the future. For example, a

stock of trees or fish provides a flow of new trees or fish, a flow which can be sustainable indefinitely. Environmental capital may

also provide services like recycling wastes, water treatment and removal of air contaminants.

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Social Capital

• Social capitals required for human well-being include:– Human capital - Individual knowledge, skills, and

other assets (including human rights) required to take effective individual action.

– Community capital - Shared knowledge and cooperative networks of people committed to achieving common goals (schools, hospitals, government, etc.)

– Constructed capital - The material world that humans produce such as roads, utilities, etc.

• Also known as anthropogenic capital, because these capitals are produced by humans

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Should not to be confused with financial capital“So, while the economic component of the triple bottom line

is often assumed to be synonymous with financial performance [i.e., with the financial bottom line], in fact, there are significant differences between the two….[E]conomics

extends beyond the boundaries of a single organization….A company’s investment in a community can

serve as an engine of growth in the economy through employment, boosting local supply chains and developing a new skills base. The goods and services that companies produce can also contribute to a higher quality of life.” 4

Economic Capital

4. Henriques A., Richardson J. The Triple Bottom Line: Does It All Add Up? London: Earthscan Publications Ltd.., 2004.

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Economic Capital

• There are many, and could be considered variants of social capital:

–Employment rates–Employees’ wealth–Owners’ wealth–Local, regional and global commerce–Trading partners–Customers–Community economic affairs–Etc.

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Sustainability is the subject of a social or management science that studies and manages the impacts of human activity on

the quality and sufficiency of vital capitals in the world, as required to ensure human well-being. 5

What is then Sustainability?

5. McElroy, M. Social Footprints – Measuring the Social Sustainability Performance of Organizations. Dissertation, 2008

The Sustainability Professional studies and manages the impacts of an organizations’ activities on the quality and

sufficiency of vital capitals wherever it operates, as required to ensure human well-being.

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Part II - What is Sustainability Management (SM)?

Sustainability ManagementSustainability Management

Enterprise OrientationEnterprise Orientation

Social Benevolence

Social Benevolence

Eco-efficiency

Eco-efficiency

Triple Bottom-Line

Triple Bottom-Line

Context Based OrientationContext Based Orientation

Life Cycle OrientationLife Cycle Orientation

Environmental Capital

Environmental Capital

Economic Capital

Economic Capital Social CapitalSocial Capital

LCA’s of Products and Services

LCA’s of Products and Services

Environmental Capital

Environmental Capital Social CapitalSocial Capital

Refresher: to achieve Sustainability, SM must address all three vital capitals

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• Focus is on influencing sustainability performance at the organizational level

• Activity- or operations-oriented• Seldom takes into account sustainability

performance further up or down the supply or demand chains

• Product- and life-cycle-based• Takes the position that it is more

important to influence the environmental impact of a product throughout its entire life cycle

• This approach examines the impact of a product from its inception as a raw material to its ultimate disposal following consumer use

Enterprise Life Cycle Analysis

Two common approaches to managing and reporting on sustainability that differ by boundary and content:

Enterprise vs. Life-Cycle Orientations

As here defined, LCA’s are an important element of Sustainability

Management

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Eco-efficiency

Social Benevolence

Triple Bottom Line

Context-based Sustainability

Enterprise Orientation – Four Schools of Thought

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“Industry is moving toward ‘demanufacturing’ and ‘remanufacturing’ — that is, recycling the materials in

their products and thus limiting the use of raw materials and of energy to convert those raw

materials…It is the more competitive and successful companies that are in the forefront of what we call

‘eco-efficiency’ ” 6

Arguably the basis of the “green” movementAlso the basis of life cycle orientations to sustainability, including LCAs

Is more about efficiency than sustainability, as the name suggests

Eco-Efficiency

6. Schmidheiny S., Changing Course, The MIT Press, Boston: Apr. 1992

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Similar terminology includes Corporate Responsibility and Corporate Citizenship; views sustainability in terms of social responsibility and

philanthropy. Companies that adhere to this view tend to focus on social and economic impacts, and less in terms of environmental performance

…“is the continuing commitment by business to behave ethically and contribute to economic

development while improving the quality of life of the workforce and their families as well as of the local

community and society at large” (WBCSD, 1999)

Social Benevolence (Corporate Citizenship and CSR)

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“Today we think in terms of a ‘triple bottom line,’ focusing on economic prosperity, environmental quality, and — the element which business had

preferred to overlook — social justice.” 7

Explicitly pluralistic in its orientation: social, economic, and environmental. Arguably the dominant sustainability

paradigm in use today, including reporting requirements under the GRI, the leading measurement and reporting

standard

Triple Bottom Line

7. Elkington J., Cannibals with Forks, Capstone Publishing LTD. Sep.1999.

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• An approach that takes actual social, economic and environmental conditions in the world explicitly into account

2Knowledge of natural resource supplies tells us what our maximum impacts on the environment should be in order to ensure human well-being

2Knowledge of social resource demands tells us what our minimum impacts on society and the economy should be in order to ensure human well-being

• Most of what passes for mainstream Sustainability Management tends to be context-free

Context-Based Sustainability 8

8. McElroy M., “Sustainability Measurement and Reporting.” Deloitte. Weston, MA. 2010

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Here’s the Company X performance with context missing

Context-Based vs. Context-Free Example

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Sustainability Threshold (performance above

threshold is unsustainable)

Here’s the Company X performance with context added

Context-Based vs. Context-Free Example (cont.)

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What is then the Right Framework?

As Sustainability Management concerns itself with managing the impacts of human activity on the quality and sufficiency of our vital

capitals as required to ensure human well-being, it follows that:

Only the Triple Bottom Line in conjunction with the context-

based Sustainability approach allow us to manage all vital

capitals needed to guarantee human well-being.

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Part III – Developing a Sustainability Strategy 9

Objectives

• Specific targets

Mission

• Fundamental purpose

• Values

Strategy

• Prioritizes initiatives

SupportingOrganizationalArrangements

• Structure• Rewards• People• Systems

Strategic Analysis

• Benchmarking• Assessment of

impacts on vital capitals

• Assessment of internal strengths and weaknesses

9. Hambrick D., Fredrickson J., “Are You Sure You Have a Strategy.” Academy of Management Executive. 2001. Vol 15, No. 4.

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Infrastructure

Human Resource Management

Technology Development

ProcurementInboundLogistics

Operations OutboundLogistics

Marketing& Sales

Service

Support Activities

Primary Activities

Education and job trainingDiversity and discrimination

PhilanthropyWork-Life Balance

Transportation impactsPricing practices

Marketing practicesProduct Safety

TransparencyLobbying

Tax PlanningStakeholder Alliances

Supply chain practicesUtilization of natural resources

Trading PracticesCommerce Impacts

Emissions and wasteEnergy and water usage

Worker safety and labor relationsHazardous materials

Packaging useTransportation impacts

Customer AssistanceQuality of Life

Relationships with universitiesEthical research practices

Conservation of raw materialsRecycling

Assessing Vital Capital Impacts – Value Chain 10

10. Porter, M. E., “Strategy & Society.” Harvard Business Review, Dec. 2006

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Prioritizing Initiatives - Materiality Assessment 11

11. Global Reporting Initiative. Sustainability Reporting Guidelines. Amsterdam: 2006.

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Part IV

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Sustainability Management – Functional Support

Environmental Environmental CapitalCapital

Environmental Environmental CapitalCapital

• EHS• Engineering• Facilities

Social Social CapitalCapitalSocial Social CapitalCapital

Economic Economic CapitalCapital

Economic Economic CapitalCapital

• IT• R&D

• EHS• Engineering• Facilities• HR

• Finance• IT• Marketing• Public Affairs

• Accounting• Executive• Finance• Gvmt Relations

• HR• IT

Quick Visual Scan Reveals…

1. Multi-functional support required

2. No clear right of ownership to SM

3. EHS is in prime position to drive both EHS performance improvement and career growth

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Are EHS professionals properly trained, positioned and motivated to successfully

deal with this new generation of issues and the changing perspectives on traditional

issues?

The Fundamental Question

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Recent Presentation by EHS Professional… 12

Bruce A. Karas, MS, CIH, CSP, ROH Director, Sustainability, Environmental and Safety

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Yet Another… 13

David Eherts Ph.D.VP and Chief Safety Officer

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Gretchen Digby Senior Manager, Safety Engineering

And Yet Another… 14

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Are EHS professionals properly trained, positioned and motivated to successfully

deal with this new generation of issues and the changing perspectives on traditional

issues?

Back to The Fundamental Question…

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If appropriate, and depending on specific responsibilities and available resources, we should accept responsibility for driving Sustainability throughout our organizations.

As shown above, EHS professionals have as much at stake in Sustainability Management as any other, and we’ve also proven to have the ability to take ownership of the program and drive it to success.

We will however have to show the desire to learn new fields, the open-mindedness to accept new perspectives on traditional issues, and the passion to drive change.

What to do?

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Summary and Conclusion

Sustainability is defined as that subject of management science that studies the impacts of human activity on the quality and sufficiency of vital capitals in the world as required to ensure human well-being.

The Sustainability Professional studies and manages the impacts of corporate activities on the quality and sufficiency of vital capitals wherever it operates.

The EHS professional, because of organizational positioning and experience in managing environmental and social capitals, is in prime position to gain responsibility and accountability for designing and implementing the organizations’ Sustainability strategy.

The associated increased visibility and potential linkages to business drivers could drive both safety performance and career growth.

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1. “Our Common Future.” World Commission on Environment and Development. Aug. 1987.2. “Re-Casting the Triple Bottom Line.” Center for Sustainable Innovation. Jun. 2007 3. Daly H., Beyond Growth: The Economics of Sustainable Development. 253 pp. Boston: Beacon

Press, 1996.4. Henriques A., Richardson J. The Triple Bottom Line: Does It All Add Up? London: Earthscan

Publications Ltd.., 2004.5. McElroy, M. Social Footprints – Measuring the Social Sustainability Performance of Organizations.

Dissertation, 20086. Schmidheiny S., Changing Course, The MIT Press, Boston: Apr. 19927. Elkington J., Cannibals with Forks, Capstone Publishing LTD. Sep.1999.8. McElroy M., “Sustainability Measurement and Reporting.” Deloitte. Weston, MA. 2010 9. Hambrick D., Fredrickson J., “Are You Sure You Have a Strategy.” Academy of Management

Executive. 2001. Vol 15, No. 4. 10. Porter, M. E., “Strategy & Society.” Harvard Business Review, Dec. 2006 11. Global Reporting Initiative. Sustainability Reporting Guidelines. Amsterdam: 2006. 12. Karas B., “Sustainability: Coca Cola North America, System Actions to Support our Sustainability

Strategy.” Occupational Safety & Health Group: ORC Worldwide. Washington D.C. 2009.13. Eherts, D. “Leveraging Safety & Health to Enhance Labor Relations.” Occupational Safety & Health

Group: ORC Worldwide. Washington D.C. 2009.14. Digby G., “From Safety to Sustainability: an Ingersoll Rand Case Study.” Occupational Safety &

Health Group: ORC Worldwide. Washington D.C. 2009.

References