Risk leadership perspectives Risk Manager of the Year
Noshcon3
1. Using Integrated Sustainability Management
Systems to Leverage Supply Chain Management
& Environmental Performance
Champagne Sports Resort, Central Drakensberg,
KwaZulu-Natal, South Africa
Dave R. Meyer
Founder/Principal
ValueStream Performance Advisors
2. ValueStream Performance Advisors
– Sustainability Best Practices Helping companies maximize the value of
– Integrated Management Systems sustainability - improving environmental
Planning/Development performance, implement creative thinking,
– Sustainable Supply Chain realize corporate responsibility, and achieve
Alignment profitable growth.
– Environmental and Sustainability
Audits
– Product Stewardship/Life Cycle
Analysis
– Governance and Policy
Sustainability Consulting | Compliance | Finance | Development
3. Managing Resources in a Finite World
• 30% of Earth’s natural
resources have been
consumed in the past 30 years
• We over consume earths
resources by 30% per year
• Will need two additional earths
to support 6 plus billion people
4. TRENDS THAT CAN AFFECT YOUR
ORGANIZATION
• Equity and capital markets increasingly screen
for sustainability risks and performance
• Customers are looking to “green supply chains”
• Multinationals are adopting a “strategic view”
promoting innovation at all levels
• Risk, compliance and cost must still be managed
to reduce impacts
Important Questions
# 1 – What position should we assume on “sustainability” ?
# 2 – What initial steps should we take?
5. THE ORBIT OF SUSTAINABILITY
Financial Environmental Social
• Revenues • Beyond compliance - ”green” • Community values and
• Rates • Restorative to nature culture
• Reserves • Cradle-to-grave management • Civic pride
• Esthetics
Economic and Social and Ethical
Financial Health, Safety, and
Environmental
6. SUSTAINABILITY IS AN IDEAL.
It represents direct interactions between business, society and the
environment to create the maximum benefits for all three elements.
• Progress is measured by performance under each element. Some examples:
1) Environment: preserving resources versus “once through” uses
2) Society: employment opportunities and quality of life
3) Financial: market share, profitability and growth
• The “Triple Bottom Line” indicates the “dynamic balance” between the three
elements.
Environment Society Financial
Equal levels of
Performance
Sustainability
Triple Bottom
Line
7. FOCUS ON ONE ELEMENT CREATES INSTABILITY
•Ignoring environmental impacts can create liabilities or resource depletion
and lead to business loss
• Failing to understand social concerns may lead to loss of social license to
operate
• Failing to be profitable may lead to bankruptcy and no environmental or
social progress
Focus on “Over protection” Philanthropy is
profits only drains the business not business’ sole
function
8. THE BUSINESS CASE FOR SUSTAINABILITY
• Increased Revenue / Market Share
• Reduced Operational Expenses
• Reduced Waste- Enhanced Environmental
Benefit
• Reduced Liability/Cost of Compliance
• Reduced Risk– Enhanced Financial Position
• Increased Employee Productivity
• Competitive Advantage
• Enhanced Recruitment & Retention of Best
Talent
9. HOW A COMPANY ADOPTS SUSTAINABILITY IS A
CRITICAL SUCCESS FACTOR
• Need to align the business mission and sustainability
principles
– How can sustainability improve the business?
– Where can we have the biggest impact?
• What does our current “triple bottom line” look like?
• Should we adopt an international standard, develop our
own code of conduct or both?
Getting the most business value from
Sustainability requires strategy
10. SUSTAINABILITY-FOCUSED EHS
MANAGEMENT SYSTEMS DEFINED
A collection of EHS and organizational
best practices that increase long-term
business value manage your EHS
“footprint”, improve organizational
efficiency, recognize social values and
enhance sustained competitive
advantage.
11. MAGIC PILLS OR FORMULAS?? …THINK AGAIN
• No single model for a “sustainable” organization
• There are no universal performance standards
– Emerging “standards” … codes of conduct and metric specific
– Examples: Global Reporting Initiative (GRI), World Business
Council on Sustainable Development
• Performance is typically “relative” to company baseline and sector
– Basic tenants of “code of conduct” must be followed
– Example: Climate Change performance is judged by GHG
emission reductions over time
Important Questions
# 1 – Is all this really relevant?
# 2 – Will it affect my company?
13. “WE ALREADY HAVE AN
ENVIRONMENTAL MANAGEMENT SYSTEM”
Compliance Assurance Most organizations have some type
Systems of environmental compliance
management system in place….
Pollution Control & …the “Silo” Effect
Loss Prevention
Systems
Emergency Response
System
15. EHS AND SUSTAINABLITY PROGRAM
DESIGN ALTERNATIVES
Model 1:
Regulatory Compliance
Model 5:
ISO Conformity, Model 2:
Compliance Assurance, ISO 14001/OHSAS 18001
Environmental Performance, How Does Your
Conformity
Sustainability EHS/SMS Program
Stack Up?
Model 4:
ISO Conformity, Model 3:
Compliance Assurance, ISO 14001/OHSAS Conformity
Environmental Performance & Compliance Assurance
16. CORE OF THE SEMS
ID Significant
Impacts/Risks
Exploration
The SMS Fence
Project Design line Review Legal and Other Regulated
Requirements
Mine Development The Four Scale &
Walls Severity
Extraction Interested Party
Suppliers
Concerns
Processing
Neighbors
Probability &
Closure Duration
A B C Significant or Not
Activities Significant
Legal Requirements
Aspects Significant
Environmental Aspects/Hazards
(Routine/Non-Routine)
Economic
Social
17. CROSSWALK BETWEEN EMS &
SUSTAINABILITY
EMS FEATURES SUSTAINABILITY FEATURES
• Regulatory Compliance • Governance &
Assurance Management
• Waste Management & • Stakeholder Engagement.
Minimization • Environmental Process
• Air Emissions Management Improvement
• Chemical & Natural • Environmental
Resources Utilization Products/Services
• Energy • Local Economic Growth
Utilization/Management • Community Development
• Maintenance Optimization • Human Resource
• Water Conservation Management &
Development
18. ENVIRONMENTAL-FOCUSED
RESOURCE FLOW
OUTPUTS
•Finished goods
•Emission to air
•Emission to water
INPUTS •Noise generated
•Water use •Disposal to land
•Energy use •Hazardous waste
•Raw material use PROCESS •Abnormal situation
•Vehicles use FLOW (e.g. start-up &
•Chemicals shut-down conditions)
(Activity,
•Emergency
Product conditions
or •Leaks and spills
Service) •Illness/injury
20. ISO 14001/OHSAS 18001 BASED
OBJECTIVES/TARGETS TYPICALLY
CONSIDER:
Significant
Legal and Operational
Environmental /OHS
Other Requirements Requirements
Aspects/Hazards
Integrated Sustainability
Views of Objectives Management
Interested Parties and System
Targets
Technology Financial Business
Considerations Considerations Considerations
21. CORE OF THE SEMS
Categorize Develop Management Programs Develop
Objectives and “Project Plan” Procedures and
Targets Work Practices
Significant
EMP’s
Aspects
l Tasks, Responsible Procedures
Parties, Time
Frames
Control/
Study l Operational
Maintain Work Prt.1
(e.g., Regulatory Improvement (e.g., Controls
Compliance) Feasibility
(e.g., Chemical
Study)
Work Prt.2
Reduction and l Monitoring and
Maintenance Measurement Work Prt.3
Planning)
Procedures/Work
SEMS Programs Practices
Objectives and Targets
23. WHY SUSTAINABLE MINING??
• The status quo is not sustainable
• Our social license is at risk
• The bar keeps rising
– Mines must improve and account for performance,
both operational and social
– Mines must improve public opinion by taking action
collectively
24. GOT SUSTAINABLE ENVIRONMENTAL
MANAGEMENT?
• Mines • Aggregate/Cement
– ASARCO (Consent Order) – Boston Sand & Gravel
– Newmont (gold) (Consent Decree)
– Freeman United (coal) – Aggregate Industries
– BHP (coal) – Hanson Aggregate
– CEMEX
– Resolution Copper (copper)
– CPCC
– Kennecott (silver, copper)
– Holcim
– Freeport-McMoran (copper & gold) – St. Lawrence
– Unocal-Molycorp (Moly) – Lucky Stone
– U.S. Borax (borax)
– Doe Run (metals smelting)
25. MINING COMPANIES
MAKING A DIFFERENCE
Unocal Molycorp
Decreased fuel oil use by 12 %...$0.20 per ton savings in ore
produced and reduced air emissions
Nearly $80,000/yr from maintenance improvements
U.S. Borax- Boron Operations
40% reduction in process water
30 % reduction in hazardous solid waste
Hanson Building Materials
Portable Rock Crusher units
Concrete/aggregate collection and reclaiming
Over 5 Million Tons of materials reused/recycled in 2002
27. RIO TINTO
“Develop common tools through a
sustainable development leadership
panel and to encourage different parts of
the Group to apply these tools and the
concept of sustainable development
within their specific social,
environmental, economic and
governance circumstances, and to
implement the policy in a manner that is
consistent with local priorities in the
local context.”
29. • Implement and maintain ethical business • Seek continual improvement of our
practices and sound systems of corporate environmental performance.
governance.
• Contribute to conservation of biodiversity
• Integrate sustainable development and integrated approaches to land use
considerations within the corporate planning.
decision-making process.
• Facilitate and encourage responsible
• Uphold fundamental human rights and product design, use, re-use, recycling and
respect cultures, customs and values in disposal of our products.
dealings with employees and others who
are affected by our activities. • Contribute to the social, economic and
institutional development of the
• Implement risk management strategies communities in which we operate.
based on valid data and sound science.
• Implement effective and transparent
• Seek continual improvement of our health engagement, communication and
and safety performance. independently verified reporting
arrangements with our stakeholders.
31. SHARED TRAITS…UNLOCKING VALUE
Position Through:
Optimizing the linkage between sustainability,
environmental and business objectives
Creating a performance measurement system
that demonstrates bottom line results
Identifying marketplace trends that reward
innovation toward sustainability
Building assurance systems for compliance
and credible public reporting
33. International Supply Chain Challenges
• Companies account for and report environmental
impacts
• Supply chain tracking and measurement of
multimodal transportation emissions
• Estimation of emission reduction impacts of new
technologies and strategies
• All Market Driven…Now Sustainability and ISO
14001 is a key supply chain driver
34. Green Supply Chain Management (GSCM)
Defined
GSCM is ‘integrating environmental thinking into supply-chain
management, including product design, material sourcing and
selection, manufacturing processes, delivery of the final
product to the consumers as well as end-of-life management
of the product after its useful life’ (Srivastava, 2007)
35. Supply Chain Management (SCM)
Drivers
• Logistics, Procurement have become strategic
• Organizations outsourcing, forming partnerships,
alliances
• Product environment becoming more complex
• Time based competition requires time compression
• Managing suppliers and customer relationships
necessary
• Competition shifting from company vs. company to
Supply Chain vs. Supply Chain
37. Green Supply Chain Framework
ISO 14001 ,
OSHAS 18001
Foundation
Source- Diamond Management & Technology Consultants
38. News Flash
Thursday, April 15, 2010
“IBM said on Wednesday that it will require its 28,000 suppliers in
more than 90 countries to install management systems to gather
data on their energy use, greenhouse gas emissions and waste and
recycling. Those companies must ask their subcontractors to do the
same if their products or services end up as a significant part of IBM’s
$40 billion global supply chain.”
“Our overall interest is to systemize environmental management and
sustainability across our global supply chain so it helps our suppliers
build their own capacity in a way that’s not only good for the
environment but their business” - Wayne Balta, IBM VP of Corporate
Environmental Affairs and Product Safety
38
39. Supply chain gets its
‘sustainability groove’ on
Context
• Growing public concern- customer driven mandates/product
preferences
• Increased Demand for Transparency
• Environmental mandates in regulations (restricted materials)
• Safe transport provisions
• Increasing availability of greener products and services
Supply Chain/Logistics professionals responding
• More environmental specs in contracts
• “Greener” specs for conventional products
• Use of eco-labels
• Looking at supplier environmental practices
44. Electronic Industry Citizenship Coalition (EICC) & Global
e-Sustainability Initiative (GeSI) Frameworks
• Targets the “pinch point” in the supply chain- the smelter:
• Business Process Review: Evaluate company policies
and or codes of conduct relating to conflict minerals
• Material Analysis Review:
– Conduct a complete material analysis to demonstrate that all
sources of materials procured by the smelting company are
conflict-free;
– Evaluate whether source locations are consistent with known
mining locations; and
– Establish whether material identified as “recycled” meets the
definition of recycled materials.
45. OECD Due Diligence Framework to
Conflict Minerals Management
Strongly advocates for traceability and accounting
systems for both upstream and downstream supply
chain organizations:
– Step 1: Establish strong company management systems
– Step 2: Identify and assess risks in the supply chain
– Step 3: Design and implement a strategy to respond to
identified risks
– Step 4: Carry out independent third-party audit of
smelter/refiner’s due diligence practices
– Step 5: Report annually on supply chain due diligence
46. Supply Chain Practices
Prequalification of suppliers
• Require/encourage environmental criteria for approved
suppliers
• Require/encourage suppliers to undertake independent
environmental certification (ISO 14001)
Environmental requirements at the purchasing phase
• Build environmental criteria into supplier contract specs
• Incorporate 3BL staff on sourcing teams
Supply base environmental performance management
• Supplier environmental questionnaires
• Supplier environmental audits and assessments
47. More Supply Chain Practices
Build environmental considerations into product design w/ suppliers
• Design for environment (DFE) product innovation, life cycle analyses,
clean tech
• Coordinate minimization of environmental impact in the
extended supply chain
Cooperate w/ suppliers to manage end-of-pipe environmental issues
• Reduce packaging waste at the customer/supplier interface
• Reuse/recycle materials in cooperation with the supplier
• Launch reuse initiatives (including buy backs and leasing)
Reverse logistics
• Give supplier an incentive to reduce the customer’s
environmental load
48. Some More Supply Chain Practices
Work with industry peers to standardize requirements
• Create internal procurement group to collaborate on
environmental issues
• Standardize supplier questionnaires
Inform suppliers of corporate environmental concerns
• Issue statements of ISO 14001 EMS priorities to suppliers
• Draft and distribute comprehensive GSCM policy
Promote exchange of information and ideas
• Sponsor events to facilitate discussions between customers and
suppliers on environmental issues
• Host training and mentoring programs.
52. ISO 14001 Inventory and Order
Management Strategies
Supply Chain Strategies: Eco-Strategies:
• Flow through distribution • Reduces warehouse activities
• Inventory re-routing from required to distribute product
transload facilities • Reduces space requirements
• Single sourcing of direct order in warehouse
fulfillment
Business Benefits: Eco-Benefits:
• Reduces warehouse labor cost • Reduction of fuel/energy used
• Increases revenue by fork trucks and delivery
vehicles
• Reduces transportation cost
• Reduces CO₂ emissions
• Reduces energy consumption
by warehouse
53. Co-opetition Partners
• Producers, Customers, Consumers who drive
producer demand and determine product eco-footprint
• Shippers and Terminal Operators: who generate the
freight flows and provide the critical infrastructure for
product flow
• Logistic Service partners (3PLs): who can design
and implement optimized solutions and move the
freight
• Fourth Party Providers: who can facilitate
partnerships, referee blockages, find common ground
• Governments who can assure that legal and
regulatory arrangements are in place to support
seamless collaboration
54. Reciprocal Value Creation
Communication & Collaboration
Sustainability Value Chain
Consumer
Value
Suppliers Customers
Supplier Customer
Supplier Customer
Product Flow
Stakeholders Interests
Source: Adapted from GEMI, Forging New Links
55. Value Mapping Identifies Reciprocal Value
Value Chain: A series of linked steps organizations use to
identify value opportunities. At each step in the value chain
there is a sustainability value proposition or “filter”.
Supply Operations Customer
E S F E S F
E S F
• E: Renewable Resources • E: Carbon Footprint • E: Low Impact Goods
• S: Local Sourcing • S: Community Outreach • S: Responsible Brand
• F: Stable Cost Structure • F: Lower Costs • F: Competitive Pricing
56. Recent Study Results/Findings
• >75% of manufacturing executives had ISO 14001
certification or were in process in order to enhance
their competitive supply chain position,
• ISO 14001 Companies are 40% more likely to
assess their suppliers’ environmental performance;
50% more likely to require that their suppliers
undertake specific environmental practices,
• Preference in market share is often given to
suppliers that have attained ISO 14001-certification
56
57. ISO 14001/OHSAS 18001 can be
a Supply Chain Enabler
• Access key markets through ISO/OHSAS registration,
• Specialize and concentrate supply chain manufacturing
efforts to manage environmental risk,
• Able to respond to “green economy” market drivers;
• Improve brand differentiation and customer loyalty,
• Respond and conform to ISO/OHSAS supply chain
certification market drivers, and
• Improve product, process, and quality while sustaining
global environment.
57
58. What ISO 14001 Certification Can Achieve:
• Identification and control of environmental impacts of suppliers
activities, products or services,
• A systematic approach to supply chain environmental
accountability,
• Supply chain continuous improvement in environmental
performance,
• Reduced operating costs and improved quality performance in
supply chain,
• Supply chain environmental sustainability communication
process improvements,
• Competitive differentiation in your marketplace.
58
59. A Structured Approach to Tier-Based Supply
Chain Sustainability
Q1 Q2 Q3 Q4
Year 1 Commence supply chain Tier 1 notification Test approach on a small
approach Finalize approach number of existing Tier 1
suppliers
Year 2 Use experiences from • Tier 1 Finalize roll out Commencement for new • Tier 2 Finalize roll out
test suppliers to improve • Tier 2 Notifications suppliers, engage using • Tier 1 Assess
approach/process sustainable approach performance
regardless of Tier
Tier 2 roll out
Year 3 • Use experiences to Tier 3 Rollout Assess the performance
improve approach of all suppliers engaged
• Tier 3 notifications under the sustainability
framework
59
60. An Orderly Methodology To Keep On Track
• Strengths
• Weaknesses
Where are we today? • Opportunities
• Threats/ obstacles
Supply Chain
ISO 14001 • Vision
Environmental Where do we want • Goals
Management to be tomorrow? • Objectives
System • Issues
Planning • Initial strategies
• Critical success factors
How do we get there? • Tactics
• Refined strategies
• Refined vision
• Mission
61. Green Supply Chain Management
Summary
• Get started today, seek out high impact suppliers
and vendors- establish ISO 14001 mandates or
incentives
• Help suppliers find the low hanging fruit
• Look for the win-win and make the business
case
• Consider all aspects of your business & innovate
62. Steps to Sustainability
• Identify critical sustainability issues
• Select areas of focus- look outside the four walls
• Develop a compelling and clear vision of sustainability
• Develop and adopt goals and performance indicators
for addressing critical sustainability issues
• Reflect sustainability in business processes and
decisions
• Build a network of internal sustainability champions
• Strength relationships with key external sustainability
partners
• Communicate Sustainability (corporate reports,
websites, event sponsorships, publicity campaigns etc.)
63. General Design -Rules Of Thumb
• Any Environmental Management Program is only as
good as what is designed into it
• Program Design is a Proactive, Integrated and
Cross-Functional Process
• View the EMS Program as a Product
– deliver on budget, on time, be marketable (from a
mission critical perspective)
– be useable
– constantly upgrade and nurture
64. TYPICAL SEMS STRATEGY AND
PROGRAM DEVELOPMENT
Select
Assess Map the Benchmark issues to Select Drive Performance
Stakeholder current metrics &
issues impacts create change assessment
inventory state of TBL objectives
“new TBL”
Critical Strategy for
Foundation Change
How do we “rate”?
Why change?
Resources and Tools
Relevant?
Inventory Dimensions Mapping “Standards” KPIs
• Energy
•customers • Social • Value Chain • GRI
• Work-force
• community •Environment • Alignment • GEMI diversity
• suppliers • Financial • KPIs • DJSI • ROI
• financial • Other ? • Other • Benchmark
Where does change make sense?
65. Sustainability Strategy & Program Development
Customer
Visioning
Performance
Assessment Assess Issues
Critical
Actions for Foundation
Change Drive Change Continual Map impacts
Improvement
Select Metrics Select issues to
& Objectives create “new TTL”
Benchmark current
state of TBL
Strategy for TTL= Triple Top Line
Change
68. Thank you
Dave R. Meyer
ValueStream Performance Advisors
+1-858-212-2020
dmeyer@valuestreamadvisors.com
http://www.linkedin.com/in/drmeyer
www.valuestream2009.wordpress.com
Twitter: @DRMeyer1
