Responsible Business: Jeans & the Circular Economy – Automobiles & the Old Economy

Status

I was interested to read that several of the world’s leading jean brands have been working with the Ellen MacArthur Foundation to lay down a set of Jean Redesign Guidelines based on circular economy principles.  The new redesigned jeans will enter the shops next year.  The new principles, in addition to focussing on the health, safety, and rights of workers in the fashion industry present minimum requirements for:

  • Recyclability: Jeans made with greater than 98% cellulose fibres, designing out or minimising metal rivets, and all additional materials should be easy to disassemble.
  • Material Health: Jeans fibres sourced from regenerative, organic or transitional farming methods; free of toxic chemicals and conventional electroplating; the banning of techniques such as stone finishing, potassium permanganate, and sandblasting.
  • Durability: Jeans able to withstand a minimum of 30 machine home washes while still meeting minimum quality requirements and have labels with clear information on product care.
  • Traceability: Confirmation of how elements of the guidelines will be made available, compliant companies will be able to use the ‘Jeans Redesign’ logo, and an annual review of the logo annually based on compliance with the reporting requirements.

Participating ‘denim’ organisations in the scheme currently comprise

Brands:  Bestseller, Boyish Jeans, C&A, Gap, H&M Group, HNST, Lee, Mud Jeans, Outerknown, Tommy Hilfiger, and Reformation

Manufacturers:   Arvind Limited, Hirdaramani, Kipas, and Sai-Tex.

The initiative represents an interesting case study of organisations adopting a responsible leadership approach to address unsustainable supply chain practices, build trust and co-operating in advance of any need for governmental regulation.  It also demonstrates how even a long existing product such as your pair of blue jeans can be redesigned to add new value & continued economic growth within an existing industry, and ultimately recycled back into new jeans at their end of use.

In contrast this week, it looks as if the Alliance of Automobile Manufacturers, a political lobbying trade group (motto – Driving Innovation!) representing 12 of the world’s largest car manufacturers (BMW, Fiat Chrysler, Ford, GM, Jaguar Land Rover, Mazda, Mercedes-Benz USA, Mitsubishi, Porsche, Toyota, Volkswagen Group of America and Volvo USA) have been lobbying the Trump administration to rewrite existing laws to lower fuel efficiency and fines for missing emissions targets.

Three interesting issues struck me in this case:

  1. Jaguar Land Rover whose range is almost 80% diesel powered have been lobbying the UK government hard for aid to help switch their range over to electric vehicles and to maintain jobs in the UK, but who seem to aspire to other ethics abroad.
  2. The absence of Honda from the group – who are well on with their fleet conversions towards mileage efficiency, lower air emissions or electric power, and finally
  3. The lobbying groups concern for the harm that non-compliance fines for fuel inefficiency would have on auto manufacturers, workers, and ultimately consumers – as opposed to the harm poor urban air quality already has on innocent members of society – which when last checked also included auto manufacturers, workers, and ultimately consumers!

In the wake of the VW-emission rigging scandal and under President Obama, The US National Highway Traffic Safety Administration (NHTSA) was on track to effectively treble the cost of fines levied against vehicles that did not achieve their claimed mileage efficiency.   In February, the Trump administration broke off talks with California’s clean air regulators, and last Friday, the administration said that NHTSA would be issuing final rules suspending these regulations.  Eighteen US states, including California, have responded by vowing to sue the Trump administration if the vehicle emissions requirement freeze becomes finalized.  Now the Trump administration seems to be trying a different tack by rewriting the rules to lower fines for missing emissions targets.

The two scenarios represent two very different approaches to the challenges that signal whether these companies have a strong enough organisational culture to demonstrate to the marketplace that they are modern responsible businesses and responsible players within their respective marketplaces. 

It has been clear for many years concerning the global impact that cheap non-recyclable clothing and fossil-fuel based power-train automobiles have been having on our world.  The evidence has been there for years, and companies have had time to prepare their responses to the social and environmental challenges faced.  Whilst it looks as if the clothing industry is now actively waking up to the challenge of new economic models and consumer values, the automotive industries within the western world, still reliant on their technologies of the past and unable to effectively manufacture many of the future components of tomorrow’s vehicles , still exhibit a worrying tendency to remain in the past.  

Two trends I can see myself being affected by in the future:

  • Within 10 years effectively ‘hiring’ my clothes from a trusted retailer who will take them back for recycling at their end of life
  • Within 3 years obtaining an electric/hybrid vehicle whose parts and technology primarily originates from the Far East.

At Leading Green, our approach to sustainability in business consulting and training encourages our clients to look closely at their own internal leadership strengths and goals.  Helping them adopt an inquisitive state of mind and supporting them in how sustainability can support their long-term business strategy.

Responsible Construction requires Responsible Management practices (Part 2)

Status

Taking the First Steps into CSR for SME Construction Businesses

Customers have power over firms – in highly competitive markets sector, customers have the option to switch supplier.

This is the primary reason why Corporate Social Responsibility (CSR) can help safeguard growth and business development within such as competitive sector as Construction.   Clients are consumers, and consumers value responsible behaviour by companies and reward such behaviour with loyalty to thier products and services.

For this reason, no growing SME construction business can now afford to be perceived as lagging in its responsible management activities nor to be half-hearted in thier enactment.  A future growth focussed boardroom and its members within the construction sector are now expected to have an understanding in not only:

  • how they fulfil legal obligations to society on health and safety, the environment, human rights or race, gender or disability discrimination, but also
  • how they incorporate these into their business model, their brand and reputational safeguards with clients, banks and society.

The potential damage locally to a construction SME if its reputation and future workload can be significant when its own practices, or those of its employees, contractors & suppliers are called into doubt or question. What first steps can a SME construction company take towards building responsible management practices into the Boardroom and its work force without draining its limited resources.

Building the Business

In the UK there is a high correlation between companies being perceived by the public as socially and environmentally responsible and being viewed favourably overall. Consumers value responsible behaviour by companies and reward such behaviour with loyalty to its products and services. For this reason, no company can afford to be found wanting in fulfilling its legal obligations to society on health and safety, the environment, human rights or race, gender or disability discrimination. The potential damage to a business, its reputation and its sales is great if its own practices, or those of its suppliers or subsidiary companies, are called into question. 

Employees as resources

One of the biggest mistakes a business can make is to forget that its employees are its key resources.  Experienced employees with their site experience, specific trade and in the technical nature in how issues are managed quickly and efficiently to maintain construction progress is a key determinant of ‘profit’ and ‘efficiency’.  Success is often defined not by the management team but by the relationship between firm’s leaders and their key employees, and the mutual regard both parties have for eachother.

To succeed, construction firms need to attract and retain the best people locally to work for them.  Respect for people, their skills, diversity and their need to achieve a good work life balance is an important aspect of socially responsible business practice.  Firms that fail to improve their attitude and performance towards respecting people will fail to recruit and retain the best talent and business partners. The construction industry has a generally poor record on employment issues and under-performs on diversity and employee satisfaction scores.  Companies can either follow the pack or differentiate themselves by demonstrating that:

  •  they value their workforce, their health & safety, their working environment, training, personal development & diversity; and
  • they maintain an active commitment to equal opportunities for all across thie workforce.

For this reason, the industry’s own Movement for Innovation recommended that firms of all kinds and sizes should commit to achieving the standard of Investors in People as the most effective and most systematic means of developing and demonstrating respect for people. Furthermore, people want to work for socially responsible businesses that respect not only their own workforce but wider societial values.  Surveys consistently find that most people believe that a company that supports society and the community for example, by establishing links with local or national charities, schools or other local groups is a good company to work for.

Building Trust

Trust is important in influencing the way employees, clients and the wider community judge a company. A successful company needs to operate with honesty and openness to create trust in its relationships with all its stakeholders.

Although there is no legislative requirement to report on social responsibility, companies that do so tend to be better perceived by their stakeholders. Reporting and communicating their impact on society can help to demonstrate openness and transparency about their operations, a willingness to be accountable for their actions and their seriousness of intent regarding community and social responsibility, thus developing confidence in their business.

Reporting is, however, not an end. The public will see through cynical reporting and attempts to be politically correct for its own sake. Companies need to demonstrate their commitment is real and produces real results.

Getting started

The principles of community and social responsibility need to be embedded into the overall business conduct of a company and become part of its core values and objectives. A badly targeted approach will be ineffective, and companies need to identify the actions that will have most impact for them, manage them in a professional way and communicate to their stakeholders what they are doing. Without effective communication, no-one will be aware of their work. Without awareness, there will be no benefits to business standing or reputation.

As for any other project, it is first vital to secure the commitment of senior management and the allocation of adequate resources for developing a community and social responsibility strategy. Then, by reviewing current policies and performance, you can identify the issues of most relevance to your company and develop an effective strategy and action plan. The process should be iterative, with review of progress leading to adjustment of the strategy and continued business improvement.

Five Common Strategies to Consider Starting with

  1. Building Satisfaction and relationship with the customer – building future relationships based on integrity and tailored to the customer’s needs.
  2. The development of talent and commitment among the firm’s key frontline employees – to invest in a team committed to and prepared for the construction sector challenges the future will bring.
  3. Responsible Management based on solid values – the senior management team will continue to develop in terms of good boardroom governance that strives to ensure values and responsible culture, risk management and relations with third parties.
  4. Responsible Construction & Sustainable development – Demonstratable progress towards achieving a low-carbon construction industry by managing the direct and indirect impacts arising from operational activities.
  5. Social contribution – Contributing to building a better local community, supporting real needs and safeguarding the natural environments & its resources.

Responsible Construction

Increasingly SME companies within the construction sector are seeking to build in business strategies that, through choice or through client requirements, that build in Corporate Social Responsibilities (CSR).  Leading Green can provide strategic and operational support to Boardrooms & senior leadership teams on topics such as Responsible Management, Sustainable Construction, Governance and CSR that are essential on BREEAM and LEED registered projects. 

Responsible Construction requires Responsible Management practices (Part 1)

Status

Responsible Management is the leadership approach that many in the construction industry are using as the springboard to get them attuned with the many ‘Responsible Construction’ programmes that sprung up over the last decade. 

The hard days of being a start-up or one-man business are long gone, your hard work and ambition has built the business into a successful local construction player with an expanding portfolio and an increasing wage bill! 

The days of day-to-day on-site hands on management practice have receded, with a new tier of supporting managers and partners now sharing responsibility for the business.   The downside – lack of fresh air and a growing list of business administration practices and new organisational problems as structures and responsibilities stretch and expand across the business.  The purpose of some are clear – financial accounts, payrolls and asset logs form a distinct tangibl links to assets, employees and business practice and ultimately profits & loss accounts.  However there are others whose purpose seem vague and confusing. You recognise that some of the more intangible ones are important, but it is easy to put them off as you are uncertain about how exactly they add to the bottom line of the business. 

Amongst this growing intangible portfolio of ‘other stuff’ terms such as corporate social responsibility and sustainability seem to be regularly occurring issues.  The days of adding a simple 1 page A4 ‘Environmental Policy statement’(usually cribbed from another source) into tenders are becoming a distant memory as clients no longer accept simple EHS assurances and now demand proof of commitment within invitations to tenders and on-site audits.  The language within your trade journals and business networks has also started to change with new terms increasingly entering the dialogue such as ‘corporate social responsibility’, ‘responsible construction’, ‘climate change’ and ‘sustainability’ and you are beginning to consider more and more whether these are threats or opportunities:

  • What do they mean for your business? 
  • Will they hit profits? 
  • Are new hires required? and importantly
  • How do you respond in a manner that continues to build the business?

An introduction to Responsible Management

Furthermore, the concept and meaning of corporate social responsibility (CSR) within the construction sector and in particular amongst its SME businesses remains largely undefined, highly fragmented and wide open to interpretation.  CSR can cover a myriad of meanings, issues and definitions that are both daunting and confusing to leadership groups within SME businesses –  terms such as:  stakeholder management, governance, corporate  ethics, responsible  sourcing, environment  and  sustainability,  human  resource  management,  supply chain sustainability, circular economy, discriminatory  labour practices, equality and human rights, corruption and modern slavery – sound expensive to address and resource. Despite a lot of information out there, conflicting CSR messages to SMEs in the construction sector suggests that little practical organisational support has been directed towards helping SMEs map out and address CSR as a wider business tool or aid understanding how CSR practices can aid continued growth in a manner aligns with their often limited or yet to be developed resources.

The long list of issues above is slowly starting to coalesce and morph into what is now commonly termed ‘responsible management’ practices within the Construction company boardroom.  A simpler handle that allows businesses to focus on key areas where they may be exposed to risk or deem opportunities to exist.

Responsible Management is the leadership approach that many in the construction industry are using as the springboard to get them attuned with the many ‘Responsible Construction’ programmes that sprung up over the last decade. 

Responsible management requires that construction companies, their suppliers, consultant and contractor support services take responsibility, and act to make the construction sector more responsible in its business management practices.  Within individual SME construction firms Responsible Management can take a variety of forms and can be characterized as a business leadership team that has seized the opportunity to differentiate itself from many of its competitors by taking into consideration elements such as:

  1. How to minimize any negative environmental, social and cultural impacts its activities can have on its clients and its local community;
  2. Generating greater economic benefits from the business by improving retention and working conditions for staff, developing a brand as a good employee and local business;
  3. Safeguarding natural and cultural heritage and protected species, and possessing the skilled staff to act responsibly on behalf of the business when issues are encountered on site;
  4. Addressing diversity, access for physically challenged people or opportunities within the local community;

Responsible Management represents a mix between safe and responsible business activities during site preparation, construction, transportation to/from site, material usage, design and local community relationships.  Whilst many construction companies still view these as potential obstructions to ‘time, cost and quality’, more established firms view these more in terms of brand, local reputation and employee benefits that they can use to grow their business while providing differentiation between themselves and other local competitors, help safeguard works from delays, additional costs and adverse PR and further contributing to the brand’ that has been built up over so many years.

Responsible Management in the construction sector should help underpin the core business strategy or specialisation by promoting a high quality service for future customers and clients – by respecting all the regulations regarding nature and HR management; safeguarding long term relationships through good communication with local authorities, which can pay back significantly in times of economic downturn or mishaps on site.

In the boardroom it involves:

  • being aware regarding main environmental regulations, laws;
  • implementing and raising awareness within the board, as well as amongst staff, regarding what responsible management implies in the business’s daily activity;
  • facing difficult tasks and problems by offering the right solutions for the staff and clients;
  • being informed of the available trainings measures and sector-specific educational trends;
  • being oriented to results optimization.

The next part of this blog will look at how the boardroom within a Construction SME can get started in starting to lay a preliminary foundation for responsible management within the business, and align its outcomes with other strategies to continue business growth and performance.

Responsible Construction

Increasingly SME companies within the construction sector are seeking to build in business strategies that, through choice or through client requirements, build in Corporate Social Responsibilities (CSR).  Leading Green can provide strategic and operational support to Boardrooms & senior leadership teams on topics such as Responsible Management, Sustainable Construction, Governance and CSR that are essential on BREEAM and LEED registered projects.

Carbon Capture – but with a difference

Status

Occidental Petroleum (Houston USA) has released plans disclosing the company’s intention to construct the world’s largest direct air capture facility in Texas oil.  What makes this investment stand out to Leading Green is the fact that it will be in partnership with Carbon Engineering, a Canadian company backed by Bill Gates.

Unlike other forms of carbon capture technology for carbon storage which I have worked on in the UK, this claims to extract CO2 directly from the environment.  The technology claims to capture CO2 from atmospheric air, converting it into a purified form for use or storage.  It achieves this within a closed loop system, adding only water and energy, with the output taking the form of a concentrated stream of compressed CO₂ gas.  This captured CO₂ offers a range of potential environmental & chemical opportunities from industrial CO2 use, urea yield boosting, beverage carbonation and food processing, the production of low-carbon liquid fuel, carbon storage with or without enhanced oil or gas recovery.

In this case Occidental Petroleum would use the captured carbon to help pump hard-to-reach oil out of one of Texas’ shale oil field.   I am usually cautious when the words ‘shale gas’ and ‘carbon storage’ are concerned, but in the move towards climate change adaptation there has to be transition points along the graph between high carbon use – low carbon use and zero-carbon technologies.  Industrial & societal transition to a low carbon economy cannot be achieved overnight.   

In this case Occidental Petroleum & Carbon Engineering claim that the plant once on stream will remove over 500,000 tons of carbon from the atmosphere every year – this it is claimed will offset the drilling and eventual burning of the shale oil that will be extracted — potentially bringing the overall operation towards a zero carbon balance in emissions.

What is often ignored in climate adaptation strategies is the requirement not only to significantly cut emissions across various high CO2 sectors, but also to move towards zero/low carbon emissions where it is achievable in partnership with significant carbon capture to remove the CO2 that has (and will be still be) entering the atmosphere.  Increased atmospheric carbon capture through natural or industrial chemical routes will be key to dropping, and dare I say, managing future global temperature rises.

So I wish this project well, as it takes us into new territory and a new way of thinking both about new energy technology but what needs to be achieved where industry and societies seek to continue to exploit fossil fuels and live within carbon-controlled economies.  However, the goal across all components of human life must be negative carbon release. 

The facility is due to be completed in 2023, and I hope that Occidental Petroleum, under its CSR or ESC policies places the environmental impact assessment statement on line for the global climate change community to examine (we expect a very comprehensive and waffle free section on climate change!).  In truth, this technology is still in its early stages.

Here at Leading Green we hope it is a success and that it is commercially viable in meeting its zero carbon claims, but it does raise some interesting regulatory & land-use planning questions if the technology proves successful:

  • The willingness of civil councils to actively promote within land planning, zoning and other social regulatory policies the ‘political’ presumption in favour to develop carbon neutral technologies.
  • The technological ability and capacity of environmental regulators, environmental health officers and environmental consultancies to undertake and verify the mass balance carbon calculations that will form the beneficial claims of these plants.
  • The regulatory control to ensure net-zero or net positive C-capture within these plants’ over thier commercial life; and
  • Clarity on other carbon-demanding elements within the technology & plant, its components and feedstocks that back up the claims of carbon neutrality within such a plant’s mass balance if the technology achieves global expansion. 

Climate Change Transition – can you see the changes yet?

Status

Climate Change transition can be hard to identify within the operational investment plans within some oil & gas giants.

At the IAIA 2019 conference in Brisbane last week, several authors delivered papers on current & future oil + gas investment projects and programmes that would be rolled out over the next decade.  The local press was also reporting on new coal investment plans for Queensland, and within a 2-day Leadership in EIA training programme I led with Claire Gronow of Bristol University in Brisbane, several of the course’s experienced EIA participants were employees or IFC/Government officials with oversight of new fossil fuel projects coming through the investment chain. 

Yes, they were all dealing diligently with any environmental & social risks arising on site, but it was hard to define any clear signs of climate change transition or adaptation within the corporate business strategies of their parent companies, or any corporate shift away from fossil fuel exploitation.

This concern has been backed up by analysis from Global Witness in April that identified close to $5 trillion of planned investment in exploration and extraction from new oil & gas fields.  This the authors concluded is incompatible with reaching the world’s climate goals.  The report also concluded that despite rhetoric to the contrary, the oil and gas sector’s future investment plans remain drastically incompatible with limiting climate change.

From recent experience, I concur with these unfortunate conclusions.  If politicians and businesses are increasingly tempted to use the word ‘emergency’ in respect of climate change, there is an obligation on them to demonstrate thier own response and strategic action they are taking to address the ‘emergency’.   As sustainability and IA professionals we are working hard to mitigate the unintended consequences of Man’s exploitation of cheap carbon-based energy and advocating for greater sustainability within business practices. Future climate change transition now requires more than advocacy, it demands action and a strategic shift in the mindset of Governments and Boardroom leaders.  The solutions and advice are out there to be called upon, but action is an individual responsibility.