Corporations and Sustainability

Module 14

Overview

• The Case for Sustainability in Manufacturing

• Terminology

• Natural Systems as Models

• Directions in Industrial Ecology

• Examples

Political Importance of Sustainability

1970 20001980 1990

Polit

ical R

ele

van

ce o

f S

ust

ain

ab

ility

Oil Crisis

BrundtlandUN-Report

Agenda 21Biodiversity

CountryStrategiesSustainability

Compulsory CO2-reductionGoals (Kyoto)

EcologicalTax reforms

SustainableProduction &Consumption

RIOSustainabilitySummit

Economic importance of sustainability

1970 20001980 1990Eco

nom

ic R

ele

van

ce o

f S

ust

ain

ab

ility

Industry:EMASISO 14‘000

Banks/InsuranceUNEP-Declaration

Unilever:Sustainable Fishing

Shell:CompulsorySustainability-Goals

Swiss Re:SustainablePerformance Group

Chemical industry:Environmentalreports

Shell20% renewableenergy by 2020

Daimler-BenzFuel Cells notlater than 2004

Dow Jones:Global SustainabilityIndex

Dow Jones Sustainability Index

80.00

130.00

180.00

230.00

280.00

330.00

Dec93

Jun94

Dec94

Jun95

Dec95

Jun96

Dec96

Jun97

Dec97

Jun98

Dec98

Jun99

Dec99

Jun00

Dec00

DJSGI World (in EUR)

DJGI World (in EUR)

187%

131%

• DJSGI / DJGI (Euro):

• Correlation: 0.9617 Tracking Error:3.08%

• DJSGI Volatility: 16.80% DJGI Volatility:16.11%

Investment performance

"Most of these companies will fluctuate with the market," Zehnder said. "But the larger ones don't fall as hard. The smaller sustainable companies have a little more volatility -- they may be hit harder in a downturn, but they come back at a stronger rate, as well."

Zehnder may have a point. In recent days, when the Dow Jones Industrial Average has taken a dive, the sustainability index has made modest gains of 2 or 3 percent -- although it's about 14 percent lower than last year at this time.

Gainesville Sun, Thursday, March 22, 2001

Candidates for Lessening Impacts

• Zero Emissions Systems– Orderly progression from Type I (high throughput mass and energy, no

resource recovery) to Type III (closed loop)– Eliminate ‘leaks’

• Material Substitution– More durable, less waste, more recyclable

• Dematerialization– Theory of Dematerialization: the more affluent a society becomes, the

mass of materials required diminishes over time– Must result in less waste to be effective

• Functionality Economy– What is the function? Do we need automobiles? Waste from telephone

disposal (old phones were leased and returned!)

Terminology• Ecology: the study of the earth’s life support systems, of the

interdependence of all beings on Earth (Odum, E.)• Metabolism: sum of the processes sustaining the organism:

production of new cellular materials (anabolism) and degradation of other materials to produce energy (catabolism) (Ray)

• Industrial Ecology: application of ecological theory to industrial systems (Rejeski); views the industrial world as a natural system, embedded in local ecosystems and the local biosphere (Lowe)

• Industrial Metabolism: flow of materials & energy through the industrial system and the interaction of these flows with global biogeochemical cycles (Erkman)

• Industrial Symbiosis: an industrial system where waste from processes is a resources for other processes

More Terminology

• Design for the Environment: considers all potential environmental implications of a product: energy and materials used in the product; its manufacture and packaging; transportation; consumer use, reuse, and recycling; and disposal.

• Design for Recycling

• Design for Disassembly

• Design for Remanufacturing

Design for the Environment (DFE)

• Considers all potential implications of a product– Energy & materials– Manufacture & packaging– Transportation– Consumer use, reuse or recycling, and disposal

• A holistic design process• Example: automobile bodies (Iron, plastics, & aluminum)• Tradeoffs: virgin vs. recycled, energy at each stage, materials

recyclability, manufacturability, costs• Challenges:

– Adequate database about materials and their impacts– Concurrent engineering to work across R&D, marketing, quality..– Public sector involvement for defining values for trade-off

DFE Example - Xerox

Raw Materials New Components Build

Certified Reprocessing

Certified Reprocessing

Deliver

Customer Use

Closed Loop Recycling

Third Party Recycling

Alternative Uses

Return to Suppliers

Materials for Recycling

Sort/Inspect

Disposal Goal: Zero to Landfill

Dismantle

Remove

More Terminology

• Eco-Efficiency: Integration of economic efficiency (financial return, profit, productivity, customer perception) and environmental efficiency (energy, emissions, environmental impacts.

• Ecofactory: integrated design of production systems technology- including DFE at product and process levels – with disassembling, reuse and materials recycling technology (Agency for Industrial Science and Technology, Japan)

Natural Systems

• Function as an integrated whole• Minimize waste: dead or alive all plants and animals and their

wastes are food for something• Decomposers (microbes and other organisms) consume waste

and are eaten by other creatures in the food chain• Toxins are not stored or transported in bulk but are

synthesized and used as need by species individuals• Materials are continually circulated and transformed in

elegant ways.• Nature runs largely off solar energy• Nature is dynamic and information driven, identity of

ecosystem players is defined in process terms

The Deep Ecology Paradigm

• Earth is a closed system• Human society and ecosystems have co-evolved

– Nature has value and an independent right to exist– Nature’s intrinsic value is hidden by economic activity

• Sustainability is the wrong question as it comes out of human-centeredness

• Human transformation of “self” to realize harmony with nature

• Technological pessimism: the value of technological innovation must be proven

• Level of economic activity ultimately consistent with solar inputs

Industrial Ecology• The name “industrial ecology”- why?

– Models of non-human biological systems and their interactions with nature are instructive for industrial systems that we design and operate

– The biological model is clever, a closed-loop materials system– Recent better understanding of the materials and energy flows of biological

systems

• Questions:– How do you apply the biological principles of resilience, limiting factors,

other rules?– What about the low efficiency of natural systems (<5%)?

• Bottom Line: – Lessen (dramatically the impacts of our industrial system)– Management of the industry-natural systems interface, match input-output

of the manmade world to the constraints of the biosphere

Industrial Metabolism

• A “Big Picture” analytic tool developed by Robert Ayres• Examination of the total pattern of material and energy

flows form initial extraction of resources to final disposal of wastes

• Factors in the real value of nonrenewable resources and environmental pollution, gives value to externalities

• Can be used for regions (the Rhine basin), specific industries (aluminum) or specific materials (heavy metals)

• Suggests some measures of sustainability: ratios of potential to actual recycled materials, virgin to recycled materials, materials productivity

Industrial Symbiosis

• Most commonly understood meaning of industrial ecology• Waste materials and energy serving as inputs or resources

for other industrial processes• Also referred to as “By-product synergy,” “green twinning,”

“zero-waste/zero-emissions,” “cradle-to-cradle eco-efficient manufacturing”

• Evolving into the concept of an Eco-Industrial Park where co-locating

Brewery

Mushroom Growing

Chicken Raising

Methane Gas Production

Fish Ponds

Conventional Waste Managment in FijiBrewery waste dumped

into oceans to destroy coral reefs

Muck dumped on fields

Waste piles up

Methane vented

Muck cleaned out

Brewery

Mushroom Growing

Chicken Raising

Methane Gas Production

Fish Ponds

Hydroponic Gardening

Industrial Ecology in Fiji Brewery waste fertilizes

mushrooms

Mushroom residue feeds chickens

Chicken waste is composted

Solids become fish food

Nutrients used in gardens

Industrial Ecosystem: Kalundborg

Kemira Statoil Refinery

Lake Tisso

Fertilizer

Asnaes Power Station

Novo Nordisk

Greenhouses

District Heating

Gyproc

Fish Farming

Cement;roads

Water

Water

Water

Fly Ash

Sludge

Heat

Heat

Gypsum

Heat

Steam

Gas

Steam

Water

Implementing Industrial Ecology

• Technical Basis– Choose material– Design the product– Recover the material– Monitor the Situation

• Institutional Barriers and Incentives– Market and informational barriers– Business and Financial barriers– Regulatory barriers– Legal Barriers

• Regional Strategies– Ecoparks, Eco-Factories

The Eco-Industrial Park (EIP)• A community of manufacturing and service businesses seeking enhanced

environmental and economic performance through collaborating in the management of environmental and resource issues.

• The interactions among companies resemble the dynamics of a natural ecosystem where all materials are continually recycled.

• Industrial Park: restricted meaning in terms of geography and ownership.• An EIP is a relate estate property that must be managed to bring a

competitive advantage to its owners.• An EIP is a “community of companies” that must manage itself to

provide benefits for its members.• Decisions are based on maximizing the profitability of the EIP as a whole• Transfer prices negotiated so each member will be as profitable as

without the EIP

Some Case Studies of Businesses

• Victoria Versicherungs-Gesellschaften

• Monsanto

• Xerox

• Interface

• Ford Motor Company

Victoria Versicherungs-Gesellschaften• Certified to European Union (EU) Environmental Management and Audit

Scheme (EMAS) in 1999• EMAS designed for manufacturing firms but there are many indirect

impacts of financial institutions• Victoria has extensive real-estate holdings (184) buildings: location,

energy-consumption• Internal operations: energy, water, solid waste, consumption of office

supplies, restricted air transport (most air emissions due to business travel)• Rewards environmentally-friendly behavior in insurance coverage,

premium calculations, claims adjustment, etc.• Compensates clients for replanting trees and shrubs in residential

construction• New guidelines for calculating premiums for liability at wastewater

treatment plants for reduced chemical use.• EMS is a license to participate in developing new tools and markets

Interface, Inc.• A manufacturer of carpet tiles and carpeting• 6,300 people, 110 countries, 26 plants• Want to become the world’s first truly

sustainable company: 400 sustainability initiatives

• The basic questions:– What do we take? – What do we make? – What do we waste?

The Path to Sustainability

1. Eliminate Waste

2. Benign Emissions

3. Renewable Energy

4. Closing the Loop

5. Resource Efficient Transportation

6. Sensitivity Hookup

7. Redesign of Commerce

The Prototypical Company of the 21st Century

Xerox• ‘Waste Free Products from Waste Free Plants for Waste Free

Offices’ philosophy.• Definition of Xerox equipment: "Xerox equipment and

accessories have been produced in a factory from new parts and reprocessed parts, which meet the performance standard of new parts.“

• The company uses eco-efficiency to enable it to satisfy customers’ requirements for environmental and functional benefits, while at the same time improving its own operational efficiency while deriving economic benefit. This is done through waste free products, waste free plants and waste free offices.

• Packaging free products is major goal

Xerox-Ecoefficiency Strategy

Xerox has shown that eco-efficiency can provide win-win-win situations:

1. win for the customer (increased savings by increased efficiency, and lowering the environmental impact)

2. win for the company (avoiding raw material purchases, and increased customer satisfaction)

3. win for the environment (reduced raw material consumption)

1. reduced material mix – resulting in easier separation of materials for recycling

2. parts commonality – enabling the reusing of parts

3. multiple lives – avoids disposal of useful parts and optimized part life

4. serviceability – digital machines utilize ‘sixth sense’ diagnostics, which allow remote servicing and eliminating ‘broken calls’ whilst minimizing service engineer journeys

5. easy disassembly – products designed for disassembly allowing reuse/recycling

6. packaging-free – reusable or recyclable pallets eliminate the need for traditional waste producing packaging

Xerox –Waste Free Products

7. life cycle analysis – used in the design process to evaluate environmental impacts

8. life cycle costing – costing throughout all phases of the life cycle

9. customer requirements – delivering products which include customers’ requirements into the design process

10. materials recycling – as much material as possible is reprocessed or recycled, reducing resource consumption and providing an economic return through the purchasing of fewer raw materials

11. document productivity – by making document management more efficient, Xerox is both satisfying its customers with higher flexibility and functionality while reducing material consumption.

Xerox-Zero Waste Plants

Xerox-Waste Free Offices

• Waste in an office is a sign of inefficiency

• Reclaim toner bottles and cartridges

• Printing on both sides of a sheet of paper

Monsanto’s Product Sustainability Process

Ford Motor Company• A typical U.S. car weighs 3,274 pounds with the industry

consuming:– 76 percent of all natural rubber– 33 percent of iron– 31 percent of aluminum

• Ford has developed and offered Design-for-Environment training to all engineers and suppliers to help them understand issues, tradeoffs and the state-of-the-art with respect to recycled content and other desirable materials.

• Cross-functional Vehicle Recycling Action Teams in North America and Europe are charged with the task of increasing the use of recycled content, non-metallic materials and "design for recycling" in an effort to achieve environmental targets.

• Ford was the first automotive company to issue worldwide recycling guidelines to its suppliers and engineers

Ford (continued)

• These efforts have borne fruit, with Ford's recent models such as the Taurus, Fiesta and Excursion ranging from 80 percent to 84 percent recyclable.

• Ford itself has entered the recycling business through the purchase of more than 25 automotive recycling companies.

• Ford is an active participant in the International Dismantling Information System (IDIS), a consortium formed in 1995 and expanded in 1999 to include all 20 major automotive manufacturers worldwide.

• The purpose of IDIS is to provide dismantlers with needed information on environmentally sound treatment of end-of-life vehicles.

• IDIS has developed a single, user-friendly database of information on vehicles dating back to the early 1980s, listing any parts that are worth recycling and detailing procedures for fluid removal, air bag treatment and dismantling.

Program in Sustainable Manufacturing (PRISM)

• Leading edge of courses offered at universities

• Michigan Tech

• “A student-led, manufacturing learning enterprise.

Summary and Conclusions

• Manufacturing, like other sectors, must deal with sustainability

• Industrial Ecology and Metabolism provide a possible framework for creating a shift

• Leading businesses around the world are beginning to examine how to shift their practices to accommodate zero emissions, closed loop behavior, mimicking of nature, into their businesses

• Sustainable manufacturing can make the US more competitive globally