The ULS Report TM January-February-March
2000 |
Index
Sustainability: New Concept, New Century
$USTAINABILITYA Business Concept for a New Century
We've been using the term sustainability quite a bit lately. The bad news is that while experts are not really sure what it means or how to measure it, they are sure that they'll know it when they see it. The good news is that the business world isn't waiting for an agreed-upon definition before deciding if it's the right thing to do.
None other than Dow Jones, the venerable publisher of The Wall Street Journal and namesake of the famous stock market index, has begun tracking companies based upon an assessment of their level of sustainable activity. Under the name The Dow Jones Sustainability Group Index (DJSGI), the measure is the "first systematic methodology for identifying leading sustainability-driven companies world-wide."
According to the DJSGI Web site, sustainability-driven companies achieve their business goals through the integration of economic, environmental and social growth opportunities into their business strategies. By managing all three (commonly known as "the triple bottom line"), firms should be in a better and more profitable position to compete in the future. There is a mounting body of evidence that suggests this is true.
Superior performance of sustainability-driven companies relates directly to their commitment to five principles
1. Technology -- The creation, production and delivery of products and services should be based upon innovative technology that uses resources effectively and efficiently.
2. Governance -- Sustainability should be based upon the highest standards of corporate governance.
3. Shareholders -- Shareholder demands should be met with sound financial returns and productivity increases as well as with increased competitiveness and contributions to intellectual capital.
4. Industry -- Sustainability companies lead their industry's shift towards sustainability by demonstrating commitment and publicizing superior performance.
5. Society -- Companies should encourage long term social well being through their responses to social change, changing demographics and the need for continuing education.
The DJSGI is set up to include a number of business sectors. Certain sectors can be excluded as well for obvious reasons, such as tobacco, alcohol and gambling. Also, the index can be broken out by geographic region (e.g., USA, Europe) or aggregated for the entire global economy.
While not all companies that comprise the index are publicly available, we thought you might like to get a look at a few of the ones that are listed on the Web site:
Company Economic Sector Industry Group BMW Consumer, cyclical Automotive FUJI Consumer, cyclical Recreation Unilever Consumer, non-cyclical Food, other Bristol-Myers Squibb Consumer, non-cyclical Pharmaceuticals Credit Suisse Financial Banks Honeywell Industrial Electronics Fujitsu Technology Computers Deutsche Telecom Utilities Telephone Systems
These companies have met the DJSGI criteria for sustainability. Other companies that have purportedly made the list include Dow Chemical, DuPont and Henckel.
It's interesting to note that Dow Jones does not make it easy for you to find out about the DJSGI. Going to their Web site at www.dowjones.com gives you not indication. To learn more, try this address: indexes.dowjones.com/djsgi.
What does all of this mean for you, the typical consumer? First, you can track how well sustainability-driven companies perform versus the rest of the market. Second, you can make investment decisions that reflect your environmental and social concerns. And finally, you can make purchase decisions that let manufacturers know you favor their business approach, thus rewarding them for sustainable policies. In the long run, the latter will also help get the laggards on the bandwagon. Otherwise, they run the risk of falling off for good.
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Big Changes Brewing for Beer Industry
It's Saturday afternoon and you're out of beer. You run to the nearest store and grab a six-pack of your favorite brew. Hmmm... The carton feels somehow lighter. And the bottles thud, rather than clink, when you place them on the seat. When you get home and open one, the bottle isn't very cold to the touch, but the beer inside is nicely chilled. What's going on here?
You've just had your first beer packaged in plastic, rather than glass, bottles. Plastic bottles may not be in your store yet, but they're definitely coming.
Many brewers, including Miller, Anheuser-Busch and Heineken, are testing the market for plastic beer bottles. Since glass is recyclable and cheap, why would they want to switch?
After attending conferences, visiting recyclers, touring production plants and listening to brewers and bottle manufacturers, we have not received a clear or consistent answer. Here are some of the many reasons that were shared with us
* Plastic beer bottles are made from PET, the same plastic used in soft drink bottles. Thus, in theory, they should be easy and profitable to recycle (more on this later).
* While plastic bottles may cost more than glass, the overall cost to the wallet and the environment may actually be lower, due to significant savings in transportation costs. Since PET is much lighter than glass, it takes much less energy to transport plastic bottles, saving fuel and reducing air pollution and greenhouse gas emissions.
* Consumers like plastic bottles, since they're safer (won't break), lighter and recloseable.
* Sales of beer have been flat lately (pun intended), and brewers are hoping that new and unique types of packaging will help put the fizz back in their business.
On the recycling front, there are two issues that beer producers must address. First, most plastic beer bottles contain what's called a barrier layer, which is a special type of plastic that keeps carbonation in and oxygen out. (Beer that loses carbonation through the package becomes flat, while beer that picks up oxygen from outside the bottle becomes stale.) These barrier layers have the potential to make life tough for recyclers, since the barrier material has the potential to contaminate the PET, making it less valuable.
Second, most beer bottles are amber. While this is fine for glass, recyclers currently have no market for amber plastic. One solution is to make the bottle clear and the barrier layer amber-colored, but again we're back to the barrier issue.
Fortunately, neither the recyclers nor brewers are sitting on their hands. Through the Association of Postconsumer Plastic Recyclers (APR) and NAPCOR (National Association for PET Container Resources), brewers and bottle producers can work with recyclers to test the affects of different bottles on typical recycling operations. The same type of activity is occurring in Europe, through PETCORE, which represents PET recyclers across the Continent.
By the way, recycling plastic bottles is a fascinating and fairly mature process. First, bales of bottles are brought to a recycling facility, where they are sorted and washed, removing impurities, labels, dirt, etc. Then the bottles are ground up into flakes, washed again and dried. The flakes are then melted down, run through an extruder and and filtered again for impurities. The resin is then chopped up into little pellets, which are the raw materials for new plastic products. Depending upon the end markets, other steps may be required to enhance the quality or consistency of the reborn PET pellets.
And just where do recycled bottles end up? Markets include fiber for clothing and carpets, plastic sheeting, industrial strapping and new bottles. According to some industry experts, there is currently more demand for recycled PET than there is available supply. Thus, a move to plastic beer bottles may in fact help keep recyclers' facitilities humming, since this additional source of material could provide a profitable way for them to fill the gap.
Will you be seeing plastic beer bottles anytime soon? Maybe. Companies have different strategies for introducing them. Miller, for example, will be selling beer in plastic bottles in what it calls venues -- sports stadiums, arenas, etc. The reason is that there is a big advantage to the plastic bottle over either the glass bottle or open cup. Versus glass, the plastic bottle won't break and is lighter, making it easier for vendors to carry. Versus cups, bottles keep the beer cold, prevent spilling and are recloseable.
Other beer producers may try different approaches. It looks as if Heineken will try plastic bottles for larger sizes, such as 1 liter bottles. This allows drinkers to have a glass, reclose the bottle and put it back in the fridge for later.
Regardless of which brewer does what with plastic bottles, one thing's for sure The beer industry can't afford to ignore the recycling industry. Brewers will have to ensure that their packaging is compatible with the existing recycling infrastructure.
You have an important part to play, too. Please make sure that if you obtain beer in plastic bottles, you recycle the bottles. PET can be a profitable and important part of the recycling process, but only if you put in the small amount of time and effort it takes to participate. Cheers!
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The EPA Gets Serious About Waste Prevention
The Environmental Protection Agency (EPA) recently released its National Source Reduction Characterization Report (EPA530-R-00-034, November 1999), the first comprehensive analysis of source reduction at the national level. There's lots of information contained in the report, and we're very happy to see that the EPA is confirming what we've been saying all along source reduction (using less stuff) is a powerful and increasingly important way to reduce trash, pollution, organic waste and the use of hazardous materials.
The principal finding in the report is that in 1996, Americans reduced municipal solid waste (MSW) by over 23 million tons. This is equivalent to 11% of the 210 million tons of waste that were generated in that year. Significantly, source reduction has been growing by leaps and bounds, as shown below
Source Reduction
Year 000 Tons 1992 630 1994 7,974 1995 15,879 1996 23,286 Here are the functional areas used to measure waste prevention and their impacts on the total amount reduced
1996 Source Reduction By Material Categories
(000 Tons Reduced)
Durable Goods
2,179 Nondurable Goods
3,571 Containers & Packaging
4,002 Organics & Miscellaneous
13,534 Total
23,286
Durable Goods -- The reduction here relates primarily to the growth of electronics reuse markets as well as weight and size reductions for items like computers and telephones.
Nondurable Goods -- The primary driver here was source reduction of newspapers, either by reducing the amount of paper used per page or the total number of pages produced.
Containers & Packaging -- The reduction in this area was due to two different factors. First, waste from wood pallets was significantly reduced, thanks to greater reuse of pallets as well as a trend toward thinner, lighter slipsheets. Second, much packaging weight was eliminated as manufacturers continued switching from glass to plastic or aluminum. This trend was most striking in the soft drink industry. For example, between 1980 and 1996, beverage consumption increased by 63%, yet packaging waste declined by 20%!
Organics & Miscellaneous -- The biggest overall reduction was in yard trimmings, as communities began banning them from landfills, composting facilities came on line, and individuals began the switch to mulching mowers.
Not all areas showed reductions, however. Clothing and footwear showed an expansion of almost 800,000 tons, commercial printing grew by 1.5 million tons, and paper boxes increased by almost 2.2 million tons. It is hoped that use of the Internet for business-to-business applications will slow the growth of commercial printing. However, paper boxes (corrugated) continue to expand as electronic commerce increases and more packages are shipped, rather than driven, home. The corrugated industry is working hard to reduce the weight of their materials, but demand is simply outpacing their abilities to do so.
Here are a number of interesting case histories outlining ways in which companies large and small have saved financial and natural resources by lightweighting, eliminating, substituting, reusing and recovering
Montgomery County, MD -- Following a 1994 ban on yard trimming disposal, the county began an aggressive program aimed at grasscycling, backyard composting and mulching. The result has been a 50% reduction in yard trimming generation, as well as a $1million reduction in annual composting costs. The county was also able to avoid the $2.5 million cost of expanding its composting facilities.
Pallet Resource of North Carolina -- This company collects, repairs and reuses over 1.25 million wooden pallets per year. By diverting this material from landfills, over 16.25 million board feet of lumber are saved each year, conserving about 180,000 cubic yards of landfill space.
Clorox Company -- The company switched from glass to plastic bottles for its barbecue sauces and salad dressings. This eliminated nearly 15,000 tons of waste annually. The reduced weight of the product also meant that shipping containers could be made lighter, eliminating the annual need for some 1,000 tons of corrugated.
Procter & Gamble -- By redesigning plastic bottles used for vegetable oils, P&G cut their use of plastic by 1,250 tons . Like Clorox above, the lighter bottles meant that lighter cartons could be used, further saving 650 tons of corrugated annually.
Coca-Cola Company -- Simply by shaving the diameter of the neck of its aluminum cans, Coke has reduced aluminum usage annually by an estimated 20,000 tons.
New York State Dept. of Correctional Services (DOCS) -- Survey data found that 30% of the DOCS waste stream was food scraps. To reduce disposal costs and comply with state waste reduction legislation, a composting program was initiated at 47 facilities. The result was an annual reduction in organic waste by almost 7,000 tons, representing a 90% recovery rate. Annual savings in avoided disposal costs total $560,000.
Federal Express -- Since 1981, Federal Express has continuously reduced the thickness of the paperboard used to manufacture its 9-1/2" by 12-1/2" FedEx Letter envelope.The envelope has been lightweighted by 40%, and the combined savings from this source reduction activity and the redesign of other paper, paperboard, and polyethylene shipping containers totals more than $20 million annually for the company.
Target Stores -- This chain of over 850 retail stores eliminates about 2,250 tons of waste per year (the majority of which is low-density polyethylene) and saved an estimated $4.5 million by initiating a packaging reduction program for its "softlines" merchandise, which includes items like clothing and shoes. In addition, its suppliers saved an estimated $3 million by reducing the packaging material used in shipments.
Herman Miller -- This furniture manufacturer has implemented a variety of returnable and reusable packaging systems with their suppliers. In 1990, Herman Miller’s Holland Chair Plant underwent a six month switch over from a waste-intensive corrugated box and filler system for shipping shells for its Equa chairs to a reusable plastic tray system. The company has saved at least $1.4 million since the packaging change. The change itself resulted in a 70% packaging material reduction and a 94% decrease in damage claims.
3M -- This manufacturing company prepares thousands of meals daily at its headquarters. Disposal of food waste was a costly endeavor. A consultant helped 3M locate a farming operation experienced in collecting and converting reclaimed food to animal feed. In the program’s first 2 years, 3M diverted 45 tons of food scraps and edible oils and saved more than $30,000.
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