Whether corporate sustainability initiatives stem from regulatory compliance or aim to boost the bottom line, IT plays a key role in supporting such efforts according to environmental IT experts from three global companies.
The Experts: David Kepler, CIO, Dow Chemical (US), Mike McClusky, Project Manager, IT Product Development (US), Gabe Wing, Chemical Engineer and Manager, Design for the Environment, Herman Miller (US), Rosalee Hermens, CIO, Timberland (US).
Mike McCluskey and Gabe Wing
Social responsibility is at the core of Herman Miller, dating all the way back to its founding. The first formal environmental statement dates back to 1953. Design for the Environment (DFE) was formed in 2001 in order to create a more sustainable design process for our office furniture. DFE is the group charged with developing products that are as sustainable as possible.
You couldn't do that without informing designers about the chemistry and the sustainable properties of the hundreds of materials they use. Our materials database, which we created using Microsoft Access, captures information on the materials we use, where the reliable sources for those materials are and communicates that to the design team. The IT function and IT support is vital to that process.
The database is also Web-enabled, which makes it easily accessible to our designers, all of whom are independent contractors. That's the main driver behind Web accessibility, but customer demand is also important. About 90 percent of all questions we receive from customers are about the recycled content in our products, how recyclable the product is and where it is sourced. It's important that our customer response teams have access to the data so they can report it to our customers.
About three years ago, we put that database into our ERP system.
Herman Miller is well-positioned right now to comply with Reach and another EU regulation, Restriction of Hazardous Substances (RoHS) requirements. [Reach, which stands for Registration, Evaluation and Authorization of Chemicals, is a European Union regulation that goes into effect in June 2007 that requires manufacturers to register information about the substances they use in a central database. RoHS limits the amount of toxic chemicals that a product may contain.]
The purpose of DFE has been to control the chemicals in our products by identifying chemicals of concern and eliminating them. We've already started an extensive inventory of our products and have begun phasing out components we feel are problematic. So we're one step ahead. Our ability to comply with regulations is going to become increasingly important as we move forward.
For instance, we have a European-based manufacturing site for which Reach is going to have implications. We also export seating products to Europe from the United States, and the European regulations require that we track the chemicals in those products.
Right now our challenge is one of integration. We have certain data in one environmental database and bill of materials data in another, and we've got our ERP system. They're almost able to be integrated, but not quite. I don't think we imagined these things would necessarily have to be integrated together, but it's important that they are. If we pull this information together it will make our efforts more effective.
To me, sustainability is about the world and our contribution to some of its challenges. Ten years ago we set environmental and safety goals around things like injury and illness, process safety and chemical emissions. We have made significant progress: One of our goals was to reduce our energy consumption by 20 percent, and we reduced it by 22 percent. We also achieved an 84 percent reduction in emissions.
We expanded beyond those initial goals recently with Dow's 2015 Sustainability Goals.
We intend to improve our environmental health and safety performance by 75 percent within the next eight years. IT touches on almost every one of our goals. For example, IT is charged with creating databases to track environmental activity — measuring our emissions, tracking the safety and performance of our carriers, and managing our contractors.
IT not only manages the information but it serves as a watchdog.
Dow's current process control automation at its plants is so stringent that these systems will shut a plant down if it is not compliant with air and water emissions requirements. This technology allows facilities to operate compliantly at all times. Dow also uses a real-time monitoring system to measure the air and water emissions at its plants, and we are implementing an environmental reporting system that manages reporting of emissions data to state and federal authorities.
Some of Dow's locations in North America employ this reporting system now, and the North American roll-out of this system will be finalized by the end of 2007. It will be implemented globally over the next several years.
IT also helps provide safety assessments for all of Dow's products. We are taking the Reach concept a step further. Dow's Sustainable Chemistry goal is about creating products in more sustainable ways — which includes increased energy efficiency, increased efficiency of material use, decreased use of scarce resources, decreased emission of man-made substances to nature, and improved social, health and security risk profiles.
We will ultimately provide our stakeholders with key information related to the safety and risk of every chemical from Dow. To meet our goals relative to Reach, Dow will develop an integrated database that tracks consumption, usage and loss of a given base material that makes up bigger products to do a net balance across the entire lifecycle of a product. This database will allow Dow to better understand how materials are consumed during manufacturing. We started to gather information on 15 products this year. There's another 50 to go next year, and by the end of 2015 we want information on all our products out there transparently. Using SAP's environmental health and safety platform, we will make that information available on our Web site.
Regulations are a main driver behind these initiatives. Even though we've had environmental systems in place since the early 1980s and toxicology labs since the 1930s, the issues those systems are required to address change. So we come up with new environmental initiatives, and there is a lot of automation that goes into successfully executing them: Process control systems, monitoring systems, new interfaces — those are the pieces that IT has to upgrade. As we go forward, different regions and countries are going to mandate different things, and we are going to have to comply with those regulations in addition to our own environmental agenda.
However, in our progress toward our 2005 goals, we also realized great savings from better use of our resources, including energy efficiency.
For example, we estimated we would spend $US1 billion on technology and processes to save $US3 billion. However, our actual savings were closer to $US5 billion due to the rise in energy costs. Given the magnitude of the savings, our modest investment in IT solutions such as the Global Emissions Inventory or Global Incident Reduction Database would suggest a very high return on investment.
Many of our 2015 goals are related more to top-line growth than bottom-line cost reduction, so it's tough to assess their impact at this point. But some of the new IT tools and systems, including an integrated Life Cycle Assessment database and decision tools, will go directly to our ability to achieve our growth and innovation goals.
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