critical success factors for sustainable growth juan aguiriano, managing director sustainable...
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Critical Success Factors for Sustainable Growth
Juan Aguiriano, Managing Director
Sustainable Operations
May 23, 2011
1
Topics
• Sustainability Point of View
• Key Sustainability “Drivers”
• Regional & Industry Sustainability Challenges
• Effective Sustainability Methods & Approaches
• Results
Corporate Approach to Strategic Issues
Recognize strategic value & drive from the top
Line accountability
Appropriate support resources
Integrated Management System
Consistent implementation approach across entire operations portfolio
Rigorous performance management
Prioritize no-capital & low-capital improvement
Sustainability
Sustainability is a Strategic Issue
Essential to viability & long term health
When integrated into managing systems
Improves competitiveness
Releases capital
Attracts investment
All while increasing productivity
External drivers Volatility, magnitude and escalation of energy costs are
increasing the urgency to drive improvements in energy efficiency.
Governments and global institutions are introducing new energy management regulations and policies, pressuring companies & societies to re-think energy consumption.
Companies are expected to publish energy improvement goals and are being held accountable for delivering results.
Energy efficiency is being used as a powerful strategy to lower the cost of goods and attract customers at every level.
1. Volatility of resource costs
2. Public policy
4. Public accountability
5. Competition
The Investment community is increasing the weight of a company’s energy efficiency commitments and capabilities when making investment choices.
Sources: 1Generation IM (2007), 2Freshfields Bruckhaus Deringer (2005). 3EU Eurobarometer Survey (2008). 4Salterbaxter (2007)
3. Access to capital
External “Drivers” pressuring companies to be more sustainable
Regional Conditions – Our Understanding
• GDP Growth in the booming Asian economy is estimated at 7% GDP on average
• Energy demand from Southeast Asian nations is growing faster than anywhere else in the world, estimated to expand by 79% by 2030
• With only 1% of the world’s proven reserves of oil, energy efficiency is an essential strategy
• An IEA 2009 report says “more than 60% of greenhouse gas emissions could come from Southeast Asia if region adopts energy efficient programs.
• Underscoring the need for energy efficiency is the Region’s high exposure and sensitivity to climate change.
Source: Global Fund Exchange, International Energy Agency (IEA) November 5, 2010,
The DuPont Energy Challenge
DuPont has addressed sustainability and energy reductions on a continuous basis since 1989
Our motivations:
Recognized energy cost as a significant part of our total operating cost
Experienced supply disruptions as costs were increasing rapidly
Energy efficiency would provide the greatest cost savings among global warming initiatives, but emissions would gain ground
A way to outperform competitors
Overall, the health and welfare of the organization and its product lines would be at risk if we didn’t act.
Overall, the health and welfare of the organization and its product lines would be at risk if we didn’t act.
DuPont Sustainability Accomplishments
Goal
achieve 5% ($50 Million USD) annual decrease in energy use, consistent with sustainability goals
Goal
achieve 5% ($50 Million USD) annual decrease in energy use, consistent with sustainability goals
Results 1990 - 2009
19% decrease in energy use
20% increase in production
$5B in cost savings
Results 1990 - 2009
19% decrease in energy use
20% increase in production
$5B in cost savings
* TRI = Toxic Release InventorySources: DuPont Global Reporting Initiative (GRI) report, Yahoo Finance* TRI = Toxic Release InventorySources: DuPont Global Reporting Initiative (GRI) report, Yahoo Finance
Reduction 1990 - 2009Air Carcinogens
92%
U.S. TRI* “Releases”77%
Air Toxics75%
Energy Efficiency Initiatives Examples
Integrated load controls Utilize Vented H2 in CB Boiler Improve Condensate Return Reduce Liquid Nitrogen Usage Steam Trap Maintenance Cooling Tower Water Temperatures Monitoring & Targeting Mindset and Behaviors…
Energy Efficiency Initiatives Examples
Integrated load controls Utilize Vented H2 in CB Boiler Improve Condensate Return Reduce Liquid Nitrogen Usage Steam Trap Maintenance Cooling Tower Water Temperatures Monitoring & Targeting Mindset and Behaviors…
Absolute Values
0%
20%
40%
60%
80%
100%
120%
140%
160%
Per
cen
t o
f 19
90 (
2004
fo
r w
ater
)
Production
Water
Hazardous Waste
Energy
CO2 eq.
Share price ($)Share price ($)
100$100$
1990 1995 2000 2005 20091990 1995 2000 2005 2009
Driving sustainable performance in operations requires the management of varied and multiple demands…
…dealing with priority levels and resources availability
Stakeholder engagementStakeholder engagement
Doing More With Less:Sustainable PerformanceDoing More With Less:
Sustainable Performance
Emissions Resources
Energy
Reliability
SafetyMaintenance
Quality
Supply Chain People
Management
Culture
“From Compliance to Performance”
Integrated management systems that can accelerate the goals and transform organizations so that they can turn their environmental and sustainability efforts into cost and competitive advantages that last.
Operational efficiency Product innovationInfluence on Society and the competitive
landscape
Awareness and Compliance
Risk Mitigation Cost Reduction Revenue Generation Competitive Advantage
Move from discrete sustainability initiatives to integrated sustainability competence and business case
3 Phase Approach: Assess & Envision, Design & Implement, Integrate3 Phase Approach: Assess & Envision, Design & Implement, Integrate
Bottom-up
business
review
1
Top-down
critical issues
identification
2
Stakeholder
engagement
3
Goals
development
& benchmark
4
Management System Design & Implementation
CORPORATE BUSINESS UNITS OPERATIONS
Detailed TargetsDetailed Targets
Corporate Analysis &
Prioritization, KPI
Corporate Analysis &
Prioritization, KPI
Communicate & CascadeCommunicate & Cascade Leadership
Process & ToolsOrganization
Structure
LeadershipProcess & Tools
OrganizationStructure
3344
5 2
Organizational Processes
Cultural Transformation
CapabilityBuilding
Assess & Envision
Integrate
1
Guidelines, StandardsGuidelines, Standards
Business Units Plans
Business Units Plans
Corporate Sustainability Planning Process
Building an integrated sustainability management system that delivers tangible value to client shareholders & the environment
Reduce environmental risk and improve corporate environmental reputation
Improve returns on investments in Sustainability
A transparent, goal-driven sustainability strategy that is demonstrating real progress.
An integrated business and sustainability planning process that is identifying the best environmental projects for the company
An enduring management process that ensures the organization can sustain and build upon its goals
Client’s needs Benefits
Corporate Sustainability Planning
Leading Oil & Gas Co.
Design & implement an Integrated Production System that enables client transformation towards world-class operational performance
Company performance improvement
Integrated approach to operations management: operations systems and procedures, management processes, people capabilities mindsets and culture.
A sustainable roadmap with significant year-on-year payback that enables to deliver the business objectives
Very significant contribution to the bottom line (up to 20% of operating costs)
World-Class Operational Practices and Culture in 4-5 years
Client’s needs Key questions & Approach Benefits
Sustainable Assets
Leading Petrochemical Company in Russia
Design & implement an Asset Reliability Management System that delivers operational excellence to customer
Minimize Asset downtime, production losses and associated costs
Integrated management and capabilities improvement towards operational excellence in the facilities group
Maximises uptime while minimising Risk to customer’s objectives
Direct Impact on the bottom line
Client’s needs Key questions & Approach
Sustainable Assets
Benefits
Leading global displays producer
Design & implement a Project Management and Contractor Management Solution that delivers significant value and less risks to client multiple capital projects delivery
Company cement production capacity increase
How can I build the new assets with limited in-house capabilities while minimising risks
Better planning for lower capital projects costs, better cycle-time
Less injuries through Contractor Safety Management implementation
Asset protection through constructability
Contractors with enhanced understanding of company requirements for safety & quality
Competent team in project management
Better Quality Assurance and Readiness To Operate
Client’s needs
Capital Effectiveness & Contractor Safety
Expected Benefits
Leading Cement Producer
In Summary….Success depends on leaders’ ability to create and execute the business case for sustainability improvement
Understanding key drivers for sustainability in sector and current performance
Integrating sustainability into business vision, strategy and objectives
Using sustainability to manage risks, reduce costs, create options and build stakeholder’s value
Measuring and communicating performances
Developing competencies and supporting behavioural, mindsets and cultural change
