As the English physician Sir Thomas Browne wrote in 1642, “Charity begins at home.”1 Likewise, sustainability also begins at home, and many companies look inward and focus their initial sustainability initiatives on self-improvement. “Developing and implementing sustainable manufacturing practices is an essential part of doing business today,” said Michael Darr, plant manager at Bridgestone's passenger and light truck tire plant in Wilson, North Carolina.2
In most cases, these initial efforts align with the company's economic goals. Thus, improvements in the “make” process are often motivated by eco-efficiency considerations, including reducing the use (and therefore cost) of energy, water, and other inputs. These and other initiatives may also be motivated by eco-risk mitigation considerations, such as reducing or eliminating toxins in products or emissions, either of which could create expensive liabilities for the company or invite NGO criticism and attacks. This chapter emphasizes sustainability improvements in the manufacturing processes of a company's existing products, rather than changes to the products themselves (see chapter 8), changes in the raw materials and parts (see chapter 5), or changes in disposal (see chapter 7).
A blazing fire can either be an untamed terror that consumes all before it or a comforting source of light and warmth that brings cheer on a cold winter night. At least half a million years ago, humanity tamed fire to harness this chemical process for an ever-growing number of applications.3 Centuries of innovation have exploited the miracle of fire inside furnace boxes, beating pistons, and the twirling turbines of jets and power plants. The discovery of abundant fossil fuels, such as coal, oil, and natural gas, made energy cheap and plentiful, which fueled the modern world of industry and transportation.
As oil derricks drilled deep into the ground to extract black gold, so, too, did smokestacks, chimneys, and exhaust pipes rise into the sky. Emissions from the bright fires of early industry cast a dark pall over the landscape and sparked a wave of environmental laws after the Industrial Revolution. In response to regulation, engineers designed more efficient combustion systems that ensured more of the fuel was converted to useful heat. They also added a host of exhaust system add-ons, such as catalytic convertors, ash precipitators, and scrubbers, to further remove pollutants from exhaust.
Nevertheless, for all the control that humanity has exerted over this powerful natural reaction between air and fuel, it has failed to contain the most basic by-product of combustion: carbon dioxide. Each day, nearly 100 million tons of carbon dioxide flow into the atmosphere from the burning of fossil fuels in vehicles, factories, power plants, and other sources.4 Those emissions have outstripped the present-day capacity of vegetation and other natural geochemical processes to absorb the excess CO2, leading to a 27 percent increase in atmospheric carbon dioxide between 1960 and 2016.5 The majority of scientists (but by no means all) believe that these emissions have been and will be responsible for significant climate change that could threaten the viability of agriculture and ecosystems.
Supply chains play a major role in the atmospheric buildup of CO2 through the consumption of energy in both manufacturing and transportation. In the United States, industrial applications consume about one-third of all energy. Worldwide, industry consumes half of all energy. For that reason, many green supply chain initiatives focus on improving energy efficiency and reducing the carbon-intensity of energy sources. Under the Greenhouse Gas Protocol6 described in chapter 3, these are, in large measure, improvements to Scope 1 and Scope 2 emissions. According to the US Department of Energy, “Energy efficiency is one of the easiest and most cost-effective ways to combat climate change, clean the air we breathe, improve the competitiveness of our businesses and reduce energy costs for consumers.”7
In 2006, Siemens began implementing a “very German”8 four-step approach to internal energy efficiency. The process begins with selecting a site for improvement, continues through an “energy health check,” then moves on to an analysis of energy use, and ends with the implementation of a performance improvement contract between that Siemens facility and Siemens corporate headquarters.9 This cycle of assessment and improvement is largely an eco-efficiency initiative.
At one of its Bavarian factories, Siemens installed €1.9 million in new energy-efficient equipment and processes. The program cut the factory's energy use by 20 percent and cut its carbon emissions by more than 2,700 metric tons of CO2 per year.10 Of course, a 2,700-metric-ton reduction at one factory is negligible in comparison to the 2,737,000 metric tons of CO2 that Siemens emitted in 201311 and is infinitesimal compared with the 2013 global carbon emissions from fossil fuels of 36,000,000,000 metric tons.12 The initiative does nothing to mitigate emissions at Siemens’ tens of thousands of suppliers. And Siemens has thousands of business customers that use the company's products in ways that emit further carbon. However, the Bavarian factory improvement was only one of hundreds of initiatives undertaken by Siemens.
For example, at its factory in Newcastle, Siemens defined 13 individual initiatives in three categories: extension of existing building automation, modernization of measurement and control technology for the heating system, and installation of energy-efficient lighting. Siemens implemented its four-step energy saving process at its 298 major production and manufacturing plants worldwide. As a result, between 2010 and 2014, the company improved its overall energy efficiency by 11 percent and its CO2 efficiency (output per unit of CO2 emitted) by 20 percent.13
These examples show that sustainability is a broadly implemented process, not a “silver bullet” point solution; reducing environmental impacts requires multiple points of intervention. In other words, as any golfer knows, “you don't get to the green in one stroke.” Such is the case with many of the examples outlined in this book, which exemplify the kinds of initiatives companies are pursuing rather than exhaustively documenting every single initiative.
Furthermore, many of these small changes are eco-efficient and are, therefore, financially justified because they meet the company's return on investment thresholds. The Bavarian initiative paid for itself in four-and-a-half years with projected annual savings of almost €700,000.14 The Newcastle improvements delivered a 27 percent internal rate of return (IRR).15 In addition, each modest success story (and its cumulative effect on impact reduction) contributes to eco-risk mitigation by demonstrating ongoing progress.
A 2006 study by the US Department of Energy (DOE) involving 200 energy savings assessments of steam or process heating systems utilized by manufacturers found that the average company in the study could save $2.4 million a year on natural gas alone if it implemented best practices in energy management or made modest upgrades to systems.16 Companies interested in superior energy performance can pursue ISO 50001 certification, which is an international standard that specifies requirements for industrial energy management systems.17 The US DOE claims that companies that achieve both ISO 50001 and the DOE's Superior Energy Performance (SEP) certification typically save 10 percent on their energy costs within 18 months of SEP implementation.18 Of course, such studies do not test each environmental improvement against other possible efficiency investments that companies could make or the investment hurdle rate used by each company.
Beyond making improvements in the efficiency of each industrial process, companies can pursue more systemic solutions.
Visit almost any factory and you will see pipes, ducts, and conduits of all sizes carrying chilled water, hot water, steam, natural gas, and electricity. Manufacturing processes often require various cycles of heating and cooling of ingredients, intermediate products, and finished goods. Much of the energy in a factory is consumed by attaining and maintaining the right temperature for all these industrial processes. Yet, many of these processes duplicate efforts, with one system consuming energy to chill down hot materials while another system consumes energy to warm cold materials. Moreover, the cooling towers and cooling ponds of electric power plants offer graphic evidence of the “wasted” heat produced in powering all these industrial heating and cooling systems.
To reduce such systemic waste of energy, Unilever spent about €28 million on a cogeneration program in Europe. Cogeneration, also called combined heat and power (CHP), is the intentional co-location of electricity generation and heat-dependent manufacturing systems. With cogeneration, Unilever captures more of the total energy latent in the fuel than a traditional power plant would and avoids the need for separate boilers. The program made both environmental and economic sense: it avoided 60,000 tons of CO2 emissions and saved about €10 million a year.19 Overall, cogeneration can be 20 to 60 percent more efficient than standard power plants.20 “So we basically have a much cleaner energy generation, and it saves money,” said Tony Dunnage, group environmental engineering manager at Unilever.21
BASF, the large German chemical producer, extended the eco-efficiency principle behind cogeneration to other make processes that produce significant quantities of by-products, such as those in the chemicals and agricultural products industries. BASF uses a holistic eco-efficiency practice of site-wide management of products and by-products, which it calls verbund, the German word meaning “combined,” “linked,” or “grouped.” The largest of BASF's six verbund sites is located next to its headquarters in Ludwigshafen, Germany. The site integrates 160 production facilities interconnected by 2750 km of pipelines in a 10 square km campus. “At our verbund sites, production plants, energy and waste flows, logistics, and site infrastructure are all integrated,” BASF claims on its website.22 The strategy saves BASF more than €300 million annually.
Cogeneration and verbund take advantage of a supply chain that is more complex than the linear stages shown in the typical SCOR diagram. The verbund sites are a mesh in which each make step might consume multiple input materials (e.g., various raw materials and hot water) and produce multiple outputs (e.g., the intended product, valuable by-products, and cool water). Within this mesh, a by-product chemical from one production facility can provide a key ingredient to a second facility, while the second facility produces by-product heat used to power the first facility. With verbund, every production unit is potentially both a supplier and a customer of every other production unit. This holistic vision is also found in the circular economy: a sustainability concept borrowed from ecological sciences in which materials continually cycle in the environment (see chapter 7).23
Cogeneration and verbund require both large scale and breadth to be cost-effective. A smaller, more specialized chemical plant typically produces by-products in volumes that are too low to be economically viable for sale or further refinement, so they are typically burned for fuel or dumped. However, by integrating multiple large production facilities that can feed off each other's by-products, the volume of the by-products is large enough to justify storage and further processing, reducing the costs of subsequent manufacturing steps, and cutting by-product disposal costs. Yet, even the most efficient systems still need energy to drive manufacturing processes, which raises the issue of minimizing the carbon-intensity of these energy sources.
Starting in 2016, the winds sweeping across the hot dry plains of central Mexico have been helping General Motors build cars. The company signed an agreement with Enel Green Power to build a 34-megawatt wind farm to supply four of GM's Mexican factories. The new wind farm covers about 3 percent of the company's North American power needs and reduces GM's carbon footprint by nearly 40,000 tons annually.24
“There's also a good business case [because] prices for traditional power [in Mexico] are about a third greater than the United States,” said Rob Threlkeld, GM global manager of renewable energy.25 In addition to the environmental benefits, GM will save about $2 million annually over Mexico's electricity rate.26 “Using more renewable energy to power our plants helps us reduce costs, minimize risk and leave a smaller carbon footprint,” said Jim DeLuca, GM's executive vice president of global manufacturing.27
Again, while such a reduction is trivial (vehicle manufacturing and assembly constitute only 4 percent of the total life cycle value of energy use and carbon emissions of a vehicle), it is but one effort among many potential renewable energy technologies being tested by the automaker. For example, two of GM's Ohio plants have multimegawatt rooftop solar arrays. “You don't often think of the Midwest when you think of ideal locations for solar, but reduced costs and increased utility rates have made sites like Lordstown and Toledo optimal locations to expand GM's use of solar power,” Threlkeld said.28 GM expects to get 12 percent of its total energy from renewables.29 Overall, GM claimed to have achieved a 14 percent reduction in carbon intensity between 2010 and 2015.30 Nevertheless, some companies are targeting 100 percent renewables.
Apple uses one kind of flat-panel product to supply power for another kind of flat-panel product. On the one hand, Apple buys hundreds of millions light-emitting display panels each year for its iPhones, iPads, and iMacs.31 On the other hand, in 2015, the company pledged to invest $848 million in light-absorbing solar panels with First Solar's “California Flats Solar Project.”32 This commitment is part of $3 billion in investments by Apple in solar facilities in California and Arizona.33 Those solar panels will power Apple's energy-hungry data centers that the company uses to fill the display panels of Apple users with apps, maps, videos, messages, and other data.
Apple has pursued renewables very aggressively, with the intent of reaching 100 percent renewables in its own operations. In 2010, Apple got 16 percent of its power for corporate, retail, and data center facilities from renewables. Like GM, Apple has tapped into a wide variety of renewables, including solar, wind, micro-hydro, biogas fuel cells, and geothermal sources.34 Only four years later, Apple's percentage usage of renewables in its own worldwide operations had climbed to 87 percent.35
Greenpeace even recognized Apple for its progress toward using 100 percent clean energy. The NGO gave Apple straight A's on all four dimensions of Greenpeace's scorecard: energy transparency, energy commitment and siting policy, energy efficiency and mitigation, and renewable energy deployment and advocacy.36 “It's one thing to talk about being 100 percent renewably powered, but it's quite another thing to make good on that commitment with the incredible speed and integrity that Apple has shown in the past two years,” said Greenpeace senior IT sector analyst Gary Cook.37
The smell of decay from a landfill or sewage treatment plant can also be the smell of an opportunity to reduce carbon intensity by using biofuels. Many companies convert biomass waste (e.g., food waste, agricultural waste, paper, and wood waste) into methane that can then be used as fuel. Although BMW USA in Spartanburg, South Carolina, does not produce significant biomass waste during the production of cars, the car factory is located near a large municipal landfill. The decaying garbage gives off methane and various other smelly gases. In 1999, BMW decided to harvest this gas to run the energy-intensive operations at the plant. BMW's paint shop, the single largest energy user in the factory, burns natural gas for heating spray-booth air, paint-curing ovens, a regenerative thermal oxidizer (a pollution control device that burns off paint fumes), and its energy center boiler.
The project required several capital equipment investments and modifications. First, the carmaker built a 12-inch pipeline, 9.5 miles long, running from the landfill to the factory. This pipe delivers gas as the garbage in the landfill steadily decays. Because landfill gas (LFG) is not pure methane, it has a lower heating value than fossil fuel natural gas. To accommodate the greater volume of gas needed to deliver the required amount of energy, the project required changes to many systems in the plant, such as larger pipes, nozzle mixers, firing tubes, and blowers. BMW also added control systems to easily switch between LFG and regular natural gas as needed.
As of 2006, BMW Spartanburg got 63 percent of its energy from LFG. BMW originally justified the project based on a less than three-year payback from anticipated savings. Actual savings exceeded the original estimates. The project also reduces BMW's carbon emissions by 17,000 tons of CO2 annually. In addition to the savings, the US Environmental Protection Agency awarded BMW with its Green Power Leadership Award in 2013.38,39 For BMW, methane was a solution; for other companies, however, methane can be a problem.
When Stonyfield Farm, maker of organic yogurt, did its first LCA in the 1990s, it was shocked to find that fuel-burning trucks and power-hungry factories were not the biggest source of the company's carbon footprint. Rather, the beloved bovines that turn grass and organic grain into wholesome milk for Stonyfield belch vast quantities of enteric methane as a by-product of microbial digestion of plant material inside each cow. Methane is a potent greenhouse gas and has 30 times the long-term heat-trapping ability of CO2. The average cow emits enough methane to equal the footprint of the average family car.
Many milk producers are aware of this crucial hotspot, and some are taking steps to mitigate it. Aurora Organic Dairy, for example, began to acquire land to grow feed for its cattle.40 This allowed the company to control the type and quality of feed to maintain its organic standards, as well as control the cost. The feed has a direct impact on the amount of enteric emissions of cows. These emissions are responsible for 78 percent of the company's GHG emissions.41 Aurora also acquired milk-processing capabilities, replacing a third party. In addition to reducing the dairy's carbon footprint, the control across the supply chain allows the company “the greatest traceability, most consistent standards and highest quality available.”42
Keeping milk and other food cold on a hot summer day has a hidden environmental impact beyond the obvious energy consumed. Ironically, the most popular and “safe” gases that enable refrigerators to perform their chilling tricks are environmentally problematic. For much of the 20th century, refrigeration systems relied on chlorofluorocarbons (CFCs), because these gases were energy efficient, nonflammable, and had much lower toxicity than earlier refrigerants, such as ammonia.
The trouble starts when CFC refrigerants inevitably leak into the atmosphere during installation, maintenance, repair, disposal, and even during operation owing to imperfect seals in the equipment. The same inertness of CFCs that makes them prized for refrigeration and many other consumer, commercial, and industrial applications means that they could remain in the atmosphere for more than 100 years.43 As the CFCs slowly break down high up in the atmosphere, they release chlorine that attacks the ozone layer that shields the Earth's surface from damaging levels of UV radiation.44
Late in the 20th century, environmentalists and then governments recognized that chlorinated and bromated hydrocarbons, including CFCs, were destroying the ozone layer of the Earth's atmosphere. The UN-mediated 1989 Montréal Protocol—considered the most successful environmental treaty to date—called for worldwide regulations on a broad range of ozone-depleting substances, including CFCs.45 Governments around the world enacted regulations that steadily phased out both the manufacturing of CFCs and the use of equipment dependent on CFCs. In response, many companies turned to hydrofluorocarbons (HFCs) as ozone-safe, yet chemically similar, alternatives.
Unfortunately, CFCs, and even HFCs, create another environmental problem; a single ton of escaped HFCs could impact climate change as much as 14,000 tons of CO2.46 Although HFCs are certainly better for the ozone layer, they are potent greenhouse gases. Thus, activists began calling for a phaseout of HFCs too.47
In 2000, Greenpeace targeted Coca-Cola over the beverage maker's use of HFCs in vending machines and retail refrigeration units.48 Refrigeration was responsible for 40 percent of Coca-Cola's carbon footprint.49 Greenpeace parodied Coca-Cola's iconic polar bear ads by showing bears floating on melting icebergs and used Coca-Cola's distinctive cursive font to write “Enjoy Climate Change.”50 The NGO specifically targeted Coca-Cola's sponsorship of the 2000 Sydney Olympic Games, which were purported to be green.
Coca-Cola began testing other technologies and rolled out its first HFC-free machine in 2002,51 but its solution looked counterintuitive at first glance. Coca-Cola actually selected CO2 as a refrigerant. “We talk about fighting fire with fire,” said Bryan Jacob, director of energy and climate protection for Coke. “In the right application, CO2 can be a solution to climate change,” he added.52 Carbon dioxide is a natural alternative that is nonflammable, relatively nontoxic, comparatively inexpensive, readily available, and eliminates 99 percent of direct emissions. By using CO2 that would otherwise have been vented into the atmosphere, Coca-Cola sequesters greenhouse gases for the duration that it remains in the refrigeration system. In fact, in a document enumerating the growing threat of HFCs, Greenpeace itself recommends the use of CO2 as a natural replacement to HFCs.53
By 2014, Coca-Cola had installed one million HFC-free units worldwide, with Europe and Japan being the market leaders in installations.54 “Over the past decade we have invested more than $100 million to make our coolers better for the environment,” said Jeff Seabright, vice president, environment and water for The Coca-Cola Company.55 “We've made sustainable refrigeration the cornerstone of our climate protection and energy management efforts,” he added. Still, Coca-Cola and its bottling partners had approximately 10 million HFC coolers and vending machines in place around the world.56 On October 15, 2016, nearly 200 countries met in Rwanda's capital city of Kigali to hammer out an amendment to the Montréal Protocol to reduce the use of HFCs.57
Some impacts are almost unavoidable. During takeoff, an Airbus A380 guzzles as much as three gallons of jet fuel every second.58 Heaving the 859,000-pound jet aircraft into the sky consumes prodigious amounts of fossil fuels. Although airlines are improving fleet fuel efficiency with newer aircraft, better engines, and operational improvements, these improvements are modest at best. The physics of airflow, as well as engineering limits on airframe and engine design, prevent larger reductions in fuel consumption by airplanes.
If a company cannot eliminate its own GHG emissions through better technology or better management, it can “outsource” the emissions reduction by purchasing “carbon offsets” that pay third parties to reduce emissions or sequester CO2 elsewhere, thereby offsetting its own emissions. Carbon offset certification agencies use the money they collect from companies to fund projects around the globe that absorb or reduce carbon, such as planting trees in Africa or funding a hydropower project in Brazil.59 Reductions in carbon emissions from these projects are then transferred to the paying organization and can be claimed to offset their own emissions.
Carbon offsets became an integral part of the 1997 Kyoto Protocol on climate change through the so-called clean-development mechanism.60 If government regulations or public commitments require reduction of carbon emissions but technological or economic obstacles prevent direct compliance, then carbon offsets give businesses a viable way of complying. The net effect of using offsets is a reduction in the total carbon added to the planet's atmosphere at a lower cost for the economy than would be required for a company to do it directly. Carbon offsets help balance cost pressures with environmental pressures: If it is too expensive for a company to reduce its own carbon footprint by changing processes, machinery, or materials, the company, in effect, pays a third party to achieve the corresponding carbon footprint reduction at a lower cost elsewhere.
Some companies offer offsets to their customers as a service to their “green” customer segment. UPS, for example, offers “carbon neutral” shipping. The company estimates the carbon impact of each delivery and gives consumers the option to pay an offset fee. The company that sells the offset then uses that income to pay for carbon reduction projects such as reforestation and wastewater treatment.61 Similarly, airlines, such as Lufthansa, Air France, and United Airlines, among others, let passengers buy carbon offsets.62
Although well intended, carbon credits and offsets have been criticized for letting polluters buy the appearance of sustainability without actually achieving it. Paying to clean up someone else's house is not the same as cleaning up your own house is the mantra of the critics. The eco-vacation company Responsible Travel began offering offset packages for customers in 2002. It cancelled the program in 2009 because, the company said, offsets can make customers feel virtuous while they engage in inherently destructive activities, such as flying a private jet or taking a helicopter tour. “The message was, ‘Don't worry, you can offset the emissions,’” Responsible Travel's managing director Justin Francis told the New York Times. “But you don't really need to see Sydney from the air, do you? And you can travel in a commercial airliner.”63
Despite their imperfections, carbon offset-funded projects can have positive effects. According to British NGO Climatecare.org, British insurance company Aviva Plc offset its carbon emissions and improved the lives of 200,000 people in Kenya and India by supplying them with technologies that allowed them to burn less fuel while cooking food or cleaning water.64 According to the US NGO Conservation International, tree-planting projects funded with carbon offsets have a cascade of positive effects beyond carbon reduction. “These include the maintenance and regulation of water supplies, the prevention of soil erosion, protection of natural pollinators, and the provision of important non-timber forest products.”65
What could be a more ubiquitous natural resource than crystal clear water? It falls naturally from the sky, pools on the ground, accumulates deep in aquifers, and steadily flows into rivers on its journey to the sea where it evaporates and begins the cycle anew. As abundant as water seems, it is scarcer than it appears. Although 71 percent of the Earth's surface is covered in water, 97.5 percent of it is corrosive salt water that is unusable for drinking, agriculture, or most industrial processes. Furthermore, over two-thirds of the remaining fraction of fresh water sits locked up in icecaps, glaciers, and permafrost.66 According to a World Health Organization 2016 report, 663 million people lacked access to safe drinking water in 2015, and half a million people die every year as a result of consuming contaminated drinking water.67
The paradox of water is that it is priceless in both senses of the term: being essential to life and yet often considered an unpriced resource in that users in many locations can legally pump or divert unlimited amounts of water from lakes, rivers, and aquifers. According to Christopher Gasson, publisher of Global Water Intelligence, “Previously, water was treated as a free raw material,” but that is changing.
“Water is to Coca-Cola as clean energy is to BP. … We need to manage this issue or it will manage us,” said Jeff Seabright, vice president of environmental and water resources, Coca-Cola Corporation.68 Gasson added: “The marginal cost of water is rising around the world. Now, companies are realizing it can damage their brand, their credibility, their credit rating, and their insurance costs. That applies to a computer chipmaker and a food company as much as a power generator or a petrochemicals company.”69
Unlike GHG emissions, which create global impacts regardless of where the emissions occur, water scarcity (or plenitude) is a local or regional issue. For example, Brazil is home to the Amazon—the world's largest rainforest and river—and has been called the “the Saudi Arabia of water.” All the same, 1,000 km south of that massive water supply, the 20 million people of the São Paulo metropolitan area and 40 percent of Brazil's industrial production face critical water shortages.70 Similarly, in India, water has long been a “make-or-break” social, economic, and political issue because Indians, who account for 20 percent of the world's population, have only 4 percent of total renewable freshwater resources.71 Farms and people in hot and dry regions need more water than those in cooler climes.
Many companies such as Coca-Cola, AB InBev, and Nestlé measure and manage water efficiency, which is the ratio of “water used” to “product produced.” Given that a company like Coca-Cola makes bottled beverages, it absolutely cannot use less than one liter of water per liter of produced beverage, so it looks to other areas of water consumption within its production processes and facilities. Reducing the water footprint of syrup and bottling plants is a key part of that strategy. For example, the company found significant efficiency improvement opportunities in the cleaning processes for both bottles and the factory. It developed a new spray nozzle design that cleans bottles with less water.72 The company also implemented air rinse systems to remove most of the dirty or soapy water from the bottles by using air blasts, much like those used in high-tech hand dryers.73
Similarly, water efficiency is the focus of AB InBev's water stewardship efforts. In 2002, the company needed 6.48 liters of water to manufacture each liter of beverage.74 Then it implemented a wide range of water-saving initiatives at its breweries, such as controlling evaporation losses in the malting process, condensing the waste steam, and reusing treated wastewater for factory cleaning and other non-product uses.75 By the end of 2014, AB InBev had achieved a ratio of 3.2 liters per liter, which implies the company could then produce double the amount of beer from a given amount of water.
“We're going to run out of water long before we run out of oil,” said Peter Brabeck, chairman of Nestlé in an interview with the Financial Times.76 Some 38 percent of Nestlé's factories reside in water-stressed regions,77 a fact that has motivated the company to pursue nearly 500 water-saving projects as of August 2013. These initiatives have reduced company-wide water consumption by 10 percent, from 3.29 m3 per metric ton of product in 2010 to 2.89 m3 per metric ton of product by 2012.78 Many of these efforts focused on 31 high-priority manufacturing facilities located in areas of severe water stress or that represented a significant portion of Nestlé's water withdrawals.79
Unlike energy, water is often only borrowed rather than consumed in industrial processes. For example, in Mexico, Nestlé built a new “Cero Agua” (zero water) factory to make evaporated milk and other dairy products. The factory starts with cows’ milk, which, on average, consists of 88 percent water. By condensing the steam coming from the evaporating milk and recovering that water, the factory can harvest 1.6 million liters of water per day. The recovered water is then used twice. First, it is used to clean the evaporating machines. Then it is collected, purified, and recycled a second time to be used for other cleaning activities in the factory and for watering the grounds. This water recovery and recycling process eliminates the need to tap the area's scarce groundwater.80 It also illustrates that water can be an asset that is utilized multiple times rather than a consumable item.
Similarly, Nestlé's La Penilla candy factory in water-stressed Spain was a hot spot for water use. The plant used 72 cubic meters of water (or 72 metric tons) per metric ton of product, over 20 times more water consumption than the company-wide average. The company invested €1 million in multiple projects, such as installing a closed-loop refrigeration system with three new cooling towers that recycle water. The company also improved the regulation of water flowing into the milk evaporators to better achieve the required vacuum on the equipment. Finally, training helped too. “At the beginning, it was challenging to change the habits of the operators, who were used to working in a specific way,” explained Ramon Montserrat, head of engineering and packaging services for the Iberian region. As a result of the new technology, improved processes, and employee retraining, the factory reduced its water consumption by 60 percent without affecting either energy efficiency or GHG emissions.81
Coca-Cola also reduced water use through the reuse of wash water. For example, wash water can be used to clean crates and floors.82 The recovered wash water is carefully treated using existing technologies, including biological treatment in a membrane bioreactor, ultrafiltration, reverse osmosis, ozonation, and ultraviolet disinfection.83 Other water reduction steps included improvements in water-based cooling systems, faster repair of water leaks, and replacing wet lubricants with dry or semi-dry ones.84
The quality of incoming water also affects the water efficiency of some processes. At Nestlé USA's pizza division factory in Little Chute, Wisconsin, the municipal water supply was hard and alkaline. The company had to flush large amounts of water through its cooling system to avoid the buildup of energy efficiency-sapping mineral deposits. To tackle the issue, in 2012, the company invested in a water pretreatment system and a new control system for its four main ammonia refrigeration condensers. According to Nestlé, these systems save 7.4 million gallons of water annually and reduce sewer discharges.85 As it turns out, the low cost of municipal water in Wisconsin meant that the effort saved a mere $50,000 in avoided water purchase costs and discharge fees.
The Pizza Division project was just one of 489 water-saving projects at Nestlé that same year, collectively saving 1.7 billion gallons of water and contributing to a 4.5 percent reduction in Nestlé's total water withdrawals that year.86 “One of our sustainability goals here at Nestlé is to continuously improve water efficiency across our operations and reduce water withdrawals,” said Louis Miller, utilities supervisor at Nestlé Pizza Division Little Chute. These water-saving initiatives help the company manage risks to the brand and to the company's social license to operate.
AB InBev's in-house water efficiency improvements do not address the largest hotspot in the life cycle water footprint of beer: In addition to the 3.2 liters of water consumed at the brewery in making each liter of beer, growing barley consumes an average of 298 liters of water per liter of beer.87 Even though 85 percent of these liters are green water, the company is working with farmers to improve water usage (see chapter 5). At the same time, AB InBev works on in-house production efficiencies that indirectly, but significantly, affect the agricultural water consumption per liter of beer. The company works to reduce so-called extract losses, which are the percentage of fermentable sugars left over after the brewing process.
Extract losses mean that the brewer must buy more high-water-footprint grain to produce a given volume of beer. In 2002, InBev's extract losses were almost 8 percent, which is to say that company had to buy 8 percent more grain than the theoretical brewing efficiency limit.88 The company benchmarked the extract losses along with hundreds of other key performance indicators at 130 AB InBev locations and used best practices from the leading locations to set performance targets and improvements for lagging locations.89 By 2013, the company had reduced these losses to 3 percent,90 which represents a life cycle reduction in water use by 15 liters per liter of beer. This example illustrates that sometimes a hotspot in one part of the supply chain (e.g., irrigation water consumed to grow barley) may be tempered in another part of the supply chain (e.g., the brewer who improves the product yield from the supplied barley).
AB InBev's extract losses had another significant effect—on the gray water emissions side—even though it was only 9 percent of AB InBev's water footprint. Extract losses mean that the breweries’ wastewater contains more leftover sugars, which make the wastewater more of an environmental threat.91 Sugars in the discharged wastewater cause bacteria to grow in water treatment plants and—if this waste is released into rivers, lakes, or oceans—the growing bacteria take oxygen out of the water and potentially kill fish and other animals living in the water.92
Reducing extract losses from 8 percent to 3 percent removed two-thirds of these waste sugars. To further reduce the amount of sugars in wastewater, AB InBev runs the effluent from the brewing process through a bio-treatment system, which serves two purposes. First, it removes these impurities from the water to help the company's wastewater meet water quality standards, thereby reducing risks and costs associated with wastewater. Second, the bio-treatment system produces biogas that helps fuel operations, as described in the BMW example earlier in the chapter, thereby cutting both energy costs and the beverage-maker's carbon footprint.93
In May 2015, torrential rains in Oklahoma and Texas reversed a five-year drought, but the muddy waters damaged municipal water systems and created a shortage of drinking water in some communities. In response, AB InBev subsidiary Anheuser-Busch halted beer production at its Cartersville brewery in Georgia to produce 50,000 cans of drinking water, which it gave to the American Red Cross.94 “It's something we're uniquely positioned to do in a very timely period,” said Rob Haas, manager of the Cartersville brewery that produces cans of emergency relief water a few times a year. The company did the same thing after hurricanes Katrina, Sandy, and Harvey. “Relief workers and people in the region are in need of safe, clean drinking water, and Anheuser-Busch is in a unique position to produce and ship large quantities of emergency drinking water,” said Peter Kraemer, vice president of supply for the company. “Our local distributors help identify those communities most in need, and work with relief organizations such as the American Red Cross to make sure the water gets where it's needed,” he added.95
That 50,000-can run was a tiny fraction of the million cans of drinking water produced by Anheuser-Busch for Hurricane Sandy in 2012, or the 9.4 million cans the company donated to relief agencies when Katrina and Rita devastated the Gulf Coast in 2005.96 Since 1988, Anheuser-Busch has reported that it has packaged and donated more than 73 million cans of fresh drinking water in response to natural disasters of all kinds.97 Although such acts of philanthropy exemplify social responsibility more so than environmental sustainability, they are part of Anheuser-Busch's broader corporate responsibility strategy that ensures that the company will maintain access to local resources, especially water. Anheuser-Busch and its parent, AB InBev, consume more than 39 billion gallons of water per year, which makes the company highly dependent on community and governmental cooperation.98 Water stewardship is therefore the leading item in the brewer's materiality assessment.
Similarly, Coca-Cola's water stewardship and replenishment efforts include more than 382 community water projects to help protect watersheds, improve people's access to safe water, educate water users, and improve every person's water efficiency.99 Coca-Cola's access to water is contingent on community access to water. “If the communities around … our bottling plants do not flourish and are not sustainable, our business will not be sustainable in the future,” said Coca-Cola's CEO Neville Isdell.100 In announcing Coca-Cola's worldwide initiative to conserve water resources in 2007, the CEO added, “Essentially the pledge is to return every drop we use back to nature.”101 The company reached its 2020 goal of being water-neutral in 2015.102 The company's efforts, however, only cover water use in beverage manufacturing, bottling, and food service. They do not extend to the growing and production of ingredients, such as sugar.
Eleven of China's 31 provinces meet the World Bank's definition of water scarcity.103 In response to this scarcity, China began building air-cooled power plants. As of the end of 2012, these plants made up 14 percent of China's thermal power generation capacity. That year, those same plants effectively avoided water consumption equivalent to about 60 percent of Beijing's total annual water use. Unfortunately, air-cooled plants have a lower thermodynamic efficiency than water-cooled plants and emit tens of millions more tons of CO2 than water-cooled plants.104
Similarly, desalination offers another direct trade-off between water and energy. Locations with access to seawater can use energy to make fresh water. Half of all the world's desalination takes place in the Persian Gulf, where fresh water is scarce and oil is plentiful. “Desalination requires a lot of power … we estimate that about four tonnes of carbon are emitted per million gallons of freshwater produced here,” said Ivano Iannelli, CEO of the Dubai Carbon Centre of Excellence.105 Given the high energy demands of desalination, the desalination plant in Beckton, East London, not only runs on biodiesel, including recycled fat and oil from London restaurants,106 but is also designed to operate as an emergency backup system rather than to operate continuously.107
Some of the most successful and energy-efficient desalination plants are in Israel. The three plants built from 2005 to 2016 reversed Israel's water situation from dire shortages to having surplus water in the dry Middle East.108 Israel's IDE Technologies built some of the largest desalination plants in the world using innovative new processes that require significantly less energy than previous plants. In 2017, the company was building desalination plants in California, India, Venezuela, and Mexico. Engineering breakthroughs, such as those of IDE Technologies, point to a rarely discussed aspect of environmental efforts and economic development. Technological breakthroughs such as carbon capture, artificial photosynthesis, solar geoengineering, cost-effective renewables, modern nuclear power, and other advances could change the current environmental calculus. Chapter 13 discusses the potential for innovation to upend assumptions that seem to link human consumption with environmental degradation.
While desalination plants trade a lower water footprint for a higher carbon one, in a few situations the two footprints can have synergistic relationships. For example, reducing the amount of wash water in cleaning processes also reduces the energy consumption used to heat that water. The example of AB InBev's extract losses and other similar wastewater treatment initiatives also demonstrate a positive coupling between carbon and water impacts: converting effluent into biogas mitigates both the company's gray water footprint and its carbon footprint.
Acrid belching smoke, discolored run-off streams, foam-flecked rivers, and a smelly landscape of dead fish and skeletal trees make up the environmentalist's dystopia of the industrialized earth. Reality may not be as bad as the Hollywood cliché of mutants bursting forth from bubbling pools of industrial waste, but many of the industrial processes used for making metals, plastics, apparel, and paper do involve a witches’ brew of heavy metals, corrosive acids, carcinogenic solvents, and toxic by-products. Manufacturers in many industries are starting to change their manufacturing assets or processes to reduce or eliminate toxins. These changes, however, may affect conversion efficiencies, costs, product performance, and customer acceptance.
The bright white paper in every office and the white-coated card stock associated with consumer goods retail packaging of many products hides a pernicious skeleton in its closet: The chemicals often used to bleach naturally brown wood pulp are toxic. In the past, paper factories typically bleached raw wood pulp using elemental chlorine, a pale yellow-green corrosive gas. Unfortunately, the process produced significant quantities of dioxins,109 which are some of the most toxic human-released pollutants in existence. Papermaking sludge, wastewater effluent, and the paper itself could contain both dioxins and AOX (“adsorbable organic halogens” that are a broad family of potentially toxic chlorinated by-products of the many different organic compounds in wood pulp). Dioxins could even leach into foods, such as milk, that are stored in chlorine-bleached paper containers.110 Chlorinated AOXs have been on the European Commission's “black list” of toxic substances since 1976.111
In theory, paper makers could use any of a wide range of oxidizers to bleach brown pulp white, or they could convince customers to accept unbleached paper. Environmentalists advocated either unbleached paper or changing manufacturing methods to use oxygen, ozone, or hydrogen peroxide to create “totally chlorine free” (TCF) paper that generate no dioxin or AOX by-products.112 However, converting papermaking operations to chlorine-free chemical processes requires significant capital expenditures, downtime, and employee training.113
Some papermakers, especially in Europe, built new factories using TCF papermaking methods.114 For example, pioneering Swedish wood pulp maker Södra Cell developed Zero Chlorine Pulp and sold this paper to green companies who were willing to pay extra for it.115 Most paper makers adopted a lower cost manufacturing process they dubbed “elemental chlorine free” (ECF). The process uses chlorine dioxide, which is actually a stronger bleaching agent. ECF reduces dioxins to “non-detect” levels and cuts AOX in mill effluent by 80 to 90 percent.116 The lower cost and superior brightness of ECF paper led to it capturing 93 percent of the world paper market as of 2012.117 Even Södra noted that market demand for ECF motivated them to use chlorine dioxide manufacturing methods in a new plant.118
Greenpeace and CorpWatch, however, sounded the alarm because ECF sounds like it is chlorine free but is not.119 Greenpeace noted that data on low AOX was misleading because it was selectively picked from the most modern, so-called ECF-light plants, situated primarily in Nordic countries.120 The moral is that partial improvements in a company's manufacturing processes, in terms of environmental performance, can still leave the company vulnerable to criticism.
Manufacturers in many different industries face similar issues of harmful ingredients or by-products in their manufacturing processes. For example, manufacturers who make, reprocess, or use aluminum often create a toxic sludge that requires special handling or disposal.121 Semiconductor companies have problems with waste that contains fluorine, which prompted Oki Electric Industry, in Japan, to develop a two-stage chemical coagulation process to remove the chemical.122 The top 20 sources of toxic pollution include mining and pesticides, which put these harmful footprints in the supply chains of any companies that depend on metals or agricultural products. The top sources of toxic pollution also include tanneries and apparel dyeing, as well as the manufacturing of pharmaceuticals, cleaning agents, and anticorrosion coatings.123
While companies mentioned in the previous section reduced the toxicity of their manufacturing waste streams, others focused on reducing the total volume (and costs) of the waste stream in the first place. These companies utilized two main approaches: avoiding waste and recycling. “The biggest savings to be made in the waste arena are from not generating it in the first place,” said Unilever's Tony Dunnage, “If we waste less, we're more efficient. If we're more efficient, we're more cost-effective.”124
The second strategy reuses or recycles any unavoidable waste material either inside the company or through an outside contractor. In general, each scrap material, by-product, or off-spec product might have multiple uses, leading companies to find the highest-value uses that can handle the volumes generated. In part, BASF's verbund strategy addresses the challenge of reusing by-products by creating sufficient economies of scale of the production of by-products to justify further reprocessing into salable materials.
In 2007, P&G created the Global Asset Recovery Purchases (GARP) group, tasked with managing waste streams at sites around the world both to deliver cost savings and to increase reuse, recycling, and waste-to-energy generation opportunities. Solutions began to roll in. P&G's Budapest plant that made feminine hygiene products started to sell excess material to a cement kiln; Gillette's excess shaving foam materials were sold to companies that grow turf for commercial uses; scrap from US Pampers was converted into upholstery filling; and sludge from toilet tissue paper in Mexico was converted into low-cost roof tiles. The drive for waste reduction uncovered new sales opportunities for off-spec products: off-spec baby wipes are sold to veterinarians for animal care and off-spec detergent is sold to car washes.125 According to James McCall, P&G's global product sustainability supply leader, the first five years of the GARP program (2007–2012) brought in an extra $1 billion to P&G.
Surplus or waste food offers even more challenges and opportunities. Marks & Spencer reduces food waste in its stores by reducing prices up to three times a day to clear short-shelf-life products.126 Unsold yet edible food is often donated to charities.127 In another example, Tesco introduced large boxes of strawberries to its stores and lowered the prices during February 2017; an unexpected warm period resulted in a glut of strawberries, and by moving large quantities of strawberries, the retailer helped avoid food waste at the farms.128 In 2016, France banned food waste in supermarkets and most grocery stores, forcing food retailers to donate it to food banks and other charities.129 Unfortunately, as a result of liability concerns and logistics difficulties, US food retailers toss out $47 billion worth of food, most of which is edible. This is despite existing US laws that encourage food donation through limited liability protection in the Emerson Good Samaritan Food Act of 1996,130 as well as some tax deductions,131 and the Federal Food Donation Act of 2008, which encourages food donations by federal contractors.132
Overall, programs to eliminate toxic materials, improve efficiency, or find value in waste can markedly reduce the volume of materials sent for disposal and reduce costs at the same time. “More than half of our sites globally (approximately 130 sites) are at zero nonhazardous waste for landfill,” said Unilever's Dunnage in an interview for this book. “Without any significant capital investment, we've saved more than €70 million in cost avoidance through the zero-waste program.”133 By 2012, Unilever reduced its manufacturing waste to half of its 2008 total and in 2014 it achieved zero waste to landfills in all its manufacturing operations. In 2015 it achieved zero waste from its other activities.134 Reducing the volume of discarded material saved money because the materials originally had to be purchased or manufactured before they were ultimately discarded; therefore, reducing waste also reduces costs on the procurement and operations side.
While BMW uses gases from a nearby community landfill to produce energy (see the earlier discussion in this chapter), other companies have found ways to turn their own costly industrial waste into valuable energy. At Unilever's Owensboro, Kentucky, facility, which produces pasta sauce under the Ragú and Bertolli brands, food waste is composted, blended for fertilizer, or converted into biogas through an anaerobic digestion process.135 Anaerobic digesters are also used to mitigate the daily waste that results from batch switching at Ben & Jerry's ice cream production sites when changing production from, say, the Chunky Monkey to Cherry Garcia flavors.
Similarly, many industrial painting systems produce large amounts of volatile organic compounds (VOCs) from the solvents used to liquefy paint. In the past, companies typically abated this source of pollution by extracting the fumes from the painting area and passing them through an abatement incinerator that oxidizes the VOCs. These incinerators, however, require natural gas and emit CO2.
Ford created a fumes-to-fuel (F2F) system that pulls VOCs from paint box air, concentrates the VOCs, and then burns them in a Stirling engine attached to a generator.136 Instead of consuming natural gas to oxidize the fumes, the system produces electricity and reduces carbon emissions by 88 percent over a traditional incinerator.137 Ford has estimated that the F2F life cycle cost is 20 to 35 percent of the cost of a traditional VOC abatement system.138 Not only does the system save Ford money, but it also earned the company a US EPA Clean Air Excellence Award in 2003.
Ford continued to make improvements as it increased the scale of the system and installed it in other locations. Whereas the first pilot installation produced 5 kW, the system in Ford's Canadian Oakville plant will eventually produce 300 kW.139 Oakville will use a third-generation version of the system that replaces the Stirling engine with a fuel cell to eliminate nitrogen oxide emissions. “The Oakville installation is the first of its kind in the world to harvest emissions from an automotive facility for use in fuel cell,” said Kit Edgeworth, abatement equipment technical specialist for manufacturing at Ford Motor Company. “It is the greenest technology and offers the perfect solution to the industry's biggest environmental challenge traditionally.”140
In 2016, General Electric Company started manufacturing and selling the first jet engine parts manufactured by 3D printing, a method of additive manufacturing. A 3D printer manufactures items by printing layers of a building material—polymers, ceramics, metals, or cement—instead of a layer of ink. By printing layers on top of layers on top of layers, the printer slowly builds up a 3D object according to a digital plan.
While visiting the MIT Center for Transportation and Logistics, Philippe Cochet, chief productivity officer at GE, described the benefits his company reaps by using additive manufacturing at scale. GE's next-generation LEAP jet engine features 3D-printed fuel nozzles. The fuel nozzles are installed on engines that entered service in 2016. The metal-printed fuel nozzle is significantly lighter and many times stronger than the nozzle it replaced. What is significant from a supply chain management point of view is that it is a single component. Instead of procuring, receiving, and assembling 19 parts from 19 different suppliers, the new nozzle is printed in a single step. By 2020, GE plans to print 40,000 fuel nozzles per year.
Not only can the new nozzles be made to exact, complex specifications, but the technology also promises many environmental benefits, mostly stemming from waste reduction during the manufacturing process. Whereas traditional subtractive manufacturing starts with a large block of material and then cuts, mills, or drills away the unneeded material—thereby creating waste—additive manufacturing builds up the object, consuming the minimum amount of material needed to make the layers of the final item.141 Moreover, 3D printing gives designers much more freedom to make unusual hollow parts that need less total material; GE's new jet nozzle is 25 percent lighter and five times more durable than its predecessor.142 Finally, once the technology matures, it may also reduce transportation impacts because the parts can be “shipped” as a digital file to a printing facility closer to the point of assembly or consumption.
Although 3D-printing technology has not yet reached its full potential, it is one of the technologies that may reduce materials consumption, energy consumption, and waste in manufacturing processes.
In 2015, at the same time that Greenpeace was lauding Apple for embracing clean energy143 [see the section “The Answer is Blowing in the Wind (and Shining in the Sky),” earlier in this chapter], Truthout, an online investigative reporting organization, was vilifying the company for its high CO2 emissions.144 That two NGOs could come to such diametrically opposite conclusions about the company illuminates an important fact about corporate claims and about supply chains. Greenpeace's analysis focused on Apple's internal operations: buildings, data centers, and retail outlets owned by the company. These were the Scope 1 and Scope 2 emissions of the company.
In contrast, Truthout took a holistic approach and included Scope 3 emissions in its analysis: emissions in both the upstream and downstream supply chains associated with the manufacturing and use of Apple's products. For example, Apple's two leading Chinese suppliers, Foxconn and Unimicron, were accused not only of deplorable working conditions leading to employees’ suicides145 but also of polluting rivers and ground water with factory chemicals.146 The NGO estimated that the vast majority (72.5 percent) of Apple's life cycle carbon footprint was in its suppliers’ operations.147 This is not surprising. As mentioned earlier, Apple does not make any of its computers, iPhones, iPads, or any other Apple product; it outsources all manufacturing to contract suppliers, mostly in China.
Truthout also asserted that Apple's products had a high footprint, not only during manufacturing but also during use. Even though Apple created energy-efficient data centers, consumers use apps connected to Facebook, Google, Samsung, Twitter, and millions of other websites and services that run on energy-intensive, non-Apple servers. Using Apple's own reporting, Truthout estimates that Apple's own facilities represent a puny 1.2 percent of the company's life cycle emissions.
For many companies, the carbon footprint, water footprint, and toxic emissions of the company's own operations are a small fraction of the total impacts of making the product. Moreover, as the examples of NGO attacks over various materials such as palm oil, tin, and paper show (see chapters 1 and 3), many environmental risks lurk outside the company's sphere of ownership in deep-tier suppliers that extract and process natural resources. Finally, many of the product attributes that green segment consumers seek (e.g., organic, natural ingredients, recycled, toxin-free, made with renewable energy) depend on the supply chain. Thus, in looking at these hotspots, many companies extend the focus of their environmental sustainability efforts to their suppliers.