Environmental awareness no longer optional - IoD chairman

Sustainable development policy and practice are advancing more rapidly these days because the power of the business community is bringing people together on this issue, led from the front in Malta by company directors and business leaders.

In a moving introduction to Sir Martin Laing at the IoD Business in the Environment luncheon, a packed Corinthia Room at the Corinthia Palace Hotel, Attard, heard Institute of Directors (IoD) chairman James Satariano say:

"The world we were born into has gone. We shall never completely recapture its climate, its seasons, the way its plants grew and its animals lived. This is not a wild-eyed prediction, a man on the street with a placard that has large letters reading 'The End Is Nigh'. Respectable science knows it and says it. Who is responsible? We are. Can we moderate it, slow it, eventually reverse it? Yes - if we try."

Mr Satariano outlined how the IoD have been leaders in introducing key concepts to the Maltese business community and the IoD Business in the Environment address by Sir Martin Laing on Sustainable Development Policy follows IoD's long commitment to corporate governance principles and business ethics in the wider community.

Sustainable development has more holistic objectives, explained Mr Satariano, taking into account social and economic issues. It considers a company's main activities, products and services in terms of their interaction with the environment, society and business needs.

It lays out a set of company-wide principles by which company directors will determine a business venture's future sustainable development aims and objectives. Sustainable development complements community affairs policy, which makes up the social element of a firm's sustainable development objectives. Environmental awareness, he stressed, is no longer optional.

This theme was built on by Sir Martin Laing, who presented some thoughts on the part that business can play to help protect our environment while helping itself by becoming more profitable.

In a series of shocking revelations Sir Martin set the scene by reporting how population has grown from one billion to six billion in the past 150 years and is currently increasing by 80 million every year, putting a huge strain on our planet.

If everyone alive today enjoyed the lifestyle of the average American, we would need at least three planet Earths, he warned.

Turning to the environment itself, Sir Martin focused on CO2 emissions which have doubled since 1969 and are set to double again by 2040. The burning of fossil fuels has quintupled since 1950, he asserted, and worldwide energy consumption is rising by five per cent a year and will double again over the next 30 years.

This is the frightening context within which business must be a leader in actioning change. With 13 of the world's 15 major oceanic fisheries in serious decline, topsoil from an area the size of India is being lost each year because of erosion. The human race has destroyed 30 per cent of the earth's natural capital since 1970. It is only through a genuine commitment to change of business behaviour and consumption choices that any reversal of this trend can take place.

In terms of core business issues, Sir Martin revealed that energy-intensive industries in developing countries represent an important target group for energy efficiency programmes. Not only is the share of energy use in these industries significant, also its increasing role as raw material producers.

With processes to a large extent based on fossil fuels, iron and steel is a relevant industry in this context. It is responsible for the emission of millions of tons of CO2, CH4 and CFCs annually, thus largely contributing to global warming.

At the same time, there is a significant potential to improve efficiency in the sector. In Sir Martin's view, moving towards a more sustainable way of doing things through the process of sustainable development is the key.

We have to move towards a situation that recognises not just the normal bottom line but one which recognises the environment, society and the economy - now called the triple bottom line. One in which the economy is structured to meet objectives and values set by society; society decides the objectives for development and sets the ethical and value framework; and the environment sets limits and is the real bottom line.

With a very practical approach Sir Martin advised Maltese business to look at the simple things as a start to add to the company's bottom line. This is easily achieved by looking at vehicle fleets and transport; checking the tyre pressures to improve fuel consumption and having vehicles serviced regularly.

Review electricity use and see where savings can be made - turn the AC down by one or two degrees. Look at water consumption; are the taps leaking? Can companies improve and reduce the water usage in the manufacturing process? He was intrigued to read, he said, in The Times of Malta, that Malta's reservoirs contain only three days drinking water for the island. Water is a precious resource; he suggested the Maltese convert the majority of urinals to waterless given the average urinal flushing four times per hour uses 170,000 litres per year at a cost of nearly Lm180 each per year.

In a clear message to conserve Malta's resources, he advised the IoD's members to champion reassessing the starting point for each project by asking a number of simple and pertinent questions:

"Do you actually know where your business impacts and by how much on the environment? Are you considering a new building? House, factory or office? Look at the building materials to assess those that are the least environmentally harmful, i.e. water-based paint instead of oil-based. Timber that comes from sustainably managed forests as opposed to rare hardwoods. Make sure that the right quantities are ordered." Nearly 30 per cent of all construction waste is new, unused material.

What can be recycled? Businesses can make simple choices that are good for the environment, for example, by using garbage bags that are degradable.

In his closing remarks Sir Martin outlined why business should embrace sustainable business models. He maintains that company directors, the leaders of the business community, should set the example on sustainability initiatives and focus activity on sustainable as well as financial outcomes.

He suggested directors help to develop the skills of their workforce for those who care but don't know how to introduce sustainability issues. Moreover, he encouraged chairmen and other board members to discuss with suppliers and sub-contractors and get them to join in sustainable initiatives. "Read and watch what is going on," he counseled.

The benefits for company leaders who adopt sustainable development initiatives are:

¤ Lower costs through waste minimisation and resource efficiency
¤ Avoided costs - designing for the environment
¤ Improved management of business risk
¤ Improved overall quality of management
¤ Enhanced reputation
¤ Stronger brands
¤ Staff motivation
¤ Innovation - new processes or products
¤ Winning new business/market share; and
¤ Enhanced shareholder value.