Sustainable Business and Industry - Designing and Operating for Social and Environmental Responsibility

219 Pages·2011·2.819 MB·219\219

by  Jacobsen, Joseph J.

Sustainable Business
and Industry
Designing and Operating for
Social and Environmental
Responsibility
Joseph J. Jacobsen
ASQ Quality Press
Milwaukee, Wisconsin
American Society for Quality, Quality Press, Milwaukee 53203
© 2011 by ASQ
All rights reserved.
Printed in the United States of America
16 15 14 13 12 11 5 4 3 2 1
Library of Congress Cataloging-in-Publication Data
Jacobsen, Joseph, 1953–
Sustainable business and industry : designing and operating for
social and environmental responsibility / Joseph Jacobsen.
p. cm.
Includes bibliographical references and index.
ISBN 978-0-87389-810-2 (alk. paper)
1. Social responsibility of business. 2. Sustainable development. 3. Environmental
responsibility. I. Title.
HD60.J33 2011
658.4’08—dc22
2010053018
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Preface
S
ustainable business and industry are new and emerging fields of
study. Colleges, universities, and business leaders are interested
in how to become more environmentally and socially responsible.
With the recent rise in interest in eco-products, innovation, responsible
business operations, green manufacturing, international standards, respon-
sible investment management, ethical financial engineering, sustainabil-
ity, social responsibility, fair labor practices, climate change, national and
energy security, the green economy, green-collar jobs, resource depletion,
renewable energy, pollution, population expansion and migration patterns,
demographic equity, holistic supply chains, local sourcing, water quality
and availability, green buildings and transportation systems, energy con-
servation, and so on, a general guide in the form of a concise handbook on
the practice of responsible business was overdue.
This book is an introduction to developing and implementing a successful
program in the domain of environmental and social responsibility. The reader
is exposed to financially, environmentally, and socially responsible objectives
that are supported by strategies and achieved by clear tactics that have measur-
able outcomes. This book explains how to build business value through tradi-
tional methods such as Six Sigma, operations research, and lean to improve
environmental and social outcomes while also improving profit margins. The
reader is introduced to methods of implementing technologies and practices
and will also learn how to measure the consequent social and environmental
performance for written reports and persuasive presentations. This book also
reveals why we should be sustainable by explaining seemingly complex top-
ics in science in a way that requires very little math or science background.
The overview captures how environmental and social responsibility can be the
source of process and product innovation.
xi
xii Preface
The nine chapters are dedicated to the practice of environmental and social
responsibility in ways that achieve financial stability over the long run. As a
result, these chapters help us understand not just how and why businesses need
to be more responsible but how businesses can be more successful advancing
social and environmental responsibility with internal and external stakeholders.
These nine chapters give the reader an overview of the integrity of envi-
ronmental and social responsibility, their respective measures and methods of
improvement, and strategies for making informed decisions about intersecting
financial, social, and environmental performance.
International standards are given full treatment. The new ISO 26000
(released in 2010) is given detailed attention, slightly more than ISO 9000
or ISO 14000, because ISO 26000 melds guidance on both environmental
and social responsibility into one general concept of social responsibility, a
concept adopted by this author. Since the book’s release closely follows the
ISO 26000 release date, it will serve as support for those who are concerned
and want to take action to improve conditions. In large part, this entire book
addresses aspects of the new ISO 26000.
This book also specifies how to use traditional methods such as Six Sigma,
lean, and operations research to improve processes, reduce resource use and
waste, and make better social and environmental decisions that are based on
data from key financial, social, and environmental performance indicators.
Internal data sources are given full treatment along with basic statistical data
management. A recurring theme throughout the book is the integration of
traditional methods of continuous improvement applied to social and envi-
ronmental data sources.
Chapter 1 makes the case for environmental and social responsibility
from a global perspective. The need for human welfare is reviewed as well
as a brief analysis of global warming. Chapter 1 also defines sustainabil-
ity, social responsibility, and environmental responsibility. It identifies one
general concept of environmental and social responsibility by examining the
similarities and differences of these seemingly separate concepts from a busi-
ness operation point of view. Chapter 1 can be used to introduce these con-
cepts to coworkers, business leaders, the community of stakeholders, and the
general public.
Chapter 2 looks at the highest level of communication an organization has:
the mission and vision of the company. The chapter contains examples of orga-
nizations that have made environmental and social responsibility part of their
vision and mission statements. Emanating from the mission and vision, the for-
malities associated with developing an environmental and social responsibility
Preface xiii
reporting system are discussed. Mission, vision, objectives, strategies, tac-
tics, and measures are applied to social and environmental responsibility. An
organization’s guiding principles and values are considered together with an
interesting application of those of W. Edwards Deming and Joseph M. Juran to
environmental and social responsibility. Attention is given to the documenta-
tion of relative performance for the purposes of reporting to stakeholders.
Chapter 3 is an application of three of the most widely used ISO publica-
tions. It outlines important aspects of ISO 9000, ISO 14000, and ISO 26000 so
that the reader can easily envision how to adopt these managerial, environmen-
tal, and social ideas into his or her business operations. Chapter 3 also brings
these three standards in line with the general concept of the triple bottom line,
later expanding it to a quadruple bottom line that includes national security.
Chapter 4 is the most important chapter because it is about environmental
and social performance measures. This chapter contains an extensive over-
view of social and environmental performance indicators to report on the sta-
tus and progress of initiatives, employees, and managers. The concept of the
footprint is defined while providing competency in developing customized
footprints and other measurement instruments. Extensive attention is given
to social surveys with samples while referencing an extensive survey instru-
ment in Appendix B. The theory of planned behavior (Ajzen 1991) is applied
to environmental and social responsibility. Social and environmental auditing
and assessments are also defined and examined.
Chapter 5 shows the reader how to calculate a return on responsible invest-
ment (RORI) and how to develop a feasibility study for a project that satisfies
at least two elements of the triple bottom line. Chapter 5 also specifies outside
funding sources and how to bring these dollars into a project to benefit the
business financially while improving environmental performance. The chapter
also focuses on financial risk management techniques that help transfer risk
away from the business to other parties that are better able to underwrite or
manage them.
Chapter 6 modifies several traditional continuous improvement methods
by incorporating a financial, environmental, and social unity project (FESUP)
as an application of business research and statistics. This chapter contains a
step-by-step guide for organizing an environmental and social responsibility
project. Two systematic approaches are presented: the abbreviated scientific
operations research method and a short Six Sigma method that is applied to a
FESUP. In all, Chapter 6 presents a scientific research study, Six Sigma, Plan-
Do-Check-Act, and the instinct approach to responsible project development
and decision making.
xiv Preface
Chapter 7 is about sustainable commercial and industrial plant operations.
This chapter, along with Chapter 8, is more detailed than the others because
buildings and supply chains are such major users of energy, water, and other
resources. Chapter 7 begins with an overview of sustainable facilities opera-
tions, quickly moves to the LEED rating system and Energy Star, and closes
with how to develop an energy and water conservation plan. Special attention
is given to energy audits and energy conservation as well as renewable and
alternative energy systems.
Chapter 8 logically moves from the commercial and industrial plant oper-
ating efficiency discussed in Chapter 7 to the supplier chains that supply the
business operation with raw materials or where the business operation is a
supplier of partly finished product to some other business operation. Logisti-
cal network modeling is given full treatment along with the reversal of supply
networks and the concept of an extended service lease that is used in place of
outright purchasing. Post-consumer goods, recycling, and other ways of put-
ting used equipment, parts, and systems back into the production cycle are
fully explored. In addition, techniques to optimize shipment methods, size,
frequency, and timing are included.
Chapter 9 closes out this first volume at a higher level, as it introduces
several concepts from ecological economics. It reviews recent important
developments in micro- and macroeconomics. A few concepts from financial
engineering are defined for the purposes of exposing an explicit disconnect
between financial engineering and sustainability. Gross domestic product is
compared with the gross national happiness scale. The relevance of compara-
tive advantage and absolute advantage in an international economy of highly
mobile capital is questioned while moving along to the topics of externalities
and systems thinking. Chapter 9 begins the argument of redefining many out-
dated concepts from economic theory.
Special attention has been given to support material in Appendixes A, B,
and C. A lecture on each chapter and appendix is available at http://www.
youtube.com/user/jakejacob2010. Tests for each chapter will also be available
for teachers who use the book in their classrooms by contacting the author or
the American Society for Quality at [email protected].
AUDIENCE
The principal users of this book are practicing managers and undergradu-
ate or graduate business students. Course titles that this book services are
(1) green business, (2) sustainable business practices, (3) managing for social
Preface xv
and environmental responsibility, (4) business, the environment, and social
issues, (5) social responsibility in a global economy, (6) the science of sustain-
ability and social responsibility, (7) sustainable operations, (8) total respon-
sibility in business, and similar titles. The book is especially appropriate for
adult learners going back to school for an MBA, for an undergrad business
degree in an accelerated program, or for training and development.
This book is also targeted toward existing and aspiring engineers, opera-
tions managers, and owners of small, midsize, or large businesses who are
interested in promoting and adopting environmentally and socially respon-
sible technologies and practices into their designs and operations. This book
is appropriate for workers, supervisors, managers, directors, and others who
want to reduce their organization’s ecological footprint and increase their
social responsibility performance while increasing value and profit. People
working with products and services in commercial or industrial settings will
benefit from the tools acquired within these nine chapters. Those interested in
benchmarking with the latest developments in energy, materials, ISO, trans-
portation, distribution, and vendors will also benefit.
LEARNING OUTCOME
When the book is used in the classroom, students should exercise their knowl-
edge and skills by doing a FESUP. The FESUP will require analysis of envi-
ronmental or social performance data from a business or industry. One method
I have found to be very successful is to have students work in groups where at
least one student is able to collect data from his or her place of employment.
Unfortunately, some or all students may not be working. When students can-
not collect data from a real workplace, the instructor may have data available
in spreadsheets or he or she may know of businesses that are willing to open
their doors to students so the students can collect these data. Lastly, students
may use their own data, such as utility bills, transportation routes, shopping
methods, or some other aspect of their lives that can be measured over time
and that has some environmental or social implication.
It is my hope that managers, operators, administrators, workers, and all oth-
ers will think and act with society and the environment in mind. As we move
toward the next several decades, it is this immediate timescale that we should
all feel a sense of urgency, because we are now centered at the ultimate fork in
the road. As it is, this bifurcation separates the fate of people and the planet.
Let us see why before we learn how by reading the first chapter.
Contents
List of Figures and Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
Chapter 1 Making the Case for and Defining Sustainability,
Social Responsibility, and Environmental
Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Social Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Resource Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Global Warming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Population Growth and Migration . . . . . . . . . . . . . . . . . . 6
The Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Chapter 2 Conveying and Reporting on a Mission and Vision
of Environmental and Social Responsibility . . . . . . . . 15
Public and Private Organizations . . . . . . . . . . . . . . . . . . . 18
The Principal Agent Problem . . . . . . . . . . . . . . . . . . . . . . 19
Reporting Environmental Performance Scores . . . . . . . . 20
The Real Balanced Scorecard . . . . . . . . . . . . . . . . . . . . . 21
Applications of Sustainability—Deming and Juran . . . . 22
Chapter 3 The Local–Global Three Bottom Lines: ISO 9000,
14000, and 26000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ISO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ISO 9000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ISO 14000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ISO 26000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
The Fourth Bottom Line . . . . . . . . . . . . . . . . . . . . . . . . . 39
v
vvii Contents
Chapter 4 Social and Environmental Responsibility Measures . . . 41
The All-Purpose Environmental Performance
Measure—Btu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Footprints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Do We Fit on the Planet? . . . . . . . . . . . . . . . . . . . . . . . . . 50
Managing Responsibly . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Environmental and Social Accounting . . . . . . . . . . . . . . . 52
Measuring Social Value . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Measuring Behavior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Measuring Intention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Measuring Attitude: Social and Environmental . . . . . . . . 58
Measuring Subjective Norms . . . . . . . . . . . . . . . . . . . . . . 60
Measuring Perceived Behavioral Control . . . . . . . . . . . . 62
Assessment and Audits . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Chapter 5 Resources, Finance, and Return on Responsible
Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Financial–Ecological Returns . . . . . . . . . . . . . . . . . . . . . 68
Energy Performance Contracting . . . . . . . . . . . . . . . . . . . 71
Financial–Social Returns . . . . . . . . . . . . . . . . . . . . . . . . . 73
Chapter 6 Financial, Environmental, and Social Unity Projects:
New Applications in Research, Statistics, and
Continuous Improvement . . . . . . . . . . . . . . . . . . . . . . . 75
Project Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Abbreviated Scientific Approach . . . . . . . . . . . . . . . . . . . 78
Abbreviated Six Sigma Approach . . . . . . . . . . . . . . . . . . 83
Plan-Do-Check-Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Instinct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Chapter 7 Sustainable Commercial and Industrial Plant
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Facilities and Energy—International . . . . . . . . . . . . . . . . 87
Building Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Hybrid Vehicles and Buildings. . . . . . . . . . . . . . . . . . . . . 89
Lighting Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
A New Standard in Building Science . . . . . . . . . . . . . . . 92
Commissioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
LEED Green Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Energy Auditing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Contents vii
The Building and Energy . . . . . . . . . . . . . . . . . . . . . . . . . 99
Smart Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
The Energy Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
What about the Midsized Business? . . . . . . . . . . . . . . . . 103
Chapter 8 Responsible Lean Logistics . . . . . . . . . . . . . . . . . . . . . . 107
Third-Party Logistical Operations Providers . . . . . . . . . . 108
Dependent Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Bullwhip Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Reverse Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Providing Service, Not Products . . . . . . . . . . . . . . . . . . . 111
Abbreviated Lean . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Pushing, Pulling, and Understanding . . . . . . . . . . . . . . . . 113
Kanban . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Process Mapping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Lean Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Logistics and Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Chapter 9 A Sustainable Economy . . . . . . . . . . . . . . . . . . . . . . . . . 125
Macro-Micro Disconnect . . . . . . . . . . . . . . . . . . . . . . . . . 127
Economics and Finance Disconnect . . . . . . . . . . . . . . . . 127
International Disconnect . . . . . . . . . . . . . . . . . . . . . . . . . 128
GDP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
World Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
It’s All About Externalities. . . . . . . . . . . . . . . . . . . . . . . . 134
Systems Thinking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Appendix A The Basics of Quantitative Analysis: What
Every Manager Should Know about Statistics . . . . . . . . . 137
Appendix B Social and Environmental Responsibility Measures:
A Survey Instrument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Appendix C Heat Literacy: What Every Manager Should
Know about Basic Heat Energy . . . . . . . . . . . . . . . . . . . . 163
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205