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Taking the long-term view4th of May 2011
Pedro Chidichimo, president of customer solutions and innovation at global cleaning solutions provider Diversey, writes the second of his series of exclusive articles for ECJ. Here he explains how implementing a long-term sustainability strategy brings real return on investment for manufacturers.
As I attend industry exhibitions and events throughout the world, I spend a good portion of my time understanding our customers and their concerns as well as the concerns of their customers. After one of my recent presentations, I spoke with some of the leading facility management companies who are looking to implement specific initiatives to reduce carbon emissions. This prompted me to think that this forum might be a good place to provide an overview of the initiatives we have been running in Diversey, and offer some actionable ideas that readers might be able to apply to their operations.
A fundamental shift in Diversey’s approach to sustainability began with a simple, yet profound change in mind-set. At a ceo roundtable discussion during the 2009 climate negotiations in Copenhagen, Diversey advocated this mind-set saying: “Once industry begins to treat greenhouse gas emissions as an indicator of inefficiency in the system, enterprises can factor it into their profit models and calculate a return on investment (ROI).”
In 2009 Diversey committed to reduce greenhouse gas emissions from its operations by 25 per cent below 2003 levels by 2013, and provide an ROI of US$32 million on an investment of $14 million over the course of its efforts.
Diversey has a unique portfolio management approach to drive its sustainability programmes, a strategy specifically focused on achieving significant greenhouse gas reductions coupled with an attractive ROI.
1. Avoidance. These projects usually account for the biggest savings opportunities. Avoidance initiatives, such as travel reduction, often require little or no capital investment. However they do often require changes in behaviour, which can be difficult. In the example of reducing travel, the company started slowly by curbing air travel booked with less than two weeks notice. Diversey also focused on improving the management of its vehicle fleet. The company runs a large fleet operation for its sales and service employees. Last year Diversey started measuring the amount of carbon dioxide emissions by car, encouraging both 'gentle driving' and 'smart use' of company vehicles. Since implementing the programme, the company has seen immediate results, both in GHG reduction and petrol consumption, with a very profitable ROI.
Diversey also started implementing a daylight cleaning programme across all its offices in Europe, in order to reduce the amount of energy normally consumed to light and heat a building in the evening hours when cleaning crews typically service the facility
2. Efficiency. These projects involve redesigning and optimising Diversey’s business processes and energy systems to be as efficient as possible. Examples include building lighting retrofits, upgrading the energy efficiency of buildings and operations in major sites around the world, improving the fuel efficiency of our vehicle fleet by switching to vehicles that use alternative fuels and achieve higher fuel economy ratings.
3. Low Carbon Energy Generation. This involves meeting Diversey's energy needs with on-site low carbon power generation. These are typically more capital-intensive projects such as installing wind turbines or a combined heat and power (CHP) fuel cell at the company’s corporate headquarters building. Doing this enabled Diversey to generate up to 40 per cent of the electricity and 80 per cent of the heating needs for that facility. Although some of these projects faced hurdles to implement due to the high costs of the initial investments, Diversey was able to fund both wind turbines and a CHP fuel cell by reinvesting some of the savings generated from its other avoidance and efficiency projects.
4. Building a Sustainable Portfolio. Diversey is in a unique position to help its customers to be more sustainable by delivering products and solutions that have a lower environmental impact. For a product or service to have a true sustainability value, it is not enough to use 'green' chemicals or materials. It must also reduce the end user's environmental footprint while generating operational efficiency. And again, it is important to use ROI analysis when evaluating the right solutions to use. Diversey created a modelling process to identify the most attractive opportunities in new product development, where energy consumption and other data is weighted based on cost and carbon reduction and performance goals (such as payback period or energy reduction targets). By combining the cost ranking and the carbon ranking, this tool allowed us to make wise investments and prioritise projects.
To summarise, the more balanced approach to energy investments has allowed Diversey to effectively manage projects as part of a long-term strategy that balances the speed of financial return, the volume of financial return and the cost of the carbon investment across an entire portfolio of projects.