BUSINESS As the Johannesburg summit ap proaches, chemical industry associations including the American Chemistry Coun cil (ACQ, the Canadian Chemical Pro ducers Association (CCPA), the Chemi cal Industries Association of the U.K. (UKCIA), and the European Chemical Industry Council (CEFIC) are planning their reports to delegates. Just last week, association representa tives met in Mexico City under the aus pices of the International Council of Chemical Associations (ICCA) to consider the report they intend to submit to the UN-sponsored conference. They are grap pling in particular with questions of how the industry's existing safety, health, and environmental program—Responsible Care—and the principles of sustainable development mesh. At a speech to students in Norway in March, Klaus Toepfer, executive director of the UN Environment Programme, described in stark detail the very basic aims of sustainable development: "In 1750, the world population stood at about 1 billion souls. Since the 1950s, it has boomed from under 3 billion to over 6 billion now. "By 2050, it is estimated that there will be around 10 billion mouths to feed, 10 billion bodies to clothe, and 10 billion GREEN THUMBS Scientists at DuPont are working on deriving polymeric people in need of fresh water, energy to materials from plants in work with Massachusetts Institute of Technology. cook and light their homes, and land on which to live. Giving these people a decent and sustainable quality of life is what is at stake. 'The time to act is now We cannot carry on depleting natural resources and pollut ing Earth if this challenge is to be met." DuPont Chairman and Chief Execu tive Officer Charles O. Hollidayjr. says he is convinced Toepfer is right and sees opportunities for business in sustainable development. In a recent speech in New York City in April, Holliday said: "There MARC S. REISCH, C&EN NORTHEAST NEWS BUREAU are currently 2.8 billion people around the world living on $2.00 a day or less. EXT YEAR MARKS THE IOTH ÀN- I opment, establishing fundamental polniversary of the Rio de Janeiro icy principles of sustainable develop- Such poverty means that half the world's Conference on Environment ment. They also drewup Agenda 21, a 40- population has little or no access to the & Development. The 1992 chapter document outlining a broad plan market and little hope to improve their meeting, dubbed the Earth for sustainable development in the 21st lives. We simply must address the needs of the developing world, or sustainabilSummit, marked the real beginning of sus- century ity will be impossible. The market is the tainable development as a concept. In Johannesburg, South Africa, in Sep- AT ΤΗ Ε Η Ε ART of those documents is the best way to do this." Before the Executives' Club of Chicago tember 2002 at the World Summit on Sus- conviction that people have arightto strive tainable Development, the global chemi- for social equity and economic prosperity in March, Holliday evoked what is de scribed as sustainable development's triple cal industry hopes to demonstrate what it with little damage to the environment. has done to make sustainable development But despite the guidance they provide, bottom line to promote the business per a reality and what it will need to do in the chemical companies and their associations spective on societal problems. "The solu future to help the concept along. worldwide are still grappling with what sus tion is to optimize markets so they can In 1992, delegates to the United Na- tainable development means to them and help promote and sustain social equity, eco tions-sponsored conference produced a whether it can be codified in a way similar nomic prosperity, and environmental inte grity," said Holliday, who is also chairman Declaration on Environment & Devel- I to Responsible Care.
STRIVING FOR SUSTAINABILITY
Chemical industry leaders wrestle with sustainable development, Responsible Care
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BUSINESS of the World Business Council for Sustainable Development—a multinational group ofmore than 150 companies in more than 20 different industrial sectors.
bers to commit themselves to Responsible Care, but it only encourages companies to adopt social principles—such as ethical trade—and economic principles such as the efficient use of energy, raw materials, and water. Utz Tillman, program director for trust and reputation at CEFIC, says the adoption of sustainable development issues is an overriding goal for the European group and its member associations. "Sustainable development is more a philosophy now. It's not easy to establish concrete objectives," Tillman says.
TO COME TO TERMS with sustainable development, many chemical companies and their associations are starting with guidance from the 1987 World Commission on Environment & Developmentknown as the Brundtland Commission. It was the first forum to suggest the need for "development that meets the needs of the present without compromising the ability of future generations to meet their own needs." Chemical industry associations say that efforts under the more than 10-year-old Responsible Care program are an important step in satisfying the goals and objectives of sustainable development. But many won"We're looking for the right der if they can expand Respon link between Responsible Care sible Care to include sustain HOLLIDAY and sustainable development," ability goals or whether sushe adds. But even with the right tainable development will require a whole link, "we may need further action on the new approach that will envelop Responsisocial aspect." ble Care at its core. The social angle is the most difficult one "I see Responsible Care as an important to deal with, Tillman says. He expects that initiative, which exists within sustainable delegates will have different notions about development and not the other way social responsibilities depending on around," says Paul Reeve, executive direcwhether they come from places such as tor of UKCI A's Responsible Care prodeveloped countries in Europe or develgram. Certainly Responsible Care has its oping countries in Asia. social aspects, Reeve says, where worker CEFIC has taken some initiative on safety and health are concerned, but it does reducing energy and resource use through not address the broad social agenda inteits Sustech program, Tillman points out. gral to sustainable development. Created in 1994, the program promotes Reeve also observes that Responsible collaborative research between process Care has always been concerned about industry companies, universities, and "industry outputs" and the need to reduce research institutes to develop environthem—things such as waste, injuries, and mentally friendly technologies. accidental releases into the environment. As ACC prepared for the meeting in Sustainable development is about "indusMexico City and looks ahead to the sumtry inputs," he says—such as energy and mit inJohannesburg, Garrity Baker, senior resources needed to produce products. director of international affairs at ACC, Reeve expected that the delegates at the says the association is taking stock. tcWe are ICCA meeting would consider initiatives looking at how we've done and what we'll to promote industry's engagement with need to do in the next 10 years," he says, to sustainable development—including put sustainable development concepts into "development of social, economic, and practice in the chemical industry environmental performance indicators." One starting place for this examinaUKCI A itself now requires all memtion is Chapter 19 ofAgenda 21 from the
1992 Rio conference. That chapter deals with the environmentally sound management of toxic chemicals and the prevention of illegal trade in toxic and dangerous products. Part of what Baker expects to be highlighted in the industry's report to the Johannesburg summit is that chemical associations and their members from 46 different countries now endorse Responsible Care, up from six in 1992. And the report will also include a reference to the industry's Long-Range Research Initiative, to which ACC members committed $100
"The solution is to optimize markets so they can help promote and sustain social equity, economic prosperity, and environmental integrity." million, to examine chemicals and their long-term health and environmental effects. But Baker is troubled about how to include some of the social features of sustainable development in a formal industry program. "How do you write a measure requiring a company to be a good neighbor? Should charity or promoting science education in schools or computer donations to educational institutions be a requirement?" he asks. Still, Baker thinks the concept of sustainable development offers as much to the chemical industry as it promises to government and environmental activists concerned about the future. "Responsible Care is about how we should conduct ourselves. The notion of sustainable development allows different actors in society to rally together," he says. CHEMICAL INDUSTRY associations of many of the countries that attended the Mexico City meeting have barely begun to grapple with sustainable development. Brian Wastle, Responsible Care vice president of CCPA, says he surveyed 45 country associations. Of the 33 that responded, only 11 believe at this point that Responsible Care is a way to address sustainable development.
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BUSINESS "There is plenty of anecdotal evidence to show that Responsible Care incorpo rates sustainable development goals," Wastle says. In fact, CCPA produced "A Primer on Responsible Care and Sustain able Development" in 1995 and updated it this year. It concludes that the Responsi ble Care program "through its built-in con tinuous improvement processes" can meet public expectations that the chemical industry can contribute to sustainable development. Clearly, Wastle has a different take on
Rhoderick points out that all ACC members agree that Responsible Care with its six codes of management practice and 106 performance goals is "agood foun dation to help us deal with sustainable development." Three years ago, ACC revised its Responsible Care Guiding Principles to include sustainable development objec tives, notes Tom Grumbles, the sustain able development task group chairman. The revised principles commit members to "lead our companies in ethical ways that
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Responsible Care than UKCIA's Reeve. Wastle regards sustainable development as a continuation of Responsible Care ini tiatives and not a larger program with Responsible Care at its core. "Sustainable development is where the journey of Responsible Care next leads us," Wastle says. Sustainable development is a condition of membership in CCPA inas much as it is a commitment included in a newly worded set of Responsible Care guiding principles that Canadian company chief executive officers must sign, he says.
increasingly benefit society, the economy, and the environment." But how companies actually put that commitment into place is part of the ongo ing debate among ACC members, says Grumbles, who is also manager of prod uct safety at Sasol North America. "What does sustainable development mean to a guy working for a chemical company in southwest Louisiana? I'm not sure he or I would understand what it means on a dayto-day basis," he says. He wonders "whether we could write codes of practice for sustainable develop THE ICCA MEETING in Mexico City not ment as we've done for Responsible Care." only allowed the industry to consider its But, he says, Ve're now seriously grappling position on sustainable development, but with sustainable development and Respon also gave it an opportunity to come up with sible Care and where they intersect." an approach to regulatory and global trade To get at the differences between Re issues that will be raised at the Johannes sponsible Care and sustainable develop burg meeting, Wastle notes. He further ment, Grumbles' task group has been expects the South Africa meeting to "clar working on a document to analyze the ify industry's and government's roles in sus nexus between the two concepts. The doc tainable development." ument notes, for instance, that "within ACC members are still struggling with the chemistry business, companies have what sustainable development means for been implementing some elements of sus them. "Our members are all over the map tainable development for many years on what sustainable development really is. through Responsible Care." We are a consensus organization, so we are The document identifies a limitation of working to get all our members on the same the Responsible Care program: 'Although page," says Heather Rhoderick, ACC's Responsible Care has achieved significant Responsible Care manager. brand identity and enlisted many partners, 20
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it is owned by the chemistry business and has a much smaller stakeholder group." By contrast, "sustainable development is owned by an expansive group of stake holders, including governments, non government organizations, and industry, and enjoys wide name recognition," the ACC document notes. The implication here is that if the chem ical industryfindsa way to closely identify itself and its Responsible Care efforts with sustainable development, it would have found a way to go beyond an essentially reactionary program. It might be able to put behind it the incident that pushed the industry to develop Responsible Care: the methyl isocyanate leak that killed thou sands in Bhopal, India, in 1984. CLOSE IDENTIFICATION with sustainable development allows the chemical indus try to point out that "it is part of the solu tion" to any number of global social, eco nomic, and environmental problems, says Jacques Busson, CEFIC's head of Respon sible Care. Sustainable development allows the chemical industry to be "proactive" and develop the energy-saving and envi ronmentally friendly products many peo ple say they want, he adds. Still, as much as associations composed of larger chemical firms are beginning to wrestle with sustainable development, smaller chemical industry groups only have the concept on their long-range radar. According to Kathleen Shaver, Responsi ble Care director at the Synthetic Organic Chemical Manufacturers Association (SOCMA), the 220 mostly small and mid sized chemical makers in the organization have not even fully implemented Respon sible Care. "We've set December 2003 as the date for our members to have all the codes of management practice in place," Shaver says. While SOCMAs focus now is on mak ing sure all members have fully adopted Responsible Care, Shaver says the group may soon have to formalize a plan to make sustainability an overt objective. In the spring, SOCMA plans to renew itsfive-yearmemorandum ofunderstand ing with ACC on its use of the Responsi ble Care program. "We expect sustainable development to be a part ofthe next mem orandum of understanding," Shaver says. But how sustainability will be part of a Responsible Care program hasn't been worked out yet, she says. DuPont's Dawn Rittenhouse has thought long and hard about sustainable develop ment. Rittenhouse, the firm's director of sustainable development, says: "CompliHTTP://PUBS.ACS.ORG/CEN
iM Ef| ihg ance with the law is an absolute minimum. opment efforts in particular on what it calls The next step is Responsible Care. And "eco-efficiency" once you go beyond that focus on envi At a New ^Vbrk City press conference ronmental issues, you go on to sustainable last fall, Walter Seufert, president of development." BASF's environment, safety, and energy Certainly Responsible Care codes have division, said: "The purpose of eco-effi their economic and social aspects, she says. ciency analysis is to harmonize economy But sustainable development considers the and ecology We want to manufacture prodgap between therichand the poor. 'Ά com ucts using the least amount of natural pany primarily exists to provide products resources—raw materials and energy— and services to society as efficiently as pos and avoid generating environmental emis sible. Its earnings are its reward for doing sions as much as possible." this well," she says. Within the next 10 years, Rittenhouse THAT PRACTICE of eco-efficiency reduces expects chemical companies to agree on a the cost of doing business. In doing so, common definition of just what sustain BASF's spokesman argues, it also serves a able development entails. One approach social purpose by not squandering re DuPont is taking is to understand the life sources, preserving the environment, and producing affordable goods. cycle of products it makes. All DuPont businesses must consider As for explicit social issues, the com not only what it costs to fabricate their pany focuses its philanthropy on the com products but also the costs involved in their munities along its fence line by "under use and ultimate disposal. Knowing all the standing their needs and making sure they costs involved would allow the company understand ours," the spokesman adds. "to make products with the lowest possi Bayer sees sustainable development ble environmental impact and the greatest both as an extension of Responsible Care economic viability," Rittenhouse says. and away to attract investors. ^Cferner Spin Work is also under way at DuPont on ner, a Bayer management board member, innovative production processes that leave told reporters at a recent news conference, behind a smaller "environmental foot "We are convinced that only a sustained print," she says. But more work needs to be orientation to the needs and expectations done on ways companies can report their of our customers and society as a whole progress on sustainable development, she will lead to an improvement in our position adds. in the competitive global market. Dow Chemical is taking a close look at "This commitment to product stew the gap between what Sustainable Devel ardship and sustainable development," opment Director Scott Noesen calls "the Spinner said, "will at the same time increase social dimension" and Responsible Care. the value of our company." In one way, For instance, satisfying the fundamental Bayer hopes such a commitment will needs of developing countries is not cov directly increase the company's value ered in the Responsible Care ethic, he through its inclusion in a new stock index says. series called FTSE4Good. "I am an advocate within Dow for sus FTSE, an equity index developer owned tainable development," Noesen says. "But by the London Stock Exchange and the I have to be careful not to be a zealot. I Financial Times, debuted four tradeable talk about profits and how sustainable indexes in July: FTSE4Good Global 100, development preserves our credibility and FTSE4-Good US 100, FTSE4Good UK relates to the bottom line." 50, and FTSE4Good Europe 50. He admits that "there is a lot of talk Will Oulton, chairman of FTSE Amer about the fuzzy social side of sustainable icas, explains: "When making investment development." But, he adds, "the question decisions, a growing number of individual is, what is the business sense behind our investors and institutional money man support of social issues?" agers are taking into account whether or It comes down to preserving the right not companies are behaving in a socially to operate in any given community, Noe responsible fashion. The new indices pro sen says. And it also means linking the com vide the tools people need to make those pany's success with that of the communi decisions." ties in which it operates and thus preserving FTSE uses the London-based Ethical the company'srightto grow, he says. Investment Research Service's aid to iden For BASF, sustainable development pro tify companies with strong corporate social vides a "platform to go beyond Responsi and environmental performance records ble Care," a company spokesman says. And for inclusion in the FTSE4Good indexes. BASF has centered its sustainable devel Chemical companies make up 2% of the HTTP://PUBS.ACS.ORG/CEN
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BUSINESS value of the FTSE4Good Europe index; words, companies would have to account pharmaceutical companies make up nearly for their economic, ecological, and social 10% of the index; and banks, almost 24%. results," he explains. Tobacco, aerospace, and defense compa nies are not on the index at all. INDUSTRY CONSULTANT Sebastian Alexander Rosar, head of investor rela Beloe, a director of London-based Sustions for Bayer, hopes his company's inclu tainAbility, says the concept of sustain sion on the FTSE4Good Global 100 index able development should spur companies will give it an edge with what he sees as a growing group of investors. Rosar says that 9% or $1.2 trillion of U.S. investor as sets managed by institutional investors were invested accord ing to social criteria in 1997. At the beginning of 2000, the total investment had risen to $2 tril to compete with one another lion, he says. to produce the next generation of environmentally friendly In the U.K., Rosar says, "59% SPINNER products. of British pension funds take "Sustainable development is about new ethical aspects into account in their products, new systems, and massively investment strategies." And social crite reducing the environmental impacts of ria for investment is likely to get a much goods and services," he says. It is very dif higher profile. ferent from Responsible Care, which he a t t e m p t s are being made at the Euro calls "a defensive program all about man pean Union level" to require publicly aging threats." owned companies to provide triple-bot tom-line reporting, Rosar says. "In other He states he likes the fact that some
chemical companies are now part of the FTSE4Good indexes and the similar Dow Jones sustainability indexes—which include Dow Chemical among their mem ber companies. These indexes raise busi ness standards and engage the mainstream financial community in socially responsi ble investing, Beloe says.
"This commitment to product stewardship and sustainable development will at the same time increase the value of our company/ But if chemical companies are to be come a larger component in these new indexes, they will have to convince the public that their efforts toward Respon sible Care can be translated into a sustain able development agenda. This work is now under way at indus try meetings like the one in Mexico City last week. It will have to take final shape over the next year if the industry is to earn points at the upcoming Earth Sum mit in Johannesburg. •
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