Green Energy and Technology For further volumes: http://www.springer.com/series/8059
Eric Johnson Sustainability in the Chemical Industry
Eric Johnson Atlantic Consulting Obstgartenstrasse 14 8136 Gattikon (Zurich) Switzerland ISSN 1865-3529 ISSN 1865-3537 (electronic) ISBN 978-94-007-3833-1 ISBN 978-94-007-3834-8 (ebook) DOI 10.1007/978-94-007-3834-8 Springer Dordrecht Heidelberg New York London Library of Congress Control Number: 2012934952 Springer Science+Business Media B.V. 2012 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. Exempted from this legal reservation are brief excerpts in connection with reviews or scholarly analysis or material supplied specifically for the purpose of being entered and executed on a computer system, for exclusive use by the purchaser of the work. Duplication of this publication or parts thereof is permitted only under the provisions of the Copyright Law of the Publisher s location, in its current version, and permission for use must always be obtained from Springer. Permissions for use may be obtained through RightsLink at the Copyright Clearance Center. Violations are liable to prosecution under the respective Copyright Law. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. While the advice and information in this book are believed to be true and accurate at the date of publication, neither the authors nor the editors nor the publisher can accept any legal responsibility for any errors or omissions that may be made. The publisher makes no warranty, express or implied, with respect to the material contained herein. Printed on acid-free paper Springer is part of Springer Science+Business Media (www.springer.com)
Abstract Sustainability programs have been adopted by many large, publicly-owned chemical companies in Europe, Japan and the US, and even by large companies in China and India. These programs aim to improve the industry s image and public trustworthiness, which sank to historic depths in the late 1980s or early 1990s and are still relatively low. In practice, sustainability is about public relations, which has been renamed stakeholder relations, and risk management. This book reviews the history and status of sustainability programs in the chemical industry. At its core is a survey of the world s 29 largest chemical companies how they do or do not put sustainability into action. (Six of the 29 do not put it into action, as the book explains.) It also covers: how academics, investors and the general public de fi ne sustainability (their de fi nitions differ from the chemical industry s); sustainability s brands as well as its limitations, and the problem of greenwash. It answers the questions: is sustainable necessary, does it pay, and is there a non-sustainable option? Finally, it recommends some guidelines for companies adopting or expanding sustainability. Keywords Sustainability Chemical Public image industry Strategy Communications v
Contents 1 Foreword: Why this Book?... 1 1.1 Review of Existing Literature... 2 1.1.1 The Poor Image of the Chemical Industry... 2 1.1.2 Sustainability as Public Relations... 3 1.1.3 Sustainability and the License to Operate... 3 1.1.4 Sustainability as Religion... 4 1.1.5 Sustainability Chartas... 4 1.1.6 What Is Sustainability Reporting?... 4 1.1.7 GMO Introduction in Brazil, Thanks to Sustainability?... 4 1.1.8 Sustainability Is Global and Local... 5 1.1.9 Varying Definitions of Sustainability... 5 1.1.10 Don t Just Talk to Stakeholders, Listen to them, too... 8 1.1.11 Dealing with NIMBY by Stakeholderism... 9 1.1.12 Greenwash... 9 1.1.13 A Path to Sustainability for the Chemical Industry... 12 1.1.14 A 20-Year Path to Sustainability... 12 1.1.15 Stakeholderism Can Have an Economic Cause... 13 1.2 Needed: An Empirical Review... 13 References... 13 2 Summary: Sustainability Is Advancing, with More Changes to Come... 15 2.1 Sustainability in Practice: Communications, Regulatory Compliance, Risk Management... 15 2.2 Sustainability Defined... 19 2.3 Is Sustainability Inevitable, and Does It Pay?... 19 2.4 Sustainability s Limits... 20 2.5 Are the Causes for Sustainability Obsolete?... 21 2.6 Making Sustainability Sustainable... 21 vii
viii Contents 3 Introduction: Sustainability s Bandwagon Has Left the Station, But Where Is It Headed?... 23 Reference... 24 4 Why the Chemical Industry Turned to Sustainability... 25 4.1 How the Chemical Industry Upsets the Public... 27 4.1.1 Environmental Problems... 27 4.1.2 Perception of a Dishonest, Uncaring Response... 30 4.1.3 Reputation Versus Liability: The Love Canal Dilemma... 31 4.2 How Regulation Has Harmed the Industry s Image... 34 4.2.1 Regulation Recap... 35 4.2.2 Command and Control... 35 4.3 The Battle of Litanies: Regulators Versus Industry... 36 4.4 Losing the License to Operate?... 37 4.4.1 A Poor Public Image... 37 4.4.2 Scapegoating, Loss of License... 38 4.5 Sustainability: A Way to Keep the License, A Way to Influence Regulation... 39 4.5.1 Shell: Defensive, to Keep the License... 39 4.5.2 DuPont: Offensive, to Turn Regulation into Advantage... 40 4.6 For the Chemical Industry, Sustainability Is Conciliation... 41 References... 41 5 How Others Define Sustainability... 43 5.1 The Popular View of Sustainability... 44 5.2 The Theoretical (Academic) View of Sustainability... 45 5.3 The Financial Market View of Sustainability... 46 5.3.1 The Sustainability Ratings Industry... 46 5.3.2 Sustainability: Avoid Scandal, Pursue Eco-Opportunities... 46 References... 48 6 How Chemical Companies Define Sustainability, in Practice... 49 6.1 Research Method... 50 6.2 Sustainability Within the Corporate Organization... 50 6.2.1 Legacy Issues... 50 6.2.2 Corporate Organization for Sustainability... 59 6.2.3 Guidelines or Charter (and Definitions)... 59 6.2.4 Awards... 60 6.2.5 Associations... 61 6.3 Stakeholder Approach to Communications... 61 6.3.1 Defining Stakeholders (or, Who Reads These Sustainability Reports?)... 61 6.3.2 How Are Stakeholders Engaged?... 63 6.4 Rebranding Regulatory Compliance and Risk Management... 75 6.4.1 Operating Safety... 94 6.4.2 Environmental Management System... 94
Contents ix 6.4.3 Environmental Indicators and Targets... 94 6.4.4 Product (or Process) Safety... 95 6.4.5 Governance... 96 6.4.6 EEO, Diversity, Economic Impact... 96 6.5 Recognition/Celebration of Green Opportunities... 97 References... 101 7 Sustainability Brands... 103 7.1 How the Leading 29 Chemical Companies Stack Up... 103 7.2 Why the Variations in Branding?... 108 7.3 What About Sustainability Crusaders?... 109 7.4 The Limits of Sustainability... 109 7.4.1 Fear of Liability... 110 7.4.2 Credibility Gap... 111 References... 112 8 The Thin Green Line: Between Sustainability and Greenwash... 113 8.1 Lying... 113 8.2 Spinning Words and Science... 114 8.2.1 What s in a Word or a Picture?... 114 8.2.2 The Quest for Sound Science... 114 8.3 Celebrating Compliance... 115 8.4 Celebrating Green Products and Processes... 116 8.4.1 Objection: It Is Not Really Green... 116 8.4.2 Objection: It Is Not Additional... 116 8.4.3 Objection: It Is Only for the Money... 117 8.5 Green Endorsements... 117 References... 117 9 Evaluating Sustainability: Is It Necessary, and Does It Pay?... 119 9.1 Academic Studies of Sustainability s Benefits Are Inconclusive... 119 9.2 Sustainability Makes for a More Attractive Employer... 120 9.3 Sustainability as a Way Out of Crisis? Not Obvious... 120 9.3.1 What If Love Canal Happened Today?... 120 9.3.2 Hoechst and Its Unsustainable Chairman... 121 9.4 How Stakeholders React to Sustainability... 121 9.5 Sustainability Successes... 122 9.5.1 Easing Regulation... 122 9.5.2 Industry-Friendly LCA Standards, and Life-Cycle Thinking... 123 9.5.3 Emission Reductions: MSRI Project of Dow and NRDC... 124 9.5.4 Responsible Care... 124 9.6 Sustainability Failures... 125 9.6.1 GMO 1: Monsanto in Europe... 125
x Contents 9.6.2 GMO 2: BASF, Monsanto, Syngenta and IAASTD... 126 9.6.3 REACH... 127 9.6.4 EU Ecolabels... 128 9.6.5 Zero Waste... 128 9.7 Is Sustainability Profitable, and Should It Be?... 128 9.7.1 What Is a Fair and What Is a Greedy Profit? There Is No Consensus... 128 9.7.2 Compliance Is More Profitable than Non-Compliance... 129 9.7.3 But Going Beyond Compliance Does Not Generate Extra Profit... 129 9.7.4 Should Public Relations Be Done with a Sustainability Approach?... 130 9.7.5 Beyond Profit: Sustainability as Religion... 130 References... 131 10 Is There a Non-Sustainable Option?... 133 10.1 Cigarette Producers... 133 10.2 Armament Makers... 134 10.3 Albemarle... 135 References... 135 11 Get on Sustainability s Bandwagon, But Not Blindly or Blithely... 137 11.1 Study Your Stakeholders... 137 11.1.1 Employees Are Your Most Important Stakeholders... 138 11.1.2 Most Other Stakeholders Are Scandal-Driven... 138 11.1.3 Some Activists Are Paid to Be Activists... 138 11.2 Consider the Corporate Position and Culture... 138 11.2.1 Take Stakeholders Seriously... 138 11.2.2 With Promises, Less Is More... 139 11.3 Be Responsive, Not Necessarily Responsible... 139 11.3.1 Acknowledging Problems as Real... 139 11.3.2 Accepting Stakeholder Outrage... 140 11.4 Sustainability and Responsibility: Right Ideas, Wrong Words... 141 11.5 Remember the Risks... 142 11.5.1 Be Careful of Chasing Fads... 142 11.5.2 Talk Is Cheap, Money Is Real... 142 11.5.3 Beware Hubris... 142 11.5.4 Who Owns Morality?... 143 11.6 Return to a Safety Culture?... 143 References... 144
Contents xi 12 Appendix 1: Company Classification... 145 Reference... 169 13 Appendix 2: Quantity Versus Quality How Experts and Laypeople Disagree About Technology Risks... 171 13.1 Quantitative Approach of the Experts... 171 13.2 Not Just Whether You Die, But How... 172 13.3 The Leading Cause of Death? Life... 173
List of Figures Fig. 1.1 A Union Carbide advert from Fortune magazine, 1962... 11 Fig. 4.1 Headed down UK public opinion of the chemical industry, 1979 2002... 26 Fig. 8.1 A Shell advertisement that has been called greenwash... 115 xiii
List of Tables Table 2.1 Example Shell s stakeholder approach to communications and external relations... 16 Table 2.2 Example Dow s recognition of sustainability opportunities... 17 Table 2.3 Example LG chemical s rebranding of compliance and risk management... 18 Table 2.4 Chemical industry stakeholders (in descending order of importance)... 19 Table 5.1 An example of corporate sustainability assessment criteria... 47 Table 6.1 Research target the world s 30 largest chemical companies, by revenues... 51 Table 6.2 Chemical companies pro fi led for sustainability... 52 Table 6.3 Chemical industry stakeholders (in descending order of importance)... 62 Table 6.4 Approach to stakeholders... 64 Table 6.5 Rebranding of risk and regulatory compliance... 76 Table 6.6 Recognition/celebration of environmental/social protection... 98 Table 7.1 Sustainability brands of leading companies... 104 Table 7.2 Sustainability brands, numbers, and some explanation... 108 Table 9.1 Sustainability s successes and failures... 123 Table 12.1 Complete classification of all companies studied... 146 xv