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Intel has said they will begin eliminating 95% of the lead it uses in proces-
sors and chipsets;
The Japanese economy is famous for its prudent use of raw materials through
processes like miniaturisation, and philosophies like Kaizen which sees any
waste as an indication of inefficient management;
A coated board mill in Alabama, Mead Westvaco™s Mahrt, has worked to reduce:
Nitrogen oxide emissions by 95% through a Predictive Emission
Monitoring System;
Opacity emissions by 35%;
Solid wastes by better landfill management, which has increased landfill
life by 30% while reducing the budget by 50%;
Fibre loss by 20 tons per day, which has resulted in substantial financial
and fibre supply benefits for the division;
Landfilling sludge by finding alternative uses for it, including transform-
ation into roofing felt;
Wastewater below permit limits and increased compliance margins;
Pulping chemical losses to wastewater through efficient recovery for other
uses; and
Annual water use while increasing tons of paper produced.
Office Depot has customised its ˜Green Book™ catalogue of environmentally
preferable products in six country specific versions;
Wal-Mart Stores says it plans to begin implementing its ˜Preferred Chemical
Principles™ to establish a clear set of preferred chemical characteristics for
product ingredients; and
Xerox Research Centre of Canada and Palo Alto Research Center Inc. (PARC)
scientists have invented an ˜erasable paper™ whose images last only a day, so
that the paper can be used again and again. The technology could ultimately
lead to a significant reduction in paper use as two out of every five pages
printed in the office are for ˜daily™ use, like emails, web pages and reference
materials that have been printed for a single viewing.

These seem to be win/win situations and must be highly motivational for the
staff involved in the processes. The continued improvements to the Mahrt
Chapter 19 “ Aspects of environmental risk 489



operation have had a great influence on increasing production while reducing
the mill™s environmental impact (World Business Council for Sustainable
Development (WBCSD) ˜MeadWestvaco: environmental opportunities add
business value™, 2 April 2004: www.wbcsd.ch).


Resource usage risk “ energy
Research and analysis into energy use risk indicates that:
Energy use risk is 0.4% of market value of the top 500 EU and US companies;
and
This risk exposure has been reduced from 0.6% of market value by good risk
management techniques (the risk reduction/management factor).
Energy use is divided into the following three categories:
Direct consumption: the volume of energy used by the company in its own
production process;
Indirect consumption: the volume of energy used by the supplier of energy in
its production process; and
Aggregate consumption: the above two categories combined “ a measure of
the overall energy consumption of the production process. Aggregate con-
sumption measures energy efficiency per unit of sales.
The graph below shows the environmental risk (net) from energy resource
usage by sector.



Energy Use
1.2%

TRANSPORT
1.0%
ELECTRONICS & ELECTRICAL
EQUIP'T
Net (Residual) Risk




0.8%
MINING

REAL ESTATE
0.6%
OIL & GAS

0.4% AEROSPACE & DEFENCE

SECTORS
0.2%
FTSE 350 AVERAGE


0.0%
0.0% 0.5% 1.0% 1.5% 2.0%
Gross (Inherent) Risk
Part D “ Overview of the Environmental Aspects of Business Risk
490



Case studies
These risks include the spiralling cost of energy fuels as consumption growth in
Asia increases rapidly and the Middle Eastern security situation deteriorates.
World energy demand is expected to increase by 50% by 2030. For example, in
2004 China will install generating equipment equivalent to the entire UK cap-
acity of 42 gigawatts. China is also set to become a net importer of coal in 2004
and double its percentage of total world oil consumption from 5 to 10% by 2010.
There is an increased trend in labelling the efficiency of products in order
to compare the indirect energy use of companies. This is becoming a source of
comparison between competitors, and some companies are using this to their
advantage.
There are the Energy Star, the Energy Efficiency Awards and the European
Energy Label, as well as a range of European country labels for consumers to make
informed choices about the environmental damage some products can do. This
level of measurement has been extended to cars and is now making progress in the
energy efficiency standards for dwellings and service sector buildings. Other
countries (e.g. Singapore, the Philippines, etc.) establish mandatory or voluntary
standards for service buildings. It is also expected that there will be an integration
of renewable and micro-power systems into the building codes making small
buildings subject to more complex performance-based building codes.


Risk management
Examples of positive risk management programmes and projects include the
following.
Improved management performance systems alone can have large benefits
like:
A UK-based consultancy, Cogitare, who have helped reduce future tube energy
consumption by 5.2 billion kWh by working with London Underground and
Metronet to optimise existing systems and planned upgrades which will
deliver new, faster and more frequent trains. The winners are the UK tax payer,
London Underground passengers and the planet;
BT plc consumes approximately 1.8% of non-domestic electricity, making the
company one of the largest consumers of electricity in the UK. BT started to
address their energy risk issues in 1986 and claim to have saved £100 million
in the last decade, also reducing CO2 emissions by 40%. They have an adven-
turous target of an additional cut of 25% of energy consumption by 2010. To
date they have managed their risk by implementing the following schemes:
Commitment to sourcing 10% of their energy needs from renewable
sources by 2010;
Use of fresh air-cooling systems as replacements for chemical-based refriger-
ant systems; and
Supporting innovative renewable energy initiatives, with plans to scale up
any successful trials.
Chapter 19 “ Aspects of environmental risk 491



Their progress in the 2004 financial year has been good with a reduction of
1.5% in total electricity consumption to 2074 GWh (BT Society and
Environmental Report 2004: www.btplc.com).
Rethinking existing processes:
Going carbon neutral: the UK-based insurer Aviva has cut building and
travel-related carbon dioxide emissions by 54% since 2002. It currently has
64% of electricity obtained from zero emission sources and Aviva will offset
the remaining emissions by purchasing carbon credits that support tree
planting and carbon-free power sources such as solar and wind, thus becom-
ing carbon neutral;
The largest US meat producer, Tyson Foods Inc., produces 2.3 billion pounds
of animal fat a year and now thinks this could be turned into fuel, ˜We believe
it™s a win for our energy independence, it™s a win for our environment, and
we believe it will be a big win for our shareholders as well™, said Jeff Webster,
an official with the company™s Corporate Strategy and Development team;
Some construction companies have begun to realise the competitive advantage
environmental health and energy efficiency can bring and the otherwise
similar products of bricks and mortar. John Laing Homes in the US has
designed their houses to make more use of natural ventilation and central vac-
uum systems that lower allergen levels;
Royal Dutch Shell is investing US$6 billion in a technology which converts
natural gas into clean fuels. The company announced an agreement with the
Egyptian Oil Ministry to build a large-scale gas-to-liquids plant. The 75 000
barrel-per-day facilities, along with a similar plant in Trinidad and Tobago,
will help increase Shell™s lead in new fuels development (The Times, 6
October 2000); and
Local authorities can often set the pace on environmental issues and a good
example of this is that Woking Borough Council operates the largest fuel cell
in the UK at 250 kW.

Renewable energy continues to gain in popularity:
The wind power capacity of the US surged 27% in 2006;
Cleantech Venture Network LLC says investment by North American venture
capitalists in renewable fuels and other so-called clean technologies had
their ninth consecutive quarter of growth, a 10.8% rise over the previous
quarter, and a 120% increase over the same quarter last year and reached a
year-to-date total of $2.29 billion;
The Worldwatch Institute and the Center for American Progress say that
many of the new technologies that harness renewable power are, or soon will
be, economically competitive with fossil fuels. In ˜American Energy: The
Renewable Path to Energy Security.™ (Worldwatch Institute and Center for
American Progress. September 2006 www.worldwatch.org/node/4405);
Google will house the largest corporate solar installation in the US;
Texas built more renewable energy capacity in 2001 than in the previous
century. This amounts to more than 1000 MW;
Part D “ Overview of the Environmental Aspects of Business Risk
492



Even the oil state has been trumped by Los Angeles City Council, which has
plans to source 50 000 MW/year from renewable energy;
Australia will build the world™s biggest solar power plant amid warnings of
blackouts within five years unless it can increase electricity generation to
meet growing demand for air conditioners;
In Spain solar panels are now compulsory on all new and renovated build-
ings as part of the country™s efforts to bring its building rules up to date and
curb growing demand for energy;
All but four of the US states now have incentives in place to promote renew-
able energy; and
Ted Turner plans to partner with Dome-Tech Solar (a leading solar energy
developer), based in New Jersey, to create DT Solar, a Turner renewable
energy company.
Energy efficiency:
The carbon trust (www.carbontrust.co.uk/energy) say they can save UK com-
panies between 10 and 30% of energy bills annually;
General Motors has reduced its energy use by 25% and added solar and landfill
gas as energy sources over the past five years;
Philips Semiconductors estimate they can save around 8% of their
electricity bill simply by adjusting the time schedule settings on their air con-
ditioning; and
A football team in the UK saved 12% of their annual costs after repairing
plant equipment, insulating valves and pipes, installing draught proofing,
energy efficient lighting and reducing the base electrical load.



Resource usage risk “ natural resources and land use
Risks resulting from damage of land resources
Results of research and analysis indicate that:
Natural resources usage risk is 0.4% of market value of the top 500 EU and
US companies; and
This risk exposure has been reduced from 0.7% of market value by good risk
management techniques (the risk reduction/management factor).
This is concerned with the ethical issues surrounding natural resources, such
as animal testing and genetic manipulation of life forms. It covers the major
impacts on biodiversity associated with the organisation™s activities and/or
products and services, including:
Land ownership and usage;
Degradation of natural habitats resulting from the organisation™s activities;
The number of IUCN Red List species with habitats in areas used or managed
by the organisation; and
Land stewardship through ownership, renting or business partners.
Chapter 19 “ Aspects of environmental risk 493




Biodiversity
The variety of organisms found within a specified geographic region and
in totality the variety of life forms on the earth.
Biocapacity
An example of the excess of societies in terms of their capacity to be sustain-
able is defined by the European Union™s ˜ecological footprint™ methodology.
This estimates the EU is using more than twice its own biocapacity. The term
˜ecological footprint™ refers to a measurement of human resources that com-
pares the rate the planet is using its resources with its ability to renew them.
Europe is consuming 4.8 hectares per capita a year (its footprint) but its
capacity to regenerate is only 2.2 hectares per capita, leaving it running at a
˜deficit™ of 2.6 (WWF Living Planet Report 2006, October 2006: http://assets.
panda.org/downloads/living_planet_report.pdf).


The following graph shows the natural resources usage risk by sector.

Natural Resources Usage
1.4%

PHARMACEUTICALS &
1.2%
BIOTECH
TRANSPORT
1.0%
Net (Residual) Risk


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