TAKING A LEAN APPROACH TO GREEN

The much-awaited Copenhagen Climate Change Conference promoted by the United Nations is likely to be remembered more for its failure to reach any consensus, rather than on how the problem of climate change should be tackled. Indeed, there were articles and articles giving out information on how President Obama and his efforts could not unite the world in this matter.

Going by the famous Indian (Sanskrit) quote: Those who do not start the work (at all) fearing the obstacles are called men of low caliber. Those who start the work but stop on encountering obstacles are called men of medium caliber. Those who even after being destroyed again and again by obstacles do not leave the work once started are called men of high caliber. So let us first applaud the high caliber leaders and officials who have been working tirelessly towards uniting the world to address this matter, in spite of knowing there will be obstacles to cross.

Let us review some of the precedents set in this matter. The following are the four essentials to calling an International Agreement as described by Yvo de Boer, executive secretary of the United Nations Framework Convention on Climate Change (UNFCCC):

1. By how much are the industrialized countries willing to reduce their emissions of greenhouse gases?

2. By how much are major developing countries such as China and India willing to limit the growth of their emissions?

3. How to finance the help needed by developing countries to engage in reducing their emissions and adapting to the impacts of climate change?

4. How to manage that money?

As an independent observer, I feel the expectations set by the UNFCCC executive secretary were too high. There are too many specific numbers being expected. Can you imagine the anxiety of a marketing manager asked to commit numbers for a year’s quarter? In spite of having historical numbers and benchmarks at their disposal, marketing managers do have difficulties in undertaking this task. In the matter of climate change/global warming, developed nations have not yet achieved complete success or set benchmarks to be followed. Moreover, making these kind of commitments will have serious implications for a country’s operation and in the management of its socio-economic growth and expectations. So naturally, there will be no consensus.

The right process will produce the right results. For the past 18 to 22 years, UNFCCC and IPCC (Intergovernmental Panel on Climate Change) have been unable to create effective processes, procedures, standards and governing institutions, for the countries of the world to implement/adopt, which would enable them to pursue common green goals. It is a gradual process to integrate the world towards achieving these common objectives. When strong and proper foundations are laid, attempts to unite the world in this, will produce better results and yield.

Sure enough, looking at history, the world has never been a fair playing field. Hence, the group of developing nations, namely, the BRICs countries, is apprehensive about the participation and commitment of developed nations to the reduction of global warming. Another psychological reason why no consensus was reached could be/is the power struggle between the developed and developing countries, where the latter have tried to display their might, through a public show of disagreement. They are well aware that with the changes in business environment, they will have to follow certain rules and regulations, especially if the exporters from their countries need to do business with the rest of the world.

MANUFACTURING PERSPECTIVE

High expectations may not be the only reason for the failure of Copenhagen to produce constructive results. There could be various other factors, which we are unable to realize and analyze immediately. There are numerous ways in which we could address and approach this subject matter. Here, this is an attempt to understand it better through the application of the 4P Toyota model.

Philosophy

Rising sea levels, less snow/ice, global warming, torrential rains, and extreme weather conditions. All of these were considered to be individual governments’ problems. Until recently, Green Manufacturing and Sustainability were subjects discussed in seminars or by academician/intellectuals.

It is only in the last few years, that we have been seeing some action taking place in the real market, beyond closed door meetings, such as the appearance of corporate social responsibility statements published by large MNCs, and government policy makers scrutinizing the implications of any international enforcement etc.

The science of reducing global warming is a long-term philosophy. The most important aspect for achieving success is by maintaining patience, staying focused on the long-term goals, making correct investments in correct processes, people, standards and securing commitment from all parties involved.

Process

In the year 1992, the United Nations Framework Climate Change Convention (UNFCCC) was formed with the objective of stabilizing the amount of greenhouse gases in the atmosphere, at a level, that prevents dangerous man-made climate changes.

The IPCC was established in 1988 (even earlier) with the objective of using scientific literature to evaluate and understand the extent of climate changes and their effects, and to study the potential to adapt to, or counteract anticipated climate changes.

There is a close relationship between the IPCC and UNFCC. IPCC produced reports with both scientific and political support are the foundation upon which the UNFCCC cooperation functions.

The major achievement in the past 18 years of UNFCCC and 22 years of IPCCC existence is the implementation of the Kyoto Protocol. Studies show that in the past 25 years, the earth’s temperature has risen by 0.18 ºC per decade, which is more than twice the average of the past 100 years. It would be interesting to assess the effect of the Kyoto Protocol on arresting the rapid increase of global warming.

Until now, these two organizations have been busy with continuous scientific research and in assessing the long term impact of global warming on a macro level. It is time to look at specifics. As we have to move at a much faster pace, what we need to see is an empowered entity who can manage micro-level issues, which can in turn, help set standards for each type of operation/industry.

Some of the measures that this new entity must be empowered to set would be:

1. Green standards for industry/ operations

2. Operating procedures for countries

3. Operating procedures for international agencies overseeing the countries

4. Internal audits for country specific agencies

5. External audits for the international agencies overseeing countries

6. Green value measuring, and declaring of conventions

7. and more….

For example the IPPC [International Plant Protection Convention] was recognized by the 1989 Uruguay Round of the General Agreement on Tariff s and Trade as a standard setting organization for the Agreement on the Application of Sanitary and Phytosanitary Measures. The right process will produce the right results.

People & Partners

The proposed new entity, will work with every country, to establish a sole responsible agency therein, for the implementation, monitoring, and reporting of green activities in the country (for example: a Phytosanitary department of a country). To start with, all exports must be accompanied by a green certificate issued by such an office.

Take the example of ISPM 15 – the International Standard for Phytosanitary Regulation for wood packaging material in international trade. The regulations are intended to help prevent the worldwide spread of plant pests and diseases by using specially treated wooden packaging material. Pest introductions and outbreaks cost governments, farmers and consumers billions of dollars every year. Once pest species are established, their eradication is often impossible, and controlling them takes up a significant percentage of the cost of producing food.

With the implementation of this regulation, local phytosanitary authorities in a country have started certifying the registered suppliers of wooden packing material who meet standards laid down by IPPC. Countries have shown resistance, but most of them have come to terms with accepting this new regulation. Solid wood packing material used will carry the IPPC mark (xx 0000 YY) and date, (xx – two letter ISO country code, 0000 unique identifi cation of the wood treatment agent, YY indicates the type of treatment). Traceability and accountability are created through this process.

The Greenpeace movement and similar activities should also be supported. It was recently reported that Unilever, one of the world’s largest consumer products manufacturer, cancelled contracts worth £20 million (US$32 million) with Sinar Mas, the largest palm oil producer in Indonesia, which was found to be clearing rainforests in protected areas, including reserves for the country’s endangered orangutan population.

With their primary business objective being to create/increase net worth of shareholders, most business entities will not be worried about the threat of global warming unless their bottom-line decreases. It is important to engage private participation for better results. Work closely with large conglomerates to adopt strict green values, so that the value chain will in turn be forced to adopt such practices. Over a period, with the trickle down eff ect, such practices will become part of normal standard operating conditions and requirements.

Globally promote and fund organizations which work with both businesses and governments to find cost effective solutions, to specific problems within industries. The Center for Integrated Manufacturing Studies of Rochester Institute of Technology (www.cims.rit. edu) is one such entity. It partners with organizations to promote sustainability in designing products, process, facilities and also re-manufacturing capabilities. Respect the parties involved, challenge them professionally and help them grow.

Problem Solving

There will be many obstacles to cross on the way, as these initiatives will have teething problems and other regulatory and implementation issues. This is a continuous process. We are talking about a universal program for the implementation of greenhouse gas reduction, with the participation of private and local governments. Only through constructive consultation and consensus, progress can be made.

However, KPIs must be set to evaluate the progress on a regular basis, especially to reduce the overheads of non-value added services which could creep in.

GOING FORWARD

First championed in the automobile industry by Toyota, lean concepts and ideas have been in use for more than 30 years. While lean-sigma awareness and application remains highest among manufacturing organizations, given its part in value chain compliance, lean practices have also begun to be implemented in service sectors like insurance and banking.

On similar lines, we will have to allow private companies to experiment with various green initiatives, so that the best among these, will emerge, which in turn, would be adopted by the masses.

Consulting firms like Frost & Sullivan and others can play an important role in helping companies to understand the need to adopt green values for sustainability. One initiative that Frost & Sullivan is launching in 2010 is the Green Manufacturing Excellence Awards program (www.frost.com/gmea), which is a complete life cycle assessment model to help organizations make the first step towards embracing green values.