Ms. Jody Kuzenko says, embedding sustainability in an organization is a necessary condition to run a successful business. She adds, every leader in an organization has the responsibility for sustainability. It’s not the responsibility of only the “General Manager of Sustainability”; it’s the responsibility of the CEO, the department directors and every employee to make choices that are consistent with working in a sustainable business. Unless and until organizations stop viewing sustainability as something that “the other department” does, she says an organization isn’t set up for success.
What does it take to innovate? Arcus Consulting Group has launched a major initiative to explore growth and innovation as key elements of corporate and business unit strategy. A majority of executives say it involves a pervasive corporate culture, deeper customer insight and a comprehensive strategy that will enable an organization to offer its customers important added value. They say such steps reduce costs, increase sales and achieve higher earnings. But how does one come up with new solutions, and can innovation really be part of a strategy plan? Arcus’ multi-industry survey of senior executives found that of all the challenges companies face in this area, the biggest challenge is finding ways to create a “culture of innovation”.
As Arcus research indicates, doing so means that you need to be surrounded by highly talented people. It also means finding a way to transmit your passion to them, so they will buy into your vision of the future, perform at the highest possible levels, and come up with innovative solutions to the challenges of achieving the vision. No surprise, then, that the topic of innovation has been gaining ground as CEOs seek to incorporate concepts like a “culture of innovation” into their assessments of a company’s long-term value.
Arcus research indicates that besides contributing to the bottom line through reduced operating costs, insurance premiums, and capital costs, sustainable business practices contribute to shareholder value in a broader and more strategic way—by strengthening brand equity, reputation, human capital, alliances, and other important “intangibles” that can account for up to 90% of a firm’s market value. The Arcus View from the Top report on corporate sustainability practices espouses the business case for sustainability by clarifying how sustainable business practices are linked to shareholder value.
The term “sustainability,” once an obscure ecological concept, has now been adopted by many in the business world to connote the principles of social and environmental responsibility. Progressive businesses have recognized that profitability alone does not guarantee continuity, and that sustainability contributes to long-term shareholder value. Likewise, investors increasingly see sustainability issues such as controlling greenhouse gases as “material” concerns that must be addressed by management.
Today, business leaders in every industry have adopted sustainability as a strategic imperative, although some prefer other terms, such as “corporate citizenship” or “sustainable growth.” In addition to customers and shareholders, corporations are beginning to consider the interests of a broader range of stakeholders, including employees, local communities, regulators, lenders, suppliers, business partners, and advocacy groups.
Many have adopted the so-called “triple bottom line”— economic prosperity, environmental protection, and social responsibility—as a basis for measuring and reporting their sustainability performance. The emerging view is that there is a strong business case for sustainability, although actual quantification of the value remains challenging. Sustainable business practices go beyond corporate governance, codes of conduct, and engagement with stakeholders.
A genuine commitment to sustainability requires adopting a broader view of the full life-cycle implications of business decisions, including new product development and supply chain management. Practical interpretation of sustainability requires evaluation criteria. For example, a sustainable product or process might be defined as one that constrains resource consumption and waste generation to an acceptable level, makes a positive contribution to the satisfaction of human needs, and provides enduring economic value to the business enterprise. The notion of an “acceptable level” suggests that resources should not be used at a rate faster than the rate of replenishment, and that waste generation should not exceed the carrying capacity of the surrounding ecosystem.
Arcus: What does sustainability mean to Vale?
Sustainability is a broad and often misunderstood term of art. At Vale, we see operating based on sustainability principles to be an opportunity to improve social conditions, environmental performance, foreign investment and true transparency – all of which result in an improved business climate and shareholder returns. If true sustainability principles are at work and embraced broadly, we should not shy away from the economic impacts of improved sustainability. We believe sustainability is about the positive environmental and social legacies we can leave in the communities in which we operate. Historically, for the extractive industries, legacy was equated with something negative – whether it be disturbed land, barren rock or contaminated waterways. Today, we are working hard to turn that perception around, to ensure that we are leaving positive legacies in the communities in which we operate. That is how we view sustainability in an organization which fundamentally depends on a non-renewable resource. In terms of some of our successes, we have many projects that speak to our commitment to sustainability and to the overall business imperative to remain innovative and competitive.
In Canada, we have had very little attention paid to water resources over the last number of decades.
Arcus: Could you describe a project that illustrates Vale’s commitment to innovation, environmental responsibility and sustainability?
One of our key projects in the pipeline which speaks to our environmental commitment and innovation is something called our Clean AER project. “AER” stands for Atmospheric Emissions Reduction. This is actually the largest single environmental investment in the history of our North Atlantic operations. It is a $2 billion spend that will significantly reduce air emissions – specifically, sulphur dioxide (SO2) emissions, particulate and CEPA toxics. The project involves a major overhaul of our smelting facilities in Sudbury, including the addition of a new acid plant, a wet gas cleaning plant and new bag houses. One of the most important points is that this project is focused squarely on environmental improvement; on reducing our air emissions impact in the local community and more broadly. It has no direct positive production or financial impact for us. That, for me, embodies Vale’s commitment to innovation, environmental responsibility and sustainability.
We also have what I would describe as world class, leading edge, internationally recognized reclamation work, with our greenhouses, our commitment to reclaiming our own sites that are no longer operating and, more broadly, our re-greening in the city of Greater Sudbury. So, air emissions is one strategic priority, our focus on water is another, and then reclamation would be a third. Those are the 3 broad areas that we are focusing on to ultimately reduce our impact, shrink our footprint and achieve zero harm.
It is an exciting time to be in industry and working in the sustainability field. As social conscience continues to elevate with respect to how we as a planet use our resources, then industry, across sectors, must respond to that or, better yet, lead it. In Canada, we have had very little attention paid to water resources over the last number of decades because we quite simply have such an abundance of it. But increasingly, as our investors, our communities, our shareholders, and our customers become more concerned about water conservation and water quality, then industry will have to respond. At Vale, we are already responding through a number of initiatives and programs to ensure that we are managing our water resources responsibly.
Arcus: How do global and local environmental standards impact your operations?
Given that Vale is a global company, both global and local environmental standards are relevant to our operations. Our approach is to share best practices and set our global standards based upon the world’s best, and most stringent, local standards – with the ultimate goal of elevating all of our operations to the highest standards. So in areas like Canada, where we have a very sophisticated regulatory environment and the standards are very high, it is incumbent upon us, as a global company, to take those standards, expectations and best practices to other areas of the world where the regulatory framework isn’t as sophisticated as it is in Canada, and, where possible, still hold ourselves to that standard.
People are, quite rightly, interested in the overall effects our operations have on the environment. As responsible operators, our aim is to reclaim the areas in which we operate such that our impact is a net replenishment of resources. So, as we embark on new projects, the first order of business is to minimize impact and to reduce the footprint of any operation before we even start – our new processing plant at Long Harbour is an excellent example of this. Then, if and as we do have impact, to reclaim, in a way that supports biodiversity principles and supports the environment. I do think biodiversity is an area of significance for us globally. I also think there will be a very significant global focus placed on water conservation.
Arcus: How has Vale engaged First Nations?
Another area in our Canadian operations that is gaining momentum is our interaction with First Nations communities. We are taking proactive steps to bring projects on line in a fashion that encourages open dialogue with our First Nations partners. It’s not just an emerging area of law, but we see it as a matter of moral and social imperative. We engage with First Nations communities as we are opening up, closing and running our operations, and this open, consultative dialogue has increased exponentially in the last decade. The Voisey’s Bay project in Newfoundland is an excellent example of that. We partnered with the aboriginal community there and entered into an Impact Benefit Agreement that is seen a global standard. In Ontario, we’re partnering with local First Nations in the same sort of way.
It really is a process of mutual introduction, negotiation and education. The First Nations people have what they call “traditional knowledge” about the lands where we operate – aspects of their culture and history that we are not aware of, about which we need to come in to be educated. For our part, we share information about the nature of our operations, and the nature of the impact that our operations have and don’t have.
So it really is a two way dialogue – based on mutual respect and learning. The goal is to partner to achieve mutual benefit from our operations – the First Nations benefit from things like employment opportunities, education opportunities and contracting opportunities and we benefit from project certainty and a positive, sustainable legacy. It’s been an absolute success story in Voisey Bay. I believe that currently, approximately 50 percent of the workforce in our Voisey operation is from the Innu/Inuit population.
Arcus: Please describe Vale’s involvement and engagement with communities.
There are those who believe that the people in the “sustainability department” carry the responsibility for community engagement and sustainable development. My view is that every leader in an organization has the responsibility for sustainability. It’s not the responsibility of only the “General Manager of Sustainability”; it’s the responsibility of the CEO, the department directors and every leader in the organization. Unless and until we stop viewing sustainability as work that “the other department” does, I don’t think an organization is set up for success.
At the end of the day, sustainability is good business. Major investment firms are making investment decisions based on our performance on the Global Reporting Index. GRI was designed to create an even platform for the investing public to make some decisions based on sustainability indicators as well as financial performance. Embedding sustainability is absolutely a necessary condition to run a successful business.
Arcus: What are the drivers of a successful community engagement strategy?
I would say there are three fundamental pillars to a successful community engagement strategy. One is transparency – for a community to be informed and accepting, we have to be transparent in what it is that we’re doing and not doing. The second is maintaining ongoing forums for communication, to allow us to tell the community what it is that we are doing and to allow the community to have input on how that impacts them. The third, I would say, is the willingness to adapt our plans and to listen to those concerns.
If you look at our operations in Sudbury, we directly employ approximately 4,000 people. Literally, at our fence line, is the community of Copper Cliff. To be able to coexist peacefully with the community, we have forums like the Copper Cliff Community Liaison Committee, which is an opportunity for our senior leaders to meet with community members, hear their concerns and explain to them what’s going on with our business. We respond to their concerns if and as we can.
A simple example – the community members in Copper Cliff told us that blasting late in the evening or early in the morning was disruptive to them, because they could actually hear it and feel it in their homes. In response to that we were able to change some of our blasting times to be less disruptive to them and we now have a practice where community members are informed about when we will be blasting.
A more complex example is the approach we are taking at our operations in Thompson, Manitoba where we have made the decision to shut down the Smelter and Refinery. Recognizing the impact of that decision on the community, we have engaged with community members to develop a plan to support and sustain Thompson through this period – a plan to create positive social and community legacies. These kinds of things enable our operations and neighbouring communities to peacefully co-exist. So, transparency, communication and a willingness to be responsive would be what I consider three key pillars.
Also remember that internal engagement is a critical thing. When you are leading an organization like Vale that has 120,000 people worldwide, that can be a significant power when you get people behind an idea. At Vale, one of our core values is “life matters most” and our key goal is “Zero Harm”. This not only means zero fatalities and zero harm to our employees, but also zero harm to our assets, the environment and the communities in which we operate. Getting both our communities and employees engaged and working towards that goal, is the only way we will make it happen.
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