Marianne Lines

BRIDGES to Sustainability

2.1 INTRODUCTION

This book's focus on the chemical industry reflects the industry's prominent role in the global economy and society. The chemical industry is very diverse, producing thousands of substances that are present in countless products. No longer associated with just commodity chemicals, plastics, and additives, chemical companies have made significant forays into consumer care products, pharmaceuticals, biotechnology, agribusiness, and many other sectors that touch upon almost every aspect of our lives. Chemical companies provide a wide range of products and solutions, from automobile components to construction materials to consumer goods (Inno-vest, 2002). Because of its size and diversity, the industry has had a significant impact on our global economy, the environment, and society.

The chemical industry has a long history of product and process innovation and has provided enormous benefits to society. Since the late 19th century the industry has continually developed new products and processes, improved its functionality and cost-effectiveness, and displaced many traditional materials. Its products are now integrated into many economic sectors and it has a history of collaborating with its customers to develop innovative solutions. As a result there has been a dramatic increase in the use of chemicals and plastics, and these have provided tremendous cost savings as well as improved functionality (Sherman, Chapter 4, Section 4.6 of this volume). Safer and more efficient automobiles, and large-scale

Transforming Sustainability Strategy into Action: The Chemical Industry, Edited by B. Beloff, M. Lines, and D. Tanzil

Copyright © 2005 John Wiley & Sons, Inc.

production of life-saving drugs, to name a few, also bear witness to the societal benefits produced by the industry.

Nevertheless, events during the past 35 years have directed public and government scrutiny on the chemical industry and its unintended impacts on the environment and society. For instance, despite evidence of health effects linked to chemical exposure, a great majority of the chemicals found in our air, water, food, and everyday products lack basic safety data for human and ecosystem health, particularly that of developing organisms. Of the 100,000 chemicals in common use, 30,000 are used in volumes of one ton or more. Of these, 95 percent have little or no environmental or human health data, simply because prior to 1980 no data were required before marketing in the United States or Europe (Thorpe, Chapter 3, Section 3.2 of this volume).

This chapter will look at the scope and scale of the chemical industry; the industry's response to formative developments and drivers; and the evolution of its signature program, Responsible Care®, with a look at its role in advancing sustainability.

2.2 UNDERSTANDING THE CHEMICAL INDUSTRY 2.2.1 Sector Profile

There is no single definition of the chemical industry or a universal categorization of the industry's subsectors. There are, in fact, numerous ways of identifying sub-sectors of the chemical industry, including, according to the Standard Industrial Classification (SIC) codes (US OMB, 1987), the North American Industry Classification System (NAICS) (US OMB, 2000), the European Union NACE Codes for the nomenclature of economic activities,1 the Japanese standard industrial classification,2 and according to S&P definitions (S&P, 2004), to name a few.

The Organisation for Economic Co-Operation and Development's (OECD) categorization, demonstrating how diverse the industry is, divides the chemical industry into four groupings (OECD, 2001):

• Basic chemicals (or commodity chemicals). Markets for basic chemicals are primarily in other basic chemicals, specialty chemicals, and other chemical products, as well as in other manufactured goods (textiles, automobiles, appliances, furniture, and so on) or in the processing applications (pulp and paper, oil refining, aluminum processing, and so on). They include bulk inorganics and organics (e.g., ammonia, gases, acids, salts), petrochemicals (e.g., benzene, ethylene, xylene, toluene, butadiene, methane), fertilizers, industrial chemicals, plastics, resins, elastomers, fibers, dyestuffs, and so on.

• Specialty chemicals. These chemical substances (e.g., adhesives and sealants, catalysts, coatings, electronic chemicals, plastic additives), which are derived from basic chemicals, are more technologically advanced products

'See http: //www/top500.de/nace4-e.htm. Accessed October 2004.

2See http://www.stat.go.jp/english/index/seido/sangyo/3.htm. Accessed October 2004.

than basic chemicals. They are manufactured in lower volumes than basic chemicals and have a higher value-added because they cannot easily be duplicated by other producers or are shielded from competition by patents.

• Life science products. These include pharmaceuticals, products for crop protection and products of modern biotechnology. Technological advantages are extremely important and R&D spending for this sector is the highest among all industries.

• Consumer care products. This includes soap, detergents, bleaches, laundry aids, hair care products, skin care products, fragrances, and so on. These products are formulated products, employing what is often simple chemistry but featuring a high degree of differentiation along branding lines. Research and development expenses are rising and many of these products are becoming high-tech in nature.

2.2.2 Contribution to the Economy

The global chemical industry today produces tens of thousands of substances. The substances can be mixed by the chemical industry and sold and used in this form, or they can be mixed by downstream customers of the chemical industry (e.g., retail stores that sell paint). It is important to note that most of the output from chemical companies is used by other chemical companies or other industries (e.g., metal, glass, electronics), and chemicals produced by the chemical industry are present in countless products used by consumers (e.g., automobiles, toys, paper, clothing) (OECD, 2001).

The chemical industry has a prominent role in the global economy, accounting for about 13 percent of world trade (Krueger and Sein, 2002). Almost every country has a chemical industry, yet almost 80 percent of the world's total output is currently being produced by only 16 countries: the United States, Japan, Germany, China, France, the United Kingdom, Italy, Korea, Brazil, Belgium/Luxembourg, Spain, the Netherlands, Taiwan, Switzerland, and Russia.

In 2001, the value of worldwide chemical output was reported to be $1.67 trillion, generated from the regions or countries shown in Figure 2.1. More recent data reported in Chemical & Engineering News (McCoy et al., 2004) suggests small fluctuations on these data over the past few years.

In the European Union, some 25,000 chemical companies employ 1.7 million, or 7 percent of the overall workforce in the manufacturing industry (CEFIC, 2004). While the chemical industry employs only about 1 million people in the United States, it is one of the largest industries within the U.S. economy and contributed $460 billion worth of shipments in 2000, accounting for more than 1 percent of total U.S. GDP and nearly 12 percent of the manufacturing GDP (Innovest, 2002).

In the United States alone, the industry produces more than 70,000 different chemical substances from 12,000 operating chemical plants. The industry concentrates 63 percent of its production in 10 U.S. states: Texas, New Jersey, Louisiana, Illinois, North Carolina, California, Ohio, Pennsylvania, New York, and South Carolina.

Canada

Other Latin Am 6%

United States 28%

Canada

Other Latin Am 6%

United States 28%

Central/Eastern Europe

Western Europe 27%

Figure 2.1. Percent of total worldwide chemical production in 2001. (Source: American Chemistry Council, 2002.)

Central/Eastern Europe

Western Europe 27%

Asia/Pacific 30%

Figure 2.1. Percent of total worldwide chemical production in 2001. (Source: American Chemistry Council, 2002.)

2.3 DRIVERS OF SUSTAINABILITY

Major events and developments during the past 35 years have caused the chemical industry to examine ways to improve its environmental, social and economic performance. Drivers encouraging industry's action include expanded regulation of industry processes and products; increased public right-to-know initiatives and the public reporting of environmental, health and safety (EHS) performance; greater stakeholder participation in government and corporate decision-making; the trend of restructuring, mergers, and the globalization of business activities; global environmental management systems and standards; and the re-examining of security practices (Yosie, 2003). Some of the many milestones that have marked society's journey toward sustainable development and those developments that have influenced the chemical industry are highlighted in the Sustainable Development Timeline produced by the International Institute for Sustainable Development (IISD, 2002) (Table 2.1).

2.3.1 Chemical Sector Survey

To corroborate and explore the importance of the drivers commonly cited in the literature, in 2004, BRIDGES to Sustainability (BRIDGES), in collaboration with PricewaterhouseCoopers LLC (PwC), developed a survey addressing the chemical industry's view of sustainability and its response to sustainability issues. BRIDGES,

TABLE 2.1. The Sustainable Development Timeline

The Sustainable Development Timeline captures some of the key events. The original version of The Sustainable Development Timeline was published in 1998 with the support of the IDRC. The second edition was published in 1999. IISD has prepared this third edition of the Timeline in advance of the World Summit on Sustainable Development.

Silent Spring was published in 1962. The book's release was considered by many to be a turning point in our understanding of the interconnections among the environment, the economy, and social well-being. Since then, many milestones have marked the journey toward sustainable development.

1960s

1962 - Silent Spring by Rachel Carson brought together research on toxicology, ecology, and epidemic to suggest that agricultural pesticides were building to catastrophic levels. This was linked to damage to animal species and to human health.

1967 - EDF Environmental Defense Fund formed to pursue legal solutions to environmental damage. EDF goes to court to stop the Suffolk County Mosquito Control Commission from spraying DDT on the marshes of Long Island.

http: // www.environmentaldefense.org/

1968 - Biosphere. Intergovernmental Conference for Rational Use and Conservation of Biosphere (UNESCO) is held; early discussions of the concept of ecologically sustainable development. http://www.unesco.org/

1968 - Paul Ehrlich publishes Population Bomb on the connection between human population, resource exploitation, and the environment.

http: // www.pbs.org / population_bomb /

1969 - Friends of the Earth forms as a nonprofit advocacy organization dedicated to protecting the planet from environmental degradation; preserving biological, cultural, and ethnic diversity; and empowering citizens to have a voice in decision-making. http:// www.foe.org/

1969 - National Environmental Policy Act is passed in the United States, creating the Council on Environmental Quality and establishing a national policy for the environment. http:// es.epa.gov/oeca/ofa/nepa.html

1969 - Partners in Development/

1970s

1970 - IDRC Report of the Commission on International Development, chaired by former Prime Minister of Canada, Lester B. Pearson. The first of the international commissions to consider new approach to development focused on research and knowledge in the South. Led to the formation of the IDRC. http://www.idrc.ca/

1970 - First Earth Day held as a national teach-in on the environment. An estimated 20 million people participated in peaceful demonstrations across the United States. http:// earthday.envirolink.org/history.html

1970 - Natural Resources Defense Council forms with a professional staff of lawyers and scientists to push for comprehensive U.S. environmental policy. http://www.nrdc.org/

TABLE 2.1. Continued

1971 - Greenpeace starts up in Canada and launches an aggressive agenda to stop environmental damage through civil protests and nonviolent interference. http: // www.greenpeace.org /

1971 - Founex Report is prepared by a panel of experts meeting in Founex, Switzerland, in June 1971. It calls for the integration of environment and development strategies.

1971 - Polluter Pays Principle. OECD Council says that those causing pollution should pay the costs.

1971 - International Institute for Environment & Development (IIED) established in Britain with a mandate to seek ways to make economic progress without destroying the environmental resource base. http://www.iied.org/

1971 - Rene Dubos and Barbara Ward write Only One Earth. The book sounds an urgent alarm about the impact of human activity on the biosphere but also expresses optimism that a shared concern for the future of the planet could lead humankind to create a common future.

1972 - UN Conference on Human Environment/UNEP held in Stockholm under the leadership of Maurice Strong. The conference is rooted in the regional pollution and acid rain problems of northern Europe. The conference leads to establishing many national environmental protection agencies and the United Nations Environment Programme (UNEP). http://www.unep.org/

1972 - Environnement et Developpement du Tiers-Monde (ENDA) is established to provide courses and training about environment and development in Africa. In 1978 it refocuses, becoming an international voluntary nonprofit organization concerned with empowering local peoples, eliminating poverty, and research and training for sustainable development at all levels. http://www.enda.sn/

1972 - Club of Rome publishes Limits to Growth. The report is extremely controversial because it predicts dire consequences if growth is not slowed. Northern countries criticize the report for not including technological solutions while Southern countries are incensed because it advocates abandonment of economic development.

http: // www.clubofrome.org /

1973 - United States enacts Endangered Species Act to better safeguard, for the benefit of all citizens, the nation's heritage in fish, wildlife, and plants.

http: // www.audubon.org / campaign/esa/esa.html

1973 - Chipko movement born in India in response to deforestation and environmental degradation. The actions of the women of the community influenced both forestry and women's participation in environmental issues. http: // www.rightlivelihood.se/recip1987_2.html

1973 - OPEC oil crisis fuels limits to growth debate.

1974 - Rowland and Molina release CFCs work in the scientific journal, Nature, calculating that continued use of CFC gases at an unaltered rate would critically deplete the ozone layer. http://www.ourplanet.com/imgversn/92/rowland.html

1974 - Latin American World Model developed by the Fundacio Bariloche; presented at the Second IIASA Symposium on Global Modelling. It is the South's response to Limits to Growth and calls for growth and equity for the Third World.

1975 - CITES. Convention on International Trade in Endangered Species of Flora and Fauna comes into effect. http://www.cites.org

1975 - Worldwatch Institute established in the United States to raise public awareness of global environmental threats and catalyze effective policy responses. Begins publishing annual State of the World in 1984. http://www.worldwatch.org/

1976 - Habitat. First global meeting to link environment and human settlement.

1977 - Greenbelt Movement starts in Kenya. It is based on community tree-planting to prevent desertification.

1977 - UN Conference on Desertification is held. http:// infoserver.ciesin.org/docs/002-478/002-478.html

1978 - Amoco Cadiz oil spill off the coast of Brittany. http:// www.mairiebrest.fr/amocosymposium/

1978 - OECD Directorate of the Environment relaunches research on environment and economic linkages. http://www.oecd.org/

1979 - Convention on Long-Range Transboundary Air Pollution is adopted. http:// sedac.ciesin.org/pidb/texts/transboundary.air.pollution.1979.html

1979 - Banking on the Biosphere. IIED report on practices of nine multilateral development agencies, including the World Bank, sets the stage for reforms, which are still under way.

1979 - Three Mile Island nuclear accident occurs in Pennsylvania, USA. http: // www.libraries.psu.edu / crsweb / tmi / tmi.htm

1980s

1980 - World Conservation Strategy released by IUCN. The section "Towards Sustainable Development" identifies the main agents of habitat destruction as poverty, population pressure, social inequity, and the terms of trade. It calls for a new international development strategy with the aims of redressing inequities, achieving a more dynamic and stable world economy, stimulating economic growth, and countering the worst impacts of poverty. http:// www.iucn.org/

1980 - Independent Commission on International Development Issues publishes North-South, A Programme for Survival (Brandt Report). It asks for a reassessment of the notion of development and calls for a new economic relationship between North and South.

1980 - U.S. President Jimmy Carter authorizes study leading to the Global 2000 report. This report recognizes biodiversity for the first time as a critical characteristic in the proper functioning of the planetary ecosystem. It asserts that the robust nature of ecosystems is weakened by species extinction.

1981 - World Health Assembly unanimously adopts a Global Strategy for Health for All by the year 2000. Affirmed that the major social goal of governments and WHO should be the attainment of a level of health by all people of the world that would permit them to lead socially and economically productive lives. http://www.who.org/

TABLE 2.1. Continued

1982 - World Resources Institute established in the United States begins publishing annual assessments of World Resources in 1986. http://www.wri.org/

1982 - UN Convention on the Law of the Sea is adopted. It establishes material rules concerning environmental standards as well as enforcement provisions dealing with pollution of the marine environment. http://www.un.org/Depts/los/index.htm

1982 - International debt crisis erupts and threatens the world financial system. It turns the 1980s into a lost decade for Latin America and other developing regions.

1982 - The United Nations World Charter for Nature published. It adopts the principle that every form of life is unique and should be respected regardless of its value to humankind. It also calls for an understanding of our dependence on natural resources and the need to control our exploitation of them.

http: // sedac.ciesin.org/pidb/texts/world.charter.for.nature.1982.html

1983 - Development Alternatives established in India. It fosters a new relationship among people, technology and the environment in the South in order to attain sustainable development. http://www.devalt.org/

1984 - Toxic chemical leak leaves 10,000 dead and 300,000 injured in Bhopal, India. http: // www.bhopal.net/

1984 - Drought in Ethiopia. Between 250,000 and 1 million people die from starvation.

1984 - Third World Network is founded during an international conference, "The Third World: Development or Crisis?" which was organized by the Consumers Association of Penang. TWN's role is to be the activist voice of the South on issues of economics, development, and environment. http://www.twnside.org.sg/twnintro.htm

1984 - International Conference on Environment and Economics (OECD). Concludes that the environment and economics should be mutually reinforcing. Helped to shape Our Common Future.

1985 - Responsible Care® An initiative of the Canadian Chemical Producers. Provides a code of conduct for chemical producers, which is now adopted in many countries. http: // www.ccpa.ca/

1985 - Climate change. Austria meeting of World Meteorological Society, UNEP, and the International Council of Scientific Unions reports on the build-up of CO2 and other "greenhouse gases" in the atmosphere. They predict global warming. http: // www.unep.ch/iuc/submenu/infokit/factcont.htm

1985 - Antarctic ozone hole discovered by British and American scientists.

1986 - Accident at nuclear station in Chernobyl generates a massive toxic radioactive explosion. http://www-bcf.usc.edu/~meshkati/chernobyl.html

1987 - Our Common Future Brundtland Report. Report of the World Commission on Environment and Development weaves together social, economic, cultural, and environmental issues and global solutions. Chaired by Norwegian Prime Minister Gro Harlem Brundtland. Popularizes term "sustainable development."

1987 - Development Advisory Committee. DAC members of OECD evolve guidelines for environment and development in bilateral aid policies. http://www.oecd.org/home/

1987 - Montreal Protocol on Substances that Deplete the Ozone Layer is adopted. http: // www.unep.ch / ozone/home.htm

1988 - Chico Mendes. Brazilian rubber tapper fighting the destruction of the Amazon rainforest is assassinated. Scientists use satellite photos to document what the Amazon fires are doing to the rainforest. http://www.chicomendes.com/

1988 - Intergovernmental Panel on Climate Change established to assess the most up-to-date scientific, technical, and socioeconomic research in the field. http://www.ipcc.ch/

1989 - Exxon Valdez tanker runs aground dumping 11 million gallons of oil into Alaska's Prince William Sound. http://www.oilspill.state.ak.us/

1989 - Stockholm Environment Institute established as an independent institute for carrying out global and regional environmental research. http://www.sei.se/

1990s

1990 - Regional Environmental Centre for Central and Eastern Europe established as an independent, nonprofit organization to assist environmental nongovernmental organizations, governments, businesses, and other environmental stakeholders to fulfill their role in a democratic, sustainable society. http://www.rec.org/

1990 - UN Summit for Children. Important recognition of the impact of the environment on future generations. http://www.unicef.org/wsc/

1990 - International Institute for Sustainable Development (IISD) established in Canada. Begins publishing the Earth Negotiations Bulletin in 1992. http://www.iisd.org/

1991 - The Canadian east coast cod fishery collapses when only 2700 tonnes of spawning biomass are left after a harvest of 190,000 tonnes.

http: // www.greenpeace.org / ~comms / cbio / cancod.html

1991 - Hundreds of oil fires burn out of control in Kuwait for months following the Persian Gulf War.

1992 - The Business Council for Sustainable Development publishes Changing Course. Establishes business interests in promoting SD practices. http://www.wbcsd.ch/

1992 - Earth Summit. UN Conference on Environment and Development (UNCED) held in Rio de Janeiro, under the leadership of Maurice Strong. Agreements reached on Agenda 21, the Convention on Biological Diversity, the Framework Convention on Climate Change, the Rio Declaration, and nonbinding Forest Principles. Concurrent NGO Global Forum publishes alternative treaties. http://www.unep.org/unep/partners/un/unced/home.htm

1992 - The Earth Council is established in Costa Rica as a focal point for facilitating follow-up and implementation of the agreements reached at the Earth Summit, and linking national SD councils. http://www.ecouncil.ac.cr/

1993 - President's Council for Sustainable Development in United States announced by President Bill Clinton. They publish Sustainable America: A New Consensus for Prosperity, Opportunity, and a Healthy Environment for the Future in 1996.

http: // clinton2.nara.gov/PCSD/

1993 - First meeting of the UN Commission on Sustainable Development established to ensure effective follow-up to UNCED, enhance international cooperation, and rationalize intergovernmental decision-making capacity. http://www.un.org/esa/sustdev/

(continued)

TABLE 2.1. Continued

1993 - World Conference on Human Rights. Governments reaffirmed their international commitments to all human rights. Appointment of the first UN High Commissioner for Human Rights. http://www.unhchr.ch/

1994 - Global Environment Facility. Billions of aid dollars restructured to give more decision-making power to developing countries. The GEF affirms its commitment to fund projects that are country-driven, based on national priorities, and reflect the incremental costs of meeting international commitments that achieve global environmental benefits. http: // www.gefweb.org/

1994 - North American Free Trade Agreement (NAFTA) enters into force. The side agreement - the North American Agreement on Environmental Cooperation - establishes the Commission for Environmental Cooperation (CEC). http://www.cec.org/

1995 - The execution of Ken Saro-Wiwa in Nigeria brings international attention to the linkages between human rights, environmental justice, security, and economic growth. http: // www.mosopcanada.org / text/ken.html

1995 - World Trade Organization established. Formal recognition of trade, environment, and development linkages. http://www.wto.org/

1995 - World Summit for Social Development held in Copenhagen, Denmark. First time that the international community has expressed a clear commitment to eradicate absolute poverty. http: //www.un.org/esa/socdev/wssd/index.html

1995 - Fourth World Conference on Women held in Beijing, China. Delegates adopt the Beijing Declaration and Platform for Action. These documents recognize that the status of women has advanced but obstacles still remain to the realization of women's rights as human rights. http://www.undp.org/fwcw/daw1.htm

1996 - The Summit of the Americas on Sustainable Development held in Santa Cruz, Bolivia. This Summit identified the joint efforts needed to reach SD in the hemisphere. http: // www.summit-americas.org/boliviaplan.htm

1996 - ISO 14001 formally adopted as a voluntary international standard for corporate environmental management systems.

1997 - Asian ecological and financial chaos. Landclearing fires intensified by an El Nino induced drought result in haze blanketing the region and causing over US$1.4 billion in health costs and at least that amount in direct fire-related damage. Concurrently, the market crashes, raising questions about currency speculation and need for government economic reforms. http: //www.ciaonet.org/isa/dap01

1997 - Signing of the Kyoto Protocol. Delegates to the UN Framework Convention on Climate Change Third Conference of the Parties (COP-3) sign the Kyoto Protocol. This document sets goals for greenhouse gas emission reduction and establishes emissions trading in developed countries and the clean development mechanism for developing countries. http://unfccc.int/resource/convkp.html

1997 - UN General Assembly review of Earth Summit progress. Special session acts as a sober reminder that little progress has been made in implementing the Earth Summit's Agenda 21 and ends without significant new commitments. http: // www.iisd.ca/linkages/csd/ungass.html

1998 - Controversy over genetically modified organisms. Global environmental and food security concerns raised over genetically modified (GM) food products. The EU blocks import of GM crops from North America and farmers in developing countries rebel against "terminator technology," seed that will only germinate once. http: // scope.educ.washington.edu / gmfood /

1998 - Unusually severe weather. China experiences worst floods in decades; two-thirds of Bangladesh under water for several months from torrential monsoons; Hurricane Mitch destroys parts of Central America; 54 countries hit by floods and 45 by drought; Earth hits highest global temperature ever recorded.

http: // lwf.ncdc.noaa.gov / oa/climate/research /1998/ann / extremes98.html

1998 - MAI. Environmental groups, social activists and concerned citizens effectively lobby against the multilateral agreement on investment (MAI). That, along with disagreement by governments over the scope of the exceptions being sought, led to the demise of the negotiations. http://www.citizen.org/trade/issues/mai/articles.cfm7ID = 1021

1999 - The World Commission on Forests and Sustainable Development releases its report Our Forests ... Our Future. This independent Commission, after extensive hearings with stakeholders worldwide, concluded that the world's material needs from forests can be satisfied without jeopardizing them by changing the way we value and manage forests. http:// www.iisd.org/wcfsd/default.htm

1999 - Launch of the first global sustainability index tracking leading corporate sustainability practices worldwide. Called the Dow Jones Sustainability Group Indexes, this tool provides a bridge between those companies implementing sustainability principles and investors looking for trustworthy information to guide sustainability focused investment decisions. http://www.sustainabilityindex.com/

1999 - Third World Trade Organization Ministerial Conference held in Seattle, Washington, United States. Thousands of demonstrators take to the streets to protest the negative effects of globalization and growth of global corporations, and along with deep conflicts among delegates inside, scuttle the negotiations. The first of many such antiglobalization protests, they signal a new era of confrontation between disaffected stakeholders and those in power. http://www.iisd.org/trade/wto/seattleandsd.htm

2000s

2000 - Increasing urbanization. Almost half of the world's population now lives in cities that occupy less than two percent of the Earth's land surface, but use 75 percent of Earth's resources. http: //www.aaas.org/international/atlas/contents/pages/population06.html

2000 - The Second World Water Forum and Ministerial held in The Netherlands and attended by 5700 participants from all parts of the world and 120 ministers. It results in the Declaration of The Hague on Water Security in the 21st Century. The World Commission on Water for the 21st Century also releases its "World Water Vision" for the sustainable use and management of water resources. http://www.worldwaterforum.net/

2000 - United Nations Millennium Summit. This largest ever gathering of world leaders adopted the United Nations World Summit Declaration, which spells out values and principles, as well as goals in key priority areas. World leaders agreed that the UN's first priority was the eradication of extreme poverty and highlighted the importance of a fairer world economy in an era of globalization. http://www.un.org/millennium/summit.htm

(continued )

TABLE 2.1. Continued

2000 - Miss Waldron's red colobus monkey declared extinct. It is the first extinction in several centuries of a member of the Primate Order, to which human beings belong. According to the IUCN Red Book, 11,046 species are threatened with extinction.

http: //wcs.org/news/wcsreports/6989/- story4

2001 - Terrorists representing anti-Western, nonstate interests and ideologies, bomb the World Trade Center and Pentagon, the first serious attack on U.S. soil since 1814, thus marking the end of an era of unhindered economic expansion. Repercussions are felt throughout the world, as stockmarkets and economies stumble and the United States gears up for a war on terrorism with its first target being terrorists' networks in Afghanistan. http: // www.globalpolicy.org / wtc / wtc / index.htm

2001 - Fourth Ministerial Conference of the World Trade Organization held in Doha, Qatar, sets the stage for the next round of world trade talks and features environment and development issues in several sections of The Doha Declaration. The WTO Committee on Trade and Environment is given a watching brief on the entire negotiation agenda to ensure that environmental issues are adequately addressed. NGOs and the WTO agree to reinterpret the Agreement on Intellectual Property Rights regarding access to medicines and public health. http://www.ictsd.org/ministerial/index.htm

2001 - The Marrakech Accords, agreed to at COP-7, finalize how the Kyoto Protocol should work, lay the groundwork for ratification by different countries and mark the conclusion of a process begun at COP-4 in Buenos Aires.

http: // www.iisd.ca/linkages/download/pdf/enb12189e.pdf

2002 - World Summit on Sustainable Development held in Johannesburg, South Africa. World governments, concerned citizens, UN agencies, multilateral financial institutions, and other major groups participate and assess global change since the United Nations Conference on Environment and Development (UNCED) in 1992.

http: // www.johannesburgsummit.org /

Reprinted with permission of the (IISD) International Institute for Sustainable Development, http:// www.iisd.org/ © IISD, 3rd edition, 2002.

PwC, and the American Institute of Chemical Engineers (AIChE) organized two focus groups of industry sustainability managers to discuss the survey findings in greater depth. The following summarizes key findings from both the survey and the focus group discussions; results of both efforts are detailed in Chapter 8.

2.3.2 Survey and Focus Groups Key Findings

2.3.2.1 Public Reporting Demands. Environmental mishaps of the past have galvanized the chemical industry to respond to the public's concerns and ensure compliance with environmental regulations, public right-to-know initiatives, and public reporting requirements related to EHS performance. These requirements reflect a growing demand on the part of all stakeholders for greater participation in decisions of government and industry, and for greater transparency. This is reflected in the growth of sustainability reporting; most survey respondents issue or plan to issue a sustainability report in the near future (see Section 6.5 for a more detailed discussion on sustainability reporting).

2.3.2.2 Transparency. Transparency has become a critical business issue. The Sarbanes-Oxley Act of 2002 is the legislative incarnation of the spotlight that investors, consumers, and employees now shine on the financial statements of a company (see Funk, Chapter 8, Section 8.3 of this volume, for an in-depth look at the business case). While reducing environmental impacts, engaging stakeholders more effectively and responding to their demands for transparency are seen, at a minimum, as providing license to operate in the community; they are also seen as leading to benefits, both "hard" and "soft," including enhanced reputation, cost savings, and innovation.

2.3.2.3 Regulatory Requirements. From a global perspective, the changing regulatory environment, with REACH considerations in the European Union and compliance with the Kyoto Protocol, is influencing the strategies of U.S.-based companies operating globally. On 14 April 2003, the New York Times reported that "the European Union is adopting environmental and consumer protection legislation that will go further in regulating corporate behavior than almost anything the United States government has enacted in decades." Chemical companies are therefore being driven toward sustainability by changing regulatory requirements that will affect their global operations.

2.3.2.4 Globalization. Globalization is another prominent driver of sustainability, as indicated in the survey and focus groups. Companies with global operations are seeking to work toward global best practices and are pressured increasingly by customers, investors, and NGOs to be responsible for the impacts from not only their operations, but also those of their suppliers and customers, regardless of where in the world they are located.

2.3.2.5 Competitive Advantage. There is great concurrence among sustainability managers, from both the survey and the focus groups, as well as from company case studies found in this volume, that even more important drivers of sustainabil-ity considerations come from the desire to gain competitive advantage and preserve the long-term viability of the company. When asked what are the greatest business risks associated with (not considering) sustainability, the top responses - increased costs, loss of competitive advantage, and damaged reputation - can all be interpreted as linked to financial performance and competitive advantage. Further, when asked about the greatest opportunities derived from the pursuit of sustainabil-ity, the top responses - reduced costs, enhanced reputation, and innovation - are also all related to competitive advantage. To companies more mature in the practice of sustainability, it is seen as a portal for developing innovations - new products, services, business alliances, and markets - and therefore as a growth engine (see DuPont case study, Section 8.3, and Future Directions for the Chemicals Industry, Section 7.1). Sustainability can be a way to view where the market may be going in the future and to predict the need for disruptive technologies and discontinuities with respect to corporate strategies. As such, it has the potential for positioning the company to do business quite differently and to be differentiated from the pack.

Managers are discovering also that the intangible indicators that gauge sustain-ability can also be indicators of efficacy - that is, how well a company is run. From the management of corporate liabilities to new market ventures, a sustainable business strategy can improve all segments of corporate activity (Funk, Section 8.3; also see Section 8.9 business case).

2.3.2.6 Market Value. Investors are increasingly valuing sustainability practices and SRI (Socially Responsible Investing) funds are found to outperform the S&P 500 and Dow Jones Global Index by significant amounts. In the chemicals industry, a Value Creation Index (VCI) model reveals that the top four indicators for the chemical industry that are highly correlated with the market value of equity of these companies are related to innovativeness, strategic alliances, leadership, and environmental and social responsibility (see Section 8.9, business case).

2.3.3 Current Status of Sustainability Programs

While the vast majority of survey respondents believe sustainability to be of the highest importance and that it will continue to be so in the next five years, sustainability is not yet fully integrated into their core business strategy; less than half have written sustainability policies, and only a few have established a sustainability management system. Around a third have what they refer to as triple-bottom-line metrics to track performance in this area. Only about a half of survey respondents have a senior-level executive or executive committee with dedicated responsibilities to coordinate and promote sustainability. Further, management of sustainability is fragmented across multiple organizational and functional boundaries and not organized within one function or group.

2.4 THE ROLE OF RESPONSIBLE CARE® IN ADVANCING SUSTAINABLE DEVELOPMENT

Few will disagree that the Responsible Care® program is one of the most recognized voluntary environmental initiatives launched by an industry sector. Many proponents acknowledge that Responsible Care® has reduced releases to air, land, and water, and improved worker and community safety. While the social dimension was core to the original vision of Responsible Care®, the program's impact on public trust has met with mixed reviews. On the economic front, Responsible Care® is yet to be recognized as a business-driven initiative.

So what role will Responsible Care® play in advancing sustainability? There are clearly two views of that potential role:

On one hand, Responsible Care® is seen as "compliance focused" and, while considered a component of sustainability, does not currently offer the platform for embracing all of the concepts of sustainability (focus groups above; SustainAbility, 2004). Responsible Care® is viewed as a sector-specific collaborative initiative, whereas sustainability broadly encompasses issues of competitive positioning and business growth, which involve full engagement of internal and external stakeholders. "Even as Responsible Care® expands focus to include more sustainability parameters, it is not (seen as) sufficient to drive an overall sustainability program, performance, and the business value derived from sustainable development" (Savitz, Chapter 8, Section 8.2).

On the other hand, one needs only to examine the original intent of Responsible Care® (see Box 2.1) and a recent commitment to revitalize Responsible Care® globally (see Box 2.2), to recognize that it could be the chemical industry's approach to meet the sustainability expectations of the industry and its stakeholders.

This section reviews the evolution of Responsible Care®, with a look at its plans to become a broader business-driven initiative and its role in advancing sustainability.

BOX 2.1 THE EVOLUTION OF AN ETHIC AND A COMMITMENT

Jean Belanger

To tell the story of Responsible Care is to tell the story of how an industry has evolved over a quarter century. And trust is what it is all about - the key driver.

The initial concepts of Responsible Care, in Canada, grew out of a growing concern, in the early 1980s, that the chemical industry risked losing its mandate to produce in Canada. In that time frame, pressures to regulate the chemical industry were building up and were particularly exacerbated by a major hazardous material train derailment in late 1979 that resulted in the evacuation of the fifth largest city in Canada. The leaders of the chemical industry, through their membership on the Board of Directors of the Canadian Chemical Producers' Association (CCPA), had the foresight to understand that the crux of the problem was one of trust. The public, in fact, believed that the industry knew about the dangers associated with its products, but it did not tell anyone and even worse, it just did not care.

The industry leaders deliberately chose the path that would be anchored on gaining the trust of the community, both near the plant and, further, to all society. Trust, therefore, became the key driver. Building trust required the application of three fundamental principles, which formed the cornerstones of Responsible Care:

• Caring about products from cradle to grave;

• Being open and responsive to public concerns.

Concerned about its eroded credibility, not just with the public but also with government decision-makers, the CCPA developed a Statement of Policy on Responsible Care® in 1979. By 1985, a once simple one-page statement of principles became the Responsible Care® program endorsed by the CCPA, and adopted in 1988 by the American Chemistry Council (then the Chemical Manufacturers Association). What was initiated in the early part of the 1980s as a simple one-page statement of principles, touching the singular aspect of environmental responsibility, has since evolved into a set of codes, verification processes, visible performance measurement and advisory panels. There has, however, been one constant, namely, that the whole exercise of Responsible Care is about building trust through ethical behavior and listening attentively to the evolving concerns of the public.

Today Responsible Care® exists in 52 countries worldwide and has become the industry's initiative to address environmental, health, and safety (EHS), security, outreach, process safety and "cradle to grave" product management.

Jean Belanger's more indepth look at the evolution of Responsible Care® can be found in Chemistry International. Mar/Apr 2005, pp. 4-9.

2.4.1 Public Trust and Environmental Performance

The main objectives of Responsible Care® were to regain public trust and demonstrate leadership beyond compliance by improving the environmental performance of the industry as a whole and by improving community relations.

In the 1980s, Responsible Care's six Codes of Management Practices served as a framework for the chemical companies to use internal processes to improve performance. Overall, environmental performance did improve because of a commitment to the codes and expanding regulatory requirements (Yosie, 2003). Members of the CCPA steadily improved their environmental and workplace health and safety records throughout the 1990s. Their records indicate a steady decline in workplace injuries and a marked reduction in the frequency and severity of transportation incidents (CCPA, 1999).

Evaluating the program's impact on public trust is more complicated. Although Responsible Care® may have helped arrest the precipitous decline in trust that marked the early to mid-1980s, industry polls continue to reveal low overall levels of public confidence in the industry. To address the concerns of its diverse stakeholders, the chemical industry has formed hundreds of community advisory councils and partnerships with community and environmental activists in an attempt to hear their points of view (see Section 6.7). While individual companies report improved community relations and while the industry is much more open than it has ever been, polls indicate that it remains low in the public's esteem (Moffet, 1999).

A survey completed in 1999 indicates that although the public believes the chemical industry provides valuable products, creates employment, and contributes to positive economic growth, it "does no better than a fair job when it comes to minimizing risks to health and the environment, considering the future effects of chemicals, and assuming responsibility for their activities" (Earnscliffe Research and Communications, 1999). In fact, despite the work, the industry still faces huge hurdles in terms of public acceptance and confidence. These concerns and the public's unfavorable perception of the industry are covered in Chapter 3.

BOX 2.2 TAKING PERFORMANCE TO A NEW LEVEL: THE RESPONSIBLE CARE® GLOBAL CHARTER

Terry F Yosie

Recently (2003), the global chemical industry, acting through the International Council of Chemical Associations (ICCA), has undertaken a strategic re-examination of Responsible Care and committed to comprehensive and significant performance commitments in the 52 nations that currently implement the program. Working through a CEO-level task force comprised of business leaders from Asia, Europe, and North and South America, this reassessment aimed to:

• Review the current status of Responsible Care implementation worldwide;

• Obtain external stakeholder expectations of chemical industry performance;

• Develop consistent core commitments for the industry worldwide;

• Achieve continued performance improvements;

• Deliver significant business value and reputation benefits;

• Enable the industry to speak with single, stronger voice on performance issues.

The result of this review is the Responsible Care Global Charter (2004; Appendix 1), a document that goes beyond the original elements of the program since its inception in 1985 and focuses on new and important challenges facing both the chemical industry and global society, including: the growing public dialog over sustainable development; public health issues related to the use of chemical products; and the need for greater industry transparency.

The Responsible Care® Global Charter contains nine key elements. They commit the global chemical industry to:

• Adopt Responsible Care core principles;

• Implement the program based upon a set of eight fundamental features;

• Advance sustainable development;

• Continuously improve and report performance;

• Enhance product stewardship;

• Extend Responsible Care through the value chain;

• Support national and global Responsible Care governance processes;

• Address stakeholder expectations;

• Provide appropriate resources to implement the program.

In addition to the Charter, the ICCA endorsed a commitment letter for CEOs of ICCA member associations to sign to declare their support for Charter implementation.

Sustainable development as practiced through Responsible Care is increasingly part of the business equation for chemical companies in the global marketplace. Business value is derived in such areas as the following:

• Evolving legal and regulatory practices and standards are becoming more stringent. Responsible Care embodies elements of preventative law that protects companies from legal liability as their performance improves.

• Demonstrating leadership through expanded knowledge for how to better identify and manage chemical-related risks. Such "capacity building" contributes to the development of critical global infrastructure by providing technical information and assistance, management systems, training, and assistance towards institution building in many nations. All of these factors are critical to improving environmental, health and safety performance.

• Improving customer relations as a result of enhanced performance. This practice builds customers' confidence and enables them to communicate progress to their stakeholders.

Responsible Care® is not a substitute for government policymaking or regulation. Rather, it is a necessary and complementary commitment to improving performance that effectively leverages the skills and capabilities of the chemical industry to improved living standards and quality of life. In our rapidly changing world, the value and the need for programs such as Responsible Care will become even more significant as current and future societal needs are addressed through business initiatives and plans.

2.5 CHALLENGES AHEAD

Despite the chemical industry's efforts to improve environmental performance and gain the public's trust, the industry still faces huge hurdles in terms of public acceptance and confidence (see Chapter 3). There are still fundamental issues - such as historical performance, the failure of risk assessment on a broad basis, and the intrinsic nature of materials - that need to be resolved if the industry is to realize the future it envisions.

A genuine commitment to sustainability will mean more than resolving these concerns - it will mean real innovation in the chemical industry. Future generations will continue to need chemicals, and the industrial transformation of chemicals, to meet human needs, will continue to require ingenuity and enterprise. However, the types of chemicals and how they are used must be significantly reconsidered.

This transition will require a new mission for the industry that promotes human health and environmental quality as seriously as the market promotes economic efficiency and product effectiveness. Put conceptually, a sustainable chemicals industry would be one that optimizes value from the use of chemicals, adds no new risks to everyday life, increases natural capital, minimizes the transfer of risks from one generation to another, respects and enhances the natural functioning of the planet's ecosystems, and assures no net loss of valuable resources. Creating such an industry will require government policy and market incentives that promote sustainability. This will require financial investment institutions and international development programs that are committed to developing an industry that is as ecologically sound and socially sensitive as it is economically productive (Geiser, Chapter 7, Section 7.1).

As pressures mount for a world more respectful of resource limits and the material needs of future generations, the chemical industry must find its own path to sustainability.

REFERENCES

(ACC) American Chemistry Council, The Business of Chemistry: Essential to our Quality of

Life and the New Economy. American Chemistry Council, Arlington, Virginia, 2002. CCPA, 1999 Emissions Inventory and Five-Year Projections, Reducing Emissions 8: A

Responsible Care Initiative. CCPA, Ottawa; 1999. (CEFIC) European Chemistry Council, Facts and Figures, June 2004. http://www.cefic.org/

factsandfigures/. Accessed October 2004. Earnscliffe Research and Communications, Results ofKey Audience Research, conducted for the Canadian Chemical Producers' Association. Earnscliffe Research and Communications, Ottawa, Ontario, Canada, 1999. M. McCoy, M. S. Reisch, A. H. Tullo, P. L. Short, J.-F. Tremblay and W. J. Storck, Facts and figures for the chemical industry. Chemical & Engineering News, 82(27), 23-63 (2004). Innovest, The Chemical Industry. Uncovering Hidden Value Potential for Strategic Investors.

Innovest Strategic Value Advisors, Inc., April 2002, New York. (IISD) International Institute for Sustainable Development. http://www.iisd.org/, 2002. J. Krueger and H. Sein, Governance for Sound Chemicals Management: The Need for a More

Comprehensive Global Strategy. Global Governance, 8(3), 323-342 (2002). J. Moffet and F. Bregha, The Responsible Care Program. In: R. Gibson (Ed.), Voluntary

Initiatives (Broadview Press, Toronto, 1999). OECD (Organisation for Economic Co-Operation and Development), OECD Environmental

Outlook. OECD, Paris, 2001. (S&P) Standard and Poors, http://www.spglobal.com/. Accessed October 2004. SustainAbility, External Stakeholder Survey. Final Report for the Global Strategic Review of

Responsible Care. SustainAbility, Washington D.C., February 2004. (USOMB) US Office of Management and Budget, Standard Industrial Classification Manual.

JIST Works, Inc., Indianapolis, IN, 1987. (USOMB) US Office of Management and Budget, NAICS Desk Reference: The North

American Industry Classification System. JIST Publishing, Inc., Indianapolis, IN, 2000. T. Yosie, Fifteen Years - Responsible Care. Environmental Science & Technology, November 1, 401-406 (2003).

0 0

Post a comment