THE AMAZING GREEN JOB CREATION MACHINE

If businesses, state-owned enterprises and state institutions pursued sustainability vigorously in South Africa, there is little doubt in my mind that there would be a positive impact on our unemployment problem. Of course, fixing our problems requires an integrated, multi-stakeholder approach, good governance, exceptional discipline and a host of other ingredients, and I certainly don’t claim to have all of the answers here. However, in terms of the practical application of sustainability in industry, I do have some insights, and would like to illustrate the practical power of sustainability as a force for good and as a viable route to competitiveness for organisations.

Industrial sites represent endless opportunities for increased resource efficiency. The thing is, while the use of specialist measurement tools, software applications and technical knowledge can be used to identify opportunities, to most people these opportunities remain hidden. And so we have many industrial sites that continue to operate oblivious to the potential opportunities available through investment, optimisation and simple process changes, which could significantly reduce their costs and increase their competitiveness. I see this regularly, even with respect to very large, successful and profitable companies, but of course this is also prevalent at small companies, where technical resources are scarce.  This enormous-yet-hidden goldmine of productivity improvement opportunities represents a massive job creation opportunity for our country, which has been in the grips of a deep unemployment crisis for decades now.

Measurement tools used to assess
opportunities in steam systems

To illustrate the point, consider a typical manufacturing site. This site would use inputs such as raw materials, water and energy and, using specific transformation processes, would produce products, by-products and liquid, solid and gaseous waste streams. 

Now imagine if this site embarked on a structured process to identify, develop and implement a portfolio of resource efficiency projects, each of which was aimed at reducing waste and the consumption of resources, and preventing pollution at source. Some of these projects would require simple optimisation, such as changes to a process set point e.g. operating a high-temperature process at as low a temperature as possible reduces energy requirements. Some would require simple changes in operating procedures – for example, all employees to switch off their air conditioning units when they leave their offices at the end of the day. In these two cases, you could argue that there could be some job creation potential arising from the savings derived from these actions, but there are no guarantees that this is where the savings would be diverted. We cannot therefore rely on such actions to be the engines of job growth. 

There will however certainly be a sizable number of projects which would require changes in technology, modifications to plant and equipment, specialist services such as software changes for automated facilities and other types of interventions best carried out by an outside third party. This is where I believe the serious job creation potential lies, and importantly, since most of these projects tend to be too small to attract large engineering houses, many of these jobs would be created in small businesses, now widely regarded as the primary job creators in modern economies.

To give you a feel for the types of opportunities I am referring to, I have included some examples in the table below:

RESOURCE EFFICIENCY/COST-REDUCTION  OPPORTUNITY	EXAMPLES OF POTENTIAL PROJECTS CARRIED OUT BY CONTRACTOR
Steam system modifications	Insulation of steam lines and valves, routine assessment and repairs to steam traps, installation of an in-line oxygen analyser in the boiler flue to improve boiler efficiency management, modifications at point of use to enable better control and reduced steam usage
Compressed air system modifications	Refurbishment of air reticulation system, installation of oil traps, water traps and pressure regulators, installation of variable speed drives on compressor motors, leak detection and repair, changes to control algorithms to improve the management of multiple compressors, elimination of unnecessary usage
Fleet fuel efficiency	Training of drivers in eco-efficient driving techniques, installation of satellite vehicle monitoring systems, modifications to vehicle components to improve aerodynamics
Motor efficiency improvements	Motor power surveys, replacement of standard-efficiency motors with premium-efficiency motors, motor shaft alignment and belt drive tensioning services, gearbox and coupling modifications, improvement of motor loadings through motor swaps/replacements
Lighting improvements	Installation of new fittings and efficient lighting solutions, rearrangement of switching to permit more effective zoning, modifications to allow lower-wattage lamp usage in existing fittings
Material usage reductions	Condition monitoring and calibration checks for material-critical equipment e.g. flow meters/load cells used to measure material flows
Reduction in maximum demand	Installation of a power factor correction system, supply and installation of soft starters, supply, installation and programming of a load demand controller
Reduction in electrical heating requirements	Insulation of equipment, installation of a temperature probe with feedback control, tuning of control loops
Improved waste management	Supply and commissioning of compactors to reduce haulage costs, outsourced waste management services, installation of recovery systems to allow reuse and/or to turn wastes into revenue streams
Reductions in cooling tower evaporation	Design and commissioning of integrated heat recovery systems to reduce heat rejection e.g. heat exchangers, piping, valves and control systems
Reductions in water usage	Supply and installation of low-flow shower heads, water filtration systems that allow increased reuse, treatment options etc.
Awareness	Training and coaching of staff

In a growing economy, the industrial sector would typically invest in capital projects, and hence jobs would be created at companies providing the types of services indicated above. However, the current economic situation means that many of these types of suppliers are without work. The beauty of resource efficiency projects is that they are not wholly dependent on the economic climate to be viable (though it is true that increased demand generally makes resource efficiency projects more financially viable). Resource efficiency projects are about doing more with less, and it is precisely at times such as now that they are most needed. In addition, when there is an uptick in economic activity, resource-efficient operations stand to benefit most from the increases in margins that come with the reduced costs per unit of production delivered by resource efficiency in areas such as energy, water and materials. Resource efficiency has a multiplier effect on profits in boom times.

Essentially, what we are doing when we develop and implement resource efficiency projects is creating a pipeline of projects for small businesses (and some large businesses too). In essence, deployment of the correct expertise and the use of specialist measurements creates “something out of nothing” by identifying opportunities that were hitherto hidden and which, if not implemented, would not prevent industrial operations from functioning, but which once implemented have a material effect on productivity and environmental performance. Recent increases in energy, water and material costs make many of these projects viable in their own right, but the South African government has also, through the DTI, recently launched incentives which will make them even more attractive.

What types of jobs am I talking about then? Let’s consider the example of a power factor correction system (more a cost reduction opportunity than a sustainability issue, but useful for illustration). Firstly, site power consumption would have to be logged over a period of time to determine demand trends and the variables necessary to understand variations in the site’s power factor. Some other parameters may also be of interest, for example harmonic distortion and variations in supply voltage. Next the size of the economic opportunity would need to be investigated, which implies an examination of utility bills and the potential savings that could be achieved by improving the site’s power factor. These would then require comparison to the costs of installation and maintenance of a new system or an increase in the capacitance of an existing system, along with the costs of other associated equipment e.g. harmonic filters. It is generally a good idea to look at this in conjunction with any other potential initiatives that could impact on demand, e.g. load management, energy efficiency projects etc. If viable, a power factor correction system would need to be designed, installed and commissioned. Performance would then need to be tested to ensure that expected improvements are realised. The system would then need to be maintained over the course of its useful life, or until circumstances on the site changed such that the system was no longer required. 

If we examine the life cycle of this small, relatively simple project, the following job roles are identified:

PROJECT TASK/PHASE	JOB OPPORTUNITY
Transformer logging	Logging equipment procurement (vendor) Conducting of logging (technician)
Financial review	Analysis of financial feasibility (financial analyst )
Supply of PF correction system	PF correction system parts procurement/manufacture/assembly (vendor)
Installation of PF correction system	Site prep, tie-ins, siting (technician, electrician, engineer)
Commissioning of PF correction system	(engineer, technician)
Testing of PF Correction system and confirmation of results	Technical and financial analysis (technician and financial analyst)
Maintenance of PF correction system	Assessment, preventive maintenance tasks and routine repairs to PF correction system over 20 year lifespan (technician)

The actual number of jobs created depends on a number of factors, but for each individual element of the value chain, clearly the more individual projects carried out by industrial sites, the higher the probability of creating new jobs. Local manufacture of the logger, power factor correction equipment and replacement parts required for maintenance would also mean increased local job creation, some of which would be in lower-skilled categories.

I have tried to illustrate the variety inherent in these types of projects, to show that even when implemented on a single industrial site, a wide range of small businesses can be touched. Now imagine if every industrial site in the country invested some time and energy in project identification and development. Each site would play host to a number of projects such as the one illustrated above. We would have an engine for significant job creation, not founded on charity, but on good business practice. In this win-win scenario, individual industrial sites would become more competitive, conduct their operations in a more environmentally and socially responsible way, and create jobs, many of which would be in the type of skill areas that sorely need development in South Africa. We would truly have a green job creation machine powered by the next wave of industrial productivity - sustainability.

CHARACTERISTICS OF SUSTAINABLE INDUSTRIAL ORGANISATIONS

What makes some organisations more sustainable than others? Is there a set of defining characteristics that organisations can aspire to that, if achieved, would improve their performance on sustainability issues? There is a general appreciation that the world is still learning about what sustainability really is and what it means for different industries. So what I want to explore in this post are some of the characteristics which I believe are important for organisations wishing to embark on the process of becoming more sustainable. These are my views, not the product of any research, but are of course founded on my observations of different industrial organisations and how they are managed, and which ones appear to be more successful at driving sustainability issues.

First and foremost, sustainable organisations have to be successful in economic terms, and hence many of the characteristics I will talk about will overlap with characteristics required of successful businesses in general. There are however some characteristics that are unique to sustainability-focused organisations and in reading this post, consider each characteristic within the context of sustainability rather than general business practice.

Sustainable Organisations are Outward Looking

Sustainability has a lot to do with how your organisation fits into the world, how it interacts and impacts on stakeholders and how quickly it can identify and assimilate best practices. All of these things require continuous scanning of the environment and ongoing interaction with stakeholders, followed by deployment of acquired learnings within the organisation. No man is an island, and certainly no sustainable organisation can be one either. Sustainable organisations keep abreast of environmental, economic and social issues impacting on their industry, and also are continually assessing what their contribution is to improvements in these areas within the broader environment within which they operate.

Sustainable Organisations are Innovative and Flexible

Balancing economics, the environment and social challenges, not just in terms of policy but as a fundamental way of doing business, is difficult, and requires innovation at all levels of an organisation. Becoming more sustainable implies constant change, new products, new processes, new ways of managing people, new ways of engaging with consumers, communities and staff and basically ongoing reinvention. This doesn’t mean making every business process an exercise in all-out creativity, but it does mean encouraging fresh thinking and being open to new ideas.

Core Employees within Sustainable Organisations are Industry Experts

While the principles of sustainability are generic, industrial sustainability presents very specific challenges to individual industries, along with a lot of generic ones. All industries largely face similar challenges and opportunities regarding the usage of electrical energy for example. However, the pulp and paper industry faces additional challenges in terms of persistent organic pollutants, the electroplating industry has to manage risks regarding heavy metal pollution, the coal-fired power generation industry has to mitigate sulphur dioxide pollution risks and spray painters have to manage employee exposure to volatile organic compounds, as examples of industry-specific challenges. Individual industries generally come with a number of key sustainability challenges. To effectively deal with these issues while still remaining profitable and not compromising other areas of performance requires deep industry knowledge, and sustainable organisations invest heavily in the development of this knowledge within their ranks. This is achieved through in-house training, strong internal mentorship programmes, structured training programmes for new recruits and the creation of opportunities for knowledge sharing and development.

The Dominant Paradigm within Sustainable Organisations is one of Integrated Thinking

Sustainability-minded organisations view individual issues as part of a larger whole and are always looking to optimise the system rather than individual processes. A piecemeal approach to individual problems with no consideration for how they relate to each other is a recipe for confusion, disarray and ultimately organisational paralysis. Becoming sustainable is not about achieving a single goal, but about finding an optimum position at which a number of often-competing objectives are met. This applies even more so to high-performance organisations. When you are coming off a low base, it is fairly easy to make simultaneous improvements in costs, quality, flexibility and other operational objectives. For organisations on the performance frontier, incremental improvements can often mean compromises, or where these compromises are unacceptable, additional investment to remove constraints. Organisations seeking to become sustainable are keenly aware of their limits, look at the whole picture (which is the big picture and the detail) and make choices accordingly.  This applies all the way through from the shop floor to senior management. Sustainable organisations also are very clear on the issues which cannot be compromised, such as compliance with legal frameworks and the safety of employees, local communities and consumers, as examples.

A Real Desire to be Responsible Drives Decision-making

The moral aspects of sustainability cannot be ignored, and if “being sustainable” is merely an organisational goal but is not driven by real organisational values that embrace responsibility, the chances are that success will elude your organisation. This applies even more prominently in poorly regulated environments, where organisations have to make their own decisions as to what “the right thing to do” is. The challenge here is that being responsible comes at a cost, and the temptation is to only spend what the organisation is forced to spend, rather than what should be spent to protect employees, the environment, local communities and consumers. I’m not referring here to the obvious things that any going concern would do, but also to the issues with longer term implications, such as long-term occupational exposures that are not regulated, but which do have an impact on employee health. The resource efficiency aspects of sustainability are easy to justify based on the short-term economic benefits, but matters of pollution prevention and safety tend to introduce costs in the short term that are not accompanied by immediate economic benefits. Sustainable organisations recognise however that in the long term, these are actually investments. This brings us to the next characteristic of sustainable organisations.

Sustainable Organisations take a Long-term View

Another apparent truism of good business practice, this is not only about being patient and avoiding instant gratification, but also about being cognisant of the cumulative impacts of the actions taken by the organisation in terms of potential harm. In industrial environments, acting quickly is of course imperative, since in high-volume operations, impacts can mount up very quickly. The trick here is to act quickly, but to take the sort of actions that are preventive, rather than corrective in nature. This means getting to the root causes of problems and putting systems in place to prevent their recurrence. It means being able to make a bigger investment now for larger cumulative returns in the future. It means understanding that short term decisions that compromise the environment can  come back to haunt the organisation at some point in the future, resulting in large potential liabilities and immense reputational damage, but even more importantly, that such decisions impose a cost on society.

Sustainable Organisations are Disciplined

When short-term returns are not forthcoming, discipline is essential. Sustainable organisations have the discipline to follow through, taking comfort in the knowledge that their actions are delivering results in the long term and building capacity. This is not based on blind faith, but on robust measurement systems that provide ongoing feedback, and reinforce sustainable behaviours within the organisation.  Discipline is also required to maintain high levels of operational performance. The most successful organisations have very clear documented practices (typically embedded within quality management systems) which are followed by all employees. Rigorous adherence to these practices is an example of the kind of discipline needed to achieve sustainability, and this adherence does not need to detract from the organisation’s ability to be innovative and flexible. Instead, documented practices are changed as improved practices become known, and their rigorous application means that discipline and innovation live comfortably side by side in sustainable organisations.

These are just some of my preliminary thoughts on the key characteristics of sustainable organisations. There are no doubt many others, and I would be keen to hear your thoughts.