Going, going, green

Saturday 1st December 2001

For the first time, we rank New Zealand's top 20 green companies and discover, worryingly, the rest of the country's corporates have a different hue

Delyse Springett is a woman with a mission: to evaluate how clean and green New Zealand companies really are, and to spur them into improving their environmental performance. Nothing so new in that, you might think - plenty of greenies advocate higher environmental standards. But Springett's an academic (she's head of Massey University's Centre for Business and Sustainable Development) and she sets out to put some real numbers into the rhetoric. The result: the Unlimited/Massey University Corporate Environmental Awards.

The ranking of New Zealand's top 20 green performers is an update on the Corporate Environmental Responsiveness survey Springett first produced in 1999, with number-crunching based on the UK's Business in the Environment Index.

The awards bring some surprises. The top two and the majority of the best 20 companies are New Zealand-grown, not Kiwi outposts of international groups enforcing strict environmental criteria throughout their networks. And most of the strongly green companies are in traditionally polluting industries: oil and gas, chemicals and pharmaceuticals, meat processing, electricity, even tobacco. Dig beyond the numbers and there are some great stories of organisations going beyond the compliance mentality and finding real benefits (financial as well as public relations) to going green.

But there are also some strong warning signs. Springett surveyed 128 companies, taken from New Zealand's biggest 200 companies by turnover, and the top 30 financial institutions from the Deloitte Touche Tohmatsu annual survey. Only 85 companies responded (66%) and only 66 responses were useable (52%). That's only half of our top companies putting environmental responsiveness high on their agendas. And while the top companies score highly, the scores drop quickly after the top 20. Some of our biggest organisations - many of them in the "clean green" agricultural sector - are unable to meet the environmental grade on even four out of the 10 question we asked. Seems many of New Zealand's biggest companies are not as clean or green as they like their customers to think they are. (And it's not just Unlimited and Massey that say so - the most recent Friends of the Earth international environmental ranking puts New Zealand in 84th place.)

Only 33% of the companies in the Unlimited/Massey survey showed evidence of environmental reporting, and less than half (44%) even had an environmental policy. Only 12 companies had the international environmental accreditation ISO 14001, though several were working towards it. And the majority of New Zealand companies' environmental reports (if they have them at all) are basic, with few performance numbers and fewer targets. Almost no New Zealand companies have a board member with responsibility for the environment - a critical factor in terms of good corporate governance, international experts say.

Another worrying feature is the apathy in the service sector towards things green. UK environmental researcher Bernard Taylor sees corporate environmental performance as an isosceles triangle, with a few "dirty, damaging and dangerous" companies at the top making big moves toward sustainability. In the middle are "moderately polluting" ones trying moderately hard, while at the bottom are the vast quantities of "silent destroyers", with less impact but there are more of them. New Zealand has more than its fair share of silent destroyers, Springett says, with our finance sector particularly prone to the "What's it got to do with me?" syndrome. UK banks and insurance companies are increasingly involved in ethical and green banking initiatives, she notes, using the argument that as lenders to industry and commerce, they have a potentially enormous environmental influence. In New Zealand, the highest-placed financial organisation in the Unlimited/Massey survey came in at number 40. Many Springett approached simply refused to fill in the survey; one bank that did take part simply wrote "No" to all the questions and scored a grand green total of zero.

But enough gloom. Our best companies are up there with the best in the world in terms of environmental performance, and many more are making huge steps in the right direction. Read on for some case studies.

Watercare

Winner: Unlimited/Massey University Corporate Environmental Awards

The reception area at Watercare's Auckland offices has an aqueous feel, with oars, driftwood and some classy New Zealand art with a watery theme. Then there are the certificates - lots of them. Closer inspection reveals Watercare has won the Institute of Chartered Accountants' Environmental Reporting award for the last seven years. Doesn't sound that sexy, but then neither is Watercare's business of supplying Auckland's water and purifying, ahem, waste. What the buff-coloured sheets testify to is an almost fanatical desire to be transparent about its business.

I walk away from a meeting with finance manager Gary Swift (below) and design services manager Craig McIlroy (right) with seven Watercare documents, chock full of environmental statistics. I know, for example, from the sustainable development report (the thickest of the seven) that of the company's four largest wastewater pump stations, three have increased electricity usage over the last two years. I could tell you which sewers overflowed their manholes last year and how much spilled out, and that Watercare overstepped its foul odour incident limitations six times.

So what? "What gets measured, gets managed," Swift states emphatically. "The information in our sustainable development report is information available to management to deal with." Of course Watercare, as a company where the environment is much at stake, has a lot of information it must compulsorily provide to the authorities. Last year the company spent $2.7 million on Auckland Regional Council charges and compliance costs alone. But it measures far more environmental impact stuff than it has to - and it provides most of its information to everyone, not just in-house teams or officials. The company produced its first separate environmental report seven years ago, when most companies hadn't heard of sustainability. And this year for the first time it has moved to a single "triple bottom line"-style annual report, where environmental, social and economic data is presented in the same document. This may be happening overseas, but it's pretty groundbreaking here.

It's almost impossible to break down environment-related and non-environment-related spend in a business like Watercare. The company's two biggest capital projects - the $451million upgrade of the Manukau wastewater treatment plant and the controversial $155 million Waikato pipeline/treatment plant project - are both core business and intrinsically environmentally focused. So is another project under consideration, building a pipeline from the Manukau treatment plant to supply non-drinking grade water to Onehunga-based industry, instead of putting it out to sea. For this reason, people don't sit around at meetings and talk about the environment, Swift says, and there is no single person within Watercare with environmental responsibility. It's in everyone's job description; part of the culture, Swift says. "Some organisations might look at environment matters and ask: 'Can we do this cheaper?' or 'Can we get away with that?' At Watercare it's more 'How can we get this right?'"

Carter Holt Harvey (#2)

Business hasn't been easy for forestry company Carter Holt Harvey in recent years. Log prices have been low, earnings have been poor (net profit slumped from $251 million in 1997 to $62 million in 1999, before returning to $237 this year), and there's been a constant belt-tightening regime. Yet the company has spent $15 million - $20 million in the last eight years cleaning up contaminated sawmill sites it never intends to use again, without pressure from any government agency to do so. It's also spent money measuring kiwi populations in plantation forests and more money researching short- and long-tailed bats around Kinleith. And it's spent significant funds in the last year alone putting 250 staff through its newly established Environmental Health Safety and Risk Leadership college. Environment general manager Panu Raea says at CHH falling profits don't translate into increased difficulties getting environmental projects through. "Two-and-a-half years ago we moved to a balanced scorecard approach. Environment is one of the key indicators in that, so in terms of setting people's key accountability within the company, there are clearly environmental criteria everyone has to conform to."

Why? Well, part of it is "compliance plus". Get yourself a history of doing the right thing environmentally - and be able to prove you are doing it - and you are less likely to spend lots of time and money in the Environment Court. Part of it is customer-focused. Three years ago, for example, US hardware chain Home Depot started demanding environmental certification for the products it was buying; CHH has embarked on a process of getting certification (sometimes ISO 14001, sometimes other) for those parts of the business where research says customers want it. So far around 25% of the businesses have ISO 14001 accreditation.

Customer demand has also been a major factor in CHH's recent moves to develop environmental guidelines for suppliers. And after agonising for a couple of years about moving to triple bottom line reporting, it will make its first attempt next year. If nothing else, putting all the information in one report helps persuade stakeholders you really do take the environment seriously.

Affco (#5)

Karl Mischewski has "environmental compliance manager" printed on his business card, though it's not a title he much cares for. He likes to think that in his two years at New Zealand's biggest meat company, Affco, he's gone further than being the company's green policeman. He accepts that his job involves ensuring the minimum environmental standards are met to avoid regulators jumping on the company from a great height. But Mischewski also argues that by going beyond pure compliance, a company like Affco is able to cut significant time and costs from the numerous necessary consent processes of running meat plants. Take the company's decision, actively promoted by former chief executive Ross Townsend, to get all Affco's plants certified under the international ISO 14001environmental scheme. Many would ask, "Why bother?" says Mischewski, as consumers are largely unmoved by companies' environmental prowess. Mischewski argues, "Why not?"

Certification only costs $23,000, plus $625 per site per year for independent auditing. But he reckons having ISO 14001 will lift Affco's credibility when it comes to local regulators, and will give him a lever to push for dispensations when it comes to applications to regional councils for environmental consents. "For example, the councils ask for waste water management plans. I'll ask why I should recreate a management plan when we already have an independently certified one for ISO14001." That's a huge saving in time and money.

In fact, Mischewski argues that being proactive in environmental matters has already saved the company a heap of money. Before his appointment, Affco's bill for consultants to handle the company's consent processes was close to $250,000. This year, total environmental costs of the consents have been $132,000, including his salary.

Take another recent example. Traditionally, Affco got rid of its biosolid wastes (mostly the grass left inside animal stomachs and the solids coming out of its wastewater treatment) by sending them out to be spread on pastoral land. Environmentally friendly, no? Trouble is, recent BSE scares in Europe raised the question about the possibility of inadvertently putting blood and other animal proteins on the land. The New Zealand government had a look and pronounced the practice safe. Affco wasn't sure and decided to investigate alternatives before government changed its mind. Preliminary trials indicate not only that worm farms and composting might be viable alternatives, but that they might also be much cheaper.

"For our Wanganui plant, sending biosolids to land-based disposal costs about $40 a tonne. When we investigated, we found we can send them to a worm farm for around $20. You also avoid the financial cost of resource consents and the associated environmental problems of odour and leeching."

Consumer awareness will come, Mischewski believes. Affco is involved in some industry projects to incorporate sustainability into farming practices and so meet demand (so far mainly from big overseas supermarket chains) for clean, green product. The company is part of the Green Tick project, initiated by another meat company, Richmond, and is also considering expanding its own Affco Select farm-audit programme to include environmental factors.

Mischewski admits Affco has some way to go. While the company's annual report features the environmental report straight after the chairman's and chief executive's messages, the green report is still noticeably long on rhetoric and short on measurable performance indicators. "We've been through tough times as a company and I acknowledge the knockers that say [environmental reporting] is just a lot of gloss. But I hope within a year or two to see us getting systems in place to measure the company's sustainability in terms of concrete indicators like power consumption or the amount of nitrogen produced per head of cattle … What I say to the critics is it's not just about being clean and green, it's about doing things smarter, and that often means reducing costs."

Fletcher Challenge Energy (#8)

When, two years ago, Fletcher Challenge Energy set up a community advisory group with a commitment to "answer everything they asked us" about environmental, health and safety issues, many within the company were wary. What, open your books? Let the wider community see not only the good, but the bad and the ugly as well? "There was fear internally and externally that we were far worse than we were - a horrible oil company," says sustainable development manager Rachel Palmer, who initiated the group. "Internally there was a fear of having to defend something that wasn't there to defend."

The reality was that once certain key concerned outsiders had seen the sites, talked to staff and looked at the records - including reports of spills, safety problems and environmental and noise complaints - antagonism tended to disappear. "Once they saw what was happening and shared their concerns, their fear went away and their fight went away … We are actually quite a clean industry. The bad name comes from accidents rather than normal operations."

Palmer believes there's a strong economic argument for good community relationships on environmental issues, though it's hard to quantify. When the company started drilling an onshore well at the Pohokura gas field three years ago (the field has been described as the next Maui) they recognised there was a potential noise problem for the company's Taranaki neighbours. After consultation, the company decided to go beyond local authority guidelines and put special enclosed engines around the drilling sites. The project cost a cool half-million dollars for a $5 million job. "If you get the community on the wrong side when you drill the first well, it's an uphill battle from then on. By doing it right at the beginning, you save legal costs in the environment court and local battles. It's expensive to go back and patch up relationships."

Palmer says one of the keys to maintaining a strong environmental record is getting staff buy-in. As a small company, Fletcher Energy has taken the route of encouraging employees to become engaged in defining the rules, rather than imposing company regulations from above. This approach was alarming and then salutary to officials from giant international oil company Shell, which took over Fletcher Energy in March. "Shell does a lot by directives, procedures. They came in and said: 'Where are your systems?' and 'Your standards aren't high enough'. We argued that our systems fitted our purpose. And when they looked closer, they were astonished at what we could achieve with bottom-up processes."

Methanex (#9)

If you're in rural New Zealand and you see the local fire brigade out in force muttering about chemical spills, don't necessarily be too alarmed. Most likely it's just staff from methanol producer Methanex conducting training courses with the local emergency service teams. Three years ago, Methanex recognised that with trains and trucks full of potentially environmentally hazardous chemicals trundling round the country, it wasn't enough for just its own workers to be able to deal with possible spills. It started a programme to train emergency services along all its supply routes on how to deal with incidents, both in terms of environment and health and safety "We don't have to do this by law," says environmental affairs advisor David Haden, "but we think it's important to train our customers and others about the impact our product could have on the environment and how to deal with that."

Methanex, which has spent an estimated $5 million on environment-related projects over the last 10 years and has ISO 14001 certification for both its New Zealand methanol plants, has also recently introduced an environmental assessment programme for suppliers. Methanex auditors do bi-annual environmental audits on suppliers to make sure their standards meet the Methanex norm - one potential supplier was recently turned down on purely environmental grounds.

One to watch: Waste Management

Waste Management managing director Kim Ellis is still slightly in shock. Having agreed almost blithely a year or so ago to give environmental activist Guy Salmon of the Ecologic Foundation (formerly the Maruia Society) the job of preparing the company's first environmental report, he hands journalists Salmon's closely typed 33-page report with clear trepidation. How are they going to react to this uncompromising warts-and-all presentation of the company's environmental performance?

"I was expecting half-a-dozen pages with some native birds floating about," Ellis admitted at the launch of the document late last month. Instead he got a report that edges towards the best of what's on offer in New Zealand in terms of detail and credibility. As Ellis now knows, employing Salmon was the equivalent of getting in a two-tonne industrial cleaning machine to vacuum the hall rug. Given virtual carte blanche in terms of what he wrote, as well as a promise the company would not attempt to alter or water down the detail of the report, Salmon set off on a year's project that involved everything from interviewing neighbours and community groups to scrutinising council documents and setting up additional internal monitoring systems.

Despite Ellis's fears, Salmon's findings are largely positive. In a cut-throat industry known more for a "haul and bury" (pick the rubbish up in a big truck and dump it in a hole in the ground) than a resource recovery approach, for many years Waste Management has tended towards higher environmental standards than many of its competitors. And as the market has changed, the company has been more proactive than most, moving away from pure collection and landfilling over the last couple of years. In 1999 Waste Management bought 50% of compost company Living Earth, and more recently purchased some inorganic recycling facilities through Briteway.

Waste Management spent $5 million on a state-of-the-art gas and leachate collection system at its Redvale landfill. Over the last two years it has invested $6 million in a leachate incineration programme (which uses one landfill waste product, gas, to get rid of another waste product, leachate) and power generation facilities. At the moment, the company produces about 1 megawatt of electricity (enough for around 700 homes), but it intends to produce up to 15MW eventually.

Waste Management's environmental stance is far from altruistic, Ellis says. A green approach may have proved expensive with Watercare's biggest single capital project so far, the Redvale landfill (and excessive environmental commitments are seen by some to have nearly cost Waste Management's former international parent its life), but the company is confident "green" will eventually produce significant financial returns. Electricity generation already breaks even, for example, and the company hopes to be the first in this part of the world to sell greenhouse gas emission credits. "Higher environmental standards have been expensive, but it's been great for our reputation and we are already getting some business purely because of our standards," Ellis says of the Redvale landfill project. "But as environmental standards [for landfills] go up, we expect to get significantly better returns on capital … In the future we see real value added in terms of our moves to getting waste out of the waste stream."

Waste Management sits low down the 2001 Unlimited/Massey Survey of Corporate Environmental Responsiveness this year (#38), but expect significant things from this company next time round.

What we asked

The companies in the Unlimited /Massey Corporate Environmental Responsiveness survey were ranked according to 10 main criteria based on whether they had:

A main board member or senior executive with specific environmental responsibility
A written corporate environmental policy statement
Published environmental objectives
Measurable targets arising from those environmental objectives
A level of communication with stakeholder groups
An employee environmental programme
An environmental management system
An environmental audit process
An environment-focused supplier programme
Processes in place to consider the environmental impact of their products, processes and/or services

Nikki Mandow
nikki@unlimited.net.nz

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