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Can Environmental CSR Initiatives Stimulate Economic Growth?

The economic downturn brings with it new wrinkles for large corporations to address as part of their corporate social responsibility planning.

With the unprecedented focus on addressing the economic situation combined with swift government response driven by the fiscal stimulus package, CSR planning will come to the forefront for future growth opportunities for major corporations. Companies will be forced to decide whether it is financially responsible to continue to invest in CSR initiatives or to incorporate conservative spending habits in order to weather the economic storm. Of the six major CSR initiatives corporations can pursue, environmental initiatives are being viewed as the most attractive option to induce economic stimulus, while achieving solid CSR goals.

Environmental CSR initiatives play a key role for major corporations to impact climate change, water use footprint and energy use effectiveness. Some of the leading corporations that have achieved CSR success with environmental initiatives can motivate the competitive landscape of the marketplace to improve operational efficiency, rethink product designs, and seek out new and innovative technology. Effective resource management and energy efficiency are major environmental CSR goals that are relevant for the present participants. This leads to opportunities for cost savings, revenue generation, and can even influence overall brand strength through positive environmental reputation.

Environmental CSR initiatives can affect the following levels of corporate structure: environmental disclosure, environmental policy, environmental impact, and environmental performance. With disclosure, corporations can improve the transparency of internal operations to display improvements that are being implemented across facilities or assets owned. With policy, the CEO's mandate is to focus internal efforts to incorporate corporate-wide policies and agendas that will direct the corporation toward its environmental goals. Impact deals with defining the effect of environmental initiatives on the environment on the local or national scale. Performance represents a set of key performance indicators defined by the environmental CSR policy as benchmarks of achievement over time.

Despite the economic downturn, corporations are encouraged to continue to invest in environmental CSR initiatives in order to facilitate long-term growth.

Chart 1.1 represents the key drivers for environmental corporate social responsibility initiatives for North America for 2009.

Strategic Recommendations and Case Studies

Environmental CSR initiatives can be viewed as growth initiatives for a number of major corporations. These initiatives can be implemented for corporations to remain competitive in industries that are becoming more aware of the impact these efforts can have on the bottom line.

For the chemical manufacturing industry, items such as energy efficiency and production optimization are key areas to improve. The pharmaceutical industry must continue to focus on issues that stem from wastewater effluent discharges and must be aware of the growing concerns with high purity water regulations imposed by the industry. Intensification of focus is being imposed on greenhouse gas emissions and water and wastewater concerns for the oil and gas industry, while energy efficiency and operational optimization is an ongoing issue for the automotive sector. The leading companies participating in the pulp and paper industry have to address issues with resource management improvements and long-term forest asset management, while the power generation sector is being encouraged to incorporate renewable energy portfolios in order to reduce greenhouse gas emissions.

The ongoing theme amongst these industry sectors is that environmental CSR investments are no longer viewed as "optional expenses." Environmental CSR initiatives maintain corporate sustainability within each industry sector, while achieving growth and enhancing competitive advantages.

Some key questions for corporations to ask internally in order to determine the environmental CSR initiatives that are relevant to them:
• What impact will the economic downturn have in North America?
• What are the key challenges to be aware of?
• Is it profitable to invest in environmental initiatives?
• What are the short-term and long-term benefits?
• What are the regulations to watch out for?
• Will corporations be rewarded for environmental responsibility?

Some corporations are leading examples to the overall benefits of environmental policy and performance. These distinct examples display the true impact environmental CSR planning can have on the environment and to the bottom line.

As part of the corporations' environmental CSR policy, Dow Chemical has maintained membership with the United States Climate Action Partnership along with being a participant on the United Nations Intergovernmental Panel on Climate Change. In addition, Dow Chemical is striving to reduce energy intensity by 25 percent by 2015 and reduce greenhouse gas emissions by 2.5 percent per pound of product by 2015 -- both measures of performance.

Valero Energy Corporation has been a recipient of the Texas Governor's award for environmental excellence, which validates the continued developmental investments of $2 billion into cleaner burning fuel products. In 2006, Valero Energy Corporation achieved a 93 percent reduction of sulfur dioxide emissions at their North American facilities. It will highlight an annual greenhouse gas emission inventory by the end of 2009 as part of the environmental disclosure policy.

Enbridge Inc. is one of the leading Canadian corporations in terms of environmental performance and disclosure. In 2007, Enbridge Inc. had implemented a spill and lead prevention program along with a carbon management strategy program to supplement the full-scale environmental scorecard system used internally to track goals and initiatives. The company has also encouraged the reduction of energy use at the consumer level with incentives and education programs. In addition, Enbridge Inc. is on track to achieve a 20 percent reduction of greenhouse gas emissions below 1990 levels by 2010 as part of the company's performance benchmarks.

Weyerhaeuser Co. of the pulp and paper industry has focused its environmental CSR efforts on footprint management. The company has achieved a substantial reduction in water and wastewater footprint, while utilizing biomass fuel generation at their facilities. The company has accomplished a 20 percent reduction in wastewater effluent production to compliment a 70 percent increase in biomass fuel used at their operational facilities. Weyerhaeuser Co. is also incorporating an intensive forest management program for the North American facilities to address the company's sustainable forest management initiatives.

Key Growth Initiatives

Four key growth initiatives can be incorporated into various environmental CSR plans and implemented in a short time frame, namely:
• Time Investment
• Efficient Product or Process Design
• Energy Efficiency
• Waste Reduction

Industry experts highlight the following when discussing opportunities to address the four growth initiatives:
• Building solid working relationships within the community at the environmental level is a key investment of time and effort at the corporate level.
• Designing energy-efficient products and maximizing operational efficiency for manufacturing processes will improve environmental performance.
• Utilizing marketing campaigns that emphasize environmental achievement will enlist awareness amongst industry consumers.
• Having a distinct awareness of changing regulations that require long-term changes is key.
• Developing technologies and programs that recover waste or reuse key natural resources is a unique revenue stream -- and often is not fully utilized.
• Seeking alternative energy sources to supplement manufacturing operations is another area of improvement.

Eric Meliton is a research analyst with the Frost & Sullivan North American Environmental & Building Technologies Practice. He focuses on monitoring and analyzing emerging trends, technologies and market dynamics in the environmental technologies industry in North America.

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