1. Sustainability in Industry: Benchmarks and Road Maps
Darlene Schuster
Director, Institute for Sustainability
November 2008

2. Acknowledgements
Calvin Cobb, Chair Institute for Sustainability
Subhas Sikdar, Chair Instiute for Sustainability 2008
Golder and Associates
Beth Beloff,
Dicksen Tanzil,
Abigail Martin
Industry Representatives to Center for Sustainable Technology Practices (CSTP) Sustainability Guide Task Group
Carol English, Cytec Industries, Inc.
Charlene Wall, BASF
Dave Taschler, Air Products
Lafayette College
Professor Javad Tavakoli

3. The Institute for Sustainability
A community of sustainability “practitioners”
Companies (Center for Sustainable Technology Practices)
Professionals—industry and academic (Sustainable Engineering Forum)
Youth (Youth Council for Sustainable Technology Practices)
Organized under the American Institute of Chemical Engineers (AIChE)
Professional membership organization
Non-profit 501c(3)

4. Overview of the Institute
IfS
Practitioners, students & companies
Sustainability
Engineering Forum
745 AIChE members
950 additional non-
AIChE members
$25 dues
Center for Sustainable
Technology Practices
Industry Group
10 companies, growing
Air Products, BASF, Cytec,
Dow, FMC, Honeywell
Interface Inc. ,
Middough (WalMart)
Youth Council on
Sustainable Sciences
& Technologies
Partnership w/ SustainUS
9750 students, growing
Incorporates sustainability
into undergrad research,
sponsors awards & student
chapters
Projects of IfS
1.Sustainability Index
Purpose of financial guidance,
benchmarking & management
Differential to other indices
Potential for high profitability
2. ICOSSE Aug 09
Mission: to serve the needs of and influence the efforts of professionals, academes, industries, and governmental bodies that contribute to the advancement of sustainability and sustainable development. 

5. Triple Bottom Line: A Business View of Sustainability

6. “Sustainability is a path of continuous improvement, wherein the products and services required by society are delivered with progressively less negative impact upon the Earth”
Defined by AIChE Institute for Sustainability
November ‘04-July ‘05 Grassroots Project, Earl Beaver, Chair IFS

7. Ecosystems Modeling Industrial Ecology Credit Trading Design Watershed
Protection
Industrial
Ecology

8. How is your Company’s Sustainability Performance Viewed?
By the community?
By your shareholders?
By your customers?
Versus your peers?
The AIChE Sustainability IndexTM

9. How is your Company’s Sustainability Performance Enhanced?
Via the value chain?
by corporate decision making?
by job function?
The CSTP Sustainability Roadmap
A Process for Sustainable Decision Making

10. Purpose of a Sustainability Index
Investment guides
Ethical investment/SRI
Long-term return (“stock picks”)
Stock market indices
Stakeholder ratings
Benchmarks for company management

11. Examples of Financial SI’s
Investment Guide?
Market Index?
Manage-ment Benchmark?
Consult to Companies?
DJSI 
FTSE-
4Good
GS- Sustain 
Innovest

12. An Example The Dow Jones Sustainability Index (DJSI)
Investment guide
Includes only companies that meet DJSI criteria – governance, transparency, accountability
Stock market index
Track market performance of DJSI components
Subset of corresponding broader indexes
DJSI World, subset of Dow Jones World Index
Benchmarking
Inclusion, being sector leader
Consulting services through SAM – analysis and recommendations for companies who want to be included, improve ratings 12

13. Used for Market Tracking
Source: SAM, Dec 2007

14. Reporting of Financial SI’s
Dow Jones Sustainability Indices
Inclusion (in or out), ‘Supersector Leaders’
Individual company scores & analysis – to licensees only
FTSE4Good
Inclusion (in or out)
GS SUSTAIN
Ratings: leaders, average, and laggards
Analysis for sector leaders
energy, mining & steel, food & beverage, pharmaceutical, alternative energy, environmental technologies, biotechnology
Innovest
Top companies – sector leaders & Global 100 list
Ratings (AAA to CCC) and analysis, for investor clients only 14

15. What a Company Can Get from Financial SI’s
Dow Jones Sustainability Indexes
Benchmarking with peers, advisory
FTSE4Good
“Guidance and support” for companies to work towards inclusion in FTSE4Good – through EIRIS
GS SUSTAIN
(none specific to sustainability and its ESG analysis)
Innovest
“Confidential custom benchmarking studies” for companies – operational efficiency and business opportunities per peer analysis 15

16. Concept of the AIChE Sustainability Indexsm
Based on the Wright Killen Refinery Survival Index (Oil and Gas Journal)
Meant to fill a gap:
Relies more heavily on quantitative performance indicators
Provides a heavier weighting applied to various indicators of safety and environmental performance and to technological innovation towards SD
Available to range of sectors, company size
The scoring: robust methodology designed to account for subjectivity in a transparent manner.
Designed to avoid the ‘black box’ problem of other indices
Intended for executives and directors to manage company business lines
Global, initially focusing on major chemical companies
Publication remains silent on individual company ratings
Companies find it useful to benchmark themselves relative to a set of companies
Research funded by United Engineering Foundation

17. Status Needs analysis completed in the Fall of 2005
Pilot study performed in 2006
Launch
Methodology Published June ‘07
Index for Fortune 500 CPI November ’07
Additional pilots underway for Engineering Construction and Energy/ Power Sectors
Requests to explore development of index from water resources, textile chemical manufacturers
Research funded by United Engineering Foundation

18. Advisory Panel Mission Advisors:
to  protect and promote the soundness, credibility and utility of the AICHE Sustainability Index™
Advisors:
International financial community
Industrial sector experts
Media
Non-governmental Organizations (NGO’s)

19. AIChE Sustainability IndexTM for the Chemical Industry November 2007
Gray Shading = Ranges of individual company scores
Blue Line = Simple average of 11 representative companies

20. AIChE Sustainability IndexTM for the Chemical Industry November 2007

24. AIChE Sustainability Index for the Chemical Industry (Simple Average) September 2007
Gray Shading = Ranges of individual company scores

25. The AIChE Sustainability IndexTM
Fall 2007
Notes:
For Sustainability Index methodology and data sources, see CEP, June 2007, pp
Companies included in the assessment are ____, ___, ____, …
Strategic Commitment
Environmental
Performance
Product
Stewardship
Safety
Innovation – meeting social needs
Value-Chain
Management
4.1
4.3
4.3
4.0
3.8
3.9

26. Elements of the Index Strategic Commitment Safety Performance
Environmental Performance
Resource Use
Waste & Emissions
Environmental liabilities
Product Stewardship
Innovation
Product and service innovation – meeting social needs
Process innovation
Value Chain Management
EHS Management
Supply Chain Management
Stakeholder Engagement
These are the new screening criteria Golder proposes based upon available information.

27. Unique Elements Strategic Commitment Safety Performance
Environmental Performance
Resource Use
Waste & Emissions
Environmental liabilities
Product Stewardship
Innovation
Product and service innovation – meeting social needs
Process innovation
Value Chain Management
EHS Management
Supply Chain Management
Stakeholder Engagement
These are the new screening criteria Golder proposes based upon available information.

28. Calculations Use Existing Data Sources
Company reports
Annual Corporate Reports
SEC 10-K Filings
Sustainability/EHS Reports
Government Agencies
EPA
CSB
U.S. Patent & Trademark Office
Company websites
Media reports
Independent NGO reports

29. Value Chain Management Details
Environmental Management System
Corporate level environmental management system – ISO14001, RC-14001, RCMS or EMAS certified
Facility level environmental management system – ISO14001, RC-14001, RCMS or EMAS certified
% certified
Indication of presence/current effort
Supply Chain Management
Presence of a supply chain policies and procedures related to sustainability
Sustainability evaluation required of suppliers
Audits of supplier practices
Policies extended to suppliers’ suppliers

30. Value Chain Management Ideal Score of 7
Value-Chain Management—Project Orientation
System in place to manage sustainability performance in operations and project delivery
System in place to manage sustainability performance of sub-contractors and other suppliers
Significant number of projects demonstrate excellence in long-term environmental and social performance
Value-Chain Management—Product Orientation
Externally recognized environmental management system in-place at the corporate level and at all major facilities
Presence of company-wide supplier management policies and procedures related to sustainability, applied and enforced to all supply-chain entities with potentially significant impacts

31. AIChE Sustainability IndexTM
Drills down, but remains broad enough
Based on public data
Targeted for managers and corporate executives, not investors
Focused on
Environmental – performance metrics
Safety – performance metrics (workplace, process)
Product stewardship – mgmt system, history
Value chain management – mgmt system
Sustainability innovation – initiatives, tools, results
Social performance and strategic management also covered
Less than other indexes
Benchmarked to peers and best practices

32. How is your Company’s Sustainability Performance Viewed?
By the community?
By your shareholders?
By your customers?
Versus your peers?
The AIChE Sustainability IndexTM

33. How is your Company’s Sustainability Performance Enhanced?
Via the value chain?
by corporate decision making?
by job function?
The CSTP Sustainability Roadmap
A Process for Sustainable Decision Making

34. Supported by member companies
CSTP formed in 2004 as part of the AIChE’s Institute for Sustainability
Supported by member companies
Tailored collaborative projects and pre-competitive research
Monthly sustainability education “virtual” sessions
Utilize members to conduct project work
Project: Development of Case studies and evaluation of Decision Support Tools in industrial Use
Project: Focus Groups for Survey of Sustainability in the Chemical Industry (PriceWaterhouse Coopers)
Project: R&D Checklist for Sustainability
Project: Sustainability Roadmap

35. Background
Project: EPA Grant 2005: Case Studies of Industry Decision Support tools for Sustainability
Identified gaps & challenges
Great tools, not widely used
Need for better integration of sustainability into business processes
Understand context of management and technology decisions along value chain
Understand key decision points, relevant SD considerations, and key functional areas/decision makers involved
Need to understand the broader set of tools, approaches, and other resources to help integrate SD into the organization

36. Roadmap Structure & Organization
Composite Checklist –
Questions to guide sustainability consideration at each value-chain stage
Main Page: Overview
Key corporate functions & resources
Summary Table –
Form to record answers, action plans, responsible parties, status and documentation
Scoring Framework
Highlight issues and opportunities, updated at each stage

37. Potential for Improvement SD Roadmap Summary Table
192 Key Sustainability Questions
Where to ask them during process and product development
Who should be included in the “answers?”

38. SD Considerations Resource Use Environmental Impact Health & Safety
Energy use, material intensity, water use, land use
Environmental
Environmental Impact
GHG emissions, air emissions, solid waste, (pollutant effects)
Health & Safety
Toxic reduction, hazards, process safety
Social
Societal Impact
Workers’ well-being, local community impacts/QOL, global societal impacts/contributions
Economic Impact
Financials along value-chain (corporate, customers, …)
Econ.
Management
Internal process, value-chain partnership, stakeholder engagement
Business Perspective
Business Strategy
Alignment with business strategy, core values & competencies, market & regulatory drivers

39. Resource Use Energy Use
How energy intensive is the feedstock? Which feedstock materials are the most energy intensive and are there energy-efficient alternatives?
Can the feedstock be produced using renewable energy?
Has energy consumption been optimized for the selected process?
Can any byproducts be used as energy ?
Will energy be saved or conserved in the distribution of this product vs. alternative products/processes?
Will the use of this product save or conserve energy for the customer versus alternative products/processes?
Would there be opportunities to use renewable energy in the production, distribution or use of the product/process?
Are there alternatives for more energy efficient transportation/distribution system?
Could the product be reused/recycled to reduce life-cycle energy use?
Water Use
How water intensive is the feedstock? Which feedstock materials are the most water intensive and are there water-efficient alternatives?
Has water use been optimized for the selected process as both a reagent and processing medium?
Have water source alternatives been evaluated and considered?
Have water quality considerations been aligned with use requirements?
Will the product/process be more water efficient in production and use?
Has water been reused and recycled appropriately?
Have equipment and technology alternatives been evaluated for optimizing water use?

40. Elements of the Roadmap
Value Chain Stages
Corporate Functions
Corporate functions to involve or consult at each value chain stage.
(RACI Chart)
Sustainability considerations
Tools & Resources

41. Engaging Key Corporate Functions
Value Chain Stages
Corporate Functions
Corporate functions to involve or consult at each value chain stage
Sustainability considerations
Tools & Resources
Value Chain Axis
Business Strategy Development
Upstream Input
R&D
Idea Generation
Concept
Scoping
Definition
Development
Scale up
Commercialization
Production
Distribution
Industrial Consumer Use
Customer Use
End of life
Facility
Molecule

42. Engaging Key Corporate Functions
Value Chain Stages
Corporate Functions
Corporate functions to involve or consult at each value chain stage
Sustainability considerations
Tools & Resources
Corporate Functions Axis
(each box represents a different corporate function that is critical to driving sustainability in the organization)
Executive Management
Financial
Business Management
R&D
EHS
Engineering
Manufacturing / Operations
Logistics / Supply Chain
Sales
Customer Technical Service/Support
Marketing
Communications
Public Relations
Human Resources
Legal
Information Technology & Management

43. Sustainability Considerations
Checklist along the Value Chain
Sustainability Considerations
Value Chain Axis
Sustainability Considerations
Specific questions, applied and modified along the value chain whenever appropriate

44. Elements of the Roadmap
Value Chain Stages
Corporate Functions
Corporate functions to involve or consult at each value chain stage
Sustainability considerations
Tools & Resources
Tools & Resources
Publicly available & in-house tools to support sustainability considerations along value chain

45. Scoring Framework Idea Genera-tion Concept Scoping Defini-tion
Develop-ment
Scale-Up
Com-mercial-ization

46. Using the Roadmap
Model developed by CSTP member companies & associated consultants
Next step… validation of concept in use

47. Illustration of Roadmap
“Evaluation of Biofuels Processing Plant—Upstate New York”.
Reuse of existing brownfields site
Possible Feedstocks: Corn; Willow
Stages of Roadmap to Illustrate:
Upstream Input Stage (show examples)
Commercialization Stage (in progress)
Provide feedback on criteria, questions
Partner with Lafayette College cross functional team

48. Process of Evaluation Our Hypothetical Company
Information
Located in upstate New York
Purchases corn primarily from mid-western states
Has onsite corn ethanol refinery
Grows willow biomass onsite
Has onsite willow ethanol refinery
Focus of study:
Not to consider the most sustainable industry possible
Developing a plausible vantage point to make comparisons between corn and willow ethanol

49. Test Case: Biofuels Plant
Established process for biofuel from publicly available information
Answered Roadmap questions based on internet sources & personal/professional opinion/insights
Used publicly available information on willow and corn-derived feedstocks
Focused on issues with sustainability and energy efficiency

50. Process of Evaluation Example Industries
Corn Ethanol
Well developed industry
Studies done by a variety of sources; data readily available
Production plants already in operation across the US
2 processes: dry and wet milling

51. Process of Evaluation Corn Ethanol Process Flow Diagram
One of the biggest challenges in evaluating sustainability impact is to adequately consider the system boundaries. Too tight and you can miss a critical interaction. Too broad and you can do an adequate assessment of the problem.

52. Process of Evaluation Corn Ethanol Energy Balance

53. Process of Evaluation Corn Ethanol
Facts about corn ethanol
Cost
Corn
$4.00 per bushel
Corn ethanol
$ $1.50 per gallon
Production
US production goals
15 billion gallons by 2017
Current production
4.8 billion gallons of ethanol in general
Demand calculated to be 5.4 billion tons
Estimated production capacity
6.183 billion gallons of ethanol in general from 113
refineries in 20 states

54. Process of Evaluation Corn Ethanol Production
Millions of gallons

55. Process of Evaluation Example Industries
Willow Ethanol
In developmental stages
Majority of studies done by SUNY ESF
Only one plant in operation
More energy/sf than corn

56. Process of Evaluation Willow Ethanol Process Flow Diagram

57. Process of Evaluation Willow Ethanol (Energy Balance)

58. Process of Evaluation Willow Ethanol
Facts about willow ethanol
Costs
Willow biomass
$50 per dry ton cellulosic biomass
Willow ethanol
$ $2.25 per gallon
Production
US production goals
1 billion gallons per year by 2015
Current production
0.66 million gallons of cellulosic ethanol per year from Iogen in Canada

59. Upstream Input Questions
Can feedstock price, availability and access be maintained over the long-term?
Would customer/stakeholder concerns affect the future use of the feedstock
Are there current or expected future regulatory drivers that may affect steady supply of feedstock?

60. Long-term viability of corn feedstock not likely to be maintained.
Can feedstock price, availability and access be maintained over the long-term?
Corn Feedstock expected to continue to see dramatic increase in demand resulting in increase in price.
Increase demand for Corn Feedstock causing an increase in prices.
Corn planted in 2007 saw a 113% increase over 2006
Corn is in high demand as a food product as well.
used livestock feed various livestock
corn syrup as the sweetener for most soft drinks. (Hargreaves, 2007)
This competition will further limit access and raise prices.
Corn feedstock price and availability can not be maintained if demand continues to increase. The limit for maximum corn production has nearly been reached
New technology in feedstocks may cause drop in demand and price.
Long-term viability of corn feedstock not likely to be maintained.

61. Can feedstock price, availability and access be maintained over the long-term?
Demand for low-value timber, willow, has dramatically decreased in New York state recently
Current growth rate exceeds removal by 317%. (Bower, 2007)
Production potential of 188 million dry tons of willow in NYS by 2008
Long term market should be stable (Bower, 2007)
Willow feedstock shows very little fluctuation in price or availability.

62. How energy intensive is the feedstock
How energy intensive is the feedstock?  Which feedstock materials is the most energy intensive and are there energy-efficient alternatives?
Corn feedstock production is heavily reliant on fossil fuels for the production of pesticides and fertilizers, operation of the equipment, and transportation.
Short Rotation Willow Coppice (SRWC), the hybrid of willow used as biomass for energy, is much less energy intensive than corn. This is because willow has far fewer inputs.
Other alternatives for cellulosic ethanol feedstock such as sugar cane, switchgrass and miscanthus have the potential to be developed as very low input crops, if suitable for the region – lower Net Energy Balance.
Willow is more energy efficient than corn, but not necessarily the most energy efficient.

63. 18. Would customer/stakeholder concerns affect the future use of the feedstock?
Corn feedstock is being impacted by the concerns of outside political/private stakeholders.
President Bush - by the end of the decade America will meet 20% of oil needs with renewable sources
Demand requires 35 billion gallons of fuel primarily from corn ethanol, already effecting the allocation of fields to corn and the price of dairy
In % or 3.4 billion bushels of the corn crop is expected to be needed for ethanol, up 20% from 2006.
With expected increase in demand, a shortage is expected in corn stockpiles going in to 2008, despite a billion bushel crop predicted for (Brahic, 2007)
A recent surge in corn-based ethanol investment is encouraging growth. (Hasan, 2006)
Interest and concern from political/private stakeholders will have a significant effect on how the corn crop is used in the future.

64. 18. Would customer/stakeholder concerns affect the future use of the feedstock?
Willow feedstock initially would be grown almost exclusively on land being leased to the producers via private land owners and farmers. (Pioneering Energy Crops..., 2000)
Cooperation and the future of the feedstock are contingent on the confidence of landowners in the market for willow ethanol.
Willow-based ethanol industrial scale is very dependent on interest from investors, customers and potential farmers

65. Would the new product or process reduce GHG emissions over the entire lifecycle?
Plants sequester CO2 – Given the conditions of 0.25 tons ground C increase per hectare per year, “no net CO2” will be emitted
Fewer N2O emissions will be released in willow farming than is released in corn farming because of the fewer amounts of fertilizers used
Shipment by train and truck is needed and will require more energy usage than shipment by pipelines
GHG emissions are increased because of long-distance shipment by diesel burning trucks
While willow feedstock has less GHG emissions compared to corn, sequestration depends on farming conditions and GHG emissions in other life-cycle stages especially remain significant

66. Are there any demonstrated or anticipated changes to the marketplace or regulations that could affect environmental, societal or economic attractiveness?
Increasing costs of fossil fuels and future regulatory and other constraints on GHG will make ethanol less expensive than gasoline
Both cellulosic (willow) and corn ethanol are heavily tied to the government through subsidies
If political opinion and support were to be turned away from ethanol, this fledgling industry would have major issues
If the US government drops its tariffs against sugar cane import equaling $1.05 per gallon ethanol, it would make the marketplace more challenging
Willow ethanol can be very attractive in the long term, however the industry can only develop with the continuation of political support and subsidies

67. 23. Are there current or expected future regulatory drivers that may affect steady supply of feedstock?
Willow plant feedstock
Growth is currently exceeding the rate of harvest
Little or no competition for the feedstock among other industries
Great abundance near the plant site. (Bower, 2007)
Corn feedstock production was the most subsidized crop in America with an allocated $37.5 billion dollars in subsidies between 1995 and 2003 (Bryce, 2005)
Huge financial burden will not be sustainable as alternative feedstocks are developed limiting the competitiveness and scope of corn as a feedstock. (Keeney, 2006)
Great demand has caused the corn price per bushel to rise over 50% in less than two years. (Hargreaves, 2007)
Future supply of corn feedstock is very dependent on how much land can realistically be used to grow corn, what the corn is to be used for, and how long the subsidies last.
Variation in Regulatory drivers (outside of subsidies; e.g. water run off, fertilizer use and misuse) must be more fully understood and discussed with policy makers. Impact may have significant impact on supply of corn feedstock.

68. Sources & Documentation
Using the Checklist
Summary Table
Question
Summary of Findings
Action Items
Responsible Parties
Priority/ Status
Sources & Documentation … 
 Completed
Legend:
High priority
Medium priority
Low priority

69. Scoring Framework
Product & Process Development

70. What the Guide Does
Provides list of considerations asked as questions by key decision makers at each stage
Ability to score responses
Track improvement to sustainability concepts through each stage
Provides list of resources and tools

71. Summary
Sustainability Roadmap identifies key sustainability questions and criteria in a gated process/product development scheme
Use of Roadmap in biofuels case illustration appears to be increasing the level of discourse on sustainability issues in a short time period
Roadmap offers a holistic framework for consideration of progress down the path towards sustainability
Feedback is continually sought for improvement of the model

72. Sustainability: An emerging trend?
All the benefits & blessings flowing from the use of the earth were held to be the rightful heritage of all generations
“…treat the earth as though we are tenants, rather than owners”….we must leave behind ‘enough and as good’ for others”
The Old Testament- Genesis & Deuteronomy
John Locke, Two Treatises of Government, 1689
“Then I say the earth belongs to each…generation during its course…no generation may contract debts greater than may be paid during the course of its own existence”
Thomas Jefferson, 1789

73. 2008 Projects (2009 continuation)
Sustainability Guide (English—20 min)
CSTP SUSTAINABILTY GUIDE (Cytec lead)
Release of Version 1 November 18, 2008
Version 2 Tools/scoring additions
Raising Awareness (BASF lead)
Internal—Newsletter  review of 08 and 09 needs
Select/approve Exchange topics for 09
3rd Party guidelines (FMC/Colgate/Packaging Institute)
Survey plans
Supply Chain Certification Issues Table
Best Practices  (Dow 2008, 2009?)
Tools (Air Products)
Publication of Tools to CSTP members
Incorporation into Sustainability Guide Version 2

74. 2009 CSTP Proposed Projects
Sustainability Guide (English—20 min)
Biofuels Metrics Roundtable (John Carberry, lead; Federal Request)
Total Cost Assessment/Full Cost Accounting Users Group  (Request by GE, Toyota, Formosa
Water Resources Workshop (Request by ASME)
Academic Sustainability Roundtable (Request by U Michigan)
Certification of Technologies for Carbon Management (request Chevron)
Certification of Water Footprinting  (10 minutes, overview by xxxx)
NIST Metrics Data Sourcing (Request by NIST)
Sustainable Supply Chain Forum (Colgate-Palmolive, Packaging World)
Interaction with ACC research activities (Honeywell)
More??? Eastman????