Topic Area: Corporate Sustainability
Geographic Area: Europe (Switzerland) and North America.
Focal Question: How do firms instigate and maintain sustainable practices?
Sources:

1. Sulzer Ltd.’s website at http://www.sulzer.com

2. Sulzer Ltd.’s environment website at http://www.sulzer.com/com/ExploreSulzer/Environment/environment.html

3. Sulzer Ltd.’s “Environmental Report 1999/2000” at http://www.sulzer.com/com/ExploreSulzer/Environment/EnvironmentalReport2000/pdf/umwelt_99_00_e.pdf

4. The World Business Council for Sustainable Development’s website, http://www.wbcsd.ch/

5. The Dow Jones Sustainability Indexes’ website at

http://www.sustainability-index.com/djsi_world/djsi_world.html

Reviewer: Andrew Townsend, Colby College ‘02
Review: Sulzer Ltd., headquartered in Switzerland with production facilities around the world, is recognized as one of the leaders in corporate sustainability. They were selected for the Dow Jones Sustainability Index (DJSI) for consecutive years in 1999 and 2000. The DJSI is an index of firms consisting of the top 10 percent of corporate sustainability leaders in 64 industries worldwide, selected on their ability to, “[gear] their strategies and management to harness the market's potential for sustainability products and services while at the same time successfully reducing and avoiding sustainability costs and risks.” (Source 5 from above)

They have five core companies focusing on the development and production of surfacing technology, turbomachinery, centrifugal pumps, chemical process technology, and fuel cells. These five activities had total sales of CHF 1.6 billion (Swiss Francs) in 2000 (Source 1).

Sulzer’s quest for sustainability started in the early 1990s. A manufacturing needs to consider impacts on the environment from their facilities (corporate) as well as the impacts caused by their products throughout their life-cycle. Sulzer developed two distinct strategic plans to improve their impacts. The first strategy, designed to reduce the impacts of their facilities, focused on reducing the inputs and outputs associated with production. The first step was to locate and asses their inputs and outputs. Starting in 1993, they began collecting environmental data, and by 1999 data were being collected at 40 (59%) of their facilities. Input data were collected for consumption of energy, water, and chemicals. Output data were collected for emissions (greenhouse gases, VOCs, ozone-depleting substances), emulsions (hazardous waste), as well as the amount of waste and recycling.

Using the environmental data they ranked their impacts on both a local/regional and global scale. They found that their local/regional impacts were minimal but the majority of their environmental impact was on a global scale in the form of global warming. They estimated that 90 percent of their total emissions were caused by the production of energy by their suppliers, with the other 10 percent coming from their direct emission of CO₂ and other greenhouse gases (Source 3). The other environmental impacts caused by Sulzer were in the form of water consumption, solid waste, and hazardous waste (disposed of in accordance with the law).

With this information they were able to set targets for future impacts as well as design methods by which to meet their targets. Their goal was to decrease or keep constant their energy consumption, CO₂ emissions, water consumption, and waste materials per worker, in addition to increasing or keeping constant recycled materials per worker. These might not seem very ambitious, but at the time Sulzer was experiencing much growth, and therefore the link between growth and environmental impacts was quite ambitious (Source 3).

Many strategies and methods were designed. One of the most important was establishing an environmental management system (EMS). This is a system that once implemented places environmental issues in the planning and decisions making process, in order to take a proactive approach to reducing environmental impacts. By 1999, 14 out of about 30 of Sulzer’s largest production facility’s EMSs had been certified under either ISO 14001 or the EU’s Environmental Management and Audit Scheme (EMAS). To reduce energy consumption and therefore their global warming impacts they started using heat from waste-to-energy incineration facilities. They also monitored the efficiency of their equipment, and switched to a greater portion of renewable energy sources, mainly hydro power. By 1999, renewable energy sources accounted for 50 percent of energy used in their facilities in Switzerland and 30 percent globally (Source 3). In addition, more than CHF 100 million has been spent on energy efficient lighting, heat recovery systems, solar hot water, and roof renovations since 1990 (Source 3). They found that these improvements increase worker productivity by five percent.

To reduce waste they have implemented methods for waste separation and recycling at all Sulzer facilities. One of the leaders, a facility in Austin, Texas, recycles 78 percent of total waste. The lower disposal costs plus the reduced need for inputs produced a cost savings of $450,000 per year. One key was employee training programs that emphasized employee inclusion in the program as well as environmental purchasing, handling, storage, and waste disposal (Source 3). In their textile division, an innovation with respect to weaving reduced water consumption from this process by 90 percent and chemicals by 75 percent by making the process a closed circuit (Source 3). In hopes of maintaining the improvement of their environmental impacts Sulzer has implemented an internal environmental audit system that reviews the major production facilities every five years.

The overall results of their programs have been mixed relative to the goal of constant or decreasing impacts per worker. Energy consumption per worker decreased initially and remained pretty constant from 1996 to 1999. CO₂ emissions per worker increased by 44 percent from 1995 to 1998, but remained constant from 1998 to 1999. Water consumption per worker decreased by 6.6 percent from 1995 to 1999. Solid waste per worker has increased by 50 percent between 1996 and 1999. (Source 3)

The second category of environmental impacts by Sulzer comes from the life-cycle of their products. In order to improve the total environmental performance of their products Sulzer used life-cycle assessments (LCA). LCA is a strategic process in which the environmental impacts of the entire life-cycle of a product are identified and assessed. The life-cycle of a product consists of resource extraction, manufacturing (covered above), transport and installation, usage, and disposal. The environmental aspects associated with their products are energy consumption, emissions to the air, water, and ground, in addition to any waste produced throughout the life-cycle. Through LCA Sulzer Industries discovered that 90 percent of their product’s total impacts occurred during consumer use (Source 3). Therefore they should focus their attention on the designing more energy efficient products. One of the designs used cooling towers to provide natural air conditioning to some highly insulated office buildings. Another developed Germany’s first geothermic storage unit in an office building in Frankfurt. This proved to decrease the amount of energy needed for heating and cooling as well as reducing their associated costs. Other examples of environmental improvements in their products are a new efficient and economical thermal coating process as well as increased recyclability of the carpets they produce. Many of the products Sulzer produces are large factory equipment with long lifetimes, but high disposal costs. They have improved the design of their compressors so that they are easier to modernize and reuse. (Source 3)

Although no specific numbers have been published on the profitability of these improvements, both corporate and product related, by Sulzer they indicate that, “the results so far are positive.” (Source 3) Sulzer hypothesizes that because of the implementation of environmental strategies in the design phase of their products they will benefit from mover advantages within these specific markets.