5 steps to transition to a Sustainable Corporate Strategy
By: Aishani Gupta
Tags: Sustainability, Lubrizol, Esg, Corporate Strategy

I met James Puckace, or Jim, when he visited Babson to hire interns for an interesting new project at Lubrizol: exploring a new raw material source in nut shell waste in developing countries and working on setting up a new supply chain system for the same. The aim of the project was to reduce raw material costs for business, up-cycle the waste material, and uplift the economies of societies in these regions by providing opportunities for employment. It intrigued me, how did this old giant manage its innovation for sustainability? And, more importantly, how did it transition to incorporating sustainability into a chemical company?

Jim is the Senior Director of New Business Development and Innovation. He’s a dynamic leader and his thought leadership in innovation and making a difference in this world through business comes across very strongly.

As per expert respondents in the 2019 Leaders Survey, integrating sustainability values and making sustainability part of the core business model are the key characteristics that define corporate leadership today (2019 Sustainability Leaders Report). I reconnected with Jim recently to discuss how Lubrizol has been leading the sustainability efforts. He laid out the plan that serves as a starting point for driving sustainability in an organisation, highlighting 5 steps to lead this transition. I have added details to points shared by him so as to make it relevant for organisations irrespective of industry.

Set up a dedicated team- The first thing is to put together a cross-functional core team with members from the various businesses verticals in order to embed resources into each system. While having a sustainability champion is essential, the only way it will permeate all layers of the organisation is through successful employee engagement models. It is important to define what sustainability means for each business vertical in the organisation and the benefits for each. Take stock and benchmark- It is important for the organisations (or the core team) to familiarise themselves with what’s happening in the industry: what are the competitors doing? Where is society headed? And, what is the organisation doing to align with the industry best practices? Collecting data is essential for understanding the high impact goals, and most importantly, understanding the possible difficulties with the implementation plan which could pose as bottlenecks in achieving these goals. Data could be about taking stock of the inventory, products, processes and the current business goals. Lubrizol identified seven United Nations Sustainable Development Goals (UN SDGs) that they believed the business could have a positive impact on. They then continued to implement and refine their sustainability program to identify indicators and ways the business could specifically impact these seven SDGs by their 2030 target date.

The 7 UN SDGs that align best with the organisation’s capabilities and goals

3. Map the Impact- In order to understand where sustainability efforts should be concentrated in a company, it is necessary to identify the issues that have the biggest impact and are most relevant to the business and to its stakeholders. A Materiality Matrix helps to map this potential business impact and stakeholder priorities. The issues of greatest importance to the stakeholders in the areas of environmental, social, governance and ethics, and economic performance are mapped against the priorities of the business shareholders and management to inform strategic decision making, goal setting and reporting. This enables you to ask the right questions, choose the right stakeholders, apply the appropriate methodology and visually present the information effectively to help inform decisions.

Through more than 30 internal and external interviews, input synthesis, analysis, and the validation process, Lubrizol identified 17 material topics of highest priority to manage, set goals and discuss in their reporting, which formed the basis of their 2017 CSR report.

4. Define metrics and systems to track progress- Lubrizol tracks and reports its progress annually and has seen varied results that fluctuate with business and operating conditions. Metrics must be determined based on current industry benchmarks and the future benchmarks the company would like to achieve. To set new goals, it is important to incorporate learnings from the current goals in order to establish consistent approaches to managing performance that will enhance the ability to track and report progress. In 2013, Lubrizol introduced long-term environmental reduction goals for waste, energy and greenhouse gas (GHG) emissions associated with their global manufacturing operations, and testing and R&D facilities. The annual average per unit of production from 2008 to 2012 was used as the baseline to set these goals, and they set a 2020 target of a 10% reduction in energy use, greenhouse gas emissions, waste generated and waste disposal directly to the environment (e.g., waste to landfill) (Lubrizol’s Corporate Sustainability Report 2017). Tracking these helps the organisation ascertain whether the level of performance is up to expectations or not and determine priority goals and model projects around these priorities.

Also, Life Cycle Assessment (LCA) is a great tool for creating and measuring impact. It is a way for assessing environmental impacts associated with all the stages of the life-cycle of a product, process, or service and therefore helps gain the overall environmental impact from cradle to grave. In the case of manufactured products, environmental impacts are assessed from raw material extraction and processing (cradle), through the product’s manufacture, distribution and use, to the recycling or final disposal of the materials composing it (grave). Lubrizol does quick assessments, deeper analysis and also complete plant assessments allowing them to zoom in and out of the production process. Jim mentions that one of the most powerful uses apart from measuring the impact is the influence this data has on an organisation’s marketing capabilities and power for advocacy.

5. Invest in Technology- The only way to efficiently impact the scale of positive environmental and economic impacts is by leveraging technological developments relevant to a company’s industry. Technological developments for product, process and infrastructure have a cumulative positive impact.

Designing sustainable products - Lubrizol’s pursuit of innovation has aimed to enable its customers and end-users to increase energy efficiency and reduce greenhouse gas emissions while maintaining superior quality. Their impact on lower emissions across many transportation applications is notable. For example, Lubrizol’s investment in the development of additive technology that enables Gasoline Direct Injection (GDI) engines has resulted in an approximate 100 million MT CO2 reduction over a six-year period and also improved the durability of the engines. Lubrizol has sustained investments in technology to improve their products. While for Lubrizol the core focus is on chemical technology, every organisation should identify the appropriate technological investment that could aid sustainable development of their core product.

- Lubrizol’s pursuit of innovation has aimed to enable its customers and end-users to increase energy efficiency and reduce greenhouse gas emissions while maintaining superior quality. Their impact on lower emissions across many transportation applications is notable. For example, Lubrizol’s investment in the development of additive technology that enables Gasoline Direct Injection (GDI) engines has resulted in an approximate 100 million MT CO2 reduction over a six-year period and also improved the durability of the engines. Lubrizol has sustained investments in technology to improve their products. While for Lubrizol the core focus is on chemical technology, every organisation should identify the appropriate technological investment that could aid sustainable development of their core product. Technology in Manufacturing and supply chain- Organisations are using Artificial intelligence and the Internet of Things ( IoT) to become more efficient. Organisations are doing this by reducing waste, recycling and reusing materials, creating lean and efficient supply chain systems and creating process capabilities for more sustainable sourcing practices.

Jim has a growth mindset and is always learning, extracting lessons and devising his own mechanisms to further the organisation’s innovation goals by exploring untapped customer needs. In the end, Jim emphasises that organisations must explore product, process and business model innovations in conjunction with combining individual and group innovation capabilities to become more sustainable. If organisations adapted these innovations, they would make strides to become more circular by addressing the three principles of the circular economy: design out waste and pollution, keep products and materials in use and regenerate natural systems (Ellen McArthur Foundation), looking beyond the current take-make-waste extractive industrial model, while exploring new profitable avenues for business.