THE FUTURE OF ARAB ENVIRONMENT
THE FUTURE OF ARAB ENVIRONMENTTHE FUTURE OF ARAB ENVIRONMENTTHE FUTURE OF ARAB ENVIRONMENT
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November 2007

Introduction

At a groundbreaking Corporate Environmental Responsibility Summit, convened in Abu Dhabi on November 29, 2007, and attended by over 120 chief executives representing major business sectors from across the region, business leaders from the Arab world have agreed on staunch commitment to advance and adhere to the principles of environmental responsibility and cleaner production, and set a target to reduce the consumption of energy and water in their operations by 20% by the year 2012.[1]  The Corporate Environmental Responsibility program, which seeks to institutionalize environmental thinking and action in corporate decision-making, provides an ideal opportunity to translate this declaration into action.

Through the Corporate Environmental Responsibility (CER) program, the Arab Forum for Environment and Development proposes to work in partnership with a group of corporations to improve their environmental performance.  We envision our role to be that of creating visionary goals, catalyzing change, and propagating environmental best practices.

The Arab Forum for Environment and Development is seeking corporate founding members for the CER program.  Founding members will commit to working collectively and in close partnership with AFED to introduce environmental thinking and action to business decision making.  In addition, corporate founding members agree to provide financial support covering CER program costs for a two-year period based on a pre-approved budget.  Funding will cover AFED's program management costs as well as other expenses associated with developing and implementing a set of agreed-upon environmental initiatives. The CER program will be launched in 2008. 

The CER program proposes to conceive and implement resource conservation as well as environmental sustainability reporting projects.  Resource conservation projects will focus on the eco-effective and eco-efficient use of energy and water.  The environmental sustainability reporting initiative will enable CER corporate members to adopt a set of environmental accounting tools, which corporations can utilize to communicate to the larger public their environmental performance.

The remainder of this report is divided into three sections.  In the first, we present a detailed description of CER program philosophy and a road map for program design and program execution.  In the second section, we present an underlying framework for organizing our efforts.  In the third section, we present CER program deliverables and budget inputs.

 

Section I:

What is The Corporate Environmental Responsibility Program?

The Corporate Environmental Responsibility (CER) program, a project of the Arab Forum for Environment and Development (AFED), works in partnership with corporations to develop and implement environmental initiatives.  The CER program's mission is to achieve substantial environmental benefits by influencing corporate behavior and action.  The program works to identify strong synergies between business value creation and breakthrough environmental results, while leveraging the results of each partnership to create broader change.  We will create success by assisting corporations integrate environmental considerations into their standard business practices.

The CER program will work closely with an initial group of corporate founding members over the course of two years (2008-2010).  We will seek to create environmentally aggressive initiatives that also generate business benefits, such as increased revenues or reduced costs.  This approach will ensure that incentives for further progress are internalized within corporate operations.

We, at AFED, believe that a multi-sector collaborative approach provides the best vehicle to build capacity in corporations and civic institutions to achieve economic, environmental, and social sustainability in our society.  Inventing environmentally sustainable products, services, and business models presents a profound challenge to established business norms.  Learning how to remain profitable while acting in an environmentally sustainable way is thus best addressed by integrating our collective efforts.  The sustainability challenge transcends technical competencies at any one corporation to encompass organizational inertia to new ways of thinking, learning, and acting.  We see the CER program as an ideal forum to raise these issues, develop new approaches, and take common action.  Inspired transformation takes place only by acting on our thinking.

What is the Philosophy of the CER Program?

The Arab Forum for Environment and Development believes that though government may or may not always play an important role in helping to set and enforce environmental standards, additional efforts are needed to encourage and assist business to reduce its environmental impacts.  Similarly, classic advocacy methods such as education and direct action can be used to motivate businesses to change, but do not always provide constructive outlets for corporations to do so.  AFED is launching the Corporate Environmental Responsibility (CER) program to bridge the gap, providing expert assistance to businesses to set and achieve aggressive environmental goals that go beyond regulatory compliance.  Beyond that, we seek to transform corporate culture and bring about shifts in established norms.

How does the CER Program Work?

Historically, environmental movements and organizations have used a wide array of advocacy methods to convey their messages for environmental change to government institutions and businesses.  Voluntary, cooperative partnerships between non-governmental organizations (NGO) and corporations have increasingly been employed only over the last decade.  AFED proposes to launch a corporate responsibility program in that very same vein.  In this sub-section, we thus present our view of program design and program execution elements that are key to creating successful and effective CER projects with our corporate partners.

  • 1. Program design: The design and start-up phase of a partnership requires significant investment of time and resources. This phase begins as soon as corporations declare their intent to become founding members of the CER program, which also marks the formal start of the program. The design phase should end with the signing of a formal memorandum of agreement. A corporation may become a founding member by submitting a Letter of Intent committing to becoming a CER partner and agreeing to provide funding to cover program expenses. AFED will seek to secure Letters of Intent from 4-6 corporate partners. Total CER program costs will be divided equally among corporate partners. In addition, AFED will seek funding for sub-projects as needed from outside sources once the CER program is formally launched. Prior to securing corporate Letters of Intent, AFED will provide seed funding to cover the costs of the exploratory, pre-startup stage.

Once Letters of Intent are obtained, the parties should take the time to define project scope, estimate the resources required, and evaluate the risks involved.  It is also an ideal time to build trust and generate common expectations about the goals a corporate partner wishes to commit to, to improve its environmental performance.

Once an initial proposed scope of work is developed, the partnership should be formalized through a memorandum of agreement (MOA) signed by senior managers from each organization.  Agreements are necessary as they define the ground rules and clarify expectations for all parties.  The MOA should also include detailed description of program budget and program deliverables.

Because corporate partners will fund the CER program, it is important for the formal agreements to clearly communicate AFED's role in the program.  AFED believes that a formal partnership as defined works best when each partner maintains its independence and credibility throughout the project.  AFED's name and overall reputation are central to our organization's long-term ability to meet our vision and carry out our mission.  AFED takes particular measures to ensure that the CER projects are carried out transparently, between the partner(s) and us, and ultimately including the public so that others can learn from and benefit from the program's success.  Therefore, it is AFED's view that discussions during the design phase leading up to the signing of the formal agreements must adequately address at least the following key areas:

•a.      Substantive scope of work.  AFED will work with partner companies to define a scope of work for the program at the outset in order to ensure that the projects are adequate to reduce the environmental impacts of partners' operations.  By providing a clear statement of what issues will be addressed, the expectations of both partners and the public are clear from the start.  The agreement will also note AFED's assumption and understanding that each partner will devote sufficient resources to the projects, consistent with fulfilling the goals of the CER program.

•b.      Public accountability.  Once a project agreement has been signed, AFED will announce the program to the press and may provide briefings to other environmental organizations.  All projects are concluded with the release of a jointly written report that announces the environmental and business benefits resulting from the CER program as well as any useful concepts or techniques developed as a result of the partnership.  Once accepted, the corporate partner will commit not to reverse its implementation of the results of the partnership.  We usually accompany the publication of the final report with the issuance of a joint press release or the holding of a joint press conference.  These mechanisms for ensuring public accountability provide an essential backdrop for AFED's work, lending it greater visibility and creating a public expectation that substantive action will result from the project.   

•c.       Replicability.  As a public advocacy organization, AFED has an interest in maximizing the reach of our CER program by sharing the results as broadly as possible.  Our agreements, therefore, must affirm our right to disseminate information, tools, and methodologies developed in the course of the program, through the public report and any other means we may wish to use, subject only to any applicable restrictions regarding confidential information.

•d.      Independence.  To protect AFED, its advocacy mission, and its role in the CER program as an independent organization, our agreements reserve our right to withdraw from a project at any time. They also stipulate our right (as well as our partners') to include a dissenting statement in the final report on any issue on which agreement cannot be reached.  Finally, the agreements make clear that we remain free to characterize the project, and to engage in advocacy and other activities both during and after the project, as we see fit.

•e.      Business credibility and trust.  If AFED is to achieve fundamental change in corporate practices, we may potentially have to have access to confidential information in a company's possession.  It is only reasonable that corporate partners are assured that any such data they provide to us will remain confidential.  For this reason, our agreements include a confidentiality provision.  This provision, however, does not designate any and all information provided as automatically confidential.  It also specifies appropriate limits to confidentiality obligations under certain conditions.

•f.        Governance.  To ensure accountability and transparency in decision-making, we propose the formation of a governing board.  For a proposed size of 4-6 corporate partners, we envision each corporate member to have a seat on the board.  Elections may be called for if the number of CER partners exceeds 6.  The Program Director is automatically granted a seat on the governing board as a non-voting member.

  • 2. Program Execution: The two key elements of program execution include the formation of project teams and the development of a clear work plan. Teams should be empowered to make decisions on behalf of their companies and should represent a cross-function of those corporate departments likely to be affected by the project. AFED will actively enlist the support of upper-level management at our corporate partners in order to give the project internal visibility, keep the project on the company's agenda, and motivate staff participation. Moreover, because upper-level managers will ultimately approve any changes in company operations, their early involvement paves the way for later implementation of project teams' recommended initiatives or actions.

While work plans continually change in the course of a project, developing an initial work plan serves a number of purposes.  It enables each party to communicate its expectations about project tasks and anticipated results.  A work plan helps the teams better determine staff and financial needs, establish a timeline, understand the sequence and relative priority of the various tasks required to advance the project, and assign the appropriate resources for their completion.  AFED will work closely with partner teams to maintain project momentum by ensuring equitable distribution of tasks, proactively addressing staffing problems, jointly setting the pace of the work, and by identifying and working toward early, visible results.

In most cases, environmental initiatives will only sustain themselves and grow within a company when they deliver specific, measurable business benefits, particularly with regard to a company's core business functions.  It is important therefore, that business analysis be performed concurrently with the environmental analysis, with company staff providing the necessary information about the company's business operations.  As a result of this process, ideas that are unrealistic or impractical may have to be shelved, while other ideas may emerge as winners.

An environmental project can add value to business performance in a number of ways:

  • v By decreasing costs;
  • v By increasing revenue;
  • v By reducing risk.

You may refer to Appendix A for a summary of factors to consider when evaluating the impacts on business.  Whether measurements are quantitative or qualitative, understanding and transparently communicating the potential or actual benefits of the CER program - both environmental and business - is critical to sustaining both project momentum and environmental progress once the project is complete.

The Next Step: Creating A Larger Impact

Moving beyond the initial CER program, AFED will implement a dissemination and communication strategy that capitalizes to the greatest degree possible on the immediate success of the projects' resource conservation and sustainability reporting concepts.  Our program aims to catalyze environmental change within founding corporate members first and, by setting new best practices, in the larger marketplace.  To that end, we will design a replication campaign to convince a broad spectrum of corporations in the Arab region to adopt and even go beyond the environmental best practices developed through the CER program.  In addition, our communication campaign will be designed to ensure that government policymakers, media, and other opinion leaders fully understand and appreciate the significance of the CER program, and leverage that understanding into new CER programs in other areas such as clean production.

Section II:

Environmental projects: a framework

AFED proposes for consideration as candidates the following environmental initiatives:

  • v The design of environmental accounting measures leading to the publication of periodic environmental sustainability reports;
  • v The design of conservation projects for the eco-effective and eco-efficient use of energy and water resources.

The successful development and implementation of these projects will require the design of a systematic approach.  I suggest the following framework to organize our efforts:

•a)      Historical situation analysis.  An understanding of how energy and water use and environmental reporting have been historically embedded in business operations;

•b)      Political will of stakeholders.  Enlisting the commitment and cooperation of multiple actors within each organization and across organizational boundaries;

•c)      Knowledge.  Building the capacity to create new knowledge and developing the organizational capability to transform knowledge into action;

•d)      Learning.  Adopting an adaptive management posture to promote learning; and

•e)      Goals and means.  Articulating ends and strategies monitored by a set of strategic indicators. 

Planning should be anchored in implementation of our goals to begin within two years or by the year 2010.

In the remainder of this section, I will describe our organizing framework in more detail so as to create common understanding.

•a)      History: We need to understand the historical context shaping corporate partners' efforts to address water and energy conservation as well as sustainability reporting.  A historical view positions us to understand how corporate partners have in the past managed water and energy use.  This exercise will also position us to discern how current business operations related to water and energy use continue to affect the environment and human health.  It will also help us establish a baseline against which progress can be measured.  Ultimately, the goal is to understand how the consumption and/or conservation of energy and water have been historically embedded in the corporate partners' business operations.

•b)      Politics: A strategy for resource conservation and environmental sustainability reporting may require political dialog among multiple actors representing different functional groups.  A thoughtful analysis of all stakeholders is, therefore, necessary to determine who gets to have a say in the formulation of conservation and reporting projects.  Various stakeholders represent different interests, perhaps even conflicting, and therefore care must be exercised to identify for inclusion those who have the most to gain or lose from these projects.  Interested actors may include operations managers, procurement managers, accounting personnel, senior managers, engineers, designers, and maintenance staff among others.  Developing consensus and implementing plans will require non-trivial level of agreement and cooperation among all these actors.  Ultimately, there must be a political will to act.

•c)      Knowledge: We need to envision the role of science in making resource conservation plans and put mechanisms for using new scientific knowledge.  For example, to diagnose water and energy use, we need to conduct an audit to account of the sources, quantities, and rates of consumption, as well as develop an understanding of their transformation and disposal patterns.  Additionally, we need to monitor emissions to air, water, and land related to energy and water consumption and their fate in the environment.  Finally, we need to assess conservation plans and their effects on business operations.  Concerning environmental reporting, we need to build competencies in environmental measurements and monitoring methods.  In addition to developing basic knowledge, we must have or develop the capability to utilize and transform this knowledge into concrete actions.  In summary, there needs to be an organizational capacity to acquire and utilize knowledge practically.  

•d)      Learning: Conservation plans for water and energy and their effects on business operations always contain technical uncertainties and generate more questions for additional research and planning.  However, this knowledge base and corporate case studies from elsewhere form the scientific and engineering basis upon which conservation projects are designed, as incomplete our understanding may be. Therefore, it is imperative that we adopt adaptive management, by which we treat water and energy conservation projects as experiments.  This approach puts a premium on promoting learning from success and failure, which can then be used to make adaptations and course corrections.

•e)      Goals and strategies: In a world of incomplete understanding and diverse stakeholder interests, what should be the goals for water and energy conservation and what strategies should be adopted to attain them?  This is a question about ends and means.  It is hoped that stakeholders can harness their discussions (perhaps conflicts) over the means or strategies as a tool to detect project error and make continuous adaptations.  In that vein, we must give thoughtful account to the measurement of progress towards our goals.  Specifically, agreement must be reached on what strategic indicators will be measured.  The objective is to design an honest monitoring regime that is likely to enhance the prospects for practical project implementation, learning, and compliance.    

We believe that this set of underlying ideas provides a credible framework for organizing our efforts accountably and transparently.  Additionally, the CER program provides an ideal arena within which these discussions and activities can take place.

Section III:

CER program deliverables and budget inputs

One measure of evaluating the impact of the CER program on corporate operations is to create a list of deliverables as well as a general outline of budget inputs. 

•a)                  Deliverables: We propose to measure our efforts by offering the following deliverables:

•1.      CER program orientation meeting:  To kick off the CER program, AFED will organize a one-time orientation meeting for corporate partners to formally introduce members to each other and to the program.  In addition, work plans and budget inputs for the two-year program will be presented for discussion and approval.  A review meeting will be organized at the end of the first year to discuss progress, generate feedback, and make course changes.

•2.      Corporate capacity building workshops: The CER program will organize a number of workshops aimed at developing individual and organizational capacity for learning and adapting.  The workshops will address what it means for corporations to develop leadership capabilities, organizational learning competencies, and collaborative abilities in the context of environmental sustainability challenges.  The ultimate goal of these workshops is to develop a practical understanding of the mental, cultural, and attitudinal shifts that will be necessary for programs of adaptive change.  These workshops will draw upon each participant's personal and professional experience and their benefits will transcend to other corporate organizational learning challenges.

•3.      Resource conservation workshops: The CER program will organize a number of workshops to present methods, tools, processes, and case studies for planning and implementing energy and water conservation projects.

•4.      Sustainability reporting workshops: The CER program will organize a number of workshops to assist corporate partners develop capabilities for disclosing their sustainability performance.  The workshops will present the reporting framework developed by the Global Reporting Initiative (GRI), including guidelines for preparing sustainability reports.  Other workshops will present methodologies and protocols for selecting, measuring, and monitoring relevant environmental indicators.

•5.      Custom-tailored initiatives: The CER program will design and organize a number of workshops on an as-needed basis.  Consistent with the principle of adaptive management discussed in Section II above, corporate partners will be expected to develop additional needs for accelerating their organizational learning as they navigate their transition to environmentally sustainable enterprises.  The CER program will design initiatives as needed to address the new demands and fill any gaps.  These initiatives may take different forms and will be designed in consultation with CER corporate partners.

•b)                  Budget inputs: To be successful, the CER program will require significant staff time and organizational resources.  The total budget for the two-year program is $700,000 ($350,000 per year for each of two years).  Different annual figures are budgeted for the same line item, reflecting the one-time nature of some of the costs associated with program rollout.  Please see the attached program budget for a detailed breakdown of expenses by year and line item. 

AFED has created a CER Program Director position dedicated to working closely with our corporate partners to roll out and manage all aspects of the CER program.  AFED has already selected a director to lead the CER program.  You may refer to Appendix B for program director biographical information.  In addition, AFED will assign a program assistant and an administrative assistant to provide project and management support to program activities.

AFED will hire outside consultants to assist with workshops and initiatives as needed.  Consultants will be selected from inside and outside the region based on their domain knowledge as well as their empathetic knowledge of region businesses and industries.   

We will also seek outside help to design and maintain web content dedicated to the CER program.  We anticipate that our publicity efforts will drive substantial traffic to the CER web site.  We plan to create a dedicated area within AFED's web site to tell the complete story of this program- benefits to corporate partners, environmental milestones achieved, the partnership history, and "next steps" as we reach out to regional corporations to become CER partners.

You may refer to Appendix C for the detailed project budget and other financial information pertaining to the program as a whole.  In summary, the two-year budget will cover the costs of launching the CER program, developing program materials, program management, contracted services, and travel and conference expenses.  The budget inputs described above represent the total costs of the CER program to AFED, and excludes additional costs that may be incurred by each corporate partner internally for rolling out and implementing new projects.

Conclusion

We appreciate the consideration of this Letter of Inquiry by candidate corporate founding members.  If you have any questions about this letter, please contact Najib Saab, AFED's Secretary General.  We look forward to your response to this Letter of Inquiry (LOI).

    Measuring the Business Benefits

WHAT TO MEASURE

TYPE OF MEASUREMENT

FACTORS TO CONSIDER

I. Risk reduction

 

 

Future liabilities

qualitative or quantitative

Reduced accident-related liability exposure due to fewer hazardous materialsReduced product liability exposure due to fewer chemicals/lower toxicity chemicalsReduced worker safety due to less hazardous materialsReduced regulatory burdenReduced off-site liability due to less wasteReduced risk of legal and regulatory costs

II. Costs

 

 

How does the project/action affect ...

 

 

Material or chemical costs

quantitative

Reduced materials costsReduced inventor carrying costsReduced waste disposal

Energy costs

quantitative

Reduced energy costs

Labor costs

qualitative Unless project team decides to invest resources to measure quantitatively

Reduced handling costs due to fewer components and/or less hazardous materialsIncreased productivity due to better working conditionsSwitches in labor mix due to freed time from materials and/or waste handlingIncreased productivity due to safer and/or more pleasant work environmentDecreased turnover due to higher employee commitment and moraleLess overtime due to re-work and/or more efficient processes

Shipping and/or transportation costs

quantitative

Reduced fuel costsIncreased cost effectiveness due to lighter, smaller, and more efficiently packaged productsFewer vehicles or loadsMore efficient routing

Research & development costs

qualitative and quantitative

Reduced cycle time for new products; faster time to marketReduced development cost due to less re-work around regulatory parametersShorter permitting cycles

Overhead costs

qualitative and quantitative

Fewer regulatory staff neededFewer fines and penaltiesLess management time to manage exclusively environmental matters

III. Revenue

 

 

How does the project/action affect ...

 

 

Sales

quantitative

Increased market share due to effective environmental differentiation in the marketplaceIncreased market share due to attraction of "green" consumersIncreased customer retention due to greater product loyalty from innovation and environmental performance

New markets and products

quantitative

New product entries into existing marketsExisting product entries into new marketsNew product entries into new markets

Corporate reputation

qualitative

Increased recognitionImproved performance in broad-based surveysImproved acceptance rate of new hiresIncreased employee retention

Product or brand image (brand equity)

qualitative

Increased product recognition due to environmental imagery in brandIncreased "noise" around products due to environmental attributes

IV. Cost of capital

qualitative

Increased attractiveness of corporate securities to "socially responsible investors"Increased returns due to lower risk, lower cost, and higher revenueHigher stock valuation due to improved future prospects


[1] See http://www.afedonline.org/en/inner.aspx?contentID=249

 

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