CEO of Top Cement Firm Holcim Speaks on Integrating Climate Change and Strategy
"I always believed, and believe it now more than ever, that you can reconcile economic and environmental goals," Patrick Dolberg, President and CEO of Holcim (US) Inc. told a packed audience on February 6 in a presentation co-sponsored by The International Business Program’s Global Speaker Series and The Center for International Environment and Resource Policy of The Fletcher School.
In a speech entitled, "Linking Climate Change and Business Strategy," Dolberg explained how Holcim, one of the world’s leading cement companies and recognized by the Dow Jones Sustainability Index as "Leader of the Industry" in its overall approach to Sustainability is designing its business strategy to make major reductions in greenhouse gas emissions.
"We have a goal to reduce by 20 per cent the level of carbon emissions per ton of cement by 2010, starting from the level of emissions in 1990. To meet this goal, we are focusing on new product development and internal efficiency," he said. Dolberg also explained the challenges in being the first company in the sector to aggressively pursue environmental goals, and prospects for new government policies on emissions.
"In our industry, I always heard people saying that nothing would happen in the US regarding climate change. But with an international background, I knew this would become an issue here, and I wanted to proactively lead our industry in reducing its environmental footprint," Dolberg said.
The cement industry is in a position to make a major impact in reducing carbon emissions. Production of cement accounts for around five per cent of global man-made carbon emissions which come from two main sources. Some emissions are intrinsic in the chemical process which involves breaking down calcium carbonate and releasing carbon dioxide. The raw materials also have to be roasted at very high temperatures, and the burning of fuels to heat the roasting systems is another source of emissions.
Dolberg explained that despite the emissions associated with concrete production, "if you do a full lifecycle analysis of the carbon impact of concrete, it is very favorable compared to other materials such as steel."
Holcim’s efforts to cut emissions have included major overhauls of production facilities to make them more environmentally friendly, attempts to reduce the carbon impact of the furnaces used in cement production, and the introduction of new products.
"We have been using industrial waste to fuel our cement production instead of coal. This would have been burned in incinerators, so using it for fuel reduces total emissions," Dolberg explained. He added that using these alternative fuels has cost advantages as well, since companies are often willing to pay Holcim to dispose of their waste, and they provide protection from changes in coal prices.
Reducing the amount of material (clinker) that goes into each ton of finished cement is another way to cut emissions. Dolberg, however, explained that bringing these new products into the market can be a challenge. "One part of implementing interesting solutions for climate change is to convince the regulators of this highly normalized industry that our new products are just as safe," he said, adding that, "(t)he innovative products we have introduced can be profitable as well."
"My conviction is that you need to lead changes for the benefit of your company and the industry as a whole," Dolberg said. He cautioned, though, that there are risks in moving on this issue much faster than the rest of the traditionally conservative cement industry. "There is the danger that we would be alone in the middle of the river while all the others are safe on shore."
The shape of future government regulation of industry emissions is a major question for companies like Holcim that have already launched sustainability programs ahead of their peers. "When they are thinking about regulations, authorities tend to talk to the sector, but as a company you need to lead to get the industry as a whole moving. It is a tension between leading and making sure you are followed by the rest of the industry," Dolberg explained.
"A lot of things are going to happen in policy towards climate change, and we want to be in that debate," he said.
Dolberg contrasted two different systems for regulating emissions caps based on current production, and setting targets or an industry standard. "If you introduce emission caps based on current emissions, that grandfathers in bad producers and is not good for an early mover company like us." He argued that an industry standard is better, since it forces all companies to move forward, and also rewards the steps innovative companies have already taken.
Looking beyond changes to its own operations, Holcim founded the independent Holcim Foundation for Sustainable Construction. "The foundation goes beyond just looking at projects to develop new ideas in sustainable construction methods and building technologies," Dolberg explained.
"Industry has to be responsible and lead the change, balancing the different aspects of sustainability – economic, social, and environmental," he concluded.