Creating value through sustainability

A global best practice adopted in local context

By Mayuri Wijayasundara, Sajith Edirisooriya, Tharinda Jayawardena and Sudarshan Senaratne

Holcim (Lanka) Ltd. was placed first runners-up at the CIMA Case Study Awards 2011 for their case study pertaining to the theme ‘creating value through sustainability’.

The CIMA Case Study Awards is a competition where leading corporates in a variety of industries analysed and documented the learning they gained from their past, and share that learning with the wider business community by using the business analytical skills and knowledge of CIMA graduates within their companies

Can waste of one industry be fuel or raw material for another?

Driving sustainability among industries could have a significant impact if industries be interdependent on each other positively for driving sustainable initiatives.

Governed by the principle of industrial ecology where waste or by product of one industry could be altered to be used by another, will conserve material and contribute to reduce ecological footprint of the total industry base.

Sustainability initiatives in the cement industry

Cement industry consumes a large amount of energy and material in its production processes and is generally considered to make a relatively high impact on the ecological environment.

Holcim, a leading supplier of cement and aggregate products across the world, is a pioneer in the industry for sustainability initiatives, commenced use of alternative fuels and raw materials derived out of industrial waste nearly three decades back.

The concept innovated with far-fledged visionary thinking created a pathway for Holcim companies to have a separate waste management arm to drive the waste management business under or affiliated to the Holcim company. These units were recently given a separate identity under the Holcim Group, ‘Geocycle’.

Geocycle plays a dual role, attached to Holcim. It provides waste management solutions to industrial waste generators and acts as an intermediary to qualify, control and prepare a substitution product out of waste to be thermally destructed in the cement kilns through a technology called co-processing.

While the prepared alternative fuel/raw material gets fed to the cement kiln it gets destructed in the cement kilns at operating temperatures of about 1,450 C through co-processing. Therefore, Geocycle also provides an alternative fuel or a raw material derived out of waste to Holcim to be used in its production process.

Geocycle in Sri Lanka

In Sri Lanka, waste co-processing was conducted in trial stage and was established as a regular operation by 2004. Rice husk and saw dust were the main waste derived material that used and Holcim Lanka was substituting 6% of the thermal energy requirement of the kilns through them.

Since 2004, there were key strategic changes, and Geocycle expanded its service scope not only to the agricultural waste market but for all other industries in 2004, with key strategic decision to move into hazardous waste co-processing.

At that time, there was no approved facility for hazardous waste treatment in Sri Lanka and as the only operator of a cement kiln in the country, Geocycle evolved and grew as a waste management unit over the past years, initiating change to grow a waste management industry in Sri Lanka.

A snapshot as at today

Looking at success using the triple bottom line concept of sustainability, Geocycle’s success over the last years can be discussed in three dimensions.

1. Economic sustainability

Geocycle business adds economic value to Holcim by two means. First is through savings generated by supplying waste management services and second is through the transfer price from the cement kilns for supplying a source of fuel to the kilns. This absolute economic value to the business in terms of savings is recorded as Gross Added Value.

Marking Geocycle’s penetration to the waste management industry as a solution provider, net revenue after costs for supplying waste management solutions reported a 56 fold increase in revenue in 2011 to that of 2006.

There is a replacement benefit generated for Holcim in comparison to the base case of using traditional fuel cost by using alternative fuel is the second source of value addition.

Geocycle had the thermal energy substitution by alternative fuels increased from 6% to 30% from 2004 to 2011, marking the increase of alternative fuel usage.

2. Environmental sustainability

Geocycle was able to make a significant contribution towards Environmental Sustainability. This is by

(a) Direct reduction in CO2 by incorporating the waste destruction to take place simultaneously during cement production in ‘co-processing’. The avoidance of CO2 emissions is the key direct environmental benefits resulting.

(b) Indirect contribution to environmental sustainability by diverting waste to a more sustainable, environmentally sound end-solution. Some recent examples are

• Avoidance of dumping of approximately 900 MT waste per month generated in the Katunayake Export Processing Zone in open land which previously caused soil contamination, unsafe working conditions and spread of diseases
• Avoidance of dumping or open burning of hazardous chemicals such as Polychloro biphenyl containing waste, waste pesticides, waste paints and chemicals, waste solvents and pharmaceuticals and destructing them through co-processing
• By using Rice Husk and Saw dust as an alternative fuel which was previously dumped in the river banks or burnt in the open
• Making use of Polythene & Plastic waste by them as an alternate fuel, recycling through partners and disposed them in the kiln instead of dumping
• Avoidance soil contamination through dumping / unregulated land filling, of sludge waste

a. Social sustainability

Social sustainability was achieved through the following means

a. Employment generation: Generating direct employment for 85 in Geocycle and over 1000 through channel partners.

b. Contribution to the development of the waste management industry by being a pioneer to set up best practices and standards for professional waste management solutions in the industry. The best example is the Material Collection Center in the Katunayake Export Processing Zone where over 200 families started to work in a professionally managed waste collection site instead of an open dumping yard of bulk waste, once Geocycle safety standards were implemented.

(c) Initiate introduction of specific regulatory provisions regarding permitting and enforcement framework of environmental regulatory framework in partnership with the Central Environmental Authority of Sri Lanka and the Provincial Environmental Authority of the North Western Province.

(d) Geocycle is presently the only permitted service provider in Sri Lanka to destruct hazardous waste in the country.

It also operates the only Environment Protection License for pre-processing and co-processing hazardous wastes and thereby makes its services available to the hazardous waste generators to dispose of their waste using an environmentally sound technology

(e) Passing the know-how to small to medium scale entrepreneurs to grow as partners to whom the waste is diverted to a sustainable end solution.

The learning carried forward

• Partnering with the government Institutions, other solution providers and local community and provide value addition to all and growing in harmony with the environment.
• Driving a business and market strategy to suit the local context with a clear segmentation and focus
• Striking a balance with the short term returns and long term growth of business by balancing between opportunistic and focused sales
• Focusing towards the unconscious and conscious needs of the interested customers who had a commitment to obtain an environmentally sound solution for their waste
• Building equity through professionally handling key projects to provide solutions
• Development of effective communication strategy and management by:
• Involvement of major stakeholders such as authorities and institutions in consultation at focal points
• Identifying key messages to communicate through specific communication tools
• building up awareness gradually by educating on simple messages carting scientific/ technical details ( e.g. to relate to co-processing in cement kilns a simple example of a boiler using paddy husk to heat water was taken in communicating to the nearby communities in Puttalam)
• Use of simple and clear indicators customised to the business activity to measure the economic performance and for management decision making

Final remark

Implementing the strategy towards sustainability coupled with economic returns such as one of Geocycle needs striking a delicate balance in many aspects.

The balance required to align management of two largely different businesses to strive towards the operational and economic performance in a single process, the balance of corporate image and communications in Geocycle operations and finally the balance between the heavily capital intensive, steady cement industry vs the dynamic, volatile waste management industry demanding rapid change of operations and strategy to respond to market needs.

The challenge for Geocycle in this context in adaptation is large, yet the benefit pays off directly in all aspects of triple bottom line.



Sources:

Holcim (Lanka) Ltd, (2007), Annual Review & Sustainability Report