Thank you for that kind introduction. May I add that I enjoyed the insights a few minutes ago from Professor Ramadan.
I also want to thank the organizers of the Banff Forum for their invitation to join this week’s stimulating debate and discussion.
On behalf of Alcan – a company that is proud to call Quebec its home - I want to welcome you to our corner of Canada.
Today is a rare chance to meet with such a wide audience of Canada’s emerging and dynamic leaders – who are specifically focused beyond the day-to-day – on the longer-term future of our country and our communities.
In that respect, I believe that there is no concept more clearly associated with the theme of this conference than that of sustainability.
Yes, I said that Canadian business is too provincial not outward looking enough but the specific question we have been challenged to ponder this afternoon is whether or not Canada is built to last. Like all ‘big’ questions, this one can be – and often is – approached from a number of different perspectives
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Politically – the question of unity remains an ongoing matter. One which waxes and wanes – but is always a subject of intense interest – especially here in Quebec.
Economically - can we continue to grow and meet what are increasingly high and growing expectations in standards of living i.e. GDP per capita? Or are we in reality mortgaging our future through sustained underperformance in productivity?
Environmentally – are we controlling and mitigating the harm that we do to our land, water and air? Or are we succumbing to exploitative approaches such that we have outpaced the environment’s capacity to regenerate and recover? I am sure there are other perspectives from which to approach this question. But these three come most obviously to my mind.
Allow me to start with the question of just what do we mean by sustainability?
The Wikipedia definition – which I use as a proxy for the worldwide consensus offers the following: “a systemic concept, relating to the continuity of economic, social, institutional and environmental aspects of human society, as well as the non-human environment. It is intended to be a means of configuring civilization and human activity so that society, its members and its economies are able to meet their needs and express their greatest potential in the present, while preserving biodiversity and natural ecosystems, and planning and acting for the ability to maintain these ideals in a very long term.”
A bit lengthy – but what do you expect from an estimated one billion online editors?
A more classic definition would take us back to the words of The Brundtland Commission in 1987: ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs.’ That works for me.
Bruntland created a new thesis – that economic and environmental considerations had to be integrated in a new Global Compact that would build toward greater equity. While sustainability has become a pervasive concept, I suspect that we each still have our own personal definition. If each of us here were asked to give a concrete example of what ‘sustainability’ means to us, I would venture to say that we would have a rather diverse and colourful list.
Let me borrow two definitions from two members of my own family. Two very personal perspectives.
The first comes from my 30-year old daughter. She works at a school attended largely by low-income, minority students in San Francisco and it is fair to say she loves her work. For her, sustainability is seeing her students getting into – and graduating from – quality universities. She believes the promise of better economic and social prospects for the students – and their families -- is the most meaningful definition of sustainable. I find that compelling. And am of course, very proud of her and what she does.
My sister would likely have a somewhat different definition. She runs a family tree farm in Oregon. If she is able to plant more seedling trees than she has harvested – and, for good measure, if she is able maintain the natural diversity of species – then she feels she has done her part. Foresters call it sustainable yield forestry.
I cite these two examples to make the point that sustainability is – and should be – a very real and a very personal concept.
It manifests itself differently in different circumstances. It will be realized in different choices made by different people – and different organizations. Real choices with real consequences.
For a large multi-national company like Alcan, the challenge is how do we make sense of something so multi-faceted? Something so large? We struggle for a common definition that can lead to concrete actions. Increasingly, environmental and social trends, issues and impacts are affecting business. What used to be seen as isolated issues or trends, sometimes considered as 'externalities' are now becoming a fundamentally part of business reality.
The influence these developments have on consumer markets can be profound. Appreciating these developments is key to understanding the context in which our business - or any business - operates
For this reason, at Alcan, we have tried to enhance the typical definitions of sustainability adopted by many of our corporate colleagues – corporate social responsibility or avoidance of environmental harm.
As a business organization, we know that the definition we embrace must reflect – and advance – the interests of our shareholders, our customers, our suppliers and our employees.
There is no relevant definition in my view that does not recognize the need to return or exceed our cost-of-capital over the long term. That is the textbook definition of ‘unsustainable’ in today’s capital markets. At Alcan, therefore, sustainability is a core aspect of our business strategy, not a tag-on public relations slogan. For that reason, our definition of sustainability is based on maximizing value for the benefit of all of our stakeholders. That is our ‘what’. That is our governing objective. And it is always implemented with – and never in spite of – environmental, economic and social considerations.
Which takes me to the ‘why’. Why bother to do this?
The short answer is that we feel it is both the smart thing to do and the right thing to do. It is the smart thing to do because sustainable business strategies are those that satisfy multiple stakeholders’ interests over time. Sustainability, by definition, does just that.
It is also inherently forward looking. It must be designed to meet future needs – as well as existing needs. Sustainability requires new approaches, innovative solutions and stronger partnerships. All of those, when executed and managed well, build value.
Sustainability is also the right thing to do. If you care about the world in which you live, the quality of life that your children will inherit and the ability to help those in need, then you will feel compelled to embrace sustainability.
Just to be clear with you - Alcan does care about those things. And we are proud that we care. But don’t forget, this is also about good business…and we believe that it is good business that we do care.
Thus far, I have touched on the “what” and the “why” of sustainability. But the most important element – the one usually skipped or “glossed” over by sustainability reports, NGO rhetoric, and political regulation is the “how”. Everyone understands at least the broad concept of sustainability and at the “gut” level supports it for the right reasons – but few have been able to apply it practically.
The critical question is: ‘How’? How do we make sustainability work? How do we ensure it is implemented in a way that achieves maximum value? How do we serve both the bottom line and a better world? As someone with 37 years in the operations side of our industry, it is the ‘how’ that preoccupies me. Because that is where the true difference is to be found. The difference between talk and action. Between an approach that is built to last and one that is built to “impress.”
The Banff Forum places a premium on the open exchange of ideas, so allow me to be entirely transparent on this point. Business does not yet have a complete answer to the question of ‘how’. Nor does government. Nor do NGO’s. Nor do any of us. In truth, we are all building it as we go.
That is not to say that current efforts are either unimportant or un-ambitious. But we have yet to figure out how to integrate sustainability throughout our business practices.
Our employees do not have a complete playbook to reference. We are still writing it. And we still have a lot to learn. There is little question in my mind that the first step must be awareness – and with that, communication. As I learned very early in my career: “There is no change without first dissatisfaction.” But communication alone will not create systemic change. In fact, if overdone, it can generate resentment and push-back.
In my opinion, far too much of the efforts related to sustainability – both by NGOs and businesses – are still stuck in this phase. At Alcan, we are determined to move things forward – to a deeper understanding and, in turn, acceptance, commitment, and action. To help make that succeed, we have isolated 8 specific areas of concentration – the so-called ‘Alcan 8’ – eight areas where we can more manageably focus the push for change.
In short, we are committed to getting it right…and we must constantly ask ourselves how does getting it right play in the near term and how does it play in the long term. We monitor what we do and we monitor what others do. We follow the academic and regulatory trends. We are, in far more ways than one, investing in the concept of sustainability. This effort can be, in practice, quite operational. It is often systems oriented. It is frequently unglamorous and almost always challenging. Yet, it is also very rewarding because we are creating something “Built to Last”.We are creating the Alcan of tomorrow. That is what encourages me as Alcan’s new CEO – and makes me proud of Alcan’s values and actions.
One of the ways we learn, of course, is to identify best practices – to capture examples of success so that we might apply them elsewhere. Allow me, therefore, to cite several examples from our four business groups.
First, I want to highlight a best practice involving our Alcan Gove operation in Australia’s Northern Territory. Located on land owned by indigenous people, the expansion of this operation – due to be completed in 2007 – has been made possible thanks to the unique partnership that has developed between our company and the Traditional Owners.
Working with the Yothu Yindi Foundation – a non-profit local group – Alcan Gove designed, funded and delivered a course in cross-cultural awareness that has been attended by all 1,000 of our employees, 1,200 members of the local and Yolgnu population and 1,500 project workers from all parts of Australia. There is now a better understanding of the history, the language and the cultural customs of the Traditional Owners. They, in turn, better appreciate our role in the community and have come to see us as having respect for their ways – including the proper use of their land. From a business perspective, the benefits are equally clear. Not only has the social license required to keep Alcan Gove operational been approved by the Yolgnu, but the value of harmonious employee-community relations is realized over and over again.
The second best practice I have chosen to share is focused on a more traditional aspect of sustainability: engineering innovative and environmentally sound products. You are probably already familiar with the benefits of using aluminum in automobiles. This revolutionary change to our auto industry is raising safety standards, lowering weight per vehicle and shrinking our greenhouse gas footprint by incorporating materials that are later recaptured and recycled. One ton of aluminum can replace 2.5 tons of steel, saving 20 tons of CO2 emissions over that car’s lifetime. You can imagine the huge impact that this could have if North American automakers followed the lead of their counter parts in Europe – by building more aluminum intensive and fuel efficient vehicle. But all innovations do not have to be this grand to be meaningful.
One such example comes from our folks at Alcan Singen in Germany, where our R&D specialists have developed the critical component for the world’s most promising solar cooker. Solar cookers are a relatively simple and very practical. Using rolled sheets of bright aluminum, they produce potable water for people in the developing world by capturing and boiling water using the sun’s own heat. As a result, there is no need to burn firewood or other fuels that harm our environment. In the aftermath of the Southeast Asian tsunami, we donated several tonnes of Alcan Singen’s innovative Solar Surface sheets – enough to make 900 solar cookers. And this year, through two projects, we will distribute the materials for as many as 15,000 units.
The result? Less deforestation. Safer drinking water. And fewer greenhouse gas emissions. For Alcan, the deep satisfaction of being associated with such outcomes is accompanied by possible economic benefits. The greenhouse gas reduction credits we gain may be usable to offset emissions from the Alcan Singen electrical plant and, as solar cookers become better known, sales and demand for solar surface products promise to rise.
Our next example, comes from Cameroon and the fight we have waged alongside health care providers to combat the tragedy of HIV/AIDS. In 1986, when HIV/AIDS first began to emerge as a still mysterious disease, Alcan - then Pechiney - had taken a nearly 50% interest in a smelting plant named Alucam. By the early 1990s, fully 15% of our 800 employees had tested positive for HIV/AIDS. Alucam launched an integrated and comprehensive program that has now treated more than 3,000 Cameroonians. We have distributed condoms, administered anonymous tests and assumed the cost of anti-retroviral, therapy. The results of this still-ongoing effort have been dramatic. By 2005 infection rates within the workforce had been cut dramatically to 3.5% - and the infection rate within the local community has also been brought down.
It is, of course, obvious, that a healthy workforce is a more productive workforce. But when we speak of the opportunity to do the ‘right thing’, I can think of no better example than this. The model of proactive treatment and prevention is one that we have shared with other companies, with the United Nations and with other Alcan sites.
The final example I wish to cite involves product stewardship – in this case in our packaging business. About five years ago, two children died tragically in Great Britain in two separate instances when they were able to open packages containing a drug named Paracetamol. New, more secure packaging was required that had to be made more secure. Yet, it could not be so resistant that it would discourage seniors or add significant cost for consumers. At Alcan – then Alusuisse - Packaging, our R&D shop quickly developed Guardlid child resistant blister lidding. This safer redesign permitted several advantages including longer shelf life, easier one-dose-at-a-time management, and improved patient compliance. As a consequence, this packaging has provided the marketplace with a superior and safer product. It has also become the industry standard and Alcan has seen its market share grow substantially.
Taken together, these are a few of the examples that demonstrate Alcan’s commitment to turn sustainability ‘talk’ into concrete results. We take pride in these and many other examples of leadership by our employees. However, I warned earlier that we are still in the early phases. As proud as we are – and we are extremely proud – we know that many solutions remain ad hoc and reactive rather than systemic and proactive.
A problem is encountered. A solution – often, an innovative solution – is developed. But it is too isolated, too customized. I find that approach to be insufficient for the future. We are suffering from an implementation gap. As Alcan’s CEO, I believe we must close that gap by shifting toward what I call the principle of ‘intended consequences’. A principle that sees sustainability embraced as a matter of philosophy AND as a matter of practicality – as a means of generating greater value. We want to see sustainability systematically adopted throughout our organization – across all business lines, in all 60 countries where operate and at every stage of production.
Of course, we cannot do this alone in the private sector. The critical role of public policy in securing the ‘intended consequences’ of sustainability can hardly be overstated. Governments and regulation can encourage success or they can encourage evasion. I prefer incentives to catalyze positive change rather than penalties – that can too easily be built into old practices as the new cost of business. We need good laws, good regulation and strengthened enforcement.
It is with that in mind that I would suggest that the challenge and the solution is much the same for Canada as it is for our company. Like Canada, we draw much of our strength from natural resources and the value we can build upon them. Like Canada, we have a global perspective – drawing upon, learning from and reflecting the strengths of all the people and places we touch around the world. Like Canada we are determined to succeed in a more connected and competitive world by remaining independent and innovative – while linking to a rapidly evolving global economy.
For Alcan, and for Canada, sustainability is not a challenge. It is a path – I would argue the only path – to a successful future. Thank you!
Should you be further interested in Alcan’s sustainability achievements to date, they are all available in our 2006 Sustainability Report which is available at: www.alcan.com/SR06
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