Sustainability and Cement manufacturing in Ghana

 

Introduction

In the introductory stages of the business era, companies were not worried about the impact of their activities either on the environment or on their own performance. However, the businesses of today are forced to grapple with an unprecedented number of challenges which traverse across economic, social, and environmental aspects of sustainability, including changes being noticed in the climate, loss of biodiversity, natural disasters, economic inequity, malnourishment, social insecurity, and a lot of other issues. Therefore, business operations today are to be based on sustainability measures if the company is to stay alive for a very long time.

By business sustainability, one is making reference to the processes that corporations are managed in consideration of the three different factors: economic, environmental and social. It could be called the triple bottom line in the business world (Mahajan & Bose, 2018).

The essence of sustainability in the business world cannot be overemphasized, with Kofi Annan, in 1999, the then United Nations Secretary General, announcing the world’s largest corporate sustainability initiative that is known as the UN Global Impact, geared towards encouraging corporations across the world to have their business operations and strategies aligned with the global principles on labor, human rights, environment, and anti-corruption, and also to embark on varied actions that would push the advancement of societal goals. This program was designed as a voluntary initiative that would work primarily based on the commitment of the CEOs. The UN Global Impact also launched the Principles of Responsible Management Education (PRME) in 2007, which represents a set of six principles that management institutions should adopt when it comes to training and educating managers on how to become sensitive to environmental challenges while also tackling the economic challenges facing them. The main factor behind the establishment of this initiative is that the existing management programs were being criticized for creating managers that don’t understand the ethos of sustainability (United Nations Global Impact, n.d).

In view of the fact that sustainability has become pivotal in business operations today, this paper is designed to review the concept of sustainability in line with the case of a cement manufacturing company in Ghana. The review will focus on four current environmental and sustainability issues facing the company; the impact of high energy demands on the company; the formulation of an energy conservation mix; and five long-term economic values of pursing sustainability practices in the company.

Four current environmental and sustainability issues arising out of the company’s operations

From the case study under review, there are four main environmental and sustainability issues that have been identified as: weak mechanisms for sustainability; a series of lawsuits; environmental pollution; and non-payment of huge electricity debt. These issues are further discussed below.

Inadequate sustainability mechanism

A number of debates have emerged about the operationalization of sustainability, but these debates segue into "weak" and "strong" sustainability. When it comes to weak sustainability, the assumption that holds is that natural and manufactured capital are basically substitutable. On the same note, it also holds that there is no difference between the forms of well-being manufactured, inasmuch as there is no decrease in the total capital (Hansen, 2019). The main theory that guides weak sustainability is the neoclassical theory, where everything, including nature, comes with a market price, making it tradable (Dasgupta & Heal, 1974; Solow, 1974). The defining views here are that natural resources are superabundant and that the progress being made in technology does come with the ability to increase the productivity of natural capital stock at a rate that is faster than its depletion. However, the main argument that critics have offered against this view of sustainability is that it should be limited because natural capital is actually limited and consumption beyond its capabilities to reproduce would amount to extinction. (Nol & O’Connor, 1998; Ekins et al., 2003; Pelenc & Ballet, 2015).

Thus, for a cement manufacturing company, the absence of a strong mechanism for sustainability would amount to improper consumption and eventual depredation of the resources used in the manufacturing of cement. This would definitely have a direct influence on the sustainability of the company in the long run.

A series of lawsuits

Another issue highlighted in the case is that the company is presently facing a series of law suits. In accordance with Kenton (2020), litigation risk, which is the probability of legal actions being taken against a company because of the actions or inactions of the company, affects its overall performance. The reason is that the company will eventually incur a significant amount to attend to such ligations and also make compensated payments for damages where applicable. Thus, when a company is facing a series of lawsuits, what that does is that it increases their overall risk exposure because more funds will be required to attend to such cases.

When it comes to assessing how prone a company is to litigation risks, it is known that bigger corporations are more prone because people are always seeking to dip their hands into their financial pockets (Kenton, 2020). As a result, for a cement manufacturing company, it has a direct impact on its economic sustainability because significant funds are being used to address the lawsuits, and because the company is classified as a large corporation, their risk exposure will be higher.

Environmental pollution

When it comes to corporate sustainability, environmental sustainability is one of the key factors that needs to be considered (Mahajan & Bose, 2018). The company shouldn’t just be focused on its performance, as it also needs to look at the impact of its business operations on the environment where it runs such operations. That is to say, activities that have a negative influence on the environment need to be checked because the success of the company also depends on the environment. This is the main factor guiding corporate social responsibility, demanding necessary actions from the company in the area of protecting the environment and the people that reside in it.

Non-payment of a huge electricity debt

Just like a law suit, debt is also a negative factor that affects the overall performance and sustainability of a company (Kenton, 2020). With high debts, it is expected that the company will be spending a higher amount of money on debt servicing, being forced to forge opportunities to invest in other business operations that can yield significant returns. Therefore, the issue of non-payment of a huge electricity debt is expected to affect the performance of the cement company negatively on two grounds. First, in the event that they decide to pay off the debt, they will have to divert funds that would have been potentially used to expand their business operations for the purpose of servicing such debts. On the second hand, if they decide not to pay, their electricity supply could be cut off and the implication would be a lack of electricity – bringing overall production in the company to a standstill. Therefore, this represents a significant economic challenge for the company, no matter how it is viewed.

Critical analysis of the high energy demand and low energy supply pattern of the company might have adverse impacts on its sustainability.

Basically, an energy consumption pattern that is capable of undermining the sustainability of any given firm is characterized by a high demand for nonrenewable energy and a low supply of renewable energy (Zaharia, Diaconeasa, Brad, Lădaru & Ioanăs, 2019).

It is widely acknowledged that companies spend a huge amount of money on creating and maintaining energy. The reason is that all business activities are highly energy-dependent. The company needs energy for manufacturing, administration, logistics, and all other activities. With such demand comes the cost. Reducing these costs has always been a bottleneck for companies because they have to find ways to do so. In any case, the modern era does offer a number of ways for companies to save energy by adopting various technological tricks and, eventually, by simply switching their consumption to renewable sources of energy.

In a cement manufacturing company, as is the case under review, it is expected that the company will be making use of different items of technology that would require being connected to power, which makes saving on energy bills via all possible measures a necessity. The amount of money that the company will be spending will depend on a number of factors, such as the location of the business, the size of its facilities, and the need for energy. Thus, it is expected that there will be high energy demand and low energy supply patterns that would adversely impact on the overall sustainability of the company, as discussed below.

High energy demands—as pointed out by Zaharia et al. (2019), high demand for non-renewable energy will have an adverse impact on the sustainability of the company. In terms of non-renewable energy, this will include electricity, coal, water, and so on, that are being used for manufacturing and other business operations, which the company will not be able to reuse. The implications of this come in two forms. First, this is bound to yield high energy costs for the company, as is presently the case, where the company has a huge unpaid energy bill. Secondly, the utilization of such energy will also bring about pollution in different forms, an environmental issue that has yielded a series of lawsuits for the company. Irrespective of the angle from which the issue is being viewed, the resulting final effect will always be adverse to its sustainability.

In any case, it should be pointed out that sometimes the cost of utilizing non-renewable energy can be lower than the renewable ones. Additionally, one also needs to put into perspective the overall power of non-renewable energy because of the heavy activities that are undertaken in a cement manufacturing plant. All these factors could indicate high dependence on non-renewable sources, making it difficult for the company to actually reduce its demand for such sources of energy.

Low energy supply—in addition, the low supply of renewable energy will also have similar effects to that of high demand for non-renewable energy. This is because the company is bound to maintain its operation by making use of different sources of energy, and in the absence of a renewable source, it will be forced to rely on non-renewable sources. Some of the renewable sources of energy in the company can include solar energy, water recycling plants, and energy sourced from waste tanks. The extent to which the company is able to harness and utilize these sources of energy is important, in which higher utilization would help to create sustainability while low supply will adversely affect sustainability (Zaharia et al., 2019).

While there are challenges that come with the adoption of this form of energy, it is noteworthy to state that the overall sustainability of the environment does depend on its utilization. Therefore, the company should make a significant investment to increase its supply. For instance, solar energy can be used to power (at least) all the administrative buildings in order to significantly reduce the company’s energy costs.

formulated a sustainable energy conservation mix to address the problem.

In order to address the energy issues being faced by the company, there are a number of measures that the company can put in place as suggested by Alptekin (2019). These are, as discussed below.

Build a strong energy conservation strategy with an audit—the essence of such an audit is to analyze and understand how energy is being used across the company’s facilities. Mainly, it consists of gathering data about the patterns of energy consumption and thoroughly reviewing the utility bills of the company in order to identify the right measures that should be put in place for enhanced energy efficiency, as well as tailoring such measures to the operations taking place in the facilities. The company can also work with an energy partner that will conduct the audit and also help in navigating the numerous solutions that are available for conservation (Alptekin, 2019).

Improve the lightning system—across the globe, numerous companies have already switched to LED lights, which can be installed at ease in the pre-existing lighting fixtures across the company’s facilities. LED bulbs can save up to 75% more energy than incandescent bulbs, last 25 times longer, and produce higher-quality light.On the same note, there are numerous utility companies that offer rebates as incentives for companies that decide to switch, and such a switch will significantly reduce the energy usage in the company (Alptekin, 2019).

Intelligently control the building temperature – with a standard energy management system, the company will be able to set a daily schedule for changes in building temperatures, but it is important that adopting such doesn’t routinely imply optimal outcomes. By making use of a smart thermostat—with a good example being one that can be used to access real-time data on occupancy, heat, or utilization—the company will be able to control the indoor temperature on the fly in order to match it with the actual conditions of the building. This will allow detection of an increase or decrease in occupancy, accordingly optimizing the settings of the thermostat (Alptekin, 2019).

Engage employees in conservation efforts—no matter what energy conservation measures are implemented, employee engagement will determine success or failure.Therefore, it is important to engage the employees in the process. This can be done through a culture that promotes active employee actions like switching sockets when not in use (Alptekin, 2019).

critically evaluate five long-term economic values of pursuing good sustainability practices in the company.

Since sustainability is all about ensuring that gains are repeated over the course of time, it becomes easier to visualize that a number of benefits would come with such practice. However, since sustainability can be social, environmental, or economic, these benefits can also come in different dimensions. In any case, the focus of this section is on the economic values that can be gained through the adoption of prolonged good sustainability practices as discussed below.

reduced business costs.

One main feature of sustainability is that it requires a significant initial investment, but in the course of time, the company is expected to start saving money by adopting sustainability practices. In support of this, a survey was conducted by McKinsey in 2011 on the business of sustainability and the findings showed that 33% of the companies surveyed were adopting sustainable practices in order to enhance their operational efficiency and reduce costs – and this represents an increase of about 19% from similar records the previous year (McKinsey & Company, 2011). Basically, the company will be able to reduce business costs by adopting sustainable practices like making use of more efficient lighting or creating ways to reuse materials. Although this can be initially expensive (as a significant amount of investment is required), the gains are immediate as studies have shown that, on average, commercial property owners can save about $500 per month by switching to solar energy, amounting to $587,377 over the life of the solar power system (Hollis, 2019; Energy Sage, 2020).

Improved business reputation

In business, reputation management is all about creating a good image for the brand by aligning marketing messages with actions. Sustainability is viewed by people as a plus in business, and the companies that have green values are usually eager to show them off because of the fact that it would be associated with higher value. When a company decides to "go green", the image being communicated is that the company doesn’t just care about the money they are generating, but also about the environment and the people that make the revenue possible (Grant, 2019). Thus, sustainable practices can be used to the advantage of the company when developing marketing strategies and brand identity. Therefore, with sustainable practices, the company will be able to create a good brand image in the long run, leading to enhanced patronage and loyalty from the customers (Maryville University, n.d).

serves as a source of competitive advantage.

In other research, it was discovered that S&P 500 companies that have sustainability practices integrated into their strategies performed better than those that don’t. The research showed 18% higher returns on investment (ROI) for such companies because they integrated plans for managing climate change into their business strategies (Confino, 2014). In the work of Nidumolu, Prahalad, and Rangaswami (2009), the researchers studied the sustainability initiatives of 30 large corporations over some time, and came up with the finding that sustainability is the foundation of organizational and technological innovations that bring about returns both on the bottom-line and the top-line. That is to say, if sustainability practices are adopted over time, they will eventually lead to a competitive edge as the company continues to push for more innovative measures that will be used to advance its strategies.

can make business smarter and more efficient.

Bennett (2019) pointed out that as companies push for innovative ways of running their businesses in order to attain their sustainable practice objectives, these companies eventually become smarter and more efficient. By efficiency, the same resources are being used to produce more outcomes than was previously possible, and by being smarter, the company can now undertake different functions that they previously considered impossible. Eventually, these outcomes bring about enhanced financial performance for the companies.

increase in the bottom line

Through sustainability, it is possible for the company to enhance its earnings and boost its bottom line. This is based on the notion that sustainable practices will reduce the costs of running businesses, enhance innovation, improve the reputation of the company, attract more customers, and eventually increase its revenue (Nidumolu et al., 2019).

Conclusion

From the discussions above, some of the prominent findings are that companies face various challenges in the course of running their business operations. Implementation of sustainable practices is one such challenge because it demands significant investments for the start as well as certain changes in the corporate culture and operational process, but the findings from this research also point out that such successful implementation is bound to bring about varied benefits like: enhanced brand reputation; reduced cost of production; smarter and more efficient work processes; an increase in the bottom line; and enhanced competitive edge (Beatle, 2019; Green Economy Canada, 2019). Therefore, it is concluded in this research that the cement manufacturing company should adopt sustainable practices because it would yield significant positive returns at the end of the day.

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