Appropriate technology as a business opportunity III

Brand value & reputation can be significantly enhanced by action which improves a company’s environmental and social performance. A company’s reputation is intangible but it helps to build sales, attract capital and business partners, and recruit and retain workers. It can be separate from, but related to, brand image. And in emerging markets, where brands tend to be fairly weak, the brand owner’s reputation can be a significant competitive factor. There are many components of reputation but sustainability is an increasingly significant factor for governments, NGOs, customers and investors.

Girsa a Mexican chemical company, has invested more than $20 million in environmental efficiency improvements, including the capture and use of energy generated in the carbon black process, which yielded $30 million in savings and has substantially reduced emissions and waste. The investment program was designed to improve GIRSA's overall competitiveness by expanding capacity, increasing energy efficiency, developing new products, promoting joint-ventures, and enhancing safety, environment and health standards. From 1991 to 1998, carbon dioxide emissions and wastewater per ton of production were cut by more than 80%, and solid waste per ton of production reduced by more than 90%. The net income as a percentage of sales was improved drastically. The plant has gone from being a major source of controversy in the community to a model corporate citizen that locals are proud of. It has won numerous accolades for its performance at national and international levels, including the Mexican Environment Ministry’s National Quality Award in 1997 and the National Award for Ecological Merit in 1999.

Jolyka Bolivia is the first South American producer of laminate and other tropical hardwood flooring products to be certified by FSC . It sells to the US and Europe, where consumers are increasingly concerned about the sustainability of tropical wood. In 2000, Jolyka was one of the winners of the business plan competition for promising enterprises that incorporate social and environmental benefits held by New Ventures, a World Resources Institute program. This brought direct reputational benefits, including coverage in the media as a viable, dependable and “green” company. It also helped to raise new capital as in the following six months Jolyka was visited by four investors and has renegotiated $2 million in long-term debt finance. JOLYKA ® Bolivia specializes in the production of quality hardwood flooring and accessories. All products are manufactured in accordance with US and European specifications and pass through rigorous quality control inspections. It is the company’s policy to give priority to quality production and punctuality in product delivery.

The company adheres to a policy of environmental protection in the selection and harvest of tropical woods and promotes production techniques that comply with standards established by international certifying agencies. JOLYKA ® uses only alternative wood species and does not offer any products manufactured from traditional or endangered species. JOLYKA ® attempts to limit its purchases of raw materials to wood certified under FSC criteria. The company encourages non-certified providers to acquire the voluntary forestry certification under FSC criteria.

Cembrit is a relatively small company, employing fewer than 400 people in two factories. But with the aid of external finance and expertise from IFC and its new owner it has penetrated new markets in Europe, as well as helped to clean up the local neighborhoods.

In the early 1990s the Czech government announced it would prohibit the use of asbestos materials in line with the trend throughout the European Union. Such legislation would have shut down the formerly state-owned plant. But Cembrit began to address the regulatory requirements including those of the EU.

The focus of the project was switching from a hazardous, asbestos based production process for making roofing materials to an environmentally sound cellulose-based process. The project also facilitated an extensive environmental clean-up, including the safe and proper decommissioning of the asbestos cement operations. The asbestos ban had taken place there, and the new technology was the only possibility of exploiting these markets. Sales in 2000 were $17 million, a 22% increase over the previous year and more than double what they were in 1996.

In addition, the modernization resulted in many benefits to human health and environmental quality. The immediate benefit has been the removal of hazardous asbestos, which has enhanced life expectancy and reduced negative health impacts on workers and the local population. By converting from coal to gas-oil fuel, the plant reduced air emissions almost 100% and made a cleaner source of energy available to local neighborhoods. By constructing a pretreatment facility and connecting to the municipal sewage system, the project stopped the discharge of untreated liquid effluent into the Berounka River.

These cases reveal that a company not only may benefit from the use of appropriate technology in a financial way but also improve its brand image and reputation.

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