Cannon Discusses Sustainability's Importance to Businesses at National EH&S Conference

SAN ANTONIO, Texas, Sunday, January 25, 2015

Speaking Sunday evening at an Environment, Health & Safety Management Institute conference in San Antonio, Texas, Quality and EH&S vice president Mary Anne Cannon told attendees that EH&S leaders have a new job to do in the 21st century – one that has evolved from establishing compliance to leading company policy aimed at changing cultures.

During her keynote address, Cannon told the group of EH&S leaders from various industries across the United States that in today's business world, organizations must include sustainability in their strategic plans.

Full text remarks, as prepared for delivery

Thank you for that introduction. It is a great honor to be here with EH&S leaders from so many industries, and to have the chance to share the ideas that will shape the U.S. business model for sustainability and safety in this century.

I was pleased to get your invitation to speak to you this evening because it provides such a great opportunity to set the pace for the discussion during the next few days. We EH&S leaders have a new job to do in the 21st century. We accomplished a great deal over the course of the last few decades. We saw our role move from one of establishing compliance, to leading a company policy aimed at changing our cultures.

When I reflect on my own career, which started in operations, by the way, I realize I am playing a role in my organization that people did not even anticipate would one day exist. At that time, the company had a safety manager who reported, I believe, to a VP of Human Resources via the labor relations function.

The role was mainly about compliance with safety regulations, following the 1970 signing of the Occupational Safety and Health Act by President Nixon in response to dangerous working conditions across the nation. This legislation established the Occupational Safety and Health Administration (OSHA), the National Institute of Occupational Safety and Health (NIOSH), and the independent Occupational Safety and Health Review Commission.

These were not household names. They enforced standards and provided training, outreach, education and assistance to organizations.

For a long time, the safety manager in a company responded to OSHA requirements focused on regulations for specific concerns, such as asbestos and construction hazards. In '74, organizations to comply with OSHA began to focus on carcinogens and vinyl chloride.

In 1983, the Right to Know standards, giving workers the right to know which chemicals they may be exposed to in their workplace and the hazards these chemicals present, marked the beginning of employee involvement in their own EH&S management.

That is when the EH&S function moved toward having a seat at the table in most organizations. Things began to change fairly rapidly in response not to regulations necessarily, but to employees' own demands. The marketplace, too, responded, as a series of high visibility safety problems at organizations around the world came to light, and customers began to pay attention to which of their suppliers were operating with safety as a core value.

Looking back, during the 1970s companies focused on clean water. Then the focus in the 1980s began to include waste, as recycling programs made headlines. In the 90s, it was air quality.

Of course today, the parameters have really shifted.

Going forward, there is a need for global solutions that address new customer requirements, as well as employee recruitment and retention, based on the assumption that everything we focused on in the latter part of last century is now a given.

Not just as EH&S leaders, but as company leaders, we now need to do more.

As we see it at Pratt & Whitney, company policies regarding EH&S and sustainability will be key to addressing the kind of problems that characterize the 21st century. The changes in our role as EH&S executives will be fundamental.

Since the early 90s, UTC, our parent company, and its divisions including Pratt and Whitney, have focused disciplined efforts on continuous improvement of our EH&S performance. Then CEO George David, who led the corporation until his retirement a few years ago, had the vision to recognize that corporate responsibility and corporate citizenship must be part of the business plan. It was this vision that shaped the way we do business today.

Across UTC, we apply a global standard aimed at eliminating adverse impacts in our products, in our manufacturing processes, and in our supply chain. We provide a safe work environment and support lifelong learning for all employees. We support charitable and social causes in the communities where we do business.

Moreover, UTC has a successful history of implementing water conservation efforts.

Our commitments to EH&S and the environmental impact our products and services. This includes a reassessment of the role of the EH&S leadership. Between 2006 and 2013, this reassessment has resulted in several significant environmental impact reductions:

  • • 71 percent reduction in non-greenhouse gas emissions
  • • 26 percent reduction in greenhouse gas emissions
  • • 42 percent reduction in industrial waste
  • • 53 percent reduction in worldwide water consumption
  • • 94 percent reduction in lost workday incident rate
  • • 88 percent reduction in total recordable incident rate

Examples of successes abound, including at P&W. For example, in Singapore, Pratt & Whitney's Commercial Engines business modified onsite plumbing at three facilities as part of its voluntary participation in the use of NEWater, which is a wastewater recycling and reuse program developed by Singapore's Public Utilities Board.

This innovative partnership accomplishes the goals of resource conservation and economic growth, and has resulted in decreasing water usage by approximately 15 million gallons per year.

In addition, we are mindful not to allow ourselves to be guilty of "greenwashing." This practice of introducing policies that appear to be more for show than to make a real difference can happen to companies with the best of intentions, in all industries. We have all seen it, and we spot it in a minute.

Our efforts cannot be "check in the box" efforts. Employees and customers, too, see right through "greenwashed" policies and procedures.

To make a difference, our approaches to sustainability have to be directly related to improving our products and operations.

Sustainability IS the sensible business model in today's world. Leading companies actively integrate it into their strategies and operations, according to a recent McKinsey & Co. survey.

The online survey of McKinsey clients was in circulation from July 12 to July 22, 2011 (most recent available data), and received responses from 3,203 executives representing a broad range of regions, tenures, company sizes, and functional specialties. Participants came from the energy industry, extractive industries – including respondents from the coal, metal, oil and gas exploration and refining, petroleum and natural gas distribution and refining, and other mining subindustries – as well as high- tech, telecom and retail industries.

For the purposes of the survey, sustainability was defined as relating to a combination of environmental, social and governance issues also known as corporate social responsibility or corporate responsibility.

The CEOs who responded to this survey are setting objectives that go beyond concern for reputation management — for example, they save energy, develop green products, and retain and motivate their employees to support a sustainability culture. In fact, employees who participate in workplace sustainability programs are likely to promote sustainable practices at home, and also to encourage others to participate. Three out of four of these employees will make purchasing decisions based on a company's environmentally-conscious practices, the study finds.

Another study, by Gibbs & Soell in 2013, called "Perspectives on Corporate Sustainability Among US Adults and Employees," points out that 80 percent of employees who are active in corporate sustainability programs will encourage other people to engage in social responsibility initiatives.

The study also found that 73 percent of employed US adults said they were more likely to make sustainable choices at home as a result of their workplace experience with the programs.

However, the changes in the culture are ongoing, the data shows us. Sixty-two percent of employees say that they often see, read or hear media reports about corporate sustainability initiatives, while 72 percent of them express a desire to learn about what companies are doing in terms of sustainability.

Three in four employees say they would be more likely to buy a company's products or services if they learned it was making a great effort to adopt environmentally-conscious practices but only 23 percent of full-time and/or part-time employees believe that a majority of businesses – e.g., "most," "almost all" or "all" – are committed to "going green" as defined in the report. This definition included improving the health of the environment by implementing more sustainable business practices and/or offering environmentally-friendly products or services.

Most employees — 67 percent of respondents — express uncertainty about their own company's practices. Two-thirds (67 percent) of employees are not sure if there is anyone at their company who is responsible for sustainability, or they say no one is responsible for sustainability at work. Nearly one-fifth, 19 percent of employees, say their companies do not promote sustainability at all.

The data demonstrates that employees at all levels are becoming far more knowledgeable about their companies' sustainability activities — and that sustainability is becoming increasingly important for attracting and retaining employees. So it's no surprise that one of the key 21st century concerns for a company like Pratt & Whitney is sustainability. As we approach our 100th anniversary, in the year 2025, we will be working even harder to fulfill these objectives. For example, we announced last summer at the Paris Air Show that we have launched aggressive 2025 Sustainability goals that touch every element of our business –– a true reflection of our "People.Planet.Power." campaign.

Our goal is to be the aerospace sustainability leader, and we are seeing some results as we aim for our 2025 goals. For example, compared with 2006:

  • • P&W now has 28 percent less greenhouse gas emissions — 215,000 metric tons of CO2 — from its factories since 2000, which equates to taking 41,000 vehicles off the road
  • • We now have 64 percent less water consumption, equating to nearly one billion gallons saved
  • • We achieved a 57 percent reduction in the amount of non-recycled waste since 2000 (roughly 40 million pounds), which is the equivalent of removing 1,800 full garbage trucks full of waste
  • • We successfully launched a technology plan to develop green alternative materials and is actively pursuing the elimination of materials of concern, such as hexavalent chromium and cadmium, from the design and manufacturing of its products
  • • P&W's Geared Turbofan (GTF) technology, which is available on the PurePower® engine family, provides up to a 16 percent reduction in fuel burn, plus significant double-digit reductions in emissions and noise. The engine cuts carbon emissions by 3,000 metric tons annually, which is equivalent to planting nearly 700,000 trees

P&W is also taking steps to ensure our engines are 100 percent recyclable at the end of their life. Our products will maximize the amount of recycled or reverted metals, and will contain no materials of concern.

And we are enlisting our suppliers in our efforts to follow a code of conduct that includes resource conservation, ethics, labor guidelines, as well as safe workplace requirements.

P&W has invested almost $60 million in more than 800 environmental projects since 2006. That figure demonstrates our leadership in global sustainability through innovative products and services.

Our sustainability leadership also includes establishing LEED-certified green facilities globally. Every new facility we develop, as well as existing facilities as they are renovated, must be LEED certified.

At Pratt & Whitney, sustainability means integrating environmental and social issues into the business model. That's all part of our commitment to customers, employees and the communities where we live and work. In effect, we do well by doing good.

We have been on guard against greenwashing by surveying our employees through an internal company survey. Some 72 percent of our employees report being very satisfied that with their perception of the company as an industry leader in protecting the environment, and 80 percent report being very satisfied that the company responds to safety and environmental issues in a timely manner. We are aiming, naturally, for 100 percent.

UTC conducts business in a number of water scarce regions around the world, and so we are partnering with the operations side of our business to be sure we implement technologies that solve water scarcity problems. This kind of partnering ensures that sustainability becomes a business differentiator.

P&W is not unique, nor do I stand up here today with the position that we are acting alone. Yes, we have worked to establish ourselves as leaders in our industry. But because all of us here at this conference are leaders, we all are most likely engaged in the same reassessments that P&W is. Simply put, organizations MUST include sustainability in their strategic plans.

Sustainability and EH&S are vital to customer requirements, and most important, social consciousness among employees, based on their knowledge of global environmental issues and standards, is important for retention.

As we can see, sustainability issues matter a great deal in the 21st century. Our global markets are focused on them, and it is also a talent retention issue. Addressing these issues for future generations on a planet that is getting smaller by the day is quite simply the right thing for companies to do. This is the new norm.

As we meet and discuss over the next few days, the question we all, as EH&S leaders, should ask ourselves is this: "Do I have a vision for my company that includes sustainability, and have I planned tactics for making that vision happen."

Also – and this is a key question in solving a very important strategic challenge - "If not, why not?" If top leadership is the impediment, then you must seek out those people and work to enlist them in the change. At UTC, we were fortunate to have George David at the helm just when all of these issues were emerging. If your organization doesn't have this kind of vision at the very top, I can assure you that it exists somewhere in the organization. Start with your operations people. Enlist your supply chain.

In many cases, including ours, partnering with customers can help drive the change. For example, we worked with Airbus, who have established 2030 sustainability goals, and with Embraer, whose 2020 goals go hand-in-hand with our own.

Find the person or people within your value stream who can help you sell the vision to the CEO and then work together to start the conversation. Our role as EH&S leaders is a collaborative one. We can't make this happen alone or just by driving it in our own local organizations. We need to change the culture of our companies.

It is not my plan to talk for my entire time because I want to give you a chance to ask questions. I hope I have set the stage for a good discussion, and I am happy to hear from you now.