HCL Whitepaper: HCL's Sustainability Offering

GreenEdge
Sustainability for Manufacturing-
An HCL Point of View

2
Sustainability for Manufacturers – HCL Point of View

Table of Contents
1. Abstract..............................................................................................3
2. Sustainability – What it is and why it Matters for Industrial
Manufacturers?..................................................................................3
2.1 Background........................................................................................3
2.2 Sustainability: What It Is and Why It Matters..................................3
2.3 The State of Sustainability for Industrial Manufacturing..............4
3. Challenges for Manufacturers to implement Sustainability
Initiatives.............................................................................................5
4. Sustainability Business Drivers for Manufacturers........................6
4.1 Corporate Drivers..............................................................................6
4.2 Manufacturing Drivers......................................................................7
5. Strategies to Create Sustainability for Industrial Manufacturers..8
5.1 Sustainability at the plant floor.........................................................8
5.2 Sustainability at the enterprise and value chain level......................8
6. HCL’s Sustainability Framework for Manufacturing
Companies..........................................................................................9
7. Business Benefits of Sustainability...............................................12
8. Conclusion.......................................................................................13
9. References........................................................................................13
10. Profiles..............................................................................................14

© 2011, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.

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1. Abstract
Sustainability is an increasingly common theme in the business and trade press, at
conferences, and in everyday conversation. This white paper encourages manufacturers to
integrate sustainability into their corporate strategy to drive economic value add. It reviews
the top environmental issues affecting the manufacturing sector and explains how taking
action on sustainability can help mitigate perennial business challenges.

HCL Technologies, (HCL) has designed and developed a comprehensive sustainability
framework that caters to the specific needs of manufacturing industries. Our vision is to
transform organizations through compliance into economic value add for sustainability.
This approach focuses on building carbon footprints of all GHG emissions across the
entire manufacturing value chain, energy, waste and water management which will help
build better internal control, make reporting easier, accurate and timely, thus, enabling the
organizations to achieve their business goals.

2. Sustainability – What it is and why it
Matters for Industrial Manufacturers?
2.1 Background

In recent decades, the expansion of economic activity has been accompanied by growing
global environmental concerns, such as climate change, energy security and increasing
scarcity of resources. In response, manufacturing industries have recently shown more
interest in sustainable production and have adopted certain corporate social responsibility
(CSR) initiatives. Nevertheless, such efforts fall far short of meeting these pressing
challenges. Moreover, improved efficiency in some regions has been offset by increases in
consumption and growth in others.

The reduction of greenhouse gas (GHG) emissions has been a top priority for
governments, and many have adopted long-term frameworks and targets alongside the
Kyoto Protocol to tackle global warming. Interestingly, the current economic crisis facing
countries has raised public expectations for greater industry efforts to achieve sustainable
development.

2.2 Sustainability: What It Is and Why It Matters

Traditionally sustainability is understood 'Triple Bottom Line' approach encompassing
economic, social and environmental dimensions.

The economic dimension of the
Sustainability challenge lies in
enhancing profitability, increasing
shareholder value and creating wealth Economic
w h i l s t a g g r e s s i ve l y p u r s u i n g
opportunities for growth.

The social dimension of the eq le
Sustainability challenge is in achieving ui ab
ta vi
high rates of economic growth in bl
order to enable all sections of society
e
enhance their quality of life and live
bearable

with dignity.

The environmental dimension of the
Social Environmental
Sustainability challenge lies in pursuing
economic growth whilst preserving
and enhancing our natural resources.

Figure 1: The Triple Bottom Line


4

The sustainability of a manufacturer is measured by the effect of its operations and its
products throughout their lifecycle.

"Sustainable manufacturing processes deploy the optimal use of material and human
resources for the long term to produce the desired product."

This would imply designing products that:

? a minimum of energy in their manufacture and end-use
consume
?
have minimal carbon footprints in their manufacture and end-use
?
have prolonged useful lives, and modular parts to extend the useful lives of
components
?
are composed of parts that are recyclable and reusable to the greatest extent possible
? a minimum of water in their manufacture
consume
?
are composed of materials that have minimum possible impact on biodiversity
? minimal, air, water and other pollutants in their manufacture and end-use
produce

IT's role in addressing sustainability objectives is limited to Green IT, or reducing the use
of energy in data centers. While the savings can be substantial, the fact is that only 2% of all
carbon emissions can be traced to this source. The use of IT lies in addressing the
remaining 98% of carbon emissions!

One idea in particular the “triple bottom line” shown in Fig. 1 emerged as the business case
for sustainability. This philosophy suggests a more holistic approach that relies on the
principles of economic prosperity, environmental stewardship and corporate
responsibility. Without metrics to define the achievement of sustainability, success in this
arena cannot be measured.

2.3 The State of Sustainability for Industrial Manufacturing

The industrial sector (including mining, agriculture, fishing, and manufacturing) accounts
for 31 percent of total U.S. energy consumption, the largest share of any sector including
transportation (28 percent), residential (22 percent), and commercial (19 percent). 33
Manufacturing accounts for two-thirds of the industrial sector’s energy consumption.
Natural gas and traditional electricity accounts for most of the manufacturing sector’s
energy sources. While 47 percent of manufacturers reported average progress or better
towards world-class green and sustainability measurement benchmarks in a recent survey,
only 13 percent described their green measurement systems reviews as including regular
monitoring or transparency. Only one-third of the manufacturers surveyed report having
more than three-quarters of their sales volume from products that are recyclable and/or
reusable.

Likewise, they are responsible for 36% of global carbon dioxide (CO2) emissions (IEA,
2007). Manufacturing industries nevertheless have the potential to become a driving force
for the creation of a sustainable society. They can design and implement integrated
sustainable practices and develop products and services that contribute to better
environmental performance. This requires a shift in the perception and understanding of
industrial production and the adoption of a more holistic approach to conducting
business.

The environmental impact of industrial production has historically been dealt with by
dispersing pollution in less harmful or less apparent ways. Driven in part by stricter
environmental regulations, industry has used various control and treatment measures
toreduce the amount of emissions and effluents. More recently, its efforts to improve
environmental performance have moved towards thinking in terms of lifecycles and
integrated environmental strategies and management systems, and companies have also
begun to accept larger environmental responsibilities throughout their value chains.

The adoption of more integrated and systematic methods to improve sustainability
performance has laid the foundation for new business models or modes of provision
which can potentially lead to significant environmental benefits. Efforts to create closed-
loop, circular production systems have particularly focused on revitalizing disposed
products into new resources for production, for example by establishing eco-industrial
parks where economic and environmental synergies between traditionally unrelated
industrial producers can be harnessed.


5

Implementation of non-essential technologies; End-of-pipe
Pollution Control Treat solutions

Modify products and production methods;
Cleaner Production Prevent Process optimization; Lower resource input & output
Substitution of materials: non-toxic and renewable
Systematic environmental management; Environmental
Eco-efficiency Manage strategies and monitoring; Environmental management systems

Extending environmental responsibility; Green supply chain
Life-cycle thinking Expand management; Corporate social responsibility

Restructuring of production methods; Minimising or
Closed-loop production Revitalze eliminating virgin materials

Integrate systems of production; Environmental partnerships;
Industrial ecology Synergise Eco-industrial parks

Figure 2: The evolution of Sustainable Manufacturing Concepts
(Source: Sustainable Manufacturing and Eco-Innovation, OECD)

3. Challenges for Manufacturers to implement
Sustainability Initiatives
One of the more disturbing findings of Gartner’s recent survey is that 93% of
respondents are either tracking and reporting carbon with some difficulty, or not tracking
emissions at all. Even though carbon is being internalized as a cost of doing business,
corporations aren't finding the transition easy. To better understand why this aspect of
sustainable action remains so immature and lacking traction, Gartner sought to identify
the largest obstacles associated with developing GHG inventories. Overall responses are
provided in Figure 3.

Challenges with collecting data and the cost control associated with the economic
downturn emerge as the two most significant obstacles. This is followed closely by issues
relating to the choice of methodology to employ, difficulties with product life cycle
analysis and a perceived lack of government incentives. Although there are real but
resolvable or transient challenges in relation to data collection and cost control during the
recession, many of the other major obstacles mentioned are perceived more than actual
roadblocks to GHG management specifically or enterprise sustainability generally.


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Fig 3. Obstacles Identified as Challenging the Development of Corporate GHG
Inventories (Source: Sustainable Business Systems, Part 1: Enterprise Sustainability for
the Low-Carbon Economy, Gartner, Oct 2010)

4. Sustainability Business Drivers for
Manufacturers
4.1 Corporate Drivers

Businesses define Sustainability as “Increasing short term and long term profitability by
holistically managing economic, environmental and social risks and opportunities”.
Sustainability and Climate change both are emerging to be the boardroom topics. Today,
there are compelling reasons for businesses to become aware, plan and act on sustainability
and climate change.

Fig 4. Sustainability Drivers in Manufacturing (Source: Sustainable Business Systems,
Part 1: Enterprise Sustainability for the Low-Carbon Economy, Gartner, Oct 2010


7

?to Funds & Markets – Investors are paying attention to triple bottom line.
Access
Buyers/customers are looking for sustainability credentials of suppliers in the supply
chain. Sustainability and Climate change both are emerging to be the boardroom
topics. The key trend being an increasing scrunitization of corporate sustainability
credentials by investors. Globally large investors have come together with platforms
like Carbon Disclosure Project and ask for sustainability and climate change
information from corporates. It is becoming clear that access to funds for business
growth and expansion will become difficult if corporates do not act transparently on
the issues of sustainability and climate change

Another trend is – customers and consumers evaluating vendors and suppliers on how
sustainable are they and their products and services. For example, Wal-mart has begun
evaluating suppliers on their sustainability scorecard and this will adversely impact
suppliers who are not demonstrating tangible action on sustainability. This will limit
access to the markets for such suppliers.

?
Regulatory Compliance - The second trend is that regulatory landscape is evolving
fast – there are various mandatory sustainability and carbon reporting regulations
being enacted world over e.g., EU ETS Carbon Reporting or EPA Mandatory
Reporting. This trend is catching up with both developed and developing economies.
In India, Ministry of Corporate Affairs has come up with guidelines for sustainability
reporting and companies will be able to e-file their reports.

?
Competitive Positioning - The third trend is on impact of sustainability on
competitive profile of the company. Suppliers and customers increasingly want to do
business with companies with strong sustainability credentials both from a corporate
and products and services perspective. Companies who continue to ignore the
sustainability and carbon management have the risk of losing the competitive
advantage.

?
Social Responsibility - There is no denying of the fact that a greener company, with
greener products and services, is more desirable to a growing segment of consumers
and business customers. Because of the prominence of global warming
concerns,going green has become part of any Corporate Social Responsibility (CSR)
agenda to enhance customer and public perception. Some companies are led by “true
believers” who simply want to do the right thing for the environment.

4.2 Manufacturing Drivers

?for Effectiveness – Design for environment is the systematic consideration
Design
during design, of issues associated with environmental safety and health over the
product lifecycle. 80% of a products carbon footprint is decided in the design phase
itself. DFE can be thought of as the migration of traditional pollution prevention
concepts to into the development phase of the products before production and use.
The goal of DFE is to enable design teams to create eco-efficient products without
compromising their cost, quality and schedule constraints.

?
Responsible Supply – Utilize environment friendly materials, Cost reduction benefits
from suppliers’ improved efficiency.

?
Responsible Manufacturing – Manufacturers in their quest to reduce cost and
improve efficiency have been trying to find ways to reduce the demand on critical
resources energy and water. As global demand for energy increases and the impacts of
carbon-based energy sources continue to increase, managing energy consumption
becomes more than a public relations goal. Managing energy consumption is now
critical to the bottom line.

These trends directly impact and create a burden on any company’s bottom line. Energy
Management and sustainability programs are required activities for any company that
wishes to stay competitive moving forward. Until now, companies did not have viable
Solutions to manage IT energy consumption in a manner that allowed for automated and
centralized control.


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5. Strategies to Create Sustainability for
Industrial Manufacturers
5.1 Sustainability at the plant floor

Increased productivity, reduced plant operating costs, reduction in work effort and
enforced compliance to government regulation have always been drivers that justify
investments in plant optimizations. Taken on its own, each business directive can be
related back to more efficient use of necessary resources – energy, raw materials, human
resources, information, and equipment – which relates back to a measure of
Manufacturing Execution Systems for Sustainable Production efficiency. Taken together
as an optimization strategy, a solution’s capability to meet the immediate needs of the plant
has a positive impact on business in the future – not only for the company, but for future
generations as well.

For example, the act of automating a manufacturing process to increase efficiency reduces
cycle times, reduces human error and potential re-work, increases visibility of material
flow and optimizes scheduling – all driven by economics. At the same time, these changes
reduce energy expenditures, reduce labor – by reducing the use of gasoline consumption
and capital expenditures such as office space and the energy required to power and heat
them – and minimize scrap material, all facets of environmental stewardship. The data
from these automation efforts has been traditionally used to make decisions on what to
produce and when to produce it. But that data can also be used to make further cost
reduction decisions, such as shifting production schedules to accommodate running in
off-peak hours and potentially selling surplus energy back to the grid, forwarding the latest
trend: corporate responsibility.

5.2 Sustainability at the enterprise and value chain level

The figure below give an indication as to what could be the individual business units goals
for meeting sustainability in manufacturing companies and how those can be achieved

Fig 5. Sustainability Business Initiatives for manufacturing companies


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6. HCL’s Sustainability Framework for
Manufacturing Companies
The HCL Manufacturing Sustainability Framework helps manufacturing organizations to
achieve some of these sustainability business objectives through automation led approach.
The vision and strategy that we follow are –

Vision - To transform organizations through compliance into economic value add for
sustainability.

Mission – Help manufacturing companies to design, manufacture and deliver innovative
products & services with reduced environmental impact through effective business
processes.

Our solution footprint touches across the different functional areas of a manufacturer
which are important from sustainability perspective. Our solutions in this space are
classified into two categories - Measurement solutions (those which help in the
measurement and reporting of carbon, waste, water, energy) and abatement solutions
(those which help in the improvement of business processes from a sustainability
perspective.


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Fig 6. HCL Sustainability Solution Footprint on Manufacturing Process Map

Sustainability Business Consulting

?
Sustainability organization design and management process
? organization specific metrics & benchmarks
Designing

GreenEdge Automated Assessment Framework

?
Questionnaire driven Assessment for different standards (GRI, LEED, RoHS…)
?
Dashboard, Analytics and Reporting

Green Design Workbench (GDW)

? Green (DFG) – HCL services in PLM & Manufacturing
Design For

Standards Driven Emissions Reporting and Compliance

Green Logistics TerminalTM for Travel Fleet operators
?
?
Green Manufacturing Terminal for Manufacturing Enterprises
?
manageCarbonTM for GHG emissions management

Reman Solution

? core collection process for remanufacturing
Automate

Green DC Service

?
DGQ framework for DC assessment, DC Consolidation
?
Asset Consolidation
?
DC structural changes
?
Facility non-Structural changes


11

Seva

?
Reduce carbon footprint of service process
?
Collect equipment performance and emission data real time through HCL AGORA
platform

EAD

? into profit & Loss, business flow and OEE (performance , availability &
Visibility
quality)

We believe that any company will be falling in one of the following stages in its
sustainability journey. We help customers in –

Do value discovery to understand

?
Understanding which stage they are in currently
?and prioritize the sustainability initiatives
Identify
?
Create feasibility and roadmap of each initiative

Fig 7. First step “Value Discovery” results in feasibility and roadmap

A brief overview of our different measurement solutions is given below.

? assessment – HCL GreenEdge framework for sustainability assessment
Readiness
and reporting
? Accounting – HCL’s manageCarbon tool to measure, monitor and manage
Carbon
carbon
?
Sustainability Metrics and GRI Reporting – Tool for capturing and reporting of
sustainability metrics relevant to various compliance standards like GRI.

A S SE SS M E N T R E PO R T IN G

• Q u esti on n air e ba sed a ssess m en t • Q u e s tio nn a ir e b a s e d re p o rtin g
fo r d eter m in in g t he m ater ialit y. fra m e w or k fo r re p or tin g u nd e r
• D ete rm in ing t he are as of im me diat e GR I.
foc us a nd ac t ion . • Co v e rs a ll 79 g en era l p er fo rm a n ce
• M ea su res or ga niz at ion’s in dic a to rs a s w e ll a s s e c tor
sust ainabilit y polic y agai ns t it s sp e c ific in dic a to rs ( a s pe r t he G R I
c riti cal ity & sa tis fac tion l ev el. se cto r s u p ple m e n ts)
• Support s in se t ti ng targe t s for • As s is ts in a ch ie vin g A ra n k in G R I
ac hie ving sust ainable busine ss. re p o rtin g ca te g o ry.

•S u st a in a b ilit y B a la n ce S co re C a rd for a lig ni ng su s ta in a b ility m e a s ur e s
w ith o rg a n iz a tio na l g oa l s.
AN ALYT ICS • M e a su re s o rga niz a tio n ’s e n v iro nm e n ta l a n d s oc ia l im pa cts a g a in st
fiv e p e rs pe ctiv e s o f a s u sta ina bl e b u si ne ss i .e . cu sto m e r, fin a n cia l,
in te r na l o p e ra ti on s , le a rn in g a n d g ro w th a n d n on - m a rke t.

Figure 8. HCL’s GreenEdge Framework for Sustainability Assessment and Reporting


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Fig 9. HCL’s Measurement Solutions Functionality Overview

7. Business Benefits of Sustainability
The increasing importance of environmental issues to manufacturers poses risks and
offers opportunities. The following section briefly connects the opportunities to the
business challenges commonly faced by producers.

Profitability

? energy in the production process lowers overhead and product costs.
Using less
Companies that lower their cost of goods and operations have more money to invest in
R&D, upgrading plant or equipment or capital improvements, all of which can
contribute to greater competitiveness and long-term success.
?
Using fewer materials also cuts costs. Switching to more sustainable materials may or
may not reduce costs at the front end, but will likely reduce waste, emissions and
pollution, and perhaps avoid shortages or price increases for the less-sustainable
material.
?
Companies that use natural resources wisely and take positive steps to lower their
environmental impact are more successful in attracting and retaining loyal customers
and staff.
?
Manufacturers that take responsibility for their products after point of sale can
sometimes create an annuity-based service business.13

Competition

?
Sustainability is still a differentiator, but not for long–it is quickly becoming an
expected part of doing business in the global economy.
? claim in surveys that they are willing to pay more for a safe, healthy, green
Customers
product. Recent concerns about the presence of dangerous chemicals and materials in
imported goods give domestic manufacturers a chance to regain market share for some
types of consumer goods.
? that use minimal energy and water during their useful life will cost less to own
Products
and operate than less resource-efficient alternatives.

Compliance and Managing Risk

? pressures will continue to increase and expand to cover materials and
Regulatory
products whose cumulative environmental impact is deemed unacceptable (such as
non-biodegradable plastic).
?
Pro-actively reducing the carbon and chemical footprint of a business now can avert or
minimize negative regulatory impacts later.
?
A sustainable approach reduces risks at every stage of business, leaving businesses less
exposed to the possibility of materials shortages, energy price increases, higher fees for
waste disposal and pollution abatement, liability and unwelcome shareholder actions.


13

Market Opportunities / Growth

?
Major corporations and public agencies are increasingly demanding emissions
reporting and mitigation plans from their supply chain partners.14 Suppliers who can
show an understanding of the issues and progress toward goals will win business away
from those that do not.
?a valued third party certification designation puts products on the short list for
Earning
businesses and government agencies that have implemented an environmentally
preferable purchasing policy.
?
Sustainability challenges are spurring the need for new solutions. Manufacturers that
can add or extend an existing product line to meet the challenges have huge market
opportunity.

8. Conclusion
Sustainability is here to stay. The business world is undergoing a permanent change, and
smart business leaders will build sustainability into their business model. In addition to the
environmental benefits, sustainability offers great financial, competitive and other
business rewards that give manufacturers a competitive edge in a global design market.

?
Reduce material and energy costs
?
Limit waste
?
Limit potential liability
?
Meet regulatory and certification requirements

Manufacturers are increasingly choosing to improve the sustainability of their business
operations, production processes and product designs to drive profitability and growth.

HCL’s Sustainability Approach for Manufacturing will help the Manufacturing Industry
align their IT vision with their Organizational Vision. Thus, helping them achieve their
sustainability goals.

By improving the IT infrastructure and carbon emissions that affect people and processes
across the organization, HCL helps our clients use IT to reduce their carbon footprint
while increasing efficiency and productivity. The result is immediate environmental and
business benefits, reduced costs and maximized value. A technology driven
transformation of the Manufacturing Industry will shape a powerful and positive future –
a future that ensures a competitive, a secure supply of industrial products and a sustainable
environment.

9. References
1. Stephen Stokes, Karen Carter(June 2010), “Sustainable Manufacturing During and
After Economic Recovery: Increased, Diversified and More Strategic Corporate
Actions”, Gartner

2. Tomoo Machiba, (2009), “Sustainable Manufacturing and Eco-Innovation – Synthesis
Report”, OECD

Authors : sudipta.mukherjee@hcl.com,
sanjay.mukherjee@hcl.com


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10. Profiles

Sudipta Mukherjee
Sudipta Mukherjee has over 7.5 years experience across Manufacturing & IT Industry
spanning across procurement, material requirement planning, supply chain planning,
equipment installation & commissioning functions in manufacturing industry. He has 4
years experience in manufacturing vertical of IT industry on supply chain solutions –
development, presales and marketing. He has been involved in multiple projects for the
Discrete Manufacturing customer base of HCL.

Sudipta’s e-mail id is sudipta.mukherjee@hcl.in

Sudipta’s educational background includes a Bachelor’s Degree in Metallurgical
Engineering followed by MBA from SPJain Institute of Management & Research,
Mumbai.

Sanjay Mukherjee
13+ years of successful Consulting and Sales experience across Business Transformation,
IT consulting and Outsourcing industry.

Leadership positions with IT consulting and Outsourcing majors across varied business
functions such as Key Account Planning and Management, Ownership of Services
Strategy, forecasting and planning of demand, demand fulfillment, client relationship &
portfolio management, P&L for global IT Services

At HCL Sanjay has worked in the areas of Strategic Advisory, Carbon Accounting and
enabling Technology initiatives and Business case in areas related to Green and
Sustainability. He also partnered with other organizations in the service and Software
providers to provide comprehensive solutions to clients.


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ABOUT HCL
HCL Technologies
HCL Technologies is a leading global IT services company, working with
clients in the areas that impact and redefine the core of their businesses.
Since its inception into the global landscape after its IPO in 1999, HCL
focuses on ‘transformational outsourcing’, underlined by innovation and
value creation, and offers an integrated portfolio of services including
software led IT solutions, remote infrastructure management,
engineering and R&D services and BPO. HCL leverages its extensive
global offshore infrastructure and network of offices in 31 countries to
provide holistic, multi-service delivery in key industry verticals including
Financial Services, Manufacturing, Consumer Services, Public Services
and Healthcare. HCL takes pride in its philosophy of ‘Employees First’
which empowers our 72,267 transformers to create real value for
customers. HCL Technologies, along with its subsidiaries, had
consolidated revenues of US$ 3.1 billion (Rs. 14,101 crores), as on 31st
December 2010 (on LTM basis). For more information,
please visit www.hcltech.com

About HCL Enterprise
HCL is a $5.7 billion leading global technology and IT enterprise
comprising two companies listed in India - HCL Technologies and HCL
Infosystems. Founded in 1976, HCL is one of India's original IT garage
start-ups. A pioneer of modern computing, HCL is a global
transformational enterprise today. Its range of offerings includes product
engineering, custom & package applications, BPO, IT infrastructure
services, IT hardware, systems integration, and distribution of
information and communications technology (ICT) products across a
wide range of focused industry verticals. The HCL team consists of over
79,000 professionals of diverse nationalities, who operate from 31
countries including over 500 points of presence in India. HCL has
partnerships with several leading Global 1000 firms, including leading IT
and Technology firms. For more information, please visit www.hcl.com


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