The Business Case for Sustainability and Life Cycle Assessment at Hypertherm
If all companies were like Hypertherm, a New Hampshire-based designer and manufacturer of metal cutting products, sustainability would be a no-brainer. An employee-owned company, Hypertherm shares profits with all 1350 global “associates” every year.
For them, sustainability means “you’re saving resources, but you’re also saving money, and that increases profits that go back to us as employees,” says Jenny Levy, Director of Corporate Social Responsibility at Hypertherm, who has also held sales, marketing and project management roles in her nine years at the firm.
The Business Case for Sustainability and Life Cycle Assessment
Since 2010, when Hypertherm implemented a formal CSR program, Levy and others across the company have realized and built an ever-stronger case for increasing the environmental sustainability of its operations. That case is rooted in employee ownership but is realized through minimizing risk and controlling current and future costs.
Levy says being an ESOP, which stands for Employee Stock Ownership Plan, increases Hypertherm’s already strong focus on CSR and environmental stewardship. “Sustainability is often defined as meeting the needs of today without jeopardizing future generations’ ability to meet their needs,” she says. “The employee/owners at Hypertherm maintain a constant connection to the long-term growth and strength of the company, and focusing on environmental stewardship is a big part of that.”
The long view, in other words, is baked into the company culture. Levy argues that, in a resource-constrained world, understanding product impacts and where environmental hot spots exist may give companies like Hypertherm an advantage. If managed correctly, addressing those hot spots early means less risk and lower potential future costs when key raw materials rise in price.
“You don’t do an LCA and immediately pop $100,000 out of the process,” Levy says. “But if we aren’t optimizing now, then we’ll eventually need to suffer through energy, fuel and copper and other metals increasing in prices.”
Add to that ever-changing global environmental regulations and the business case for sustainability gets even stronger. If a regulation changes, “you’re either in compliance and continuing sales or not in compliance and losing sales,” says Levy. That takes sustainability firmly out of a vacuum and makes it an integral part of a risk mitigation and business planning strategy.
Engineering Employee Satisfaction
Another reason sustainability works for Hypertherm is its tradition as a Lean Six Sigma company, which holds it to the most stringent manufacturing standards . “One of the first tie-ins I made was tying this initiative to Lean, which means reducing all waste – wasted movement, inventory, scrap, even heat and electricity,” says Levy. “Why bring in resources that we use and lose to landfill or recycling? How do we optimize the use of resources in the leanest way possible?”
Framing the agenda in those terms meant speaking to the company’s engineers in language they understand – not just lean manufacturing and Six Sigma, but also in terms of metrics and measurement.
That’s where LCA further supports the argument. “There’s a need for information that you don’t have without a tool like LCA,” says Levy. And introducing the engineers to the methodology – especially well-regarded studies from such companies as Tropicana and Lexmark – helped cement the legitimacy of the LCA process and bring the key employee groups on-board.
It’s not just the engineers that have gotten on-board with LCA and sustainability at Hypertherm, where the HR team conducts consistent cultural surveys and engagement studies. Employees from a variety of functions report greater job satisfaction as a direct result of the company’s environmental initiatives. “Our scores and ratings around environmental approach have improved greatly, driving up our general engagement around culture, which is a really positive sign,” says Levy.
Greater engagement means less employee turnover, saving money and further increasing profits, in turn putting more money in the employee’s pockets.
The Role of Life Cycle Assessment (LCA) in Hypertherm’s Sustainability Strategy
Like many other firms, Hypertherm first analyzed its carbon footprint. While the exercise offered some general insights, Levy and her team quickly realized that carbon emissions make up just one of many environmental impact categories. Understanding the firm’s overall environmental impact meant taking a broader view.
That’s where Life Cycle Assessment came in. LCA is one of the best tools for understanding where carbon fits into an organization’s overall impacts across a number of different impact categories. Focusing on carbon to the exclusion of other impacts could result in burden shifting.
Levy points to a number of corporate LCA studies that successfully rebutted the prevailing wisdom of where a company’s actual impacts were coming from. For instance, Lexmark Printers found that its primary environmental impact resulted not from the manufacturing or distribution processes, but during the use phase through excessive paper usage.
“If we say we want to be serious about sustainability, then we need to get a real understanding about what our hot spots are,” says Levy. “We wanted to deliver change that was quantitatively significant. LCA is one way of doing that.”
Levy and her team contacted EarthShift to do a preliminary HotSpot LCA on the firm’s best-
selling product, the HPR 260 XD (below).
Next, they commissioned a second study of another leading product. So far, several new challenges – like learning to reduce, remove and repurpose metal scrap – have emerged.
The team at Hypertherm believes that only by taking a serious and sober look at the company’s impacts will they maintain their current leadership position in an increasingly resource-constrained world.
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