Journal of Sustainability

Social Sustainability & Improved Standard of Living - Is it Achievable? Part 5.

Dibyendu De, Design Thinker, RMCPL, Kolkata, dde337@gmail.com

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Example 3 on Social Sustainability: Why Would an Elephant Waltz?

Once upon a time a large industrial group wanted to set up a large, modern and efficient cement plant as a greenfield project. It was an ambitious plan that would help the company capture a big untapped market. Hence, they wanted to bring up the plant as fast as possible.

So, first things first. They got the land and the limestone mine of relatively good quality. They also got a CEO who they thought would deliver the project on time. Since it was a greenfield project they thought that a very disciplined person would fit the bill nicely. A senior retired army Colonel was selected for the purpose.

As soon as he was appointed, he set about the task with all seriousness of an army officer. He understood about projects and engagements. He has done that all his life in the army. He understood command and control very well. That was his forte. Though he was an engineer by training he had absolutely no idea what a cement plant was made of.

To deliver a quality project in time, he hit upon a splendid plan backed up by an 'infallible' logic. The logic was that he would get the best machines or sub-systems of the plant from the best suppliers of the world and then he would just put them together so that the plant performs right from the first day. How would he understand what was the 'best'? He would survey the existing plants go through their records of performance and reliability, collect data to find out what part or sub-system of the system worked best for Plant X and then what worked best for Plant Y and so on. Reliability would be his benchmark and vision.

So he decided that he would buy the kiln from supplier A and the cooler from supplier B and the hammer crusher from supplier C and the conveying system from supplier D and the cement mill from supplier E and so on. When he placed his ideas before the board they found his ideas to be wonderful. They were convinced that it would take the minimum time for procurement and set up since they would avoid lengthy negotiations and hassles if they decided what to buy and from whom to buy these from. After all it would not pose any problem. They were buying the best things from the best possible suppliers around the world.

The Colonel went about the task with gusto, precision, efficiency and great care carrying just the right attitude of going to war. None needed to teach him what 'war footing' was.

Soon, the best pieces of equipment and sub systems arrived at site and were put together with great efficiency. Time flew past quickly. In no time the modern cement plant was set up. His bosses were extremely happy with the good job done and awarded the Colonel a good bonus and a promotion for completing the project much before time and within budget. Everyone was happy and the plant began operating much before the planned date. It was key to capturing the untapped market before others got in.

But very soon a problem emerged. The plant was unable to produce the designed capacity at all. They kept trying harder and harder but the plant refused to change its behavior. They coaxed people to work smarter and come up with good ideas. Nothing happened. They called in experts. The experts took their fees but the system did not improve. They started training people to no good effect. Then they brought more or the best people to leadership positions. But they also could not make the desired change. People were sacked. New blood was inducted. The system did not budge an inch.

Another problem surfaced. The plant suffered innumerable breakdowns - one after the other. People were busy fixing things up as soon as things failed. They kept doing this for years.

12 years passed. The fate of the plant was sealed. Or so it seemed. People were blamed and they were demoralized. The President of the plant was sacked. New leaders took over. A time came when people stopped talking about this plant about which they were so proud of a few years back. People fought. Blamed each other. Worked hard. And prayed often.

What was happening? What went wrong?

The problem precisely lay in the interaction of the parts of the system. They did not 'dance in harmony' or simply did not match or fit together as one whole. Why was that?

For example, they had the best kiln. Now this best kiln retained more heat than other kilns and therefore was energy efficient and reliable. It meant that the kiln lost less energy and most of it was used to form the clinker. That was good news. Then what was the bad news...?

The clinker that came out of the kiln went over a 'cooler' whose function was to cool the clinker. Now this cooler was not designed to match the performance of this kiln or in other words the cooler was not designed to handle the temperature of the clinker that came out this kiln. So by the time the clinker passed over the cooler it did not cool sufficiently enough. After the clinker passed the cooler it entered the hammer crusher. With more than the expected temperature of the 'cooled' clinker the hammer crushers performed badly. This was because the hammers wore out in no time owing to the 'hot' clinker. They were not designed to handle these 'hot' clinkers. The clinkers were still hot enough after being broken into smaller pieces. Now the broken clinker traveled over a rubber belt conveyor (RBC) to the silo for temporary storage. The RBC wasn't designed to handle the additional temperature and the rougher edges of the clinkers (produced by the bad performance of the crusher). So they often went down necessitating frequent maintenance and replacement and stoppage of the entire system.

Since the production pressures were up the clinker did not stay in the silo for a long time (that also caused defects in the silo) the clinker was taken out in relatively hot condition to be fed to the cement mill. And surely there too, it produced frequent problems. The ripples of the systemic problem were felt right up to the bag house (pollution control mechanism). In fact it was everywhere and the whole plant looked so dirty and dusty that people often did not like to work in such places.

So, in short, every part of the system got affected and strange system behaviors abounded in plenty (emergence). Such emergence inhibited production and the plant could never run as desired. Everyone was busy looking at the parts of the system and trying to improve the parts and make them very efficient. As expected it never worked. The Elephant refused to dance.

A time came when a very talented engineer was placed as the head of the plant. He kept looking at the system for days and started to understand the 'strong' relationships between the different parts that caused the problems. He then systemically tackled the issue with lot of patience and right motivation. He started changing, modifying and replacing the parts of the system as needed with the eye to match them well. His focus was not on purchasing the best things or the best parts. He simply went on matching one part to the other so that they can 'dance in harmony'. So after a time, he transformed the 'strong' relationships into 'weak' relationships.

And the plant started performing extremely well. It started winning prizes for best productivity, least energy consumption, best quality, etc. etc. People were again proud and happy to work. The top corporate management was so pleased with the sudden change in performance that they decided to expand the capacity of the plant by putting up a new system along with a new limestone quarry.

From then onwards there was no looking back for this plant -- sorry the 'Elephant' ...

The Elephant danced after a long time and continues to waltz merrily.

But is that so? For how long would that be?

Would the Elephant continue to waltz so gracefully even after say five years?

Lessons learnt:

a) It does not matter whether each part of the system is strong and reliable. What matters is how well they harmonize to produce the whole. The 'relationship' must 'dance in harmony'.

b) Strengthening parts individually does not help a system to perform at its best.

c) Strong relationships between parts cause strange emergence, while 'weak' relationships between parts provide stability and reliability.

d) When people work too hard or fight or blame each other or pray too often it simply shows that the system is broken and needs attention. One of the indicators is ‘economic hardship’.

e) Lever points can be used to effectively to change system behavior. Leverage lies in the relationships and the thinking that goes into creating those relationships.

f) System behavior or emergence changes over time. It is difficult to predict but we can certainly watch when the Elephant starts showing the first signs of strain.

g) One can't create a splendid design for the future by analyzing past records and data.

h) To make an Elephant waltz look at the big picture and the relationships between parts of the system and never at the parts. Then only a viable ‘eco-system’ can be created that is sustainable.

i) A system that operates smoothly & harmoniously with low failure rate and maintained well produces less entropy and uses less energy per unit good produced. That is what future sustainability is all about.

In all the three examples of a silk sari, rice and the industry, we have all the elements that define our new world order: Eco-non-violent, Reliable, Local needs and Economic sustainability. It is not energy intensive. It aims to preserve local talent, skills and the eco-system. It is geared towards ‘development’ and not ‘growth’. Entire eco-systems might be developed to support and sustain such ‘eco-villages’ – creating new hubs of economic activities, only if one has the ‘eyes’ to see and the patience to create ‘local innovations’ with ‘global resources’.

Hundreds of such local applications can be easily found for any country. What suits one country need not suit the needs of another. For example, the silk sari that matches so perfectly in the Indian cultural tradition might not be suitable for countries like the UK or the USA. Similarly, what would suit the UK or the USA might not be suitable for a country like India. But the example of the ‘rice’ is suitable for any country with regard to the staple crop it produces. And so is the case of the cement plant – meeting local needs with lessons that are applicable globally. In some cases the design of present products that are universally used all over the world might also to be questioned to create more energy efficient, reliable and better products. For instance, shoes, especially running shoes, as presently designed, actually absorbs less impact than thin soled shoes or slippers, the manufacturing energy cost of which is much lesser than traditional shoes.

It now depends on whether we have spotted the growing economic ‘opportunity’ of the future for earning and living sustainably and whether we are creating the right system design and the eco-system to sustain such economic activities – ‘eco-villages’, which would be more local oriented rather than aiming at global standardization & distribution. It improves the economy of communities (more distributed), provides profits for the new entrepreneurs to sustain the ‘eco-villages’ and raises the standard of living of the collective.

Afterthoughts

1. As on 2009 the world’s population stands at 6.70 billion

2. The combined global land and ocean surface temperature in May 2010 was the warmest on record, at 0.69 degrees Celsius (1.24 degrees Fahrenheit) above the twentieth century average, according to the U.S. National Oceanic and Atmospheric Administration. We are inching towards the 2 degree F limit that defines irreversible global warming.

3. As of June 2010, by a 9 to 1 ratio, Chinese respondents to a recent survey said they had better opportunities to start businesses in China than in the U.S. By a 2 to 1 margin, Indians said their home country provided better education for their children. People seem to be turning homewards from the land of unlimited opportunities and innovation. Global to local is the focus now. While this is true of India and China it might not be so for other countries. The stress would therefore be to develop the economies of the developing world possibly by the approach as outlined in this paper.

Fair and lower taxation based on system thinking rather than on ‘reductionist’ or partial thinking is also proposed. Generally speaking, as of now, higher taxation affects the poor and the underprivileged. Counter intuitively, it might just be possible that lower taxation would help boost local economy and involve the underprivileged or economically backward section of the society in the economic transformation process towards building sustainable economies.

Social Sustainability & Improved Standard of Living - Is it Achievable? Part 4.

Dibyendu De, Design Thinker, RMCPL, Kolkata, dde337@gmail.com

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Example 1 on Social Sustainability: The Silk Sari

Marco Polo and his team created the famous silk route that started from Europe and ran through India and then went right up to China. The famous Chinese silk was discovered and introduced to the world and trade flourished.

Soon silk cultivation also began in India and the Indians creatively used silk materials for designing their dresses. And one of the best examples of such Design Thinking is the creation of a woman's dress known as the sari. It is 5 meters long unstitched piece of cloth that a woman wraps around her body. It might be wrapped around in slightly different ways. The dress is complete by itself. How does it qualify as a fine example of Design Thinking for Sustainable living? Here are some reasons:

1. One size fits all and is self containing (There is no such dress in the world that fits any woman).
2. Fits all types of body, sizes and ages and any woman looks elegant in that dress (a paradox & a great user experience).
3. Any woman who care to dress up in a silk sari looks beautiful (fulfills aesthetic requirement and user experience).
4. Infinite variation of designs and motifs can be made on this material -- colors, weaving, painting, jewels, gold, silver etc (great scope for endless improvisation and design innovation).
5. A dress that has almost unlimited shelf life -- can last up to 40 to 50 years & still look good (sustainable and not oriented at consumerism).
6. Made from silk worms (material is a renewable resource).
7. Silk saris need very little washing and maintenance. And usually washed with the sap of a seed (no detergent used, eco-non-violent, little or no use of water).
8. Can be worn indoors or outdoors (multiple uses).

And it is also a good example of Social Sustainability. Why?

1. Many workers need to work together to co-create this wealth. A vibrant and economically viable eco-system is also developed.

2. It involves communities of silk growers, weavers, artists, designers, jewelers, stone polishers, and shop keepers -- all traditional trades

3. Wealth sharing within the community and beyond

4. Sustainable work for generations of workforce based on traditional and artistic skills

5. No global warming -- no carbon footprints during manufacturing -- made in hand looms

6. No ecological damage -- does not rely on non-renewable resources or damages forests, plants, water or animals

7. Needs low capital to produce

8. Can sell from around $ 4 to $ 100,000 (more than a Ferrari)

9. Market sustainable and never vanishing

10. Catering from a basic need to vanity

11. The whole is more beautiful than any part of it. The whole (including the beautiful woman who drapes this silk) brings out the deeper meaning & beauty -- difficult to tell who is more beautiful -- the woman or the sari -- both would be my answer.

Example 2 on Social Sustainability: Cyclone Eats Rice & Tiger for Breakfast

Two of the best quality saline tolerant rice varieties (Hamilton and Malta) of the Sunderbans (literal translation: beautiful forest -- the largest single block of tidal mangrove forest in the world: http://en.wikipedia.org/wiki/Sundarbans ) is now lost forever. Sunderbans is also the home of the Royal Bengal Tiger.

Introduction of high yield paddy (non-local varieties) gradually pushed a number of traditional saline tolerant varieties to extinction as delta dwellers preferred cultivating the big produce variety rather than the types that had endured ages of evolution and adapted to the local conditions.

However, when salinity rose alarmingly with the ingress of saline water after the cyclone Aila, the high yielding varieties just did not stand a chance. They failed to adapt to the changed conditions of the soil. As a result, the Sunderbans is now going through serious food scarcity and things will get much worse in the days to come.

As the population rose and the number of mouths in a family went up, people turned to high yielding paddy which doubled the crop quantity. Gradually, the cultivation of traditional paddy stopped and their seeds became rare and some of them became extinct in this highly sensitive ecosystem. All this happened in the last 25 to 30 years. The big and false assumption was that local varieties were low yield.

There are other losses too. The saline resistant varieties not only tasted better but also the straw provided better and stronger thatch roofs of the huts of the local inhabitants. Moreover, such varieties did not need fertilizers and pesticides to survive. Traditional organic variety has ingrained pest-repellent properties. The soil and the sub-soil water also gets better and better over the years with less and less use of fertilizers and protects other species in the environment that are dependent on the soil and water to survive.

It is not therefore surprising that the decisions that we take today to determine the way we live and earn affect others in our rather delicate uncertain relationships of our ecosystem.

What else was affecteThe Royal Bengal Tiger, an essential part of this eco-system is now close to extinction. There are now about 1400 of the majestic animals left. 50 years back there were more than 30,000 of these beautiful animals.

Lessons learnt:

a) Don’t play with a system unless we understand the relationships completely. Understand the context. Anything that affects the eco-system affects the economy and makes living difficult.
b) Assess the risks, uncertainties and the consequences before taking a decision on living and earning. Nature keeps score with consequences.
c) Focus on Development; Not Growth.
d) Critically examine and challenge assumptions before making changes in the system.
e) Adaptation is the rule of Nature; don't violate speed limits (the rate of adaptation). It only kills.
f) Think Big (systemically), Think Local, Act Local, Learn Global.

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Social Sustainability & Improved Standard of Living - Is it Achievable? Part 3.

Dibyendu De, Design Thinker, RMCPL, Kolkata, dde337@gmail.com

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Do we have a Common Understanding?

We have now examined the problem from four different viewpoints – economic, mathematics, thermodynamics and systems. In each case we found that we really have a real and irreversible problem. We also found the reasons for the problem to exist grow and develop. Most importantly we have now established that the present solutions by which we are trying hard to solve the problem of sustainable living are not only ineffective but also wrong. Are we trying hard to answer the wrong questions? Unfortunately, it is ‘YES’.

What might be the Possible Solutions?

What might be the possible solutions? The solutions have a cost, which would be more than a few trillion dollars that would affect billions of lives. What are some of the steps we have taken? Some of these are as follows:

a) Asking people to mend their ways – to veer away from excessive consumption

b) Use energy efficient lighting and electrical appliances

c) Carbon trading – off sourcing manufacturing facilities to India, China and others

d) Curb population explosion

e) Conserve natural resources by using renewable energy sources.

f) Recycle man-made resources

g) Do not increase green house gases beyond those created by nature – use Bio-fuels

h) Etc.

In the light of the discussions as above, the proposed solutions appear to be downright silly ideas. These simply don’t work. Let us take one example to understand this. An office tries to reduce its energy consumption by replacing fluorescent tubes by CFL (Compact Fluorescent Lamps). The savings is immediately offset if the office buys one additional SUV (Sport Utility Vehicle) that guzzles up the savings in form of the extra energy needed to run the car.

There must be a more efficient approach to the whole thing. We must find the answer within the system itself.

In order to do that, let us examine how the philosophy of economic growth came into existence and captured our imagination to spread like wild fire across the globe threatening our economies and the earth.

At the beginning of the previous century until around sixty years ago, fossil fuel was cheap and available in plenty. This allowed technology to grow in leaps and bounds. It allowed technology to become bigger and more complex. It used a lot of energy and churned out goods in millions and in no time. ‘Economics of scale’ was the secret mantra to make a lot of money in the shortest possible time. Soon industries became capital intensive and costly. That effectively kept out competition and industries were set up by people who had the money to invest. It also turned working people into robots who contributed to the economic growth through their disciplined highly skilled labour. Conformity and standardization were the key words to follow. As business houses became bigger and played a powerful role in the economy, nobody seemed to notice that the capital intensive industries were slowly becoming eco-violent.

In brief, technology that boosted economic growth in the developed nations had the following characteristics:

1) big, 2) complex, 3) costly and 4) eco-violent.

This wonderful economic growth helped developed societies to march ahead relentlessly. Such societies improved their standard of living. All they needed was an ever increasing global market to sell the goods coming out non-stop from the assembly lines. They also needed highly developed infrastructure to move their goods around and make it available to the consumers. As a result of such rapid development, ‘megacities’ came up and people came to live and work in richer towns and cities. These megacities became so big and strong that such built environments were soon consuming 60% of the total energy of the nation. A better standard of living meant that people started consuming higher energy.

It did help to improve the lives of many but not for long. Within the next sixty years one particular element in the ‘Energy, Economics and Environment’ triad changed for good, which would now force us to have a relook at whatever we were doing. Old ways of doing would no longer serve us.

As fossil fuel prices shot up, energy became costly. With the high cost of energy ‘economics of scale’ does not make much sense any longer. With high energy cost, technology obviously becomes costlier and more complex. Naturally, it follows, that the Return on Investment (ROI) on the costly capital investment does not work out favorably. This change in the economic environment is now forcing us to look at the obvious evolutionary route for both people and the earth, which would from now on be grossly determined by ‘technology’. Whether we like it or not technology would continue to stay and influence our lives. Industries and it eco-system would continue to be our main source of living and standard of living.

It is easy to envisage the natural evolutionary route that technology would be forced to tThe focus as I envisage would rest on the consumption of energy. The solutions might be as follows:

1) Create industries and associated eco-systems that consume less energy and meets local needs. There would be many such industries based on local knowledge and know-how. Such industries might be small or big. Example – fashion industries, traditional medicines & health care, food and nutrition, education, housing etc

2) Design products that are reliable and use less energy during manufacturing and usage.

3) Existing industries would move towards becoming more and more reliable with low failure rates and wasting minimum possible energy. The focus would be on a) improving System Reliability and reducing the overall costs to operate and maintain such systems b) improving performance per unit of energy. Combining these two factors would help industries maintain profits and offer goods & services at affordable rates suited to local economies. This would require a new way of designing, installing & running systems in cost effective ways.

4) Design alternative materials for products that use energy intensive materials like aluminium and steel or design in such a way to minimize the use of such material. At the same time, the trends would be in using renewable materials, for example, in construction of houses and infrastructure.

5) Use and apply more of innovative system thinking to create more sustainable and holistic economies (local as well as global) that would prevent energy wastages in work, infrastructure, housing and transportation. This type of system thinking based design would be needed for designing factories, schools, medical systems, local economies, housing, buildings, cities and villages. For example, create work and markets that would need less of transportation, infrastructure and energy without sacrificing salaries that would help people to maintain or improve their standard of living.

6) Increased stress on maintenance and maintenance technologies to maintain the present assets and infrastructure at the least possible cost. This would be applicable to machines, factories, roads, buildings, bridges, airports, ports, etc.

Such innovative improvements can be applied ‘universally’. It would also mean that such technology based thinking, design and improvement must be made to suit local conditions, local needs and culture of local communities. It therefore implies that infrastructure and built environment must be such that it consumes minimum possible energy to build and sustain without sacrificing quality of living. This would then help us keep the entropy at a low level to match adaptation rates or maintain the rate of energy dissipation more or less constant at an acceptable level – the basic secret of social sustainability that would also improve the living standard of the people.

Therefore, new design skills, new type of thinking, education and its propagation would come into play. This would enable people to truly participate in the transformation of their economies by developing and selling their talents and not only their hands and/or time to create newer and better ways of sustainable living and improve their standard of living.

Such an evolution would therefore help us look at things differently and work differently. In a nutshell the suggested focus areas would help people and the earth by being ‘Eco non-violent’, ‘Reliable’ and ‘Development Oriented’. This would be the mantra of living for the future.

To live and support this mantra some fundamental social changes would be needed, which are the following:

1. To stabilize population – women’s education and empowerment that allow them to make reproductive choices.

2. Change in education system away from the rigid approaches that stultify innovation towards one that helps learners see systems as a whole rather than in parts of a growing and living system but simultaneously focusing on local problems and needs.

3. More inter-reliant collaborative skills amongst communities to earn and live sustainability.

4. If the previous century belonged to ‘scientists’ this century would belong to ‘engineers’, ‘designers’ and ‘system thinkers’. We would definitely need more design and engineering skills backed up by system thinking to make the successful transition to the new world order that would focus on local needs and local development and sustainability. The focus would shift from ‘economic growth’ to that of ‘human development’.

I would like to end this paper with three simple examples of social sustainability that has the potential to improve the standard of living of the collective.

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Social Sustainability & Improved Standard of Living - Is it Achievable? Part 2.

Dibyendu De, Design Thinker, RMCPL, Kolkata, dde337@gmail.com

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The Root of the Problem

We would like to search for answers from different viewpoints than purely from an economic perspective.

Economic Viewpoint

It is clear that economic growth is directly related to energy consumption. The coming together of the three things – ‘Energy, Economics and built Environment’ defines modern civilization. In addition, this triad is what is affecting the people and the earth.

So far, we have assumed that economic growth is the key to prosperity and better standard of living. Governments all over the world are hell bent on pushing economic growth for their individual countries.

However, what might be the effect of such great effort?

We now see that boosting global economic growth is an extremely inefficient way achieving poverty reduction and sustainability and is becoming even less effective as years go by. For instance, between 1990 and 2001, for every $100 worth of growth in the world’s per person income, just $0.60 found its target and contributed to reducing poverty below the $1-a-day line. As a result, to achieve a single dollar of poverty reduction, $166 of extra global production and consumption is needed, with consequent enormous environmental impacts which counter-productively hurt the poorest most.

Hence, we need to move decisively away from the inefficiency of relying on global growth for poverty reduction, towards a system in which policies are designed explicitly and directly to achieve our social and environmental objectives, that is ‘human development’ and whilst treating growth as a mere by-product.

But why would we prefer human ‘development’ over global ‘growth’?

The Mathematical Viewpoint:

Perhaps it might be better to see the difference through mathematical logic.

Let us consider the earth (E) as the universal system or set where all sub-systems do exist.

The property of this set E is such that it does not grow but constantly changes to produce new relationships.

Now the economic system (say set A) is naturally a sub-system of the set E.

The property of this set A is such that it always grows.

But we know that A is a sub-set of E.

Logically if E does not grow at all but A keeps growing then a point comes when A outgrows E and the therefore A ceases to become a subset of E and balance between A and E is lost. Chaos follows.

That is exactly that has happened now. It is now estimated that we are trying to live on 40% more resources than what the Earth can produce or sustain at this point of time -- hence the problem. Moreover, the US alone consumes around 60% of the earth’s resources. Would it then be possible for others to live to the same standard of living as that of the US? Certainly this is impossible.

The Thermodynamic Viewpoint

The first law of Thermodynamics tells us that we can’t create or destroy energy; only convert it from one form to another. This is fairly straightforward to understand. None doubt this at all. In simple words it would mean that the energy and the resources available to us for exploitation are fairly constant. We can’t do much about this. Hence this can’t grow any further.

That is fine. But the ugly problem rears its head as soon as we examine the situation in light of the second law.

The second law deals with ‘entropy’. Entropy is an elusive term. We can say that all matter around us has a certain amount of maximum energy which we call the ‘free energy’. This energy is being constantly dissipated into the environment and matter transforms increasing the entropy in the process. The rate of such dissipation determines the transformation or the degree of chaos. The bad thing about it is that it is an irreversible process.

However, from the second law of thermodynamics one thing is clear. Entropy can’t decrease. It can either go up or remain constant. In other words it would mean that the rate of dissipation can’t decrease. It can either go up or remain constant. If it goes up, chaos increases and our present problem is accelerated. We can contain the problem in a sustainable way if it remains constant.

Unfortunately, at present it is going up. The rate of utilization of resources (energy) is much faster. With the entropy going up an equilibrium point is reached when all the free energy of a matter possessed is given up. Naturally what happens next is death.

To illustrate this concept we might consider two examples. A fire burning coal is an example of an irreversible process (since we can’t get back the coal) where the entropy would increase. Whereas if we just warm a pail of water by sunlight but do not allow it to boil into steam the entropy remains constant since this is a reversible process (we haven’t changed the state of the water from liquid to gaseous form).

There is another thing that happens with the rate of dissipation changing. Let us consider the world as a thermodynamic system with the outline of the earth along with its atmosphere as a natural boundary of the system. Energy enters the system (from the Sun) but finds it increasing difficult to get out of the system boundary, owing to ‘greenhouse effects’. When this happens we are allowing heat in the system to gradually increase (reinforcing cycle) and with such an increase the water in the ocean and matter like ice of say icebergs start to change form (water to steam and ice to water). The same would happen to the air and it starts changing its density at different layers and starts changing its state from that of say a ‘non-chaotic state’ to chaotic state (turbulent flows). If that be so, entropy starts increasing in the system. As entropy starts increasing, the wind and the water of the oceans start changing their directions of flow patterns, seeking new paths of least resistances. The velocity of the flow also increases to keep up with the increase in the entropy within the system (they just try harder enough to dissipate the energy through increased friction of ferocious storms – the only way available to Nature so as to maintain a constant rate of change of entropy). Slowly it loses the battle. What happens next is easy to understand from the viewpoint of nature. Climate changes, vegetation changes, species start their desperate attempt to adapt for survival. When the ‘adaptation rate’ is slower than the change itself, species (both plant and animal) die. This is exactly what is happening.

Today, the emperor penguins living off the coast of Latin America swim 900 kms into the ocean to gather food whereas even 50 years back then were only going 40 kms into the sea for food. They are adapting to the changes. As soon as their adaption rate becomes slower than the rate of change, they will become extinct.

This had happened to the ‘blind dolphins’ that lived in the Yangtze River in China. With the unprecedented economic growth taking place in China, the river is used for transportation. Hence a large number of steamers now ply on this river. These steamers make a lot of noise in the water. The poor blind dolphins that rely on their sense of hearing for food were confused by this strange loud noise. Their hearing was impaired and they could no longer hunt for food. They failed to adapt to this change and today not one of these dolphins is alive.

Clearly, from the thermodynamic viewpoint, it is not possible for us to live in a sustainable manner.

System Point of View

From a System point of View, we have three types of rates to deal with, which are as follows:

a) Rate of economic growth

b) Rate of change of entropy

c) Rate of adaptation

How does ‘adaptation rate’, ‘rate of change of entropy’ and ‘rate of economic growth’ relate to each other? These are related in at least two ways.

Firstly, rate of economic growth influences the rate of change of entropy and the rate of change of entropy influences the rate of adaptation. One sequentially follows the other.

Secondly, since these are all ‘rates’ the term ‘time’ could be common to all. This is a fallacy. Nature’s time scale does not match our invented time scale. Our time scale (by which we try to measure everything) has two main characteristics – a) time interval is constant (linear) and b) continuous (analog). Would Nature obey such a time scale for its own function? No. It appears that Nature has it own time scale that is different to ours. This is evident because most changes are exponential in nature (non-linear). The phenomenon that happens in nature is neither linear nor continuous. Why is it so?

Transformation in Nature happens in discrete jumps. Things do appear to remain constant for some time and then suddenly a transformation occurs. Next, matter undergoes several transformations. The time, rate of change and energy taken for each transformation is not equal to the time, rate of change and energy taken for other transformations. Hence for Nature, time is neither linear nor continuous. It is rather non-linear and discrete.

This is where the problem is -- a total mismatch of Time scales -- Linear vs. Non-linear; Analog vs. Discrete. That is why most of what we observe in nature appears to have non-linear character. Therefore, the linear and continuous time scale of our economic growth does not match the non linear time scale of change of entropy and when a species cannot keep up or adapt to the time scale of entropy (non linear adaptation rate) it dies. This I presume is Nature’s way to balance the entropy and keep the rate constant as possible. Does this have any relationship with infant mortality rate of poor and developing countries? It may!

[continued]

Social Sustainability & Improved Standard of Living - Is it Achievable? Part 1.

Dibyendu De, Design Thinker, RMCPL, Kolkata, dde337@gmail.com

Abstract

The world for the last 200 years has developed on the fundamental principles of industrial economy. At this point in history, we realize that it does not work for us anymore. Europe struggles economically, Asia struggles militarily, US Gulf struggles environmentally, and middle class just struggles and keeps struggling and sinking.

Adam Smith was true. Karl Marx was true. However, we wanted to take sides with one or the other and live in separate worlds – a world defined as capitalist and the other defined as socialist. However, there is no country today that totally follows Smith or Marx. We have both.

It is dangerous to believe that future of the common people and that of the earth should be based on unmitigated economic growth, open markets, globalization etc.

We are slowly realizing the wisdom that we must leave the same resources as we enjoy today for the 7^th generation that would follow us.

Hence, social sustainability is the answer. It has two parts to it. First, how do we make a living? Second, how do we continue to live comfortably for generations without depleting the resources of the earth too fast? Both issues are interrelated.

The paper tries to address these vital issues on social sustainability from different perspectives. We would therefore be forced to Design Think a new way of earning and living.

Introduction:

The writing is clear on the wall.

Major Global Issues Synopsis
as reported by the UN Environmental Program (UNEP)

Population
World population passed 6 billion in 2000, up from 2.5 billion in 1950. Almost all growth will occur in the developing world.

Poverty & Inequality
The degree of inequality between rich and poor is not getting smaller, and this is a deterrent to reduction of poverty. There are still 1.2 billion people who subsist on less than $1 per day.

Food & Agriculture
Food consumption per capita is increasing substantially around the world (both developed and developing countries), measured in calories. Food production is increasing, but continued increase is limited by available land and water, especially in Asia.
Water
Water use is growing over twice the rate that population is growing. 70% of water is used for agriculture. Worldwide, half of all wetlands have been lost, and more than 20% of the 10,000 known freshwater species are extinct or threatened.

Forests
The world's forests continue to shrink. The highest rate of decline is in Africa, followed by Latin America. The loss of forests is lowering water quality and causing floods. About 10% of tree species are at risk of extinction.

Energy
Consumption of all types of energy is growing, the largest increase being fossil fuels. Renewable energy sources (mostly hydroelectric) account for 4-5% of the world's energy, and potentially much more. Solar and wind power currently account for only 0.04% of the total.

Climate Change
Fossil fuel consumption and carbon dioxide emissions continue to grow, especially in Asia and the US. The level of said consumption and emissions per capita is 10 times higher in the US than in the developing countries, and twice as high as in Europe. There are many signs of climate change, such as rising temperature (2 degrees F.), rising ocean levels, 40% melting of Arctic ice, and changing weather patterns including more intense droughts and more intense storms. .

Health
Most deaths in the least developed countries are readily preventable. These deaths-often in childhood-are primarily due to communicable, environment-related diseases. Most common of these are due to lack of clean water and sanitation. Over one billion people still lack access to safe water, and 2.5 billion lack adequate sanitation facilities. 96% of all deaths owing to natural disasters happen in the developing world. This translates roughly into death of 50 million people per year.

What does all this mean?

In brief, it means that though we are all trying our best to feed people and eliminate poverty - exactly the opposite is happening. People are becoming poorer and the resources are vanishing much more quickly, climate is changing fast and people are dying from otherwise preventable causes. In addition, it appears that much of the problem appears to be happening in the developing world rather than in the developed world.

If that is so then the answer appears to be rather easy. Let us all start living the way people in developed countries live. Most of us do think so and it is not a surprise to see that many from the developing world live their lives in the developed part of the world.

But is this possible? The answer is NO.

For example, it is estimated that if all of us want to live the way people live in the UK then we would at least need two Earths to live. In addition, if we do want to live the way people live in the US then we would need at least five Earths. Now that is quite a problem. We have not yet found another Earth anywhere else. Obviously, this is impossible. So are we only destined to die a slow death much before the sun actually disappears? Or can we do something about it now?

[Continued]

Is there any potential of increased environmental performance through ISO 14001 in manufacturing companies in Pakistan? Part 3.

By Ahmad ur Rehman Hafiz, ahmaderfurt@googlemail.com

[continued]

Glossary

COC Codes of Conduct

CP Cleaner Production

CPI Cleaner Production Institute

CSD Compliance and Systems Department

EMS Environmental Management System

ENERCON National Energy Conservation Center

EPAs Environmental Protection Agencies

HRD Human Resources Department

ISO International Organization for Standardization

LCD Liquid Crystal Display

NCS National Conservation Strategy

NECP National Energy Conservation Policy

NEQS National Environmental Quality Standards

NSDS National Sustainable Development Strategy

PEPA Pakistan Environmental Protection Act

REEE Renewable Energy and Energy Efficiency Program

SCI-Pak Sustainable and Cleaner Production in the Manufacturing Industries of Pakistan

SMART Self-Monitoring and Reporting Tool

SMEs Small and Medium Enterprises

SP Sustainable Production

TOE Targets of Evaluation

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Luken, R. A., & Hesp, P. (2004). Towards Sustainable Development in Industry: Reports from Seven Developing and Transition Economies (illustrated edition.). Edward Elgar Publishing Ltd.

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Sapphire textile mills Ltd. (2010). Sapphire. Retrieved June 14, 2010, from http://www.sapphire.com.pk/about_us.htm

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Is there any potential of increased environmental performance through ISO 14001 in manufacturing companies in Pakistan? Part 2.

By Ahmad ur Rehman Hafiz, ahmaderfurt@googlemail.com

[continued]

Comparison of findings

The following table draws a comparative analysis of the survey results at both companies.

Table 1: Comparison of finding of survey about the Implementation of ISO 14001
Sr. No	Indicator	Azgard9 Ltd	Sapphire textile mills Ltd
1	ISO 14001 certified	Yes	Yes
2	Corporate environmental policy	Yes	No
3	Motivation to adopt ISO 14001	To fulfill environmental commitments outlined in environmental policy	Export benefits
4	Financial support from the top management for ISO certification	Generous	Limited
5	Environmental benefits from ISO 14001	Improved environmental performance, energy conservation demonstrated, customers and legal agencies satisfied	Improved disposal and management of solid waste, better monitoring of emissions and prevention of ground contamination
6	Financial benefits from ISO 14001	indirect benefits such as use of ISO 14001 as a marketing tool	no benefits since the customer do not accept ISO 14001 certification
7	ISO 14001 EMS as bases of cleaner production practices	installed effluent treatment plant, took energy conservation initiatives and adopted cleaner technology	installed 50 percent LCD lighting system at the production floor and boundary walls and replaced monitors with LCDs
8	Relieve from regulatory liabilities due ISO 14001 implementation	Yes	No
9	Competitive advantage due to EMS	Yes	No
10	Internal environmental training department	Yes	Yes

The comparison shows that the two manufacturing companies in Pakistan have no common level of sensitivity and attitude towards ISO 14001. The majority of companies want to improve their export performance through ISO 14001. Since the adoption of an EMS requires commitment from the management, allocation of financial resources, creation of organizational structure, the companies calculate cost and benefits of this investment.

Over and above due to the absence of any significant financial assistance from the government, the incentive to acquire ISO 14001 certification is further reduced. However, the companies which adopted EMS realize the improvements in their environmental performance with better management of solid waste, effluent reduction, improved energy efficiency, reduced emissions and better monitoring of environmental aspects of production processes. Hence it is clear that the implementation of ISO 14001 at Pakistani manufacturing industries provides a good solution to environmental management, enhanced environmental awareness and a good tool for marketing, provided conditions required for the certification are set by the government adequately. That means low-cost certification-trainings and subsidized certification programs should be available for small and medium sized enterprises. Policy recommendations are included at the end of the paper.

Indicator 7 of table no 1 shows that, in both of the companies surveyed, ISO 14001 EMS has contributed towards the cleaner/sustainable production as well. Azgard9 has set up an effluent treatment plant and conducted a number of energy conservation initiatives. The interview finds that the company has installed steam traps on all steam lines, and improved boilers productivity with the installation of economizer. A waste heat recovery boiler has also been installed on power generators.

Analysis of the company’s responses reveals that the company has achieved significant benefits from the EMS and has strong operational controls over all critical energy and resource intensive processes. The company is effectively conserving the resources and controlling its energy consumption. The implementation of an EMS based on ISO 14001 led to the implementation of CP technologies in Sapphire textile mills, where 50 percent of LCD lighting systems have been installed at production floors and boundary walls.

Regarding indicator 10 of table 1, the responses of the survey reveal that through the EMS, the awareness of employees to environment has also improved. As in Azgard9, regular refresher courses are conducted regarding environmental management system where all its employees receive training. Similarly in Sapphire textile mills, the Compliance and Systems Department conducts awareness training on a monthly basis for all new employees.

Regarding the question, to what extent does an EMS facilitate compliance with applicable environmental regulations (indicator 8), there are mixed responses. In this case Azgard9 has responded that since the company complies with environmental laws it avoids legal liabilities like fines/charges, whereas the Sapphire textile mills responded that the EMS does not reduce the regulatory liabilities for the company.

The outcomes of the survey thus make it clear that there is a significant potential of improvement in environmental performance in manufacturing companies in Pakistan through ISO 14001. Public policy should enable and facilitate the companies in acquiring ISO 14001. There is a need to establish conditions which encourage the implementation of the certification within manufacturing companies.

This includes raising awareness of industries to certification, making low-cost training programs accessible to companies and also providing financial incentives to adopt certification. NGOs, media and civil society can be brought in to start dialogue with the polluting companies and sensitize them about the environmental concerns of their production processes and demonstrate benefits of environmentally responsible production practices in marketing practices and thus gaining competitive advantage over their competitors.

There are good lessons to be learned from past successful experiences of trade liberalization policies in Pakistan that in addition to bringing significant boost in country's exports also generated positive impacts regarding environmentally friendly manufacturing. This is evident in the case of export-oriented textile firms in Pakistan which are mostly ISO 9000 certified now and use relatively more environmentally friendly production techniques compared to the firms which focus only on domestic market (Luken & Hesp, 2004, p. 127).

There is a need to strengthen the capacity of the companies serving the domestic market but that lack the resources to qualify environmental standards like ISO 14001. As discussed earlier these companies need capable and trained staff to establish and operate environmental management system, and the certification-training is too costly for these companies. Furthermore given that there are very few auditing firms in the country, the companies had to turn to foreign auditors that in turn demand high consultancy fees and service charges, making it difficult for small and medium sized companies to invest in certification.

Policy Recommendations

The findings of the survey “Is there any potential of increased environmental performance through ISO 14001 in manufacturing companies in Pakistan?” reveal that small and medium sized companies lack finance, guidance and expert staff to establish an ISO-14001 EMS. The following recommendations are based on the findings of the survey:

There is a need to make low-cost certification available in Pakistan in order to enable SMEs take advantages of ISO 14001. Government needs to make low-cost training programs accessible to SMEs and develop conditions for standard's implementation in SMEs.
Experience in Pakistan show that the business associations have a strong interest to cooperate in matters pertinent to trade promotion. Interviews conducted for this study reveal that All Pakistan Textile Manufacturing Association (APTAPMA) in collaboration with the embassy of Netherlands has started providing free of cost services to organizations that want to implement an EMS but the scope of such services is limited. This initiative provides a good example and government can also contribute with a partial funding or giving tax exemptions to organizations willing to implement an EMS.
Government should enhance awareness of companies with regard to ISO 14001 through information campaigns, organizing seminars, round tables, workshops, conferences and disseminating guidance material.
Government should increase the number of registered ISO certification bodies in the country so that the organizations have more choices and price comparison. With increased number of government approved private certification bodies, monopoly of existing bodies will be challenged and there will be a tense competition among them to win more and more clients and thus offer comparative prices.
As the companies cannot acquire ISO 14001-certification unless their effluents comply with the NEQS prescribed limits, government should improve the capacity of environmental agencies for enforcing NEQS. The companies which would already be complying with NEQS, would find it easy to get ISO 14001 certification.
According to the survey findings, the cost of ISO 14001-certification depends on the size and nature of the entities. This cost can be divided into two types: 1) the cost incurred on the implementation of an environmental management system and it requires allocation of a permanent budget within company’s expenditure accounts; for example allocation of finances for the installation of waste water treatment plant; and 2) the cost of services paid to the certification body. The later cost stands between Rs. 200,000 to 300,000 (US $ 2,341.65 to 3,512.47). Medium and small sized companies find it difficult to bear former costs since they are recurring costs and there must be sufficient capital from which an appropriate amount can be specified for maintaining the system. In order to encourage these companies, government can announce a subsidy on waste water treatment plants and energy conservation technologies etc.
The evidence suggests that majority of companies adopt ISO 14001 due to its perceived advantages in marketability of company’s products and services. In order to improve the incentive for ISO 14001 certified companies, in public procurement, they can be preferred in awarding tenders.
As the survey findings reveal that international buyers increasingly prefer the ISO 14001 companies in business contracts, those companies which do not have the certification are losing trade. For the survival of these companies in international trade, government should set up both short-term and long-term targets. In short-term a target of “minimum” number of ISO 14001 certifications per year could be set. While in long-term, the vision should be that all companies having a “certain” annual turnover must be ISO 14001 certified within five years.

[continued]

Is there any potential of increased environmental performance through ISO 14001 in manufacturing companies in Pakistan? Part 1.

By Ahmad ur Rehman Hafiz, ahmaderfurt@googlemail.com

Introduction

Sustainable production is a concept that means producing goods and services in way that is least harmful to the environment. The European Commission, under its Switch Asia Program, is funding a three year project namely: SCI-Pak, for the introduction of sustainable production in Pakistani manufacturing industries.

Pakistan's history has largely been dominated by political instability, poor economic growth and low improvement in social and environmental sectors.

Being a larger contributor in economy after agriculture, Pakistan’s manufacturing sector has considerable environmental impacts as well. Since the government’s development policies have not been giving considerable attention to environmental considerations of industrial growth, the outcome is that Pakistani industrial exports faced multiple of sanctions by the developed world and lost their competitiveness.

Industrial pollution is a major source of environmental degradation in Pakistan. Due to the lack of enforcement capacity on the part of environmental agencies, the majority of industries discharge their waste water into open streams which create a variety of diseases and threats to the health of the population living in surrounding localities. The textile and tannery industries - which can be seen as representative of other major manufacturing industries in the country - largely employ production process that cause huge amounts of energy losses and resource wastage.

In the textile processing phase, for example, the environmental aspects are identified as: the lack of insulation on hot bare pipelines and surfaces, wastage of hot water and steam condensate, malfunctioning steam traps, wastage of energy from hot waste-water and flue gases, steam compressed air leakage, use of low efficiency motors, inefficient compressed air system and low power factor.

In addition to environmental aspects, social aspects of manufacturing processes are evident from the increasing number of industrial accidents due to the hazardous working environment. In occupational sectors including textiles, tanning, chemicals, paper, sugar, electrical and electronics, the workers suffer mostly from diseases like lung cancer, skin and eye diseases, deafness and headaches etc.

The contributing factors to such a low degree of environmental performance and huge social aspects of production processes are the inadequate policy frameworks, regulations, economic incentives for sustainable production and the lack of know-how on the part of industrial equipment manufacturers on developing energy efficient technology. The legislators lack the capacity to enforce or adapt existing legislation for manufacturing industries.

The constraints to growth of the sector are enormous, particularly: the sector faces difficulties in access to credit, availability of reliable infrastructure, capable human resources, bureaucratic functions of government and contract repudiation.

Legislators lack the capacity to enforce or adapt existing policy frameworks for manufacturing sector to foster sustainable production. As a consequence of poor regulatory enforcement, the manufacturing sector of Pakistan is littered with plethora of environmental problems.

With regards to environmental legislations and institutions developed for resource conservation in the manufacturing sector, the government has adopted: Pakistan Environmental Protection Act, 1997, National Environmental Quality Standards, National Conservation Strategy, National Sustainable Development Strategy, National Energy Conservation Policy, National Energy Conservation Center and Renewable Energy and Energy Efficiency Program.

Among the legislation and policies adopted against industrial pollution, the most significant and scientific approach to monitor and control pollution are the National Environmental Quality Standards (NEQS). Despite their being helpful in the measurability of pollution and effluents and a convenient monitoring tool for the environmental protection agencies, the lack of sustainable environmental frameworks makes the standards less effective. In other words, NEQS just set emission limits. They do not devise standards of environmental quality which ensure the long term stability of ecosystem. Thus a company's compliance with the NEQS does not mean that it would not impact the environment. Furthermore, the enforcement mechanism for NEQS is inadequate. According to Government of the Punjab less than one percent of the polluting industries are complying with the NEQS.

In addition the reporting tool designed to facilitate companies to process the data on effluents and report to environmental protection agencies is also not effective. To develop the capacity of companies on the use and application of SMART for gathering and compiling data on certain environmental variables to report to environmental agencies, Punjab EPA has organized an introductory training of the SMART program in various chambers of commerce and industries, but the training programs are not backed by feedback and there is no adequate mechanism for environmental survey or surveillance. According to Government of the Punjab there are hardly any industries which use the SMART for complying with the NEQS. (Government of Punjab, 2008, p. 35)

To deal with these critical areas, two types of policy instruments can be adopted namely: regulatory and voluntary policy instrument.

As described above in Pakistan environmental regulations are failing due to inadequate capacity of government environmental agencies in enforcement. In such circumstances, voluntary instruments can play their role in improving environmental performance of manufacturing companies. The ISO 14001 environmental management system is one such instrument. The standard is comprehensive solution to environmental management challenges in companies. The certification to the standards is conditioned to implementing a management system with clear organizational structure, job description and sufficient budget in order to pursue activities and functions aimed at improving environmental performance of the company.

The standard is not restricted to just meeting the regulations, it goes even beyond and allows firms to voluntarily adopt measures for continual environmental improvement. The companies which seek certification need to set up internal environmental management system and pass a third party audit which would confirm the conformance to the objectives of EMS established by the companies. In view of tailor-made approach of ISO 14001 for each company, it appeared to be a best alternative in circumstances where government regulatory institutions lack the capacity to enforce state environmental legislation.

In order to test the question “Is there any potential of increased environmental performance through ISO 14001 in manufacturing companies in Pakistan?” a survey in two Pakistani manufacturing companies was conducted.As in Pakistan the number of ISO 14001 certified companies is very selective (according to Malik 2006 estimates only 4% of all 3000 ISO certified companies are certified to ISO 14001), the sample of the survey is also very small and sampling technique which is employed is purposive sampling (Purposive sampling starts with a purpose in mind and thus sample consists of the people of interest and those who do not suit the purpose are excluded). Furthermore, the constraints in choosing a bigger sample were mainly the availability of limited possibilities of communication due to geographical distance, time zone difference and lack of cooperation from various companies. Therefore, the only choice, author ended up for the survey was two leading textile companies namely: Azgard9 Ltd and Sapphire textile mills 7 Ltd.

Findings of the survey about the implementation of ISO 14001 at Azgard9 Ltd and Sapphire textile mills - two leading Pakistani textile companies

This study was aimed at testing the research question: Is there any potential of increased environmental performance through ISO 14001 in manufacturing companies in Pakistan? Given the selected quantity of ISO 14001 certified companies in Pakistan and the cross continental coordination problems in identifying and interviewing relevant personnel at the industry, the sample of this survey is limited to only two leading textile manufacturing companies, both having production facilities in Lahore.

Though the sample may not be representative of the whole manufacturing industry, it may be possible to generalize the findings to other manufacturing industries adopting ISO 14001 EMS. The sampling method used for the survey was convenience sampling. The factors taken into consideration while choosing respondent companies were first the presence of a source person who can be easily accessed and provide required information within appropriate limit of time, and second whether the respondent company has an interest in sharing the information with the outside interviewer. Building on these factors the two companies finally selected were the Azgard Nine Ltd and Sapphire textile mills 7 Pakistan.

Both companies are large export based textile manufacturers and their shares are traded on Karachi stock market. Both companies are briefly introduced below.

Azgard9 Ltd

Azgard9 Ltd. is a vertically integrated textile manufacturing company in Pakistan. The product line of Azgard ranges from specialized yarn, denim fabric to denim garments. The products are marketed and sold through out the world with major export destinations being the USA, Canada and Europe. Its customers of denim garments include internationally renowned retailers such as H&M, Espirit, Zara and GAP. Integrated industries units consist of spinning, weaving, dyeing, finishing and computer aided design and manufacturing, stitching and laundry/washing facilities. Currently Azgard has three manufacturing facilities, all situated in Pakistan. Unit I produces open end yarn, denim fabric and garments and is located in Kasur District near Lahore, Unit II: a ring yarn production facility is situated in Muzaffargarh, near Multan and Unit III: a denim garment manufacturing facility is located in Ferozpur near Lahore (Azgard9 Ltd, 2010).

Sapphire textile mills Ltd

Sapphire textile mills Limited is one of the largest textile companies in Pakistan. The company deals in manufacturing and sales of yarn, fabric, home textile products, and energy sales. Currently its manufacturing facilities are located in Kotri, Nooriabad, Chunian, Feroze Watwan, Bhai Pheru and Bhopattian Lahore. Company's subsidiary business includes wind energy projects including assembling, manufacturing, and sales of alternative energy and lighting products. Its markets base is in the regions of Asia, Europe, Australia and North America (Sapphire textile mills Ltd, 2010).

The aim and methodology of the survey

This survey mainly tries to evaluate the question “Is there any potential of increased environmental performance through ISO 14001 in manufacturing companies in Pakistan?” The secondary questions to get to this primary question included: Did the companies interviewed have any environmental policy in place? Why were the companies interested in the certification? Did the management of these companies provide full support for implementing ISO 14001 in terms of hiring auditors, setting up compliance department and allocating finances? Did ISO 14001 certification bring any financial benefits in terms of increase in their share-value or in other financial terms? What environmental, health and safety improvements did the companies achieve through ISO 14001- compliance? Did ISO 14001- acquisition exempt the companies from regulatory or tax liabilities by the government environmental agencies? Did ISO 14001 certification by the companies give them any advantage over their competitors? And was there internal training department existing in the interviewed companies for raising environmental awareness in employees and the role of such department?

The entire survey comprised of open-ended questions with the aim of receiving varying degrees of response in content and detail. To avoid possibilities of a communication gap some questions were repeated with variation in the language.

In approaching to right person who had access and knowledge of EMS related information, personal contacts have been used by the author. After identifying the concerned officials in both companies, a telephonic appointment was set up with them. In this conversation the respondents were briefed about the aim and the objectives of the survey. This step was followed by sending emails with the questionnaire attached for receiving companies’ responses..

Findings of the survey at Azgard9 Ltd

Azgard9 acquired ISO 14001 certification in 2005 within a period of six months. The adoption of ISO 14001 EMS was a part of corporate strategy of Azgard9 Ltd about Health, Safety and Environment which clearly states the goal of aligning the environmental performance to contemporary requirements (see image below).

The reasons to adopt ISO 14001 for Azgard9 were to comply with national and international applicable environmental laws; to operate in a responsible way; to fulfill the global customer requirements; to get a competitive edge by improving the environmental performance; and to conserve the energy, natural resources and minimize waste.

The management of the company gave its full support for implementing EMS by allocating finances, setting up a separate compliance department and hiring lead auditors.

In this regard, the company has established a water treatment plant with a running cost of US $ 8300 per year. Azgard9 has contracted with a private certification body namely SGS which performs one EMS audit annually and each audit costs Azgard9 an amount of US $ 3316. In addition to this, for environmental monitoring, the company has contracted an external party that conducts monitoring of gaseous emission, effluents, noise etc. and charges a fee of US $ 2380 per year. An additional amount of US $ 100 per year is incurred on the incineration of dispensary waste and electrical tube lights.

According to the survey response, the financial benefits of ISO 14001 EMS result in marketing benefits and demonstrating that the company is observing the global customers’ code of conduct. Though no comparison on how much sales increase the company has achieved due to EMS implementation is available, the company believes that EMS plays its role in its success of working with world renowned brands like H&M, diesel, NEXT etc.

As a part of its EMS, the company has analyzed environmental aspects and impacts, has set objectives and worked towards closing the gaps. In this connection, it has completed many energy conservation programs successfully, established operational control to all critical processes and in return enjoyed more customer satisfaction and confidence of legal agencies.

Towards implementing its EMS, Azgard9 has set up a husk boiler to replace the use of fossil fuels. The company has gained the advantages of setting up its EMS on cleaner production principles. In line with the CP steam traps are installed on all steam lines, economizer has been installed on boilers, waste heat recovery boilers have been installed on the power generations and an effluent treatment plant is installed.

By being proactive in environmental management, Azgard9 has been avoiding any legal charges or fee due to its activities. Furthermore, the improvements in processes and technology have brought benefits to Azgard9 in terms of competitive advantage over its competitors in the market of cotton yarn, denim fabric, and woven denim garments. To maintain the stability and the progress of its EMS, the company has an actively functioning internal training department that provides awareness training to all its employees. It also conducts regular courses regarding environmental management systems under the umbrella of the human resources department which plans, executes and evaluates the effectiveness of trainings.

Findings of the survey at Sapphire textile mills Ltd

In the case of Sapphire textile mills the survey results reveal that the company obtained ISO 14001 certification in 2001 from UKAS & ANAB (a private certification and auditing firm) within three months. The adoption of ISO 14001 was an individual management decision rather than a part of corporate environmental strategy.

Sapphire textile mills argues that there is no economic value of adopting ISO 14001 EMS since none of its customers in the world are requiring ISO 14001 certification. Its drive for ISO 14001- implementation came from perceived export benefits but the company was disappointed when its global customers demanded to have audits according to their specific codes of conduct (COC) and targets of evaluation (TOE) instead of being satisfied with the company’s certification to ISO 14001.

There is insufficient support from the management of the company to maintain the stability and progress of the EMS. Since the company's customers have came up with new demands of advanced standards of product and environmental performance, the company feels that the implementation of ISO 14001 delivered no financial benefits in terms of increased sales and therefore qualifies the investment it made in the establishment of an EMS as unjustified. However, it still recognizes that it has achieved a lot of improvements due to ISO 14001 certification in areas such as solid waste management including its disposal, monitoring of air emissions and prevention of ground contamination due to spill over.

Considering the steps it has taken in energy efficiency improvement, the company has installed 50% of liquid crystal display (LCD) lighting systems at the production floors and boundary walls and replaced the monitors with LCD.

Regarding the benefits accruing from the ISO 14001 certification in the aspects of reduced regulatory burdens on the company, Sapphire textile mills Ltd maintains that there were no realizable benefits in this regard for the company. Taking into account its customer demands, it had not gained any competitive advantage over its competitors by adopting ISO 14001 EMS.

In order to raise the environmental awareness of its employees, the company has set up an internal training department. The Compliance and Systems Department (CSD) in collaboration with the Human Resources Department (HRD) conducts awareness programs. HRD is responsible for the selection, recruitment and training needs assessment of employees while CSD is responsible for the implementation of standards, laws, regulations and COCs and TOEs of company's customers.

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Nationalization as Privatization in Reverse: Understanding the Nature of the Commons to Identify a Possible Point of Optimal Nationalization, Part 4

By Lucio Munoz*

* Independent Qualitative Comparative Researcher / Consultant, Vancouver, BC, Canada Email: munoz@interchange.ubc.ca

[continued]

Determining the optimal level of nationalization

While we can nationalize it all, as some communist/socialist countries have done or did, this may not be an efficient move today as empirically it has been shown that some levels of privatization are needed to keep the overall system sustainable.

Persistent full nationalization and total privatization deficits appears to be the empirical reason why the Soviet Block fell or so called Soviet Union effect, which may explain why China became more eager to move towards capitalism allowing slowly more controlled levels of privatization and moving away from full nationalization.

This raises the possibility of the existence of an optimal level of nationalization, a situation where the level of the commons under public use meets social/public goals while allowing for some efficient private use. This situation can be appreciated both through a general asset inversegram and through a specific asset inversegram.

a) Optimal nationalization under the general asset inversegram

Figure 8 below captures the dynamics leading towards this possible point of optimal nationalization using a general asset inversegram.

Figure 8 above indicates that we can nationalize up to point (f), which covers the section of the commons that is not yet under private use, section between point (c) and point (d), but this does not meet social/public goals so it is not optimal. Figure 8 above also shows that we can nationalize all the way to point (h) and allow no private use at point (a), but this would be unsustainable in the long term as it would be subjected to the general asset Soviet Union effect as it would be operating at a total social welfare waste and total privatization deficit level the distance from point (g) to point (h) and from point (a) to point (b) respectively.

Finally, Figure 8 above can be used to express the view that if we nationalize the commons to a point of nationalization such as point (g) and allow some privatization to point (b), then this would be an optimal nationalization point M* as at point (g) social/public goals are met while some efficient private activity can take place. In other words, a point of optimal nationalization M* is a point where the commons is in an optimally compromised state.

In summary, Figure 8 above can be used to say the following: 1) That an optimal nationalization point M* is possible at point (g); 2) That nationalizing beyond that point (g) = M* or to the right of it is not a good choice as doing this may make the overall system unsustainable as we would be operating under social welfare waste and privatization deficit; and 3) That allowing privatization beyond point (g) = M* or to the left of it, would lead to excess capitalism and to a social welfare deficits rendering those governments unable to meet their social goals. Hence, the optimal nationalization point M* in Figure 8 above is more than just social protection, it is the point of effective social protection.

b) Optimal nationalization under the specific asset inversegram

Figure 9 below shows the nature of the optimal point of nationalization(M*) of national(N) and local(L) assets and its characteristics.

Line M* in Figure 9 above indicates the following: 1) That optimal nationalization requires the nationalization of assets of national interest(N) and of assets of local interest(L) up to line M* and the introduction of privatization of national assets(N) and of local assets(L) as indicated by section “a” and section “b” respectively; 2) That if we nationalize to the left of line M*, there will be nationalization or social welfare deficits and excess capitalism of national and/or local assets, a non-optimal situation; 3) That if nationalize to the right of line M*, there will be excess nationalization or social welfare waste and privatization deficits of national and local assets, another non-optimal situation; and 4) That at line M*, there is no social welfare waste, no excess nationalization, no privatization deficits, no excess capitalism, and no social welfare deficits of any kind as it is the optimal point of nationalization.

In summary, Figure 9 above can be used to say the following: 1) That an optimal nationalization point is possible at point M*; 2) That nationalizing to the right of that point M* is not a good choice as doing this may make the overall system unsustainable as we would be operating under social welfare waste and privatization deficit; and 3) That allowing privatization to the left of point M* would lead to excess capitalism and to a social welfare deficits rendering those governments unable to meet their social goals. Hence, the optimal nationalization point M* in Figure 9 above again is more than just social protection, it is the point of effective social protection.

The search for the optimal level of nationalization in China

As mentioned in the introduction above, China appears to be allowing currently some levels of private activity involving assets of local relevance to little by little move towards a level of optimal nationalization while protecting assets of national relevance and keep political stability as its overall goal is still to meet its social/public goals, and the process of how China is doing that can be appreciated both ways, through a general asset inversegram and through a specific assets inversegram.

a) The optimal level of nationalization in China using a general assets inversegram

The general asset inversegram for China is shown in Figure 10 below:

Figure 10 above shows the following: 1) That China before opening its commons to private activity in assets of local relevance was operating at full level of nationalization at point (h) just as the Soviet Union did; and therefore China was operating at the point of full social welfare waste and total privatization deficits; 2) That since China now has started to allow some private use of assets of local relevance, it is operating at point (i) in terms of levels of privatization and between point (g) and point (h) in terms of levels of nationalization reducing the level of social welfare waste, but still at a private sector or privatization deficit at the space between (i) to (b) as China is still operating beyond the point of optimal nationalization at point (g) = M*, which is not efficient; and 3) That China in the future will allow privatization slowly to move from point (i) to point (b) to eliminate that social welfare waste and that privatization deficit associated with it, an efficient move as it coincides with the level of nationalization at point (g), which is the optimal level of nationalization(M*) as it meets its social/public goals.

See that at point (g) or optimal nationalization point(M*) in Figure 10 above, 1) There is not social welfare waste and there is no excess capitalism; 2) To the right of point (g) there is social welfare waste and privatization deficits; and 3) To the left of point (g) there is social welfare deficit and excess capitalism. In other words, as long as China can meet its social/public goals by operating at point (g) = M*, it will be able to efficiently allow private activity at point (b), which will help to keep the system as a whole stable.

However, Figure 10 above also permits us to see by the broken line from point (b) to point (d) that 1) If private activity in China is allowed to go beyond point (g) or to the left of point M*, slowly or quickly, it will be a point of excess capitalism, then China would not be able to meet its social/public goals as it would be operating at a social welfare deficit point; and 2) The bigger the social welfare deficit, the more unstable the China system would become. Therefore, China has a strong incentive to keep for sure private activity up to the optimal nationalization at point M* and avoid privatization beyond this optimal nationalization point M*.

b) The optimal level of nationalization in China using a specific assets inversegram

The specific asset inversegram for China is shown in Figure 11 below:

Figure 11 above allows us to point out in detail step by step how China is moving from full nationalization(line T) to optimal nationalization(line M*) to remain politically stable during the transition: i) Section “1” and section “2” show that China has decided to allow slowly the privatization of local assets(L) and it will continue to allow it until it reaches the point of optimal nationalization M* and avoid that social welfare waste and privatization deficit; and ii) Section “3” and section “4” indicate that after reaching optimality in the local assets privatization arena, China will have an incentive to privatize some national assets(N) up to the optimal point M* to avoid that social welfare waste and privatization deficit associate with national assets.

Notice that China is following the principle of inverse action, it quickly nationalized everything after the revolution starting from national assets to ensure system stability; and right now it is slowly allowing privatization starting from local assets to remain stable with the goal in mind of later privatizing some state assets. And also notice that when China started to allow privatization in 1978, then the following happened: i) China went from a communist country to a dwarf country(Socio-capitalist) and from a communist development system to a dwarf development system(Socio-economic) as now it has a compromised use model; and ii) China created a dwarf market(State controlled invisible hand).

General Implications of the discussion above

Nationalization policy should be used as a proactive optimal policy to ensure effective social protection while encouraging controlled capitalism, not as a reactive anti-privatization non-optimal policy as it has been used so far. This requires the nationalization of assets still in public use to place them outside the pulling forces of the private market; and the nationalization of private assets of national and local relevance.

Full nationalization is not an optimal point as it is affected by excess state/bureaucratic self-interest, leading to total social welfare waste and privatization deficits; and therefore, it is not an efficient social protection mechanism. Full nationalization should be avoided. as it is not sustainable in the long-run as shown by the fall of the Soviet Union.

Full privatization is not an optimal point too as it is affected by excess individual/corporate self-interest, leading to total excess capitalism and social welfare deficits; and therefore, it is not an efficient social protection mechanism too. Full privatization should be avoided. as it is not sustainable in the long-run as demonstrated by the recent excesses and crash of the financial system.

The optimal level of nationalization is an optimal compromised state and its goal is to ensure effective social protection, not just social protection.

The China experience shows that when moving from full nationalization to an optimal nationalization point, to remain politically stable, it should be done slowly beginning with the privatization of nationalized assets of local relevance first.

The principle of inverse action suggests that when moving from full capitalism to an optimal nationalization point, it should be done fast, beginning with the nationalization of assets of national relevance first.

The long-term viability of implementing optimal nationalization programs needs the creation of a world bank for optimal nationalization to assist countries with the financial support and expertise they may need to implement and ensure the success of such programs in the long-term.

Optimal nationalization theory is consistent with sustainability requirements.

Specific conclusions

First, it was indicated that the commons can be thought as existing in three different scenarios: fully in public use, fully in private use, and as a compromised commons. Second it was shown that the process of privatization and nationalization can be viewed as having different stages; that the nationalization process can be seen as the opposite of the privatization process or as privatization in reverse; that a level of optimal nationalization may exist at a point where nationalization meets social/public goals while allowing some levels of privatization; and that this is an optimal compromise state where social goals are met and controlled capitalism can take place.

Third, it was pointed out also that current empirical development experience of China appears to be consistent with the theoretical possibility mentioned above as by allowing little by little some levels of privatization in assets of local relevance, China is now moving towards a level of nationalization that will still allow it to meet its social/public goals while eliminating social welfare waste, and therefore China is moving slowly towards an optimal nationalization point or a point of optimally compromised commons right now. And finally, the general implications to other countries that are now moving towards or who will need to move away from the point of full nationalization or of full privatization were pointed out.

General conclusions

First, it was shown that nationalization can be expressed as privatization in reverse. Second, it was stressed that a possible optimal rate of nationalization exist; Third, it was shown that China is following the principle of inverse action when moving from full nationalization state towards the optimal nationalization point by slowly allowing privatization of assets of local relevance first; and finally, it was pointed out that nationalization policy should be used as a proactive optimal policy to ensure effective social protection while encouraging controlled capitalism, not as a reactive non-optimal policy as it has been the case so far.

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Nationalization as Privatization in Reverse: Understanding the Nature of the Commons to Identify a Possible Point of Optimal Nationalization, Part 3

By Lucio Munoz*

* Independent Qualitative Comparative Researcher / Consultant, Vancouver, BC, Canada Email: munoz@interchange.ubc.ca

[continued]

Notice that when there are no assets in public use(g) and in private use(p) at the same time, then there is no commons(c), which can be stated as follows:

c = gp

The nature and characteristics of the different types of commons

From the model presented above( C = G + P ), it can be seen that there can be three different types of commons:

a) The commons under full public use(C1)

One possibility is that the commons is under full public use(G), no private use exists(p), which can be represented as:

C1 = Gp

This would be the case of a fully totalitarian state or full nationalization(FN) where no private uses exists(p). As it can be seen in Figure 5 below, there is a point of full public use at point “a”.

b) The commons under full private use(C2)

Another possibility is that the commons is under full private use(P), no public use exists(g), which can be presented as follows:

C2 = gP

This would be the case of a fully capitalistic state or full privatization(FP) where no public uses exists(g). As it can be seen in Figure 5 below, there is a point of full capitalistic use at point “b”.

c) The commons under compromised use(C3)

The third possibility is that the commons is under compromised used(M), one where the commons is under both public(G) and private(P) use at the same time:

C3 = GP = M

This would be the case of a mixed state, where both public(G) uses and private uses(P) coexist or exist at the same time. As it can be seen in Figure 5 below, there is public use-dominated mixed state at point “c” and there is a public use-dominated mixed state at point “d”.

Note that the arrow on the top of the inversegram indicates that levels of public use(G) of the commons move from left to the right; and that the arrow below the inversegram shows that levels of private use(P) of the commons move from the right to the left.

Possible levels of privatization

To facilitate the presentation of ideas, it is assumed that there are four possible levels of privatization: zero privatization, weak privatization, strong privatization, and full privatization. Figure 6 below captures these ideas in detail.

Figure 6 above shows the different levels of privatization of the commons as we move from right to left at the base of the figure: At point (a) we have zero privatization; at point (b) we have weak privatization; at point (c) there is strong privatization; and Full privatization is found at point (d). Notice that as the level of privatization increases, the level of public use decreases, showing that nationalization is privatization in reverse.

Also see that the move from point (a) to point (b) in Figure 6 above can be seen as the pre-globalization period when we moved from no privatization at all slowly to some privatization; and that the move from point (b) to point (c) can be taken as the globalization period, the move from weak quickly to strong privatization.

Possible levels of nationalization

Since nationalization can be seen as the opposite of the privatization process or as privatization in reverse, then there can be also different levels of nationalization, which can be appreciated in Figure 7 below:

Figure 7 above points out the different levels of nationalization possible as we move from left to right at the top of the figure: at point (e) we have zero nationalization; at point (f) we have weak nationalization; at point (g) there is strong nationalization; and full nationalization is found at point (h). Notice that as level of nationalization increases, the level of private use decreases. Hence, privatization is nationalization in reverse, which is consistent with the principle of inverse action.

Also see that the move from point (e) to point (f) in Figure 7 can be seen as the period of nationalizing all assets that are not yet in private hands and are still in public hands. And the move from point (f) to point (g) can be taken as the period of strong nationalization of private assets.

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