Adding Value To Society
The importance of quantifying the quarrying industry’s value-adding activities
By Dr Miles Watkins, director of group environmental and corporate social responsibility, Aggregate Industries UK Ltd
The quarrying industry adds a great deal of value to society, but the questions that need to be asked are ‘where?’ and ‘how?’. Without answers to these questions there is little point assuming that this is the case. Society’s use of quarried products and the provision of local employment are often cited as good examples of value-adding activities, but rarely are these quantified and, as a result, they are often regarded more as folklore than fact. Unless companies know precisely what their products do and where their employees actually come from, the answers to these questions can be little more than guesswork. It is not acceptable to be anywhere other than in full understanding of the balance of payments between the business and society.
This paper explores the concept of the value that is added to society by the quarrying industry, examining both the costs and the benefits. Providing the backdrop for the paper are the activities of Holcim Group, and within them Aggregate Industries UK Ltd, which provides context in the form of a case study.
The Holcim Group is one of the largest cement companies in the world and a major supplier of aggregates and ready-mixed concrete. With a turnover in excess of $10 billion and over 90,000 employees working in more than 75 countries (fig. 1), it represents a significant operation.
Within the Holcim Group, Aggregate Industries UK Ltd are also significant operators in their own right, placing over 40 million tonnes of materials into circulation within the UK annually. This resource mobilization is deployed through some 350 operations spanning the majority of regions of the UK and reaching the Channel Islands, Scotland’s Western Isles and the Norwegian Coast.
Clearly, the surface area between the business of the Holcim Group and society is highly significant and requires responsible and active management. Failure to do so would be irresponsible both to society and the business itself, allowing unacceptable impacts to be felt by neighbours and poorly controlled business continuity risks to arise. It is imperative that even the very basic issues of noise, dust and traffic, and the subsequent potential threat of direct action against the business, are kept in check – not a particularly hard concept to grasp and one of the most basic social responsibilities.
Very large organizations have a particular challenge owing to their size – communication. It is vital that the key messages concerning the character and culture of the business are transmitted to the employees. At Holcim, the concepts of creating value and behaving with social responsibility are core to the documented mission of the organization. Under the headline mission, ‘to be the world’s most respected and attractive company – creating value for all our stakeholders’, there are key goals that contain phrases such as: ‘acknowledged as a valued and trusted partner’; ‘play a leading role in social responsibility’; and ‘operational excellence’. This vocabulary is hard-coded into several messaging channels used within the business, and it is by relating all activities to these core messages that there is more than a chance the conduct of employees can be underpinned by a sense of values. So significant are these concepts to the Group that two out of the five mindsets of the organizational strategy, namely ‘Sustainable Environmental Performance’ and ‘Corporate Social Responsibility’, are explicitly focused on the interface between the business and society, and arguably the remaining three are of more than just peripheral relevance. Moreover, it should not go unnoticed that the Group also explicitly recognizes the tensions that exist as a global operator working in very local markets (fig. 2).
As part of the Holcim Group, Aggregate Industries UK have a number of significant programmes in place to ensure that they too are living up to the values and strategies that have been established by their parent. Specifically, these programmes relate to:
- Climate change
- Sustainable construction
- Community engagement
For any business to be taken seriously in terms of its commitment to the environment and society, a robust climate-change programme with demonstrable results is essential. CO2 will be a significant currency, both actual and political, going forward and its careful management must become part of the decision-making policy of all businesses.
In terms of climate change, the company has already beaten its target of reducing its CO2 per tonne of product output by 12.5% by the end of 2010 (using a 2003 baseline). This target has now been reset at 20% by the end of 2012. This performance will be delivered, in the first instance, by a structured programme of operational improvements developed in conjunction with The Carbon Trust and CAMCO. Using The Carbon Trust’s Carbon Management Programme, a series of investments has been identified and these are being deployed on their ability to pay back quickly from both a carbon and a financial perspective. The asphalt business is under consideration as a priority as its footprint is the most significant of all activities.
In no place is climate change more relevant than construction. One way or another, more than half of all environmental impacts can be traced to construction. The operation of buildings is often quoted as accounting for up to 40% of CO2 emissions in the UK. As almost all quarried material moves into construction in one way or another, this is something that needs serious consideration. It is not acceptable simply to state that quarries build hospitals and schools. How are these buildings being designed? What is their design life? Are they creating the best healing or learning environment? Are they harnessing natural light and ventilation? Are they benefiting from using the thermal mass of the building fabric? A responsible business knows how its materials contribute to a sustainable built environment. Sustainable construction will, without doubt, envelope the whole of the marketplace. In order to be a custodian of this important and responsible transition, Aggregate Industries became a founding member of the UK Green Building Council and have developed a range of products that, when compared to those of their direct competitors, exhibit a more sustainable performance. For convenience, these products have been included in a single brochure (fig. 3).
Aggregate Industries have always been very active members of the community but historically this has largely been left to the skill and will of local management. However, owing to the vital importance of the relationship between the company’s operations and the people that live around them, it is now mandatory to implement a formal Community Action Plan by the end of 2008. This involves identifying stakeholders using some simple criteria and then planning interactivity based on areas of mutual interest. This can consist of direct donations of cash or materials, or simply participating in local groups and societies – using the company’s management skills in a different application.
Many of the community-based activities revolve around the conservation of biodiversity. Aggregate Industries have had a Biodiversity Action Plan in place since 2002 and an updated version is to be released imminently. Within this framework, many site-based actions have been carried out, several in conjunction with the local population, schools or the Wildlife Trusts. It was with the latter that the relationship was taken to a new level in 2005 when the business took the decision to become the primary sponsor of the Wildlife Trusts to deliver the BBC’s ‘Breathing Places’ programme. This three-year commitment is a unique way of funding a national organization and not only has it delivered a range of local activities in support of the campaign, it has also facilitated improved dialogue between the many Trusts within the national movement – improving their own effectiveness in their conservation activities. It is only with full commitment to these kinds of relationships that a real difference can be made. Half-measures are not worth considering.
What all four national programmes have in common is that they are delivered locally, by local people to local people. It is at this level that social responsibility needs to be taken most seriously – and, more importantly, where the most value is added (or, sadly, lost).
In terms of adding value to society, there are a number of ways this can happen. However, as indicated above, value can be lost as well as created and must not be considered as an automatic response to simply turning up on a community’s doorstep and commencing operations. Indeed, the downsides are more important to understand as they can be the most difficult to manage. It can be surmised that the downside potential becomes greater as increasingly larger businesses take control of local operations. Table 1 explores the areas where value can be added and both the upside and downside for each.
It is highly likely that most operators will be able to relate to the value-added areas as listed in table 1, but perhaps less likely that there is a comprehensive understanding of the realization of that value. To illustrate adding value at a local level, two contrasting short case studies follow.
The first site under consideration is Cwm Nant Lleici in the Welsh valleys. Although close to both Swansea and Cardiff, the two largest cities in Wales, the operation is quite remote from its neighbours allowing for a reduced direct impact. A nationally important source of consistently high-PSV stone (one of only six sites in the UK), it produces approximately 300,000 tonnes a year.
The site’s value to society can be summarized as:
- high-PSV stone – contributing to road safety through decreased stopping distances in wet weather
- remote from community, thus minimizing disruption
- contribution to community leading to improved health and well-being (Table 2)
- implementation of QPA Play Safe & Stay Safe scheme
- average weekly wage 6% higher than local average
- secures 31 jobs in an area of Wales with the highest unemployment rate (6.7% and increasing annually).
There are two particularly interesting observations regarding this case: first, the provision of high-PSV materials to nationwide projects; and secondly, the direct contribution to the community. In terms of the materials, the long distances involved in taking the materials to market is considered a benefit owing to the safety improvements made in the use-phase of the materials. At a societal level, it could be considered to be more sustainable to drive more slowly or, more radically, not at all – just one of the many interesting challenges facing society today. In the case of the direct support to society, it is immediately apparent that there is a strong theme. This is very important, but there has to be some method of saying ‘yes’ or ‘no’ to the groups who will inevitably approach the business with regard to community benefits. It is down to the individual to decide what the theme or decision-making model is, but there must be one.
The second, and contrasting, case study is that of Bardon Hill. Situated in north-west Leicestershire, Bardon Hill produces around 3 million tonnes of granite-like material each year, which is used in a range of downstream products and as an aggregate in its own right. The site has been commercially exploited for over 400 years and, as well as being well connected to the motorway network, it has a rail link with daily trains running to the South-East.
The value to society from this unit can be summarized as:
- a quarter of customers and value of sales are within a 50km radius
- 35% of suppliers are within 50km
- 40% of staff reside within 10km of the quarry
- £2.5million of profit is generated within a 10km radius
- staff living within a 10km radius have an annual disposable income of £3.7million – likely to be spent locally
- £38,000 of charitable donations – both cash and materials.
The data from Bardon Hill were genuinely surprising, as the site is always regarded as a nationally significant unit owing to its excellent infrastructure links. Indeed, its links to other units within the business in the London metropolitan area are extremely important, however, the scale of investment in the local area was found to be much greater than anticipated. And herein lies the point – if the investigation had not been undertaken, the value added to society would not have been known. The value we create cannot be assumed – we must know what that value is and where it is experienced.
It is the inherent social responsibility of any organization to understand its impacts on society. Without proper understanding there is only guesswork and assumption, and that is not a responsible way to run a business. In very large organizations, much of the focus is on the centre, the policy-making hub, but the real interface with the world is where the materials are won, processed and integrated into a construction solution. This is where the risks and opportunities lie and, therefore, where value is added or lost; and this should be the focus of the greatest management attention.