ORC Sightlines

December 2007

Companies Opt to Reduce Greenhouse Gases Ahead of Legislative Mandates

More than 370 U.S. and offshore organizations now participate in the Chicago Climate Exchange (CCX), a voluntary, but contractually binding, cap-and-trade program to reduce greenhouse gas (GHG) emissions. CCX members are required to reduce their carbon emissions by 1 percent each year. Organizations that exceed the 1 percent requirement receive a “carbon allowance”, which they can sell to other companies that have not met their reduction target. Carbon allowances are sold in a process analogous to the futures market.

Advocates argue that voluntary cap-and-trade programs work better than legislation requiring every company to meet reduction standards. Even though all CCX members may not meet the annual 1 percent requirement. the overall result is positive – total emissions are reduced. Since the program began in 2003, 180 million tons of emissions have been eliminated. 

A growing number of companies are deciding to join CCX. The reasons vary. William Ferretti, Ph.D., vice president and special assistant to the chairman of CCX, who addressed members of ORC’s Occupational Safety and Health Group last month cited several advantages companies seek through membership:  

Risk management

Shareholders and board members are concerned that having a large, unmanaged carbon footprint could increase their liability and damage their reputations.

Financial return

Many organizations are already cutting GHG emissions. By selling credits for reductions that go beyond the required amount, they can realize a return on those reductions. Prices for allowances have already tripled since CCX’s inception four years ago, and if Congress passes a bill to make cap and trade mandatory, the value of carbon credits earned or purchased now may increase even more.

Credit for early action

Most of the cap–and-trade bills under consideration include provisions granting credit to companies that took early action.

Opportunity to influence policy

Companies engaged now in cutting GHG emissions will have a greater voice in developing new legislation.

Roy Deitchman, CIH, vice president, Environmental Health and Safety, Amtrak admitted to OSH members that when Amtrak joined CCX, the rail carrier was taking a “leap of faith” that it would be able to meet the reduction commitments. In the event, Amtrak has cut fuel use by 1 percent each year from 2003 to 2006 by taking relatively inexpensive measures such as closing the doors of box cars, not allowing engines to idle for longer than 15 minutes, and improving locomotive maintenance. Now that Amtrak has harvested the “low-hanging fruit”, continuing to reduce GHG at the rate of 1 percent each year will require a major capital investment.

For more information on cap-and-trade programs or on ORC’s Environmental, Health, and Safety services, contact Cord Jones, +1 202-293-2980.

ORC Opens Dubai Office

In October, ORC celebrated the opening of a new office in Dubai in the United Arab Emirates. The city that recently boasted the highest concentration of construction cranes in the world is now home to ORC’s Middle East regional office serving clients in the six countries of the Gulf Cooperation Council (GCC): UAE, Saudi Arabia, Kuwait, Qatar, Bahrain, and Oman.

It is no secret that the GCC countries own the lion’s share of the world’s oil and gas reserves, enabling the region’s economy to grow at a staggering rate in the last few decades. Anyone who visits the region cannot help but be impressed by the sheer scale and quality of the ambitious completed and ongoing projects. Despite recent cost-of-living increases, Dubai remains a preferred location within the region for many companies, as well as for the upwardly mobile professional, technical, and managerial workforce in the construction, banking, financial services, IT, and real estate sectors. With a population of about 1.4 million—85 percent of which are foreigners—the market presents many interesting opportunities for ORC to offer its expertise in international, regional, and local compensation policies and practices. In our first two months in the region, ORC has submitted proposals and secured assignments in Bahrain, Dubai, and Kuwait, and in response have already increased  staffing levels.

John MacDonald, formerly regional HR director for Weatherford International based in Dubai, has joined ORC as Middle East Managing Director. John brings many years of experience in the region, most of the last ten spent in Dubai, to his task of establishing and managing the new office.

Building a Safety Culture in the Asia-Pacific Region

In 1995, General Motors’ Asia Pacific (GMAP) operations had one of the highest safety incident rates in General Motors. Ten years later its record of recordable incidents and lost workdays beat out the rest of GM and approached world class in line with other global H&S leaders. Ken Thompson, ORC consultant and former Asia Pacific Regional Safety Manager for GM, attributes the turn around to a dramatic change in the safety culture of GMAP.  At ORC’s Asia Pacific Health, Safety, and Environmental forum held last month in Kuala Lumpur, Ken took members on a step-by-step tour of the culture change process GM used to such good effect:

  1. Provided a clear statement of expectations and responsibilities with acknowledgment that safety is a leadership responsibility.
  2. Set challenging targets and developed both lagging and leading metrics.  In this case, lagging metrics included injury and lost workday rates; leading metrics tracked employee satisfaction and identification and correction of unsafe behaviors and conditions.
  3. Held managers and executives accountable for meeting targets and rewarded both positive behaviors and accomplishments.
  4. Provided the resources, funding, and training required to meet the targets.

GMAP also put structures and processes in place to communicate safe operating procedures to managers, shared best practices, observe safety practices in action, and investigate incidents effectively.  Each plant has a Plant Safety Review Board chaired by the top plant executive and, where applicable, a union leader.  The Board sets health and safety strategy, reviews injuries and what caused them, and develops remedial plans. 

Change doesn’t happen overnight, but with the active and visible support of the general manager, GMAP made considerable progress within the first few years and has continued to improve its performance and help General Motors earn a reputation as a global leader in health and safety.

For more information on this program or on ORC’s Asia Pacific HS&E practice, contact Norman Tan, Vice President, Safety, Health & Environmental Services, ORC Asia Pacific at (65) 6438-0004 or visit www.orc-ap.com.

 

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