Brenda Rogel Salgado
Socia, Ambiental, Ciudad de México
Hogan Lovells

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Expert Contributor

Resource Management Strategies and the Climate Change Dialogue

By Brenda Rogel | Mon, 05/09/2022 - 13:00

Everyone has a role in the climate change dialogue. Companies, governments, citizens, non-profit organizations and other stakeholders are increasingly committing to climate action toward the net-zero transition. The rewards for companies developing and implementing reduction strategies are clear, from attracting investors with a focus on sustainable projects, retaining market access and generating new business models aligned with the strategies of global companies and the supply chain, to the innovation of new product designs and more efficient manufacturing processes.

According to the Circularity Gap Report 2021, presented at the World Economic Forum, the implementation of circular economy strategies has the potential to reduce global greenhouse gas (GHG) emissions by 39 percent. A circular economy approach promotes initiatives to redefine production and consumption models, eliminate waste generation and wastewater discharge from system design, maximize the utility and value of products, components and materials at all times and the transition to energy efficiency and renewable energy.

These are some common steps and elements to consider when preparing effective resource management strategies.

First, identify where the business is today regarding effective resource management. Preparing this baseline includes systematically evaluating reductions of the projected waste from the production process and the percentage of discharged raw materials.

Second, have a deep understanding of your business. Complete a door-to-door analysis. Understand everything that goes in, such as raw materials, auxiliary materials, energy and water, and everything that comes out as products, by-products, waste, emissions, and wastewater.  Identify the energy consumption of the most relevant energy-consuming equipment. Collect the data, review raw material invoices, water and wastewater discharge fees, fuel consumption costs, waste-handling vouchers, machinery log books, laboratory testing reports, energy efficiency in lighting and annual operating reports, among others.

At this stage, confirm that the company is in full compliance with the legal framework already in place. If not, establish and implement an action program to tackle non-compliance. In some jurisdictions, mandatory climate change regulations are already effective and demand compliance with planning, financing, reporting, and economic instruments. For example, some economic instruments developed by governments toward low-carbon transition strategies are emissions trading systems or carbon taxes (known as green taxes).

Third, find the focus of your resources management strategies. Some areas to consider are product design, development and production processes, infrastructure, organization, packaging, warehousing, distribution, construction, and air conditioning.

Fourth, develop multiple solutions. Identify measures that are technically and economically feasible and ensure the quality of the product is maintained. Be creative; evaluate alternatives to use eco-friendly raw materials, to manufacture lighter products, to design products that can be repaired or recycled, and to extend the life cycle of a product. Regarding processes, identify optimization alternatives, recirculate products and raw materials, minimize waste and emissions, and improve logistics and procurement processes.

Evaluate different lines of action for the reduction of energy consumption: lighting (includes not only replacement of luminaires but also installation of control systems on time, intensity or zoning), sustainable air conditioning, using solar energy to heat water for sanitary use, using rainwater, building eco-friendly structures (i.e. insulation of windows and doors), replacement of equipment with high-efficiency alternatives, installation of stand-by controllers, using more efficient transportation and using videoconferencing to reduce travels.

Fifth, evaluate, select and implement measures. Prepare a technical-economical evaluation of each measure, identify how each one affects the production process, other stages of the life cycle, which areas have to be involved, cost savings and resource efficiency, among others. Prepare an action plan to implement the selected measures. Be sure that each member of the company understands the objectives and their role in implementing the measures. Prepare training and be open to dialogue.

Involve different areas of the company early in the process. Assessing the legal implications of each measure shall be one of the steps. Understand plastic bans in your jurisdiction; authorizations, permits and licenses required for the implementation of a waste-handling program (including end-of-life products); economic competition perspectives for collective and voluntary initiatives; extended responsibility schemes; and quality parameters for different emissions, among others.

Finally, establish a control and monitoring process. It is required to confirm that the measures implemented effectively achieve the planned impact. To this end, use internal indicators. This is a process of continuous improvement. It is essential to generate information that allows us to report and disseminate progress in reduction strategies. Today, more than ever, the possibility of adequately reporting and disseminating this data is more relevant than ever.

Remember that resource management strategies are only one part of the initiatives covered by the sustainability strategy of your business. Today, companies establish their sustainability strategy as the compass for managing business risks and opportunities under environmental, social and governance criteria. The ESG lense enables a transition to more sustainable business models and is applicable to any creative, commercial, consumer or service process.

Photo by:   Brenda Rogel Salgado