Environmental and Social Sustainability Principles - Case Study Example

Environmental and social sustainability principles Student’s Name: Instructor’s Name: Course Code: Date of Submission: Table of Contents 1.0 Introduction 2 2.0 Company Overview 3 3.0 The company’s supply chain and logistical operations 4 3.1 Oil sands 4 3.2 Exploration and production 5 3.3 Supply and trading operations 6 3.4 Refining 7 4.0 The company’s environmental and social sustainability strategies 8 4.1 Environmental strategies 9 4.1.1 Air quality 10 4.1.2 Water withdrawal and consumption 11 4.1.3 Land and biodiversity 11 4.1.4 Tailings 12 4.2 Social sustainability strategies 12 4.2.1 Safety, health and security 12 4.2.2 Social responsibility 14 4.2.3 Community investment 14 5.0 Conclusion 15 References 16 1.0 Introduction This analysis is about Suncor Energy Inc. and it is about exploring the various principles that are employed by it in order to effectively deal with the issues related to environmental sustainability. This will be done in relation to the company’s supply chain and logistics operations. By doing so the analysis, will also use specific examples from the company case in order to try and demonstrate how it has been dealing with these major issues that are important for the company in terms of growth and sustainability. This analysis is important in the sense that it will help understand how the company supply chain and logistical operations affect both the environment and the social life. 2.0 Company Overview Suncor Energy Inc. founded in 1967 in Canada when it was first established to explore Canada’s oil sands which are actually the largest petrol basins that have ever been found in the world. Since that time, the company has seen tremendous growth to become one of the most competitive companies operating in the energy sector globally. At the moment, the company has managed to establish different six power projects from wind and which have the capacity to produce the energy worth 255 megawatts. These projects are aimed at helping the company reduce the amount of carbon dioxide emitted to the air from fuel burning activities. The company has also various plants that engage in different energy production activities with Suncor’s St. Clair being the largest plant for the company producing ethanol with a production capacity of 400 million litres in each year. The company in its quest to meet energy expectations of its customers both from within and outside Canada, has embarked on a number of activities aimed at increasing its capacity. The company for instance deals in oil sands exploration activities, supplying and trading of energy, wind power and biofuels. What this means is that these activities will directly impact on the natural environment and the social life in which the company operates and therefore the need to employ different strategies to ensure sustainability into the future (Dowell et al 2000). As an overview, it is important to highlight that the company’s strategies are founded on the company mission statement which is to create and provide energy in order to better the world. Further, this has been elaborated in the company vision which is to ensure economic prosperity, social well-being and natural environmental are improved (Schipper et al 2001). It is from this perspective therefore, that this analysis is important in addressing the company’s supply chain and logistical activities and how they impact on both the natural and social environment, and how the company is responding to them (Suncor 2013c). 3.0 The company’s supply chain and logistical operations As already established, Suncor Energy Inc. is a global company and it is operating in a number of energy production, development and marketing activities in many countries of the world. This presents the company with a number of challenges with regard to reach the wider global market (Sharma 2000). This is only possible given the appropriate company supply chain management strategies and management of logistics which affect the process of energy production to presenting it to the market. Some of the common supply chain and logistical operations that the company engages in and that have a direct impact to the environment and the society that this analysis will deal with include: oil sands, exploration and production, supply and trading and refining (Suncor 2013c). 3.1 Oil sands Oil sands refer to the company operations that it uses to produce bitumen as a source of energy. Oil sands remain the company main focus for business success. Suncor Energy Inc. is the first company globally to develop oil sands a business venture that has come to contribute greatly to the performance of Canada’s economy. Oil sands refers to the mixture of clay and sand as well and bitumen. In the production process, bitumen are extracted in the form of hydrocarbon is produced as natural liquid used as energy (Suncor 2013c). Oil sands are run near Forth McMurray, Alta. It is from this location that the company produces its bitumen from the oil sands using the two main operations known as mining and ‘in situ.’ The bitumen that has been extracted using the two processes is yet to be upgraded and refined and made ready for use. The upgrading process is used to refine bitumen in readiness for use as feedstock and also as diesel fuel. Now, all these activities of extracting and refining bitumen for the market, entails a number of operations. For instance, they involve mining, a process that can lead to large land depressions along the basins. This is very challenging to the environment as this harbors water that is not clean and that in the long-term may tamper with the natural ecosystem (Priddle 2002). 3.2 Exploration and production Among the main activities that fall within the company supply chain framework, are the exploration and production activities. The company oil exploration and production activities are responsible for the production of oil and gas and they are aimed at helping the company build a strong and sustainable portfolio asset growth for the company (Schipper et al 2001). The exploration and production (E&P) activities are focused on maintaining high profile project that can help maximize the company returns and cash flow as well as long-term business value. In other words these activities are part of the company’s strategy to widen its energy production base and also to ensure low cost of production for the conventional energy (Vera and Abdalla 2004). This is important in balancing the high cost oil sands production and more especially when the prices of crude oil are low. The issue with these operations, is that they involve heavy use of machines which burn a lot of fuel and in the process emitting a lot of carbon into the air. In addition, there is an issue of tampering with the natural terrains and vegetation, in the long-run they will trigger climate change if not checked. On the social aspect, oil and gas exploration can take place in a very vast piece of land. In many occasions, this may lead to displacement of people and in the process causing family disintegration (WHO, 2004). The company oil exploration and production activities take place mainly along the North America Onshore and the East Coast Canada and there are plans by the company to increase their production in the next one decade. This is expected to tamper with both the environment and social life even the more. 3.3 Supply and trading operations Being a major supplier of energy products in the world, Suncor Energy Inc. also engages in supplying and trading activities. The different supply and trading activities entails the processes and supply chains that the company uses to bring its products to the market. This is important in ensuring that the company has a wider market coverage from which it can tap its revenue for long-term growth and sustainability (WHO, 2004). Suncor Energy Inc. is a commercial centre for excellence in terms of sales and marketing. The company has several retail stores in different parts of the world including: Clagary, Colo, Alta and Denver as well as in London. The company does marketing activities both in the Northern America region and other global markets. The products that the company exports include: crude oil, natural gas, sulphur and petroleum coke (Suncor 2013c). However, most important to note, about the company’s supply and trading activities, is the fact that these products are processed, transported and delivered to various destinations, a logistical process that can impact the environment in very many different ways. Some of the threats posed to the environment as a result of the process include oil spilling, noise and burning of fuel which emits very harmful gases to the environment. Further, the process can also impact on the employees and the community especially if they exposure to harmful chemicals and gases that are leaked during the process and transportation activities (Vera and Abdalla 2004). 3.4 Refining Refining is also a major supply chain and logistical activity that Suncor Energy Inc. engages in. The refining and marketing activities of the company help provide a very essential link between the company’s large resource base in Canada and the very large energy market in the North America. The process of refining is used to process oil sands to produce high quality and highly refined energy products that can have a competitive advantage in the market (Kaplan and Norton 2000). The company refineries are placed on such sites as Alberta, Ontario, Quebec in Canada and Colorado in the USA. Further, the company is planning to expand on these plants in order to enhance their capacity to refine more energy products in order to help meet the ever increase demand for energy globally. However, most important about the expansion plan and the increased refinery activities, is to ensure that the environmental performance is improved for long-term sustainability (Vera and Abdalla 2004). In general, this analysis has provided different facts that show that Suncor Energy Inc.’s supply chain and logistical operations are an issue both for the environmental and the social sustainability. This is because the operations tamper with the natural environment through drilling, refining, leakage of chemicals and emission of harmful gases into the air (De Leeuw, 2002). On the other hand, the activities can also lead to massive displacement of people, health concerns and the safety of both the employees and the general community in which the company conducts its activities. These are all activities that have the potential of threatening the environmental and social sustainability and need to be addressed. The next sections will show the different strategies that the company is using to respond to these fundamental sustainability challenges that are related to the environment and the social life (O’Neill and Reinhardt 2000). 4.0 The company’s environmental and social sustainability strategies The company currently is employing different strategies that are aimed at both environmental and social sustainability. However, the most important point to note, is that the company's dedication to the environmental and social sustainability is well anchored in its mission and vision statements (Suncor 2013d). This is because the two statements of the company clearly highlight what the company wants to be and the strategies it will use. These strategies can be classified into different categories such as innovative technologies, environment, health and safety and community consultation. These issues strategies are addressed in the company’s environmental and social strategies for for growth and sustainability as shown in the model below: Source: Suncor, 2013. As indicated in the diagram above, the company identifies seven important strategies to address environmental and social concerns that arise from their supply chain and logistical operations. The seven strategies are classified into broad categories, mainly: environmental and social. This form the basis of this analysis to establish how the company is working towards environmental and social sustainability. 4.1 Environmental strategies The strategies that the company uses to address the environmental challenges include: air quality, water withdrawal and consumption, land and biodiversity and tailings. However, the most important point to note about the company's environmental sustainability strategy is that they are anchored in the company Environmental Excellence Plan (EEP). The environmental excellence is the primary driver that the company applies to achieve its operational excellence. Suncor’s EEP is a well planned and designed document that identifies the various initiatives that will be used to ensure environmental sustainability in relation to the company’s corporate goals and environmental performance (Suncor 2013d). The EEP is steered by the company’s environmental excellence team in collaboration with the other business units alongside the company strategy and planning team. 4.1.1 Air quality Suncor as a company continues to commit itself towards managing the air to ensure that its quality is sustained around its operations. The company focus is on air emission include quality management and monitoring, sulphur dioxide (SO2), nitrogen oxides (NOx) and other organic compounds that are very volatile. In general, by using these approaches, the company managed to reduce the amount of emissions into the air in 2012 by approximately 8.7% as opposed to 2011 (Suncor 2013d). This gain was attributed the significant reduction of the emissions witnesses in the company’s refining and marketing units. The emissions into the air were reduced by the extended turnaround of the Suncor-operate Terra Nova which included the regular maintenance and upgrading of the plants. Further, the emission was also reduced by the fact that the company improved its performance on the oil sands and in the exploration and production units. Air quality monitoring is used by Sancor to ensure that the company is not exceeding the certain targets of emissions, and if it so happens, identifies the various measures to be taken to ensure the situation is contained and the quality improved. 4.1.2 Water withdrawal and consumption Water is a very important resource that is widely used and its management, is a must. This calls for responsible energy development process that ensure that there is a balance between the water requirements and the need to have in place, clean and safe water for daily use. Suncor considers water performance as one strategy to its operational excellence. Because of this reason, the company is paying particular attention to the oil sands mining activities (Suncor 2013b). This is because the oil sands remain the company’s largest water consuming plants. The company objective is to continue reducing water consumption and this outcome is being achieved through the water recycling processes. 4.1.3 Land and biodiversity Suncor also recognizes that its operations have a direct impact on land which is part of the natural environment. This is because the energy development and processing activities do disturb the land (Suncor 2013d). Because of this reason, Sancor has therefore responded by addressing three specific areas that are related to land and biodiversity and expected to protect the land and the other living organisms found there from negative exploitation. In doing so the company, has developed a comprehensive land and biodiversity management program that will be used as a guideline for land reclamation, waste management and spills and releases. 4.1.4 Tailings Oil sands tailings refer to a mixture of water, clay and sand as well as residual hydrocarbons which are produced during the mine extraction process. The process of managing the tailings, is what has remained a big challenge in the industry. The problem with the tailing is like they form very hard rocks which could take ages to solidify. However, with the case of Sancor a new technology called TRO Process has been developed which helps in drying the tailings and then solidifying them within a fraction of a minute (Suncor 2013b). This has helped the company not only to reclaim the land used for mining but also in enhancing the efforts to be recycled and used for other activities of production. 4.2 Social sustainability strategies As shown in the model above, there are also other strategies that fall under the category of social sustainability that Suncor is using and they include: safety, health and security, social responsibility and community investment. 4.2.1 Safety, health and security The company has a comprehensive program that is being used to address the safety, health and security issues all of which aimed at promoting social sustainability and categorized as follows: Occupational health and wellness: In ensuring that the employees’ health is protected, the company carries out a continuous medical monitoring program to ensure that the employees are fit in terms of health in order to be placed in certain workstations (Suncor 2013a). In addition to this, the company also has an integrated program for managing disability, promoting healthy living and healthy lifestyles and employee and his family assistance program as well as producer safety all of which are aimed at promoting occupational health of the company employees. Emergency management: The company has an elaborate plan for emergency management. This is addressed by practicing disaster and emergency preparedness, standardizing different plans and processes and crisis response plan (Suncor 2013c). The objective of using the emergency management approach, is to ensure that the company employees, environment and operations are protected using the Operational Excellence Management Systems (OEMS) Model below. Source: Sancor, 2013. 4.2.2 Social responsibility Social responsibility is one governance principle that Sancor has paid special attention to. The company’s social responsibility is divided into three major areas: employees, stakeholders and aboriginal neighbors (Suncor 2013c). In the company employees are introduced to a performance culture apart from which is key to influencing the employee engagement. This forms the baseline of the work should be done. In addition to this, the employees are given competitive compensation, career development and time-off programs (Suncor 2013a). Finally, Sancor is globally recognized for being the top in quality management of the employees. This is because employee diversity is well managed which has given the company the best reputation. In the case of stakeholder management, the company has an elaborate policy on how to involve the different stakeholders in different activities. This shows how the company respects each and every stakeholder (Suncor 2013c). This enabled the company to attract great ideas on how to ensure environmental and social sustainability. Finally, the company is working very closely with Canada’s Aboriginal people in the process of developing the different energy resources. This is because they form the large part of the community in which the company operates and therefore collaborating with them is very important in ensuring that a vibrant and diversified as well as sustainable working relationship. 4.2.3 Community investment Through the Suncor Energy Foundation (SEF) has managed to implement the company’s community investment strategy of cultivating leaders in the community, knowledge building and sharing, inspiring innovation and creativity, engaging the citizens and preparing a ground for collaboration in the future (Suncor 2013a). All these are important in working together for a common goal of ensuring long-term social sustainability. 5.0 Conclusion This analysis was aimed at exploring Sancor Company and then establish the various environmental and social sustainability principles that it uses in its supply chain and logistic operations. By so doing, the analysis has covered on the various supply chain and logistic operations that pose a challenge to the company with regard to environmental and social sustainability. This gave way to exploring the different principles that the company is using to ensure that its supply chain and logistic operations are sustainable globally. In general, the study has found out that the company has one of the most complex supply chain with a number of logistic operations in the energy sector. 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