Rocky Foundations: How the cement industry is embracing CSR and why we should care

Rocky Foundations: How the cement industry is embracing CSR and why we should care

Despite some occasional setbacks, construction sites have been increasing in Lebanon since the end of the civil war.  One would be hard-pressed to walk through any neighborhood in Beirut without hearing the pulsating rap of jackhammers or seeing the latticed neck of a yellow crane jutted across the skyline.  Dubbed as the ‘Dubaification’ of Beirut, towering skyscrapers are replacing traditional homes and modest buildings at an astonishing rate. 

Development has not been confined to the country’s capital.  A drive along Lebanon’s 210 km coastline or up winding roads into the hills and mountains reveals the spreading epidemic of construction fever. 

In 2011, World Cement Magazine reported that the Lebanese cement production tripled since 2006 with a total output of 6 million tons with the majority of products sold and used domestically. Last year, construction permit requests in Lebanon reached over 16 million square meters of new construction.  Although requests for construction permits have slightly fallen in 2012 due to the regional political instability, the general trend has been for an incremental long-term increase. 

Cement production is soaring across the Middle East.  After a brief slump as a result of the 2008 global economic crisis, cement companies in the Gulf States reported profits in 2011. A study by Kuwaiti investment company, Global Investment House stated, “The GCC cement sector witnessed a turnaround after two years of decline in top line following the credit crisis wave that halted major real estate activity and construction projects affecting cement and building materials companies.”  Today, an estimated $4.4 trillion worth of construction projects are currently underway across the MENA region.  This number is set to increase as the UAE, Saudi Arabia, Qatar, and Kuwait undertake private and commercial real estate and development projects in the wake of the economic crisis. 

 

 Soaring Risks

As profits soar, so do the health and environmental risks posed by the industry. Cement production accounts for 5% of man-made carbon dioxide emissions worldwide. The majority of emissions are released in the intensive processing of quarried materials. Clinker, a sintered mix of limestone and clay, is the first processed material in the cement production process. Approximately one-third of limestone used in clinkers is released as CO2 in the processing stage. 

The second major source of carbon dioxide emission in cement production comes from the fossil fuel combustion needed to power the plant. Progressive companies around the world can decrease emissions by up to 20% by using innovative power production methods. In Lebanon, production is particularly taxing on the environment because of the inconsistent electricity supply. Companies find it necessary to have their own generator to power their plants which increases the inefficiency of the production process.

Quarries provide a third source of emissions. During the raw material acquisition stage, fine particles released into the air have been attributed to the increase of respiratory problems in exposed populations.  Quarrying is also a cause of noise pollution as well as physical and aesthetic damage to the countryside.

Finally, the transportation of materials from the quarry to the processing plant and then to the market provides another source of emissions.

 A 2001 study of the Green House Gas (GHG) emissions in Lebanon found the industrial sector to be the most significant GHG emitter after the energy sector. Cement, asphalt, and iron factories constitute 98% of these emissions.  In the same year, the Lebanese Ministry of the Environment published the results of an air quality monitoring program in the Chekka region. The study shows values surpassing legal limits for Sulfur Oxide (SO2) and Nitrogen Oxide (NO2), both major air pollutants

 In 2004, Lebanese American University Civil Engineering professors Gebran Karam and Mazen Tabbara published the results of their study on atmospheric pollutants emitted from cement factories and their corresponding quarries in Chekka.  Their research showed levels of SO2, NO2 and particulate matter (PM10) exceeding the US Environmental Protection Agency standards which are more forgiving than the World Health Organization’s recommendations; the guideline companies in Lebanon should follow.

 More recently, a 2012 study publishing the total estimated anthropogenic and biogenic emissions showed that cement factories are the major contributor to CO and CO2 emissions, (98%), NO & NO2 emissions (99%), and particulate matter emissions (99%).

 

Regulating the industry

 Several international regulatory frameworks exist which address environmental issues linked to cement production.  All of the international frameworks are voluntary and require self enforcement.

The International Organization for Standardization (ISO) sets worldwide proprietary, industrial, and commercial standards. According to the organizations website, “the ISO 14001:2004 is meant to provide a framework for a holistic, strategic approach to an organization’s environmental policy, plans and actions.”  This voluntary management tool is designed to enable an organization of any size or type to identify and control the environmental impacts of its activities, products and services, to continuously improve its environmental performance and to implement a systematic approach to setting environmental objectives and targets, achieving them, and then showing that they have been achieved. 

The Cement Sustainability Initiative is another regulatory framework initiated by 24 major cement companies who account for one-third of global cement production to specifically address quarry rehabilitation as a result of extraction activities. 

On the domestic level, most of the laws regulating cement production came into being in 2002. A series of three environmental protection laws were signed into effect by the Minister of the Environment to regulate industrial production. In April of that year, the Ministry of the Environment provided a draft law which was signed into effect in 2005 and consequently organized the coordination between itself and other ministries to ensure finding solutions for the country’s quarry problem.  Lebanese quarry legislation (decree #8803) requires the rehabilitation of natural resource by exploiting companies.  In July 2002, The Environmental Protection Act (Decree #444) provided a general legal framework for the prevention and control of air, water, land and noise pollution with the introduction of the producer pays principle. 

The absence of efficient enforcement mechanisms at the domestic level and the voluntary nature of regulation at the international level means that companies must regulate themselves.  There are several loopholes in the international and domestic overview procedures that allow companies to claim compliance while not fully applying the regulation standards.

 

 Room for Violation

Ziad Iskandarani, the Certification Manager at Bureau Veritas (a company that certifies ISO compliance in Lebanon) says that there are serious flaws with the ISO enforcement and corroboration mechanisms. Companies are reviewed every 6 months and know when inspections are going to happen. This allows some companies to violate standards for 5 months and conform to them for the period of inspection.  “You see, it’s not the law, it’s the implementation of the law I’m worried about. You can put as many laws as you want, but if there is no power to implement it, what can you do? It’s like our ISO certification, we go and we inspect them and let’s say the minimum duration is 6 months, what are they doing during those 6 months? We are not aware.”

 

Saints or Sinners

Cimentrie Nationale, Holcim and Cimentrie de Sibline account for almost all cement production in Lebanon.  The leading producer, Cimenterie Nationale, provides Lebanese buyers with about 2 million tons of cement annually accounting for about 38% of the local market share.  Holcim and Cimenterie Nationale have both complied with the ISO standards and were certified for the 14000 family of environmental management.  Lebanon’s only international cement company, Holcim, has been a member of the Cement Sustainability Initiative charter since its inception in 2006. 

Depending on who you speak with, cement companies are either doing everything right or everything wrong. A quick internet search about Lebanese cement factories reveals a multitude of sources condemning cement production in the country.  Newspaper and magazine articles discuss their effect on the environment while local residents have developed online mechanisms for voicing concerns about their health and quality of life.

In response to the controversial record and negative perception of cement companies within Lebanese society, cement companies have pursued a comprehensive Corporate Social Responsibility (CSR) policy and created offices and positions to improve their image by engaging with stakeholders in a meaningful way.

Corporate Social Responsibility is a concept of corporate self-regulation in which companies autonomously comply with local laws, ethical standards and international norms.  To reach a variety of stakeholders, a comprehensive CSR policy should target four main areas:  the workplace, the marketplace, the environment and the community.  It should be the result of careful planning for the desire to engage stakeholders at every level of operations.         

CSR is effectively implemented when corporate commitment is well-communicated to all stakeholders.  Employees must be educated on what the policy is and what it intends to accomplish.  Residents should be consulted in order to develop CSR programs which respond best to their needs and concerns.  In an advanced CSR policy, residents should also be consulted on all business decisions that affect them. Shareholders should also be reassured of how an effective CSR policy is related to the bottom line.  It should encourage them to commit to the company’s decision to develop or implement a CSR policy. A comprehensive CSR policy also responds to demands in the marketplace for sustainable business practices. 

 

Take and Give

CSR policies of cement companies in Lebanon vary from the systematic engagement at Holcim to the absence of a comprehensive policy at Cimentrie de Sibline.    

Before the Holcim Corporation developed its sustainability policy, CSR programs were developed on a case-by-case basis in each location. As Grace Azar, CSR coordinator at Holcim, explains, “CSR is something that has been present a long time ago; however, it used to be more of a scattered idea among all the operations.  So, every company had its own strategy and its own way of implementing it.”  

In 2003, Holcim developed their official CSR policy focused on social, environmental, and economic issues.  Azar states, “CSR is not like a set of initiatives that we do once every once in a while.  It’s part of our strategy; it is a strategy itself that is built within our operation...There is one comprehensive policy that we all agree on and we all follow the same approach, however, the implementation differs from one place to another.”  By allowing each location to develop its own programs, Holcim is able to have a focused policy that is customized to the needs of local stakeholders.  

Lebanon’s leading cement factory, Cimenterie Nationale, initially developed their CSR policy to focus on their employees and product quality as well as social and environmental issues.  CSR policies for national companies are developed differently than those of multi-nationals.  Without the need to report to an international headquarters, local companies can more easily engage with the community in which they operate in.

 Ciment de Sibline has not yet shifted their engagement with their stakeholders from philanthropic endeavors to an official CSR policy.  The company plans to develop an approach which focuses on employees and local residents.  According to the company’s CEO, Taalat al Lahham, 75% of the company’s employees live in proximity to the factory.  “We live here, we work here, and we should ensure that the community around us are taking positively that we work here and that our plant is in their area.  There should be open and transparent communication…this is very important.” 

 

Safe Workplace 

Good occupational health and safety practices ensure that employees work in a safe and healthy environment. According to the International Labor Board and the World Health Organization, occupational health should aim at the promotion and maintenance of the highest degree of physical, mental, and social well-being, safe and sound working conditions, and a healthy work environment.  Without a comprehensive national Occupational Safety & Health (OS&H) legal framework, it is up to companies to develop worker safety policies.  More importantly, follow-up mechanisms should be in place to ensure that the policy is effective, implemented and followed.

Both Holcim and Cimenterie Nationale consider employee safety and awareness in their CSR policies.  As  Azar explains, “One of our pillars is OH&S.  We have a whole range of activities for our work force, we have safety management systems, awareness sessions and ongoing training to ensure that the rules are followed.”

Carla Noujaim, the company’s senior communications specialist explained that Cimenterie Nationale considers the safety of employees as one of its top priorities.  To maintain a ‘zero accident’ workplace, CimNat developed a safety policy and conducts regular training and awareness sessions and campaigns to ensure that employees are educated on its guidelines and principles. As of June 2010, the company complied with the OHSAS 18001 standards for Occupational Health and Safety Management Systems.

 

Voice for the Community

In Lebanon, where cement production facilities are located in residential areas, the community stakeholders are perhaps the most important.   It is crucial for companies to move past philanthropic and charitable activities to meaningfully respond to the needs of the local community.      

Holcim develops their community pillar of their CSR policy in three ways.  First, Holcim has a community advisory panel (CAP) which opens channels of dialogue to allow the company and the community to communicate their points of view and concerns. Azar explains, “CAP is a panel that consists of local community members from diverse backgrounds such as academics, NGO members, key people, activists, homemakers and Holcim representatives and has the objective to discuss all the hot topics and concerns of the community.” 

Holcim also administers community surveys once every three years to ensure that their CSR activities respond to local needs. “We are a local company with international standards,” Azar states.  The survey – most recently conducted in 2011 – explores the environmental, social, health, and economic needs of the local community.  The company also conducts a materiality study once every three years by gathering a group of stakeholders in focus groups to discuss issues they are facing.  By combining the CAP, the community surveys, and the materiality study, the company is able to develop a plan which is customized to the specific concerns of the community they work in.

Similarly, Cimenterie Nationale works with the local municipalties to communicate with the community in which they operate.  As Carla Noujaim explained that the local community expresses its concerns through the “open dialogue” strategy which the company developed with the surrounding municipalities and the residents in the neighboring areas. 

 Cimenterie Nationale has a multitude of social activities activities which allow them to give back to the community.  The company provides funding for community development projects, support for local schools and environmental programs in the areas where they operate. 

Without an official CSR policy, Cimenterie Du Sibline supports the community through financial support to the local authorities.  CEO Talaat al Lahham explains, “Every year, we have a plan in place about the support we can give the municipalities which is ultimately going to the people.  We also deal with the social organization in various areas.  If they are sports, in the schools, in the hospitals, the activities that take place in the region, we always give our support to them.” 

 

Environment Rehabilitation

Cement companies also consider the environment as a stakeholder.  All three companies have begun rehabilitating exhausted areas of quarries to prevent desertification and restore the natural ecosystem.  Cimenterie Nationale is developing an upcoming project called ‘The Green Belt’, which will create a visual barrier  around a large portion of the perimeter of their quarry.  The project is being designed by a team of experts in the local environment and natural habitat to develop a buffer zone of indigenous plants and trees with recreational areas for surrounding towns.

Despite their efforts, the CSR policies of cement companies still have room for improvement. Communication and cooperation between the private and public sector is key to address misperceptions.  As Azar puts it, “the main issue is miscommunication between the two sides. I am not blaming any party but it’s natural that cement companies are perceived as the devil.  We know why, but at the same time as a cement company we acknowledge the environmental impact and we have a clear strategy or policy in terms of sustainability that we follow. And here, there are many opportunities that everyone can benefit from.” 

Al Lahham voices a similar sentiment. “We are not saying we are perfect, improvements are always possible, but we have proper communication; that is number one for me.  You must have clear and transparent communication with the community where you work.  You have to listen to them and you have to listen to their problems.  Again, we are not perfect, but we do our best to reduce emissions and to improve the environment,” he says.  

 

What the Community Says

 There still exists a difference between the way cement companies are perceived by the public and the way they view themselves.   Pierre Abi Chahine, President of the Environment Protection Board in Chekka, has been working since 1991 as a representative of the local community to the cement companies.  In his interview, he claimed that despite the massive amounts of pollutants the cement companies are releasing into the environment, there is no restitution for the damage.  “I always told them ‘tell me what you are doing’ so I can help you.  I am not against factories… I have a recycling factory myself, we pick up from the streets to prevent pollution.  I am like them in a way, but we want to bring together factories and the environment so we can live. We don’t want to leave Chekka, and they can’t survive without the mountains of Chekka,” Abi Chahine explains.

Despite the assurance by all three cement companies about open communication and grievance policies, Abi Chahine claims the opposite.  “They do their work but they don’t talk to anyone”, he explained in discussing the cement companies relationship with the local community.

When asked what he would ask of cement companies, Abi Chahine was quick to answer.  “I want them to clean the sea.  Second, to reforest the quarry.  Third, I want them to provide medical care to everyone in the area.  Fourth, to clean inside and outside the factory…and to stop the dynamite” [referring to Holcim’s practice of detonating dynamite on a regular basis due to the type of rock in their quarry].

It is clear that there is a failure in the mechanism of communication between the cement companies and the local community.  There seems to be a two to three year lag in the time residents learn about improvements to production methods which directly respond to their concerns.  By relying on the municipalities to be the middle-man, residents become alienated from the communication process.  This is a hindrance to both the cement companies as well as the residents who are not well-informed about recent developments. 

 

Changing Standards

Cooperation between private companies and NGOs is crucial if companies are to develop meaningful projects that have a real impact on the local environment.  This can be accomplished by consulting experts who work in the field.  One such example of a successful collaboration is illustrated by Sawsan Bou Fakhreddine Director General of the Association for Forests, Development and Conservation.  Since 1993, the organization promotes the concept of forest restoration through workshops, focus group meetings with public and private stakeholders, and media campaigns.

The organization works directly with the private sector to increase corporate awareness.  “The corporate social responsibility unit at AFDC is a very vibrant success model for partnerships with the private sector. The work is diverse and can be as simple as environmental awareness sessions for staff members, sustainable office practices, sponsorship of affected lands that need to be reforested or restored, tailor-made projects that service the community, integration of corporate environmental strategies within the company among others,” says Bou Fakhreddine.

Increased implementation and enforcement of existing laws is also necessary. The legal framework which currently exists in Lebanon is sufficient to ensure environmental protection of the air, water, and land. Nada Zaarour, President of the Green Party in Lebanon, explains that the party is pushing to pass the ‘Environmental Persecution Act’.  The act seeks to assign a judge to exclusively hear environmental violation cases as well as to create an environmental judicial police force to enforce existing laws. “The bill is currently in the General Plenary of the Parliament.  The Head of Parliament needs to put the bill on the agenda so it can be voted on.” 

Corporate Social Responsibility is necessary for companies operating in countries with weak governments. When governments are unwilling to enforce and implement existing laws, it is up to individual companies to show responsibility to their stakeholders.  This works to the benefit of both sides; the company benefits from the labor and support of the local community while the stakeholders gain some returns of the profits extracted by the company from the area where they live.

In the presence of a weak government, the responsibility to comply with regulations is left to individual companies. A sound CSR policy provides a framework to ensure the protection of affected communities and the environment while maintaining the company’s bottom line.  Especially in a highly profitable yet heavy polluting industry like cement, companies should embrace their duty to foster communication with their stakeholders while surpassing the standards set for them to follow.

 

SourceResponsible Business Magazine

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All, 2012

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