Environmental management-a company's key contribution to society

One of today's crucial business management issues is how corporations should fulfil their responsibilities to society. We have all heard the terms "public corporation" and "private corporation," but what is the difference between them? National and local governments provide capital for public corporations, and the private sector provides funds for private corporations. But today private corporations have developed a strong presence in society, so in the truest sense, private corporations have disappeared. All corporations today have a responsibility to society. Today there are a variety of problems with the safety of food products, but these are issues for society, and cannot be resolved simply by placing the costs of addressing them on just one company. In this sense, the topic of social responsibility of corporations is extremely broad and diverse.

Asahi Breweries makes beer that is consumed by millions of people-so for us customer trust as a very valuable thing, and it is important that they view our existence as a positive thing. This connects with the issue of how we can fulfill our responsibilities to society. Corporate social responsibility involves many aspects, but among them I think today's lecture's main theme of environmental management is the most important. I think that cultural assistance activities under the umbrella of philanthropy are also important. Volunteer activities and other forms of contribution to society are also a part of social responsibility. Asahi Breweries is putting a lot of effort into corporate philanthropy. What companies normally pursue is financial value (that is, profit), but that is no longer the only important thing-it is also necessary to create non-financial value. In that context, a corporation's image, or corporate brand, has become increasingly important. And I think that the extent to which that corporation is fulfilling its social responsibility is closely related to this. The activity closest to home that my company is doing is holding concerts in the lobby on the first floor of our headquarters, to support young up-and-coming artists. Also, we are giving scholarships for students of the arts, because relatively few scholarships are available in Japan for art and music. Besides this, we see environmental management as a highly strategic aspect of management issues that we are tackling as a part of our sense of responsibility.

When we speak about environmental problems, some approaches include "environmental responses," which relate to risk management, and "environmental conservation" which relates to efforts to reduce a company's environmental burden. My company goes above this level, to make the environment a part of our core management activities. Specifically, I would like to introduce some of the issues of the beer industry overall, and then Asahi Breweries' own initiatives.

Environmental management is covered in Asahi Breweries' Corporate Philosophy, and we have also established our Basic Philosophy on Environmental Conservation. The actual wording in our management philosophy states that "The Asahi Breweries Group aims to satisfy customers with the highest levels of quality and integrity, while contributing to the promotion of healthy living and the enrichment of society worldwide." In addition we have eight Guidelines for Corporate Activity. Under the heading "Safety and Environmental Responsibility," we have "We will bear full environmental responsibility and ensure the safety of all our corporate activities, ever aspiring to preserve our beautiful earth and be gentle to its people," and "We will promote resource renewal and energy conservation through recycling and waste reduction." In 1999, we elevated our Basic Philosophy on Environmental Conservation from Asahi Breweries Ltd. to cover the entire Asahi Breweries Group. The Basic Philosophy sets things out in these words: "Beer is made from the bounties of nature, such as water, barley and hops. At the Asahi Breweries Group, we believe that it is our responsibility to enable our children to inherit a healthier planet. To achieve our goals of protecting this beautiful planet and the people who live on it, we believe that our actions must demonstrate our gratitude for the natural bounty the Earth provides us all." That Basic Philosophy and the eight Guidelines for Corporate Activity form the concrete foundations of our actions.

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Zero-waste-the fruits of wisdom of all our employee

The issue of container recycling is the top issue that the beer industry overall is dealing with. Container recycling is said to be good for the environment. Containers used include cans and bottles, and the beer industry has joined forces with the related industries to create bodies such as the Aluminum Can Recycling Association and Beverage Industry Environment Beautification Association, and is putting an effort into aluminum and steel can recycling. Through such actions, the resource-recovery rate of aluminum cans in Japan has reached 80.8 percent, and for steel cans it is 84.2%. These are relatively high rates, and they are still improving. Almost all beer bottles are returnable. Steinies are returnables-we made an effort to develop them as products that are good for the environment, have good style through commitment to design, and can be opened without a bottle opener, making them very convenient. They are also very popular.

The second common initiative is acquiring ISO 14001 certification. At this point, most companies in the industry have acquired it, but at our company Fukushima brewery was the first to do so in 1998. Today all of our breweries have been certified, and last year our head office achieved certification too.

The third initiative is 100-percent recycling of waste, which was a relatively tough challenge. Today the major beer makers have achieved this at all of their breweries, but it was back in 1997 that my company took on the challenge of making the Ibaraki brewery a "zero waste brewery." It was our first major environmental initiative, with the desire to make a start by doing something we could implement right away. It originally started simply as an attempt to reduce the amount of industrial waste to zero, but we later raised our sights and decided to try and turn all of the waste from the brewery back into resources. In the end, that turned out to be a good approach. At the Ibaraki brewery, we set a goal with a deadline-asking all employees to share their ideas so that we could make it a zero-waste brewery within one year. This one-year timeline was not exactly something that we had high hopes of achieving, but because it is important for top management to set a clear direction, we set that as our timeline and called for speedy action. Also, we told them that they could use as much money as they wanted for the initiative. It would have been a problem if they took our words literally, but we were certain that no brewery manager would do so, and were convinced that this would all lead to cost reductions, so we felt comfortable saying that. Lo and behold, the zero waste brewery became a reality within 10 months.

When efforts first started in 1995, the amount of waste was 46,000 tons per year. To reduce this to zero, we discovered a number of possibilities. For example, we now extract moisture from the malt feed, add lactic acid bacteria and molasses, and turn it into feed for livestock. The used yeast becomes a medicine that has been popular for over 70 years in Japan, known as "Ebios." The diatom earth and sludge we dry and it can be used as organic fertilizer. Fluorescent lights and batteries are turned into glass fiber and metal. For us the toughest environmental problem is separation of waste for recycling. In fact, they say that if you can separate the waste you've solved 80 percent of the problem. But at factories it is extremely difficult to separate the variety of waste that is generated. Used plastics are particularly difficult. If you told someone to separate polyethylene and polypropylene plastics, they still wouldn't know what to do. There are over fifty kinds of synthetic resins, and it would be impossible to explain all the details about them to the people who are working hard every day at the brewery to make beer. Thus, we found that progress was slow with waste separation, and the recycling bin for "other" unclassified materials was always full. But just when we were stuck on this issue, the wisdom of the brewery personnel came to save us, and the solution was this: instead of describing the type of plastic by name, the idea was to describe it in a more pragmatic way, like "smooth surface," "rough surface," "plastic ties holding cartons together," and "bags that contained a certain thing," for example. The separation of waste went extremely well after we tried this approach.

We even found a way to avoid any disposal of food waste from staff cafeterias at the brewery. There was a shift in awareness of people at the brewery after we achieved success, from "they're forcing us to separate waste," to something more positive-"we're creating new resources by recycling." I think this was a big step forward. But then I got greedy. I said, "You've eliminated all garbage from the brewery cafeteria, now do it in the beer halls beside our breweries, starting with Hokkaido and Fukushima." Later, when I went to Fukushima to check on progress, I found that they had run into some major problems because customers bring in all sorts of things, like box lunches and plastics that we had never even imagined and were not sure how to handle. Despite this, in the end, through the efforts of the staff, we succeeded in recycling all of these things. Efforts such as these are now a common thing throughout the beer industry in Japan.

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Even in hard times, the company continued tree-planting in our Shobara Forest

How about some of the unique initiatives of Asahi Breweries? For one, in March 1999 we succeeded in making our Nagoya operations a completely CFC-free brewery. Not only that, it uses absolutely no CFC-alternative substances [which are less of a threat to the ozone layer but are thought to be greenhouse gases], and was the first in Japanese industry to achieve this, and I was told that there was nothing similar worldwide. It was already a relatively high but not impossible hurdle to eliminate the use of CFCs from the production processes at the brewery. But CFCs were also being used in places we had never imagined, and that made it tough. For example, we had to ensure that no CFCs were used in the air cooling and heating equipment of the security guard's post at the entrance to the brewery, there was an automatic vending machine for soft drinks in the brewery cafeteria that used CFCs, and it was even necessary to replace the air conditioning system in the staff locker rooms. We were told it would cost 3.8 billion yen to change everything. Thinking that this was a huge amount of money-and that was just at one brewery-we explored many options. In the end, we worked with an Osaka company named Daikin Industries to introduce a cogeneration system, which would reduce costs by over 400 million yen a year, so we could recover the whole 3.8 billion within ten years, with further cost savings thereafter. I'm glad to say that this approach succeeded. So far, we have also been able to convert the Kanagawa brewery to be CFC-free.

The second unique initiative is something more recent. Just a month has passed since we completed our new Kanagawa brewery in Minami Ashigara City in Kanagawa Prefecture. There are 2,000 cherry trees planted around the brewery, making it look like it is set in the middle of a 46-hectare park. With more than half of the brewery's grounds covered in greenery, this is like the ultimate environmental factory. It is the culmination of all the environmental protection efforts of Asahi Breweries. It goes without saying that it is a zero-waste brewery, but a number of other things have been done as well. For example, we worked with the power utility TEPCO to install a huge battery called a "NAS battery" [from "Na" for sodium and "S" for sulfur] that stores electricity at night, and this helps to reduce the utility's daytime electrical demand. Also, we were the first in Japan's beer industry to use the Green Power Certificate System (see note). We have a contract for 3.3 million kWh per year of electricity generated by windpower. Through efforts like this, we have made the Kanagawa brewery an environmental model brewery.

The next unique initiative to tell you about is our 2,200-hectare Shobara Forest in Hiroshima Prefecture in western Japan. You might ask what a beer company is doing by owning a forest. Well, today the seal in a beer bottle cap is made of plastic, but years ago it was made of cork. Imports from Europe stopped when World War II began, in the days when cork was still being used in Japan. We decided to use the cork-like wood of the "abemaki" tree [Quercus variablilis] that grows naturally in Shobara, and bought the forest for that purpose. Eventually the war ended and we never had to use those trees, and eventually the use of cork ended anyway. The growing use of canned beer was another in cause of the demise of cork, but eventually we stopped planting abemaki trees and instead we have planted "sugi" (Japanese cedar) and "hinoki" (Japanese cypress) trees for the past fifty years. Last year the tree planting work finally ended, and the tallest trees are now fifty years old. But even though fifty years have passed we will absolutely not cut them down. It is only after another thirty years have passed and they are eighty that we will start cutting. In the mean time, we have been carefully managing the forest by clearing underbrush and thinning the trees. I went last year for an inspection, and seeing the native and planted trees standing there, I was moved by the thought that some of the work that humans must do is to leave something behind for our grandchildren. And I thought that we were doing something very good here for the protection of nature and the environment. Today one might simply expect a company like Asahi Breweries to have environmental initiatives because of the business success we've had with sales of the Asahi Super Dry beer. But until Super Dry came out ten or fifteen years ago, our company profits were not very good. When I stop to think about that, it is remarkable that my predecessors persisted with the tree planting even during the company's hard times. I realized how grateful I should be to them.

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An ongoing challenge-to create leading standards for environmental management

Now I turn to our future challenges. I think that our biggest challenge today is to reduce the emissions of carbon dioxide, a greenhouse gas that causes global warming. This is something that all employees need to help us with, through efforts like stopping engine idling of corporate cars and delivery trucks, but the most important of all is to reduce the carbon dioxide emissions from the brewery. Japan ratified the Kyoto Protocol on June 4, 2002. To be specific, Japan committed to reduce greenhouse gases emissions by 6 percent from 1990 levels, by the period 2008 to 2010. Although it is not yet clear what reduction quotas will be expected of each industry and corporation, Asahi Breweries has been proactive in tackling the issue of reducing emissions.

The decade of the 1990s was Asahi Breweries' time of greatest growth, so if 1990 is used as the baseline, we would have to make a 45 percent reduction per unit of production to achieve a net 6 percent reduction in emissions. It would be a virtually impossible task to make a 45 percent reduction. But anyone who blames failure on a change of rules or goals won't make it in life. So in the same spirit I mentioned earlier, we are taking this on as a positive challenge. To achieve a 45 percent reduction, we have set a goal of 22 percent by 2004, and during the following few years we will seek to achieve the remaining half of the reduction.

The next area of our initiatives is the building of a base for environmental communication. We created what we call an "Eco Space" on the first floor of our corporate headquarters. It's just a modest attempt, but this is a space serves to spread information on the environment, for customers and guests who take the time to visit our company. Our future challenge is to create a base for information dissemination at our new environmental model brewery in Kanagawa.

The next area is caring for water, and for the forests that provide us clean water. Without water, a beer company can do nothing, so a forest that gives us water is a precious thing. It is from that perspective that we value nature at our Shobara forest and the new Kanagawa brewery. Our dream is to work to protect and care for the forests that provide the water for each of our nine breweries.

Next, we would like to be a company that people can say is doing good things on the theme of food and health.

On the topic of environmental management, we have had a number of concrete initiatives. And we have received a number of awards for these efforts. The Japan Industrial Journal first created the Grand Prize for the Global Environment Award eleven years ago. Asahi Breweries has won an award three times within the Prize framework-the Environment Minister's Award, the International Trade and Industry Minister's Award, and the Sankei Group Award. We received the Nikkei Shinbun Award for Excellence in Facilities twice, once for the Nagoya CFC-free brewery, and once for the Ibaraki brewery for its 100-percent recycling of waste. And at the end of September 2001 our Shobara forest was the third in Japan to be certified by the Forest Stewardship Council. I must add that we are not doing our environmental initiatives just for the sake of winning accolades from society or to win awards. But the fact that we are receiving awards tells us that our activities have been valued objectively by society, and this makes us happy. Most of today's global standards happen to be American standards, and there are few examples of standards made in Japan that have become used globally. But we are proud that at least in terms of draft beer-making we hold the world's leading standards. We would also like to demonstrate the world's leading standards for dealing with environmental problems.

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A key to success in environmental management: the involvement of top management

There are a number of points involved in succeeding in environmental management. The most important point is that it must be integrated with other management activities. You can't have people saying, "environmental issues are not my department," or "that's up to the factory floor to deal with." It's important that the whole operation is promoting these initiatives, and that they reach across the whole organization, including top management.

The second thing is employee motivation. It is important to create repeated opportunities to exchange views so that everyone shares the same awareness of issues, and all employees are committed, and so that each employee sees environmental problems as something that each and every person needs to tackle as his own.

Next is for the drive to be top-down-for the senior management to set clear directions. This means the top management should set quantitative and qualitative goals as to what and when something should be achieved, and at what maximum cost. And the top management itself should be involved in planning.

Next, environmental cost is important. Companies are in business, and if they put great effort into environmental problems but keep losing money while costs rise, they won't be able to sell anything. If a company can't sell its product, the company performance will drop. It won't do if a company had top marks in the environmental field but went bankrupt because it couldn't sell its product. It is important to pay attention simultaneously to both environmental initiatives and cost reductions. The initial cost of achieving zero waste at the Ibaraki brewery was 60 million yen. Originally there were costs involved in disposing of the waste generated at the brewery, but if we compare what we pay today for resource-recycling with the costs we were paying before for waste disposal, the current system is less expensive. In other words, we were able to connect our efforts to a reduction in costs.

At the Nagoya brewery, we have received approval to discharge effluent from the brewery directly into the Shonai River, rather than into municipal sewage treatment facilities. We have paid great attention to the issue of brewery effluent and it has cost us a lot of money, but on the other hand, the money we don't have to pay for municipal sewage treatment is saving 200 million yen a year. We are saving that 200 million yen that we don't have to pay for sewage treatment because we tackled the issue of cleaning the effluent from the brewery ourselves, and besides this the local people are happy with what we've done. When you take on a challenge of something new, you find that innovative new technologies and wisdom come from within. Innovations occur in business processes and technologies, and these lead to cost reductions. This is my thinking on environmental costs, and my sense is that if you don't find synergies between environmental issues and costs, it will be difficult to sustain company-wide environmental initiatives for very long.

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Respond rapidly even to gradual environmental change

As I conclude, I would like to say that today many people proclaim the importance of environmental management, but in reality it takes a fair amount of courage to change actual ways of thinking and put things into action. And in my sense there are still not that many companies and individuals that do this. Environmental problems will not be solved if they are just treated as someone else's problems. I think that the most important thing is for each country, corporation, and individual to look at things from one's own perspective and think "I want to make this Earth that we live on a beautiful place," and "I want to make this a clean planet for my grandchildren." And then to change one's old ways and put new thoughts into action.

Humans react when there are dramatic changes in the environment. I've been told that if you put a frog into boiling water it will jump out, but if you put it into cool water and gradually make it boil, it will stay there and die. In other words, it becomes accustomed to the environment. Environmental problems are like this-the changes that occur every day may be small, but after a certain amount of time passes, if you look at the change it has been huge. The most difficult thing is to stop treating the gradual pollution of our planet day after day as a problem for tomorrow or the day after tomorrow but as a problem for today, and then change your thinking and get into action. Even though we know we should do something, we humans often find it hard to get into action.

One best-selling book in recent years was Spencer Johnson's Who Moved My Cheese? That's the same person who wrote the famous One Minute Manager about twenty years ago. The new book you could read in thirty minutes. It satirizes the spirit of our times, in a story about two mice and two "littlepeople" who enjoy living at a house where they can eat a lot of cheese. The mice eat cheese every day with the uncomplicated sense of animals, and as time goes by, through gradual change the cheese eventually disappears. When one day the last of the cheese disappears, the mice are not surprised, and just start to look elsewhere for more. But because the humans are so intellectual, they don't jump to action, rationalizing that "cheese can't just disappear like that," "we have a right to that cheese," and "eventually the cheese will come back." And because of that they don't find more cheese. This book is really a caricature of the human world. We must not be like the littlepeople who fail to take action, but rather like the mice who started immediately with new action when circumstances changed.

Note: Green Power Certification System
A system by which corporations or organizations that want to contribute to the environment can enter into a contract with the Japan Natural Energy Company for electricity generated from wind power, and receive a Green Power Certificate for the fees they pay for the electricity. The system started in November 2001, and 36 organizations were participating by March 2003.

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