Riva Krut has 25 years of experience as a sustainability and environmental management consultant to several leading multinational companies in the automotive, chemical and materials sectors. She joined Praxair in February 2008 as Executive Director and is now the Vice President, Sustainable Development. She leads the Company’s integration of sustainable development into overall corporate strategy and the development of corporate-wide metrics and targets and performance management towards these goals. She is also responsible for maintaining Praxair’s external reputation for sustainability excellence and identifying and engaging with relevant stakeholder groups.
Christopher P. Skroupa: What are the best ways to categorize and establish sustainable development targets?
Riva Krut: Our sustainable development targets support the company’s long-term business strategy in the context of global megatrends as well as current risks and opportunities. They set out relevant, challenging and measurable key performance areas that will help drive long-term value creation for our stakeholders.
Skroupa: How can a company compile the relevant data to find what is internally a priority?
Krut: Making our planet more productive is our company mission. Our product applications help our customers solve key global challenges such as resource efficiency and emissions reduction. For example, hydrogen is an essential component for the production of ultra-low sulfur diesel fuel; it also helps to improve air quality. Oxygen in any combustion process typically reduces air emissions, improves energy efficiency, and enables higher product yields for cement and steel. Specialty coatings can help to extend product life of airplane engines and windmill blades. Nitrogen and carbon dioxide are used to preserve flavor and extend shelf life of food products. In order to determine priorities for our 5-year targets, we started with the challenges and opportunities presented by our business model. We examined this within the context of our culture, corporate mission and values.
Praxair’s Sustainable Development 2020 targets are built upon the foundation of management systems, key performance indicators and methodologies, as well as experience gained from continuous learning and improvement. We built these targets from the bottom-up. We developed them with the people who will be accountable for the implementation and achievement of each target, both at the functional level and throughout each of our regional businesses worldwide. This drives ownership and accountability. The starting point is internal, however, it is equally important to look outward, to global challenges, opportunities and our long-term business strategies. We engage actively with our key stakeholders, who include: employees, shareholders, customers, suppliers, as well as the communities where we live and work.
It is important to ensure that our Sustainable Development targets are consistent and comprehensive to demonstrate measurable continuous improvement. These targets should be both scalable and replicable to show the benefit to our business and also to society. For example, we have a target to improve our distribution Greenhouse gas emissions (GHG) intensity by 1.5 percent each year. We extended this to 2020, for a target of 15 percent GHG intensity improvement over ten years. In our operations, a strong focus on energy efficiency and GHG emissions reduction can decrease energy costs, which improves both operating margin and return on capital, and contributes to incremental revenue, i.e. growth. We are targeting to save a half billion dollars in the next five years from these actions – we call this “sustainable productivity.”
Skroupa: What trends are emerging in regard to expectations from key external stakeholders?
Krut: 2015 was a major year for the recognition of global trends and global response from key external stakeholders; which have brought a number of business challenges and opportunities. In the area of climate change, key commitments established during the Paris United Nations Climate Change Conference will create expectations for companies and markets. The UN Sustainable Development Goals (SDGs) were issued to encourage all stakeholders, including firms, to address critical social, environmental and economic challenges within the next 20 to 30 years. The Global Reporting Initiative (GRI) created the Global Sustainability Standards Board (GSSB) which has charted out a roadmap for future sustainability reporting that is digital and responsive as well as interactive.