Sustainability at Navistar:
A Model Distinguished by Sustainable Innovation, Proactive Product Stewardship, and Sound Science
Thomas W. Hesterberg1,*, William B. Bunn1, Thomas Slavin1, Jason Malcore1, MacKenzie Porter1, Neal C. Grasso2, Christopher M. Long2, and Bruce Harrison3
1Navistar, Inc., Chicago, Illinois, USA
2Gradient, Cambridge, Massachusetts, USA
3 EnviroComm, District of Columbia, USA
Prepared for Submission to
Business Strategy and the Environment
August 2011
* Corresponding author address:
Navistar, Inc.
303 E. Wacker Drive, Suite 360
Chicago, IL 60601
Telephone: 312-927-2697
Email: .
Abstract [150 word limit; currently at 149 words]
While corporate sustainability is broadly interpreted to mean ensuring success in the present without compromising the future, a well-accepted workable definition has remained elusive. Sustainability is often defined using a set of criteria or metrics that address the recognized environmental, social, and economic pillars of sustainability. However, standard metrics fail to account for how companies deal with operational challenges to their sustainability and viability. As a 175-year-old diesel engine manufacturer, Navistar, Inc. has developed a sustainability model to address not only the three pillars but also its significant business challenges, including those related to health concerns over its diesel products and environmental and employee legacies. Featuring a commitment to sustainable innovation and product stewardship and reliance on sound science, Navistar's sustainability model has evolved in response to its unique operating environment, illustrating the benefits of designing sustainability strategies to address specific business challenges rather than a standard set of criteria.
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Introduction [3,000 to 7,000 word limit; currently at 6,921 words- not including references, figures, tables]
The advent of the modern concept of sustainability is often attributed to the United Nations World Commission on Environment and Development (UN WCED) publication, Our Common Future (often referred to as the Brundtland Report, after the commission's chair, Gro Harlem Brundtland), which defined sustainable development as "[meeting] the needs of the present without compromising the ability of future generations to meet their own needs” (UN WCED, 1987, 89-963). The term was more formally defined in the Rio Declaration on Environment and Development (UN, 1992, 210-9348), and was further developed at the 2002 World Summit on Sustainable Development where the concept of the "three pillars of sustainable development"– environmental, social, and economic – was introduced (UN, 2002, 211-0621; Kates et al., 2005, 210-9345; CA Rich Consultants, 2005, 210-9644).
Despite the UN's interpretations of sustainable development, a well-accepted workable definition of sustainability has largely remained elusive (Marshall and Toffel, 2005, 210-8822). This is in part due to sustainable development being an evolving concept that can be adapted, and in effect redefined, to fit different situations (Kates et al., 2005, 210-9345; Cowan et al., 2010, 210-9223). Today, it can be argued that sustainability is more clearly defined by the guidelines and metrics that have arisen to evaluate it than by any formal definition (Cowan et al., 2010, 210-9223; Marshall and Toffel, 2005, 210-8822; Belu, 2009, 210-7979). Among the more prominent sustainability guidelines are those of the Global Report Initiative (GRI) that were first issued in 2000 and then updated in 2006 (GRI, 2006, 2010). The GRI guidelines, which measure corporate sustainability performance with respect to laws, norms, standards, and voluntary initiatives, provide a consistent and comprehensive framework for sustainability reporting that allows companies to evaluate their progress over time and against other companies. In addition to the GRI guidelines, the Dow Jones Sustainability Index (DJSI) and the International Organization for Standardization (ISO) environmental management standards (e.g., the ISO 14001 standards) have also gained usage as sustainability benchmarks. [might be good to mention ISO 26000 corporate social responsibility standard here]
Cowan et al. (2010) identified four key components that are highly prevalent among large corporations having comprehensive sustainability programs: (1) empowered leadership with a commitment to sustainability, (2) standardized reporting, (3) third-party evaluation of sustainability programs, and (4) ISO 14001 accreditation. Although these components are common among corporate sustainability programs, Cowan et al. (2010) and others (Harrison, 2009; Marshall and Toffel, 2005, 210-8822; Kates et al., 2005, 210-9345; Belu, 2009, 210-7979; Satterfield et al., 2009), http://pubs.acs.org/doi/abs/10.1021/es802980j) have emphasized the variety of different paths companies have taken in developing and implementing corporate sustainability programs in the absence of established rules, regulations, or guidelines for sustainable business practices. In general, corporations have largely taken it upon themselves to define their own visions of sustainability and to develop models for reducing overall environmental and societal impacts while satisfying profit goals and economic growth. Disparate approaches and models have emerged, with varied results, as companies have attempted to adopt more sustainable business practices and to balance economic, environmental, and social dimensions of sustainability (Adams, 2006; see Figure 1 that contrasts the desired balance of economic, environmental, and social dimensions with reality, where economic development often outweighs environmental protection and social development). [maybe after the citation , shorten and say something along the lines of “see Figure 1, where economic development often outweighs environmental protection and social development.]
Navistar, formerly known as International Harvester, began more than 175 years ago, well before the modern concept of sustainability. Like many companies throughout the world, Navistar has embraced the modern concept of sustainability, developing a sustainability model that addresses the recognized environmental, social, and economic pillars. Navistar's sustainability model has also been shaped in response to a unique set of challenges posed by its history and operating environment, including those related to health concerns about its diesel products, environmental and employee legacies from its past, and never-ending technical demands to reduce emissions and increase the energy efficiency of its products.
In this paper, we discuss key components of Navistar's sustainability model, beginning with an overview of corporate initiatives to address the recognized pillars of environmental, social, and economic sustainability. The main focus of the paper is on Navistar's sustainability initiatives that address its unique business challenges, including those related to its products (emission reduction, energy efficiency and health concerns) and those related to its legacy (environmental and employee related). Navistar’s record in breakthrough emissions-reduction engineering (e.g., a Navistar school bus utilizing green diesel technology was certified as first to achieve aggressive proposed California and federal standards) is linked to benchmarked leadership (Harrison 2008). As companies continue to shape their sustainability models and identify potential model components in the absence of prescriptive governmental regulations and requirements, the objective of this paper is to describe the Navistar sustainability model and highlight some of its unique elements. Given its clear contributions to Navistar's business success, Navistar's sustainability model can offer insights to other companies working to define and implement corporate sustainability programs.
Overview of Navistar Initiatives to Address the Three Pillars of Sustainability
Like many companies, Navistar's sustainability model incorporates numerous elements that address the recognized pillars of environmental, social, and economic sustainability. Several elements of these pillars have been embedded within the core values of the company for many years. For example, Navistar was a charter member of the National Safety Council in 1913, and established industrial safety committees and employee welfare programs more than 100 years ago and, thus, decades before governmental requirements from agencies such as the U.S. Occupational Safety and Health Administration (OSHA). In addition, Navistar established a no-fault worker’s compensation program prior to establishment of state compensation laws in the early 20th century. As discussed below, in addressing the three pillars, Navistar's sustainability model contains several elements that are common to many of today's corporate sustainability programs, including a commitment to environmental accreditation, challenging goals for energy consumption and greenhouse gas emissions, and other pioneering initiatives, including its voluntary, incentive-based wellness programs.
Environmental Sustainability
Similar to other corporate sustainability programs, Navistar has pursued environmental accreditation, namely ISO 14001 certification, as a key effort related to environmental sustainability. ISO 14001 outlines the standards for an environmental management system (EMS), providing companies with the methods for developing a systematic approach to minimizing the impact of their operations on the environment, ensuring their operations comply with applicable laws and regulations, and forging a process for continuous assessment and improvement of these processes (ISO, 2004; http://www.iso.org/iso/catalogue_detail?csnumber=31807). In order to become an ISO 14001 certified location, an organization must obtain "written assurance (the certificate) by an independent external body that it has audited a management system and verified that it conforms to the requirements specified in the standard." (ISO, 2010, http://www.iso.org/iso/iso_catalogue/management_and_leadership_standards/certification.htm). While certification is not required to implement an ISO 14001 EMS, certification provides an additional level of credibility to the management system, and further demonstrates the company's commitment to environmentally friendly and sustainable business practices. As of 2010, twelve of Navistar's 18 manufacturing facilities have been certified under ISO 14001 (Navistar, 2010b, http://www.navistar.com/Navistar/Inside+Navistar/Sustainability/Recognition+%26+Certification/ISO+14001+Certification). The remaining operations are new acquisitions or currently undergoing structural changes and will pursue certification in the future. Keys to Navistar's strong EMS program include regular internal audits, adherence to strict operational control procedures, and compliance with all environmental laws and regulations (Navistar, 2009a, 209-9347).
Stemming from its commitment to incorporating sound environmental management practices into its operations, Navistar has made great strides in reducing energy consumption and greenhouse gas (GHG) emissions. The company has set a corporate-wide goal of reducing electricity usage during production periods by one percent annually, and during non-production periods to a level 35 percent of production loads by the year 2013 (Navistar, 2011). For greenhouse gas emissions, Navistar has established a goal of an absolute 20 percent reduction in GHG emissions by 2013, compared to 2008 (Navistar, 2011). Navistar has already made substantial progress towards meeting these goals; for example, GHG emissions in 2010 were 23 percent less compared to the 2008 baseline year (Navistar, 2011). Importantly, efforts have occurred at all levels of the organization. For example, Navistar's dealerships are remaking their facilities with state-of-the-art approaches to energy conservation and GHG emissions reductions, including one Minnesota dealership that installed a geothermal heating system, along with LED signs, leading to a projected annual savings of $15,000 (Navistar, 2009a, 209-9347).
Navistar has also implemented an aggressive program to reduce waste generation at its facilities, with the ultimate goal of creating zero waste facilities. From 2003 to 2010, Navistar decreased non-hazardous waste generation by more than half from approximately 75 million pounds to less than 30 million pounds (Navistar, 2011, 210-9347). As shown in Figure 2, Navistar reduced releases of Toxic Release Inventory (TRI) chemicals at its US facilities by more than 200 tons per year between 2001 and 2009. In coordination with efforts to reduce waste generation at its facilities, Navistar has also worked to promote recycling, resulting in an increase in the company's recycling of non-hazardous materials from 20 million pounds in 2002 to more than 40 million pounds in 2009 (Navistar, 2011, 210-9347).
Social Sustainability
Navistar has focused on achieving greater social sustainability through a number of prominent employee and community initiatives, in particular a variety of voluntary, incentive-based wellness programs. Navistar has long recognized the large cost of health care (e.g., in excess of 2 percent of revenue for several of the past years), as well as the effect of health and wellness on workforce productivity. Through its multi-faceted "Vital Lives" program that provides a comprehensive approach to health, safety, and productively management, Navistar seeks to empower its employees to improve their own individual health and ewllness. This program is designed to address each of the three stages of prevention and thus both the cost and productivity aspects of health:
· Primary prevention programs help people maintain a healthy and injury-free status and reduce smoking, obesity, and other risk factors. As a key part of its efforts, Navistar offers employees an annual, confidential Health Assessment (HA) to identify ways to address behaviors that increase the risk of current and potential health issues. "Trucking Across North America (TANA)," a 13-week competition where employees log in their weekly exercise miles, encourages exercise and teamwork. “Spring Tune-up” is a six-week exercise and nutrition program. Flu shots are provided and preventive exams and screenings are encouraged.
· Secondary prevention manages risk to prevent disease or injury among those with risk factors such as inactivity, high blood pressure, high cholesterol, smoking, obesity, and stress. A health risk appraisal is offered and a $200 incentive is provided to those who complete two programs such as TANA, telephonic health coaching, or other programs targeted at risk factors. Programs are administered by independent third parties to preserve confidentiality.
· Tertiary prevention manages injury and disease to reduce impacts and prevent progression to catastrophic conditions. Diabetes education and testing, rehabilitation and return to work programs, and telephonic health coaching are some of the tools used in this effort.
These programs have been demonstrated to reduce health risks, promote evidence-based care, and encourage smart healthcare spending. (Navistar, 2009a, 210-9347; Hunnicutt, 2003, http://www.welcoa.org/wellworkplace/pdf/il_international_truck.pdf). In addition to prevention, Navistar has further addressed cost through competitive pricing in vendor and provider network selection and program design that encourages cost effective utilization (e.g., copayments, deductibles, generic drug pricing). Overall, as shown in Figure 3, Navistar health care costs have consistently fallen in recent years as the cost of US health care has risen about eight to 12 percent.
Navistar's recently added Sustainability PROMISE, standing for Personal Recognition of My Individual Sustainability Efforts, as an employee-oriented social sustainability initiative. This program, which was made company-wide in June 2009, encourages employees to engage in safe and healthy behaviors, to make life choices that save energy and are environmentally friendly, and to volunteer their time for community-improvement efforts.
Community-related social sustainability initiatives include support for numerous local arts and development programs, but also include Navistar's efforts to work with resource-constrained schools to provide students with diesel technician and other industry-related training. While addressing the trucking industry’s chronic shortage of diesel technicians, these programs have offered thousands of students a head start toward a meaningful, stable career path. For over a decade, Navistar has collaborated with the Chicago Vocational Career Academy (CVCA), an inner-city high school on Chicago’s South Side, on a three-year diesel education program that has trained hundreds of inner-city youths as qualified diesel truck and engine technicians. Similar diesel education programs have also been instituted in additional Illinois and Indiana schools, with plans to expand to South Carolina (Navistar, 2011). In addition, Navistar's South American engine subsidiary MWM International has run the Formare School program since 1987, introducing disadvantaged 16- to 18-year-olds to manufacturing, engineering, and administrative careers. Among other social sustainability initiatives, Navistar has also promoted greater environmental awareness through such programs as its America's Greenest School contest, where schoolchildren submit essays on the steps their schools take to protect the earth to compete for prizes such as a new hybrid school bus.