1 many journeys, common destination 2m360.sim.edu.sg/publications/documents/chapter... · these...

1 2Many Journeys, Common Destination

These words of wisdom from an ancient Chinese philosopher capture the intent of this sampler to provide the reader with a starting point on the subject of “Sustainability”. It also reflects the purpose of its associate publication Many Journeys, Common Destination, which was conceived to document the experiences of companies that have embraced social and environmental sustainability in their strategic business development.

Sustainability is being championed by green activists and environmentalists who are advocating the conservation of our planet, business leaders who are practising responsible sourcing and production, academics who are teaching and researching the subject, civil society crying out for greater equity and dignity for disadvantaged communities, and government organisations calling for sustainable developments. In spite of the universal urgency and widespread publicity, there is an apparent lack of a common understanding of what need to be done by companies. The situation is complicated by companies’ concerns over the competing demands of profitability and doing good for the community and the environment on their limited resources.

Introduction

“The journey of a thousand miles begins with a single step.”- Lao Tzu

Introduction

Still, some businesses have embedded sustainability goals in their operations and strategic developments with varying degrees of success. It is hoped that readers of the above-mentioned publication could gleam significant learning points from the experiences of the companies featured in it for a better understanding of the subject, and be encouraged to influence their own organisations in embarking on the sustainability journey. The book’s compilation of small, medium and large enterprises from diverse sectors is intended to showcase the relevance and applicability of sustainability practices across organisations of different scales and business activities.

We like to present this sampler to business leaders who might be on the verge of embarking on their corporate sustainability (CS) journeys, and to encourage those who are progressing in their CS journeys to participate in our community learning.


CSR in Singapore – past to the future

“Corporate Social Responsibility (CSR) is not about how money is spent, it’s about how money is made.” This, in essence, is the mantra of corporations that are implementing CSR in their business, and serves as a good springboard for those keen to examine its corporate social responsibility efforts for the first time.

CSR was a term first coined in 1953 by American economist and academic Howard Bowen in his book ‘Social Responsibilities of the Businessman’. He asked: “What responsibilities to society can business people be reasonably expected to assume?”. Sixty years on, this is still a relevant question, even as business models continue to evolve.

Throughout the 1960s to the 1980s, CSR was very much a discussion confined to the academic world and not the boardrooms. However, the growth and development of multi-national and trans-national corporations from the late 1970s meant that corporations began to play a much more significant role in society at large, and their actions – positive or negative – have a much greater impact than ever before to communities across sovereign borders. The growth and development of multi- and trans-national corporations in part gave rise to the anti-

CSR in Singapore – Past to the Future

corporate activism and protests of the 1990s, most notable being the street protests in Seattle during the World Trade Organisation meeting in 1999.

Corporations responded to these civil society movements in the early 2000 in a variety of ways: some carried out counter marketing and publicity campaigns to halt the attack on their brands; others banded together in a show of corporate lobbying to governments and regulators. Yet others came together to develop voluntary codes of conduct, guidelines and frameworks.

Out of these last set of efforts to build a new code of conduct and practices came global initiatives in the form of the United Nations Global Compact (UNGC), the Global Reporting Initiatives and the development ISO 26000 – Social Responsibility standards for CSR, which looks into the areas of fair labour practices, environment sustainability and respect for human rights. Today, these standards are recognised as globally established frameworks for corporations to adopt in transforming their business model and operations through CSR.

CSR in SingaporeWhere does Singapore’s development in CSR fit in this global picture? The short answer to this can be found in the past decade: a CSR forum was organised with support from national and tripartite leaders of the government, labour and business communities launched the National Tripartite Initiative on CSR in May 2004. A year later, in 2005, these efforts cumulated in the formation of Singapore Compact for CSR, a national society


with the mission of providing impetus to the CSR movement in Singapore, founded by the National Trades Union Congress (NTUC) and the Singapore National Employers Federation (SNEF). In the same year, the UNGC country focal point was officially launched in Singapore, bringing together signatories from ten companies and the NTUC, SNEF and the Singapore National Co-operative Federation.

Since the formation of Singapore Compact in 2005 there has been a number of government-led initiatives to promote greater social responsibility among corporations, including the Inter-Ministerial Committee on Sustainable Development to formulate a national strategy for Singapore’s sustainable development in the context of emerging domestic and global challenges; skills upgrading programmes to support the business sector in training their workers through the creation of clearer upgrading pathways for workers, to keep their skills relevant and enhance workers’ access to learning and quality training; as well as the introduction of The Retirement and Re-employment Act in January 2012 mandating employers to offer re-employment to eligible employees, up to the age of 65. This is to enable more people to continue working beyond the current statutory retirement age of 62.

Going beyondMany companies in Singapore devote significant time and resources to ‘giving back to the community’ by means of corporate philanthropy efforts and volunteerism. This has consistently been a tradition even in Singapore’s founding years, when many schools, hospitals and efforts to help the needy


were led by the early pioneers of our business communities. However such contributions remains very much an activity that is outside of core business activities of many corporation in Singapore. There is certainly room for Singapore companies to go further beyond this definition of CSR – ‘giving back’ through corporate philanthropy and volunteerism. By shifting its focus beyond the way profits are given away to the manner in which profits are made, companies here can tap into specific strengths of their core business functions to more effectively respond to needs of the community and the broader economic, social and environmental challenges.

Over the last decade, the impact of global warming has become more apparent, with extreme weather events seen and felt around the world. It is little wonder then that environment sustainability has gained greater attention in the minds of the public. More and more, companies are paying attention to the need for environment sustainability in their business as consumers become more aware of the need to care for the environment, and give premium to brands that promote environment sustainability. Producing greener products, using environmental friendly paper for packaging and promoting recycling efforts among staff is now the norm in many companies in Singapore, as it not only opens them to new markets and customers, but can also provide costs savings through the reduction of wastage.

A survey commissioned by the Ministry of Trade and Industry (MIT) also revealed a higher level of awareness about CSR among larger and foreign-owned companies, compared to local SMEs


which made up 70% of the survey’s respondents. Companies that abstained from CSR initiatives cited a lack of allocated budgets, time and know-how and revealed the perception that CSR is neither relevant to their business nor financially worthwhile.

Companies would be foolish to ignore the realities of the global, cross-border business climate today and the need for CSR to become part of their business model. Corporate governance and risk management are two major areas that remain largely untouched by CSR in Singapore’s corporate landscape, as risk assessments and audit checks are still very much talked about in financial terms. However, given the complexity of issues faced by companies today, assessing risks only through financial figures may be simplifying the matter.

Member states of the ASEAN have pledged to build an ASEAN community in 2015 which would mean more exchange and investments within the region, and CSR has been identified as a key pillar in the development of the ASEAN Community. There is certainly a need for strong CSR a pillar in order to make the ASEAN Community a reality in two years’ time, given that the region is still fighting the problem of air pollution as a result of the ‘slash and burn’ cultivation method that is prevalent in some parts of the region. As one of ASEAN’s established economy, Singapore’s business leaders can play a crucial leadership role – to integrate corporate self-regulation into their business model by adopting and implementing CSR in its true essence. This is the next level in CSR that corporations in Singapore can aspire to.


The drive towards businesses being responsible and having to give an account of their actions is gaining pace rapidly. In Singapore and globally, sustainability reporting is becoming mainstream, requiring companies to articulate how they are conducting responsible business. This is in addition to expectations of society for corporate behaviour that contributes to the wellbeing of communities. Governments also expect businesses to meet these expectations and adopt greater sustainability practices. It all adds up to doing the right things that set the foundation for sustainable business growth. I look forward to our businesses heeding the imperatives and seizing the opportunity to lead in trend setting responsible practices.

Thomas ThomasExecutive Director

Singapore Compact for CSR


Aik Moh does not waste its chemical waste. This policy has underpinned its corporate sustainability (CS) strategy. Instead, the company reuses or recycles it to maximise revenue (as in a dollar saved is a dollar earned). Since adopting CS practices in 1998, it has realised significant revenue growth by eliminating or minimising waste in its operations. It reuses chemical waste at its Tuas Street factory, consolidates customers’ purchases that are less than its minimum order quantities and recycles packaging containers.

In addition, it maximises the utilisation of limited resources to reduce or eliminate wastage, and to minimise operating costs. To cope with its continued expansion, it bought its third Singapore chemical factory in 2011. Balancing its financial, social and environmental responsibilities has been a sustained and fruitful endeavour for the company. It has thus been able to attract and retain employees, customers, partners, suppliers and other stakeholders.

Aik Moh

“Due to the nature of our chemicals business, we know that we are at times part of the problem. We continue to work towards being part of the solution and take pride in the sustainable initiatives that we have.”

- Tan Kah Moh, Chairman, Aik Moh Paints & Chemicals

Eliminating chemical waste for business and environmental sustainability

Aik Moh Paints & Chemicals

How Aik Moh Paints & Chemicals startedThe company’s Chairman Tan Kah Moh and Managing Director Jimmy Soh founded the company as a small paint shop in 1980. Although it has grown its business since and now deals with chemicals only, the co-founders have retained its original name to reflect how the business started.

Where it is nowThe family-owned business now distributes chemicals and provides chemical-related services. Chemicals include alcohols, petrochemical solvents and thinners, while its main service is toll blending (third-party contract blending) of chemicals. Other services include repacking, drumming and logistic support. It is organised into seven business groups – bulk trading, chemical distribution, toll blending, lab chemicals, freighting, technology innovation and agro-specialties.

Nearly 100 people are currently employed in its Singapore, Jakarta, Batam, Manila and Penang operations. It opened a sales office in Malaysia in 2013 and a sales representative office in Myanmar in 2012. Its customers are spread across more than 20 countries in Southeast Asia, South Asia, Australia and New Zealand.

Aik Moh Paints & Chemicals owes its success to, among other factors:

• Its infrastructure and manpower – dedicated factories and people to handle chemicals;

• Its chemical licences – it is certified to import,


export, store and transport chemicals; and• Its financial stability and reliability – it has

more than 30 years of experience in the business.

Many of the products benefit the community and the environment. Those that are of particular importance to the company are green surfactants and solvent, and bioplastic applications. Among its chemical service, storage and distribution processes that are environmentally-friendly, the collection and recycling of packaging drums and the reusing of solvent waste in general-purpose thinner production are more significant, as they save on resources, reduce costs and improve the bottom-line.

The company prepared its 2012 sustainability report based on guidelines given by the Singapore Business Federation. Although it is not yet a member of the Singapore Compact for Corporate Social Responsibility (CSR), it plans to join the society in the near future.

Where it is goingAik Moh plans to focus on the Southeast Asia market for the next five years. It intends to first concentrate on the growing industries in each country, and understand the competitive environment and political situation before deciding on which chemicals to market there.

The company aims to be the preferred partner for its suppliers, customers, employees and the environment on a sustainable basis. It also wants to


be a chemical company that invests in solutions for a sustainable future.

Aik Moh’s strategic developmentThe two co-founders are driving the company’s strategic development, with the assistance of the Chairman’s son Roy Tan. Roy now leads Aik Moh’s corporate sustainability (CS) efforts as part of its strategic development, with the co-founders’ guidance and allocation of resources. He is supported by the department managers in executing the CS plan.

Aik Moh’s exposure to CS could be traced back to its early years, when it started to work with chemical multinational corporations (MNCs) like Shell and Exxon, which placed great importance on sustainable development. After learning about and benefiting from their CS practices, it was natural for Aik Moh to accept and adopt them. Over the years, many of the CS projects were initiated by the company’s employees, who wanted to make Aik Moh different from its competitors.

Today, the company has fully embraced CS as part of its business. For Roy Tan, who is trying to sustain the company as a second-generation leader, CS fits in nicely with his ambitions. To him, it is not how fast or how big the company is becoming that is important. It is regenerating Aik Moh as a company where all staff enjoy working together for the future. While he is helping to build and grow the company’s business, he also wants to take care of its employees, society at large and the


environment. He likes to see that staff are happy to come to work each day and go home safely after a fulfilling day at work.

Aik Moh aims to achieve sustainability in all aspects of its operations by integrating the economic, environmental, people and social dimensions, for sustained financial success and environmental protection as a responsible corporate citizen. It plans to realise these objectives by:

• Complying with the relevant regulations and codes of practice;

• Considering sustainability in all its business processes and decisions;

• Ensuring that all staff are fully aware of its sustainability policy and are committed to implementing and improving it;

• Reviewing and continually striving to improve its sustainability performance; and

• Ensuring that its employees work in a safe environment, investing in its people, helping them to develop their capabilities and providing equal career development opportunities.

As an environmental policy, which is based on ISO 14001, the company “acknowledges the environmental impact caused by its business operations, products and services, and strives to promote global environmental preservation and prevent pollution.”

Corporate sustainability initiativesLike many successful companies, Aik Moh started with corporate philanthropy. It donated to

charity projects organised by MNCs that were its customers or suppliers. In 1998, it started collecting used drums from its customers for re-use. When the authorities tightened chemical control through more stringent guidelines seven years ago, the company realised the need for CS as part of its business strategy. That was the time when Roy Tan joined the family business.

As Aik Moh handles, stores and distributes hazardous chemicals, it has taken the necessary steps to ensure a safe workplace and the health and safety of its workers, suppliers and customers. Its environmental management system (EMS) has been certified to ISO 14001:2004 standards, while its risk and business continuity management system is based on BCM SS540:2008. Its occupational health and safety system was certified at bizSAFE Level 3 in 2011. All three systems are being audited annually by accredited certification bodies. Daily toolbox meeting, safety briefing, risk assessment and site inspection by its HSE (health, safety and environment) and plant managers, and regular walkabouts by senior management help to ensure that safety standards are maintained at all times. Hazard reporting and suggestion schemes are also in place to encourage staff and subcontractors to alert the company to potential risks so that they could be addressed immediately.

In addition, the company maintains regulatory licences required for handling chemicals from agencies like the Singapore Civil Defence Force, National Environment Agency and the Police. They cover transportation, storage, import, export

Aik Moh Paints & Chemicals Aik Moh Paints & Chemicals Aik Moh Paints & Chemicals


and manufacturing of hazardous chemicals. It also integrates EMS into every aspect of its operations – product and process innovation, planning, purchasing, manufacturing, distribution, customer support and R&D activities.

As petrochemical products are harmful to people and the environment without their proper disposal, Aik Moh would educate its customers on the uses and properties of such chemicals. For example, methylene chloride is labelled as a potential occupational carcinogen with toxic effects on human beings. Such information is conveyed to potential customers before they purchase. Its staff would also recommend agriculture-based or green chemicals as alternatives whenever possible. Green chemicals are derived from agricultural sources, such as palm oil, coconut oil and soya beans.

Another CS initiative is to reuse the chemical waste at the Tuas Street factory, so that it is not wasted. There, solvent chemicals used to flush or clean tanks and pipelines are collected, separated and analysed by a quality control team, before they are used to manufacture lower-grade thinner. The thinner is exported to developing countries like Sri Lanka and Cambodia.

The toll-blending service was launched with the aim of reducing chemical waste. For example, the minimum order quantity for industrial chemicals is one drum (200 litres). Since some small manufacturers may need to use only a small quantity of the same chemical (before it expires), this often results in wastage and disposal cost. The

toll-blending team groups such customers together, and supplies them their required volumes as a third-party toller who also consolidates, repacks and/or sells to other customers (who are buying the same chemical).

Aik Moh distributes the chemicals in metallic and plastic drums, carboys and tanks, which account for 8% to 12% of the total product cost. To help its customers save on the packaging cost, the company buys used containers back from its customers for a fee, collects them, contracts third parties to clean them, and reuse them. Chemicals in reconditioned packaging are sold at a lower price.

Due to the vast amount of chemicals that the company handles, treatment of its waste water is one of Aik Moh’s key concerns. For its sustainable development while meeting regulatory requirements, it had invested in a new and larger waste water treatment plant in 2010 to replace the existing one. Since then, it has spent over $165,000 on equipment and maintenance, and more than $95,000 on chemicals to treat the waste water.

Besides managing waste more productively, the company also plans to reduce the utilisation of limited resources by:

• Increasing the capacity of equipment to handle bigger volume, improving productivity, and saving time and electricity for every kilogramme of chemicals produced;

• Reducing waste generated by consolidating similar production work through a better production planning system, thus reducing



chemical usage in the waste water treatment plant; and

• Reducing waste water generated and electricity consumed per production volume by 5% per year for the next two years.

Its new and third factory, which opened in July 2013, saves energy with the following features:

• High ceiling for natural ventilation;• Natural lighting from outside the building;• Waste water treatment plant;• Scrubber system to suck fumes from

warehouse and production area;• Epoxy-coated floor to prevent any spilled

chemicals from entering the soil;• Contamination area;• Load cell to control the charging-in of

chemicals (by weight) to reduce their exposure to people; and

• Spray balls to wash the tanks to avoid exposing workers to the chemicals.

The company is also considering motion-sensor lights for toilets and corridors, LED lights for general purpose and the use of NEWater for production at the new factory.

Aik Moh measures the impact or benefits of its CS projects using a number of key performance indicators, including amount of waste generated, energy consumption and number of reused chemical containers.

Overcoming initial challenges and obstaclesAlthough Aik Moh had been successful in getting support from its employees who had understood the need to adopt CS practices and would work accordingly, educating them on CS and convincing them that it was something worthwhile took time, according to Roy Tan. Teaching them the importance and benefits of CS was conducted through informal training, briefing sessions and leadership by example. The company’s top management also highlighted some CS success stories at informal sessions to motivate the staff.

Aik Moh’s CS initiatives cover different areas. While some of them were straightforward in implementation, those requiring strong support and greater efforts were more challenging due to manpower constraints. Its management therefore needed to exercise patience, apply constant pressure, monitor the situation, explain the underlying reasons in a transparent manner, and hold open dialogue and regular staff dinner to carry out some of the initiatives. Both ‘carrot and stick’ are being used effectively. For example, the cost savings realised from the production team’s reduction in wastage were shared with the staff through monetary rewards.

As a small and medium-sized company, Aik Moh faces challenges in growing its business in an increasing competitive environment. It sees the regular recruitment of new staff, who understand its CS practices and who would influence the



older workers to adopt them, as important to its future survival. In the process, some of the older workers have left the company.

Even with management’s support in funding the CS programme to get projects off the ground, Roy Tan had his moment of doubt that CS would work for his company. If the initial costs had been higher or if the adoption rate was lower, it would mean that the results would be below expectations. However, he managed to overcome the doubt through his determined efforts and perseverance in spite of various setbacks.

When Aik Moh first introduced green chemicals to the market, there was slow acceptance due to differences in pricing and product efficiency, and regulatory requirements. However, through sustained efforts, it managed to sell 600 metric tons (MT) of green surfactants in 2011/12, compared with only 20 MT in 2004/05, due to growing awareness among its customers. Some of them wanted to use green surfactants as a marketing differentiator, while others were responding to the ban on the use of some of the traditional chemicals by the US and some European countries.

Aik Moh’s investment in bioplastic research has yielded some possible applications, such as slowing the release of fertiliser and making disposal plates and utensils. Although the technology is mature, the main obstacle is the cost of feedstock (palm oil, corn or tapioca).

How business, community and environment benefitThe introduction of green chemicals helped Aik Moh to expand its portfolio of products and to stay relevant to the market with better products. Since they are biodegradable and non-toxic, their disposal is easier and environmentally-friendly. As they come from renewable sources, the availability of green chemicals in future is also assured.

Reusing chemical waste at the Tuas Street factory has resulted in saving 24,000 kg of chemicals and US$2,400 in waste-disposal charges each year, while earning US$36,000 from their sale for the company. Its toll-blending service, which reduces wastage among customers who are buying small quantities of chemicals, also helps them to eliminate wastage and its disposal cost. It has been so successful – production volume has grown from 200 MT per month in 2009 to an average of between 700 and 800 MT per month - that the company bought another factory in Singapore, and plans to expand it by 20% each year. Besides helping the company to improve on its profit margin, reusing waste has also reduced its carbon footprint on our planet.

Reusing chemical packaging also saves costs for Aik Moh’s customers and reduces the use of metal and plastic for making the containers, thereby helping to conserve the environment. Between 2007 and 2012, 4,136 plastic and 34,502 metallic drums were reused. These were equivalent to saving 41 MT of plastic and 621 MT of steel, and translated into S$150,000 of savings a year for the company in packaging costs.



When biodegradable bioplastic developed by Aik Moh’s R & D office is mixed with fertiliser, the release of fertiliser is slowed down. This reduces the wastage of fertiliser that is lost during a rainy day and saves on labour required to apply the fertiliser again.

For Aik Moh, its sustainability journey has been marked with many memorable milestones. For Roy Tan, he finds the respect shown by customers, industry peers and suppliers for the company’s CS practices and achievements to be particularly rewarding. Its employees are proud to work in the company, which is attracting more capable people to join it. He cited the public anger against companies responsible for the 2013 haze situation in Singapore, Malaysia and Indonesia as an example of how CS could be used as a competitive edge by businesses that practise it.

Achievements in sustainability practiceAmong Aik Moh’s many green achievements, its own Ampro brand of biodegradable adjuvant pesticide developed by its R & D team is particularly meaningful to the company. It was developed for agricultural use and is more suitable for the local climate.

If there is one CS achievement that the co-founders are particularly proud of, it is the development of a common understanding and mutual support among the company’s staff that allows the business to evolve in a more sustainable manner and helps it to become a more responsible corporate citizen.

Aik Moh was recognised by the Singapore Business Federation for its CS efforts and achievements as a chemicals company with the Sustainable Business Award under the Singapore Sustainability Awards in 2012.

Key learning pointsFrom Aik Moh’s CS experience, Roy Tan has learned that it does not matter if a company is small or if the steps it is taking are small. What matters is to start on the CS journey, and collectively the small steps can make a difference. In his view, if CS can “cut across” political borders, it may offer the only viable option to protect the environment. Through their collective or individual CS efforts, businesses could help to save the planet in a significant way.

For the company, balancing profitability and doing good for the community and the environment is a cost. For example, in trying to protect the environment, Aik Moh may include the cost of treating waste as a separate item in its quotation to customers, who will need to decide if they wish to support its environmental sustainability efforts. For such efforts to have a significant impact, the economy of scale would need to grow bigger.

From his experience in driving Aik Moh’s CS efforts, Roy Tan realised the importance of leading by example, patience and consistency of approach in ensuring that CS policies are clearly understood and practised by all staff. Over time, CS practices would synchronise with its policies, he noted.



What’s next?As Aik Moh’s business expands, it becomes more complex to manage. However, the safety of its operations will continue to be its top priority. The company is working towards achieving BizSafe Level 5 standard for health and safety and ISO 18001 certification over the next two years. For environmental sustainability, its management is looking for ways to further reduce energy consumption through better factory design and planning.

In the near future, Roy Tan plans to introduce CS to the company’s overseas offices, which currently comply with its corporate governance guidelines. For the community, he wants the company to do more beyond donation to charities. He revealed that Aik Moh is working on its social sustainability plan.

For the longer term, Aik Moh’s R & D team in Penang is developing new technologies that could be commercialised as new products, such as biodegradable pesticide and bioplastic applications. These could create new market opportunities for the company. It also wants to develop new business models as part of its corporate sustainability efforts. It has invested in a start-up that is working on cutting-edge technologies that could reduce energy consumption or treat waste at its factories.

When the time comes, Roy Tan would have gained sufficient exposure and experience to take Aik Moh on its sustainability journey to the next level as its next-generation leader.

About SIMSingapore Institute of Management (SIM Group) is the leading provider of higher education and professional training in Singapore, reputed for its dedication to lifelong learning and high standards and quality. Founded in 1964 under the initiation of Economic Development Board to support Singapore’s economic development, it is today a diverse and vibrant organisation with a wide range of programmes and services. It is also a membership-based organisation with more than 44,000 individual and corporate members. Its extensive range of membership programmes, activities and resources provide an important nexus for students and members to network and learn.

About Singapore Compact for CSRThe Singapore Compact for CSR is a national society committed to bringing the CSR movement forward. Founded by the National Tripartite Initiative for CSR in January 2005, it functions as a multi-stakeholder platform in recognising the role and contributions of all CSR stakeholders. Members of Singapore Compact include big and small companies, institutions, government agencies, trade unions, associations, academia and NGOs; the National Trades Union Congress and the Singapore National Employers Federation remain founder members from its beginnings.

About SIM & About Singapore Compact for CSR

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