Submission coversheet- Individual’s work

AshridgeMBA Programme

Student Name: Rachael O’Bryan

Programme [part-time or full-time MBA]: Full-time MBA

Assignment: Embedding Sustainability

Title of Assignment: An Analysis on Al Serkal Group Environmental Division-ENVIROL

Submission Due Date[DD/MM/YYYY]: 01/12/2014

Word Count: 2,194 words (+/- 10%)

(Excluding: table of contents, acknowledgements, bibliographies glossary and appendices)

(Including: main body of text, executive summary(ies), footnotes, captions for tables and figures, citations or similar)

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Date Submitted [DD/MM/YYYY]: 02/03/2014

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Sustainability

An Evaluation of the Al Serkal Group’s Environmental Division- ENVIROL

March 2015

Rachael O’Bryan, Full-Time MBA Student 2014-2015

Sustainability Module, Patricia Hind and Matt Gitsham

2,194 words

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Table of Contents

1. Introduction to Al Serkal Group and ENVIROLPage 4

2. Context Page 43. Al Serkal Response Page 84. Evaluation Page 95. Recommendations Page 106. Implementation Challenges and Approaches

Page 107. Personal Reflection Page 118. References Page 12

Appendix 1- History of ENVIROL Page 13Appendix 2- Al Serkal Environmental Division

Page 14Appendix 3- ENVIROL Day-to-Day Operations

Page 15

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1. Introduction

ENVIROLRecycle. Re-use. Rethink your wasteThe need for environmental friendly recycling, due to the booming hospitality sector in the UAE, resulted in the launch of the AL Serkal Grease Trap Waste Treatment Plant ENVIROL in 2008, a joint venture headed by the Dubai Municipality. ENVIROL currently recycles grease trap waste (brown oil, fats, grease) obtained from the food industries, commercial kitchens, and labor camps with a vision of expanding to residential kitchens. ENVIROL is the first oil treatment plant established to recycle this waste and reintroduce this back to the environment as water for irrigation, refined oil used by the soap and biofuel industry, sludge converted into fertilizer. To date, ENVIROL exists as the only waste edible oil treatment within the region (Al Serkal, 2012). A detailed list of Al Serkal’s history, environmental division, and ENVIROL’s day to day operations are located in Appendix 1, 2, and 3.

The Al Serkal Group’s environmental division, ENVIROL, has been chosen for this assignment, as they were a client company during the recent Ashridge IBE visit to UAE. From my perspective, they were worthy of further investigation. I focused on ENVIROL’s issue of the collection and recycling/reformatting of waste cooking oil in Dubai, and ENVIROL’s potential feasibility of together recycling Waste Edible Oil (Brown Oil) and Used Cooking Oil, and producing Bio Diesel for commercial purposes in Abu Dhabi. Currently, there is a Biodiesel plant in planning process to be built in the UAE, operated by the Al Serkal Group’s ENVIROL. The research and evaluation undertaken has helped me better gain a new understanding of the company’s value proposition, and what it’s ultimately trying to achieve by the Dubai World Expo 2020. I found The Al Serkal Group to be a very interesting company, and I thoroughly enjoyed working the managers in the organization.

2. Context2.1 Stakeholder Analysis

Al Serkal’s ENVIROL stakeholders have been identified and analyzed. The outcome of this analysis is depicted in figure 2.1 below. Stakeholder analysis is now arguably more important than ever because of the increasingly interconnected nature of the world. Figuring out what the problem is and what solutions might work are actually part of the problem, and taking stakeholders into account is a crucial aspect of the problem solving (Bryson, 1992).

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Keep satisfied Key player

Least important Keep informed

Figure 2.1- Stakeholder map: ENVIROL. Power versus interest grid adapted from Eden and Ackermann (1998: 121-5, 344-6).

Of the ‘key players’, Grease Trap cleaning companies, suppliers, and the Dubai Municipality play a significant part to the success of ENVIROL. Depending on the contractor hired to dispose of the grease trap waste, things can go wrong. Some contractors are known to dump the waste in the desert or into the drains causing the municipality soaring high costs in blockages and contamination. In collaboration with Dubai municipality, ENVIROL has developed some enforcing measures in order to prevent illegal dumping: GPS tracking devices were recently installed in the trucks that are used by licensed contractors to pick up the grease trap waste. This will enable control over their whereabouts during delivery time

The Dubai and Abu Dhabi government are also important and have an impact on the success of ENVIROL. Being seven Emirates is complicated, in terms of different legislation and rules, and what the decision making process is. Although each state maintains a large degree of independence, the UAE is governed by a Supreme Council of Rulers made up of the seven emirs, who appoint the prime minister and the cabinet. Politically it remains authoritarian. Progress toward greater federal integration has slowed in recent years (BBC Middle East, 2015).

Thus, staff I’ve spoken with at the headquarters recently explained that getting anything to pass through government, takes a great deal of time. For example, ENVIROL wants to take its grease trap waste collected from Dubai restaurants into Abu Dhabi in the future. At the current time, the company isn’t allowed to carry waste across emirates, due to government restrictions. ENVIROL is fighting to change this law.

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Interest of Stakeholders

Power/influence of stakeholders

Interest of stakeholders

Power/influence of sta

Employees

Environmental campaign groups

Dubai restaurants

Al Serkal Group

Waste management plantLocal residents

2.2 PESTEL factors of ENVIROL

The PESTEL Analysis is a tool that is used to identify and analyze the key drivers of change in the strategic or business environment. The abbreviation stands for Political, Economic, Social, Technological, Legal, and Environmental factors (Johnson, 2007). The tool allows the assessing of the current environment and potential changes, and while PESTLE Analysis takes into account the major external features, it also affects the organizational structure, especially when decisions in changes to be made come into play (Dcosta, 2011). Below, in figure 2.2.1 and figure 2.2.2 is the PESTEL analysis and the implications this analysis has on ENVIROL.

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Table 2.2.1- Summary of PESTEL Analysis for ENVIROL, Adaptation from author

GPS tracking devices

Different feedstock to produce biofuel

PESTEL Factor Implications for ENVIROL

Political Difficult and time consuming to get anything passed by local legislation, consideration needs to be given if a bio-fuel plant cannot be developed.

Economic With Abu Dhabi as such a high GDP per capita, the company should consider subsidization of recycling for food business owners creating demand for recycling plants to be developed.

Social Create more of an awareness by partnering with local business who focus on these initiatives

Technological By starting to install GPS tracking devices in the trucks that are used by licensed contractors to pick up the grease trap waste, this will enable control on delivery time.

Environmental With Etihad’s recent research on “turning deserts into farmland” and producing both bio-fuels and food for the UAE, is an advantage for ENVIROL to move forward in the hopes of a bio-fuel plant and to also look at different feedstock used to produce bio-fuels.

Legal If ENVIROL focuses on the potential partnership with Etihad, and works towards achieving cross-emirates waste drop-offs, ENVIROL will be able to control the grease trap waste sector, with its new plant in Abu Dhabi.

Figure 2.2.2 Implications on ENVIROL from PESTEL Analysis, Author

The key takeaways for ENVIROL from the PESTEL analysis comes from the importance of social, technological, and environmental implications. In terms of social, Al Serkal Group’s ENVIROL and Dubai Municipality is leading the way on creating awareness of the impacts on the inappropriate disposal of waste oils (dumping into desert), and ways to prevent it. Dubai Municipality has given a code of standards, and frequently issue General Notices and implement by having inspectors visit all restaurants in Dubai.

There have also been new technological advancements regarding bio-fuels in Abu Dhabi, a project headed by Etihad Airways and Sustainable Bioenergy Research Consortium. A major initiative known as BIOjet Abu Dhabi: Flight Path to Sustainability was announced to engage a range of stakeholders in government and civil society to build the commercial framework and partnerships needed to develop a sustainable, aviation fuel supply chain in Abu Dhabi. Recently, Etihad was the first airline which tested a flight running on only plant based jet fuel. In Abu Dhabi, you are seeing an appetite for sustainable innovations.

Environmental analysis has been key for ENVIROL. Contrary to people’s belief, Abu Dhabi has been the appropriate environment for bio-fuel creation. Currently, through an integrated, closed-loop system, technology uses coastal seawater to raise fish and shrimp and irrigates plants rich in oils that can be harvested for aviation biofuel production. The plants thrive in arid desert conditions and do not require

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fresh water or arable land to grow. And lastly, mangroves indigenous to the UAE are used to eliminate nutrients and waste from the food production before the water is discharged back into the sea (Hogan, 2014).

This game-changing research promises to turn deserts into farmland – irrigated by seawater – to produce both bioenergy and food. And considering the UAE imports nearly 90 per cent of its food, the research has tremendous implications in addressing the country’s food security, while preserving its precious water reserves. (Hogan, 2014).

Rapidly increasing emissions of CO2 pushes climate change and every day moves us towards a more hostile planet to live on. Authorities acknowledge that the breakneck pace has stressed natural resources throughout the region. Sustainability is now a big theme, and Abu Dhabi is trying to learn from Dubai’s mistakes. This is great news for ENVIROL because they are heading in the right direction. But, getting through to the government and to stakeholders, is key.

2.3 Material Issues for Al Serkal-ENVIROL

Working with this company recently and focusing on the stakeholders and PESTEL analysis, it is clear that ENVIROL has 4 major challenges. Challenge 1 is the size and population distribution. ENVIROL is located in Dubai, and wants to break into other markets but in order to do so challenge 2 has to be met. Challenge 2 is getting the legislative framework right within the company to get both Abu Dhabi and Dubai government on board. Challenge 3 is meeting the infrastructure needs to build an ENVIROL plant in Abu Dhabi, and Challenge 4 is improving data collection. Currently, the UAE doesn’t do year on end financial reports. Companies don’t always seem to know where they stand in relation to competition in the market.

3. ENVIROL’s Response3.1 Stated Strategy

I recently had the pleasure of speaking with Elham Pourtangestani, the Plant Manager of the Alserkal ENVIROL Food Waste Recycling Plant. He give me a list of the 7 strategies relating to sustainability that ENVIROL currently works towards.

1) Capitalize on the opportunities present in the grease trap waste recycling industry and market for products derived from the grease trap recycling plant

2) Break new ground towards accessible, sustainable energy with our cutting-edge technology and serve as a model for the entire region.

3) Increase the environmental benefits of Fat, Oil, Grease contaminants. 4) Increase awareness of FOG damage to the environment. 5) Promote recycling and reuse of waste. 6) Contribute solutions to Municipalities, assist the Local Authority to manage its liquid waste in a

safe and non-hazardous way. 7) Assist the waste collectors and cleaning companies to handle and treat this waste in a safe way.

Secondly, I asked Mr. Pourtangestani about the choices and responses the organization has made in the light of its strategy. He listed 4 key areas that are being done within the organization currently.

1) Price signal2) Stronger legislation

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3) Programs & Actions4) Partnerships to deliver changes

4. Evaluation4.1 Sustainable Levels of Maturity

“In the future, only companies that make sustainability a goal, will achieve competitive advantage and becoming sustainable is a five step process,” (Nidomulu and Prahalad, 2009). Nidumolu and Prahalad identified a five-stage process and how to tackle and emerge from them ahead of the pack.

An analysis of ENVIROL has been undertaken and the outcome of the analysis is depicted below in Figure 4.1.1

High

Low

Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Level of Maturity: capacity for innovation

Figure 4.1.1 Outcome of Assessment of ENVIROL against Prahalad framework (model: Gitsham, M., 2014)

Considered against the Prahalad framework, it’s clear that ENVIROL have achieved stages one through four. ENVIROL has viewed compliance as an opportunity by setting UCO regulations with Dubai Municipality. ENVIROL also has a sustainable operation and product by being the first and still only waste edible treatment plant in the region.

Twenty years ago, UCO was considered a waste product that the business model innovation represented. ENVIROL’s creation of value through re-use demonstrates stage 4 of the Prahalad model.

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Integration of Sustainability within the Organization

Compliance

Sustainable Operations

New Business Models

New Practices

Sustainable Products/ Services

5. Sustainability Strategy Recommendations

Based on the evaluation in the previous sections, the following recommendations are made:

Enter Abu Dhabi with grease collection business Raise awareness and education of the issues with NOT recycling waste, & stop illegal waste

dumping Explore further innovations such as places and other types of waste to collect to create bio-fuels Look at possibly partnering with other leaders in the industry such as: Etihad Airways in Abu

Dhabi, Greenfields in the UK, Bio Bioenergy in Austria, and Pacific Biodiversity in Washington. Keep the partnership with Dubai Municipality strong and in good standing

6. Implementation Challenges and Approaches6.1 Possible Challenges Encountered

Throughout this paper, you have seen that the government seems to play a pivotal role. The government in Abu Dhabi and Dubai is the “be all end all” and if there isn’t support on their side, expanding into Abu Dhabi isn’t an option for ENVIROL.

There is also competition coming into play, including Lootah Biofuels in Dubai, who is currently generating 4.7 million liters of biodiesel from used cooking oil that powers 5,000 vehicles in Dubai. Other competitors continue to provide a fee for the collection of UCO, and ENVIROL is thinking of stopping their fee, but this isn’t a good idea. They could potentially lose a great deal of market share.

Another challenge is that there is a lack of heavy marketing funds for ENVIROL. If they aren’t very strategic on how they market, it may not do any good. Plus, behaviors of others are hard to modify and consciousness is often difficult to instill, which is why the regulations by the municipality play a crucial role in managing grease trap waste disposal.

In terms of partnerships, Dubai Municipality needs to remain a priority. The risk is that another competitor comes into the game, and creates a stronger, lasting relationship with Dubai Municipality, and the potential for ENVIROL to be pushed to the side is a possibility.

6.2 How to overcome these challenges

One way to overcome the challenge of awareness not being raised is for the company to think about closing the loop internally first, by having their employees own transport division. With this transport division, bio-fuels will be used to fuel the cars. ENVIROL could also look into hiring Brand Ambassadors to spread the word around campuses, etc. Generation Y is a key demographic ENVIROL currently solicits.

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One way to beat the competition is to become even more innovative. ENVIROL should stop just focusing on restaurants as its key source of UCO collection. It should look at labor camps, and residential homes as places of collection. It needs to branch out and look at how to increase feedstock, and this can be done by collecting new feedstock, which can also be turned into bio-fuels. These include algae, sewage, and tallow.

7. Personal Reflection

Sustainability is a subject that I haven’t realized its relevance before. Throughout my work experience, sustainability issues haven’t been at the forefront of what my company was focusing on.

While recently going on the Ashridge IBE trip to the UAE, my eyes were opened to the relevance to sustainability as an imperative in more extreme climates, and different social situations from my previous experience. It was fascinating to see the growth this company has made in light of becoming more sustainable. They have changed the way the UAE disposes waste, while realizing this is also a successful business opportunity.

I can see now the potential for a win-win. A business model that improves the lives of people, and reduces environmental degradation, while making a ROI for shareholders as a fully commercial proposition.

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References

Al Serkal Group. (2012). Al serkal-about us. Retrieved 2/28, 2015, from http://www.alserkal-group.com/about_us.php

BBC Monitoring. (2015). United arab emirates profile. Retrieved 2/28, 2015, from http://www.bbc.co.uk/news/world-middle-east-14703998

Bryson, J. and Crosby, B. (1992) Leadership for the Common Good; Tackling Public Problems in a Shared Power World, San Francisco, CA: Jossey-Bass.

Dcosta, A. (2011). PESTLE analysis history and application. Retrieved 2/28, 2015, from http://www.brighthubpm.com/project-planning/100279-pestle-analysis-history-and-application/

Eden, C. and Ackermann, F. (1998) Making Strategy: The Journey of Strategic Management, London: Sage Publications.

Gerry Johnson, Kevan Scholes, & Richard Whittington. (2007). 2.2.1 the PESTEL framework. Exploring Corporate Strategy Text & Cases (8th Ed., pp.55). GB: Pearson Education

Hogan, J. (2014). How bio-fuels can benefit the UAE-and etihad too. Retrieved 2/28, 2015, from http://www.thenational.ae/business/aviation/how-biofuels-can-benefit-the-uae--and-etihad-too

Laszlo, C & Zhexembayeva, N. (2011). Embedded Sustainability: The Next Big Competitive Advantage. Sheffield: Greenleaf.

Nidumolu, R., Prahalad, C.K., & Rangaswami, M.R. (2009) Why Sustainability is Now the Key Driver of Innovation. Harvard Business Review, 87(9), 56-64

Tharawat. (2010). AlSerkal group-A family business going green. Retrieved 2/28, 2015, from http://www.tharawat-magazine.com/en/family-business-articles/innovation/1607-alserkal-group-a-family-business-going-green

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Appendix 1- History of ENVIROL

Founded in 1947 by Mr. Nasser bin Abdullatif Alserkal, the Al Serkal Group of companies have made their longstanding mark within the market as one of the first established emarati companies. Mr. Abdullatif surpassed several milestones that boosted UAE's trading growth by being the first to commercialize electricity, introduce water drilling and generators, and oversaw the establishment of the UAE's first Telephone Company.

Having been active for more than 60 years, Al Serkal Group of companies and its subsidies have played an important role in the overall development of the UAE and its trading sector. Its various other activities include Travel and Tourism, Facilities Management, Properties and cultural initiatives. Alserkal resounds within the walls of SEWA (Sharjah Electricity and Water Authorities), DEWA (Dubai Electricity and Water Authorities), Etisalat (UAE's Communication facet), Emirates NBD and many more as an integral part of the board, aiding establishment.

Established in 1991, Al Serkal Group's Environmental Division has built a strong reputation in the market as one of the leading service providing entities within the Facilities Management sector that exude environmental responsibility as well as quality in its performance.

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Appendix 2- Al Serkal Environmental Division

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ENVIRONMENTAL DIVISION

Appendix 3- Day to Day Operations of ENVIROL

How it Works: The recycling plant is only one part of a green value chain that Alserkal Envirol proposes. The steps that lead to the safe disposal of edible oil waste involves various actors:

1. All food service owners are required to install grease traps to process their kitchen wastewater by the municipality. These traps capture FOG from the drain line and have to be emptied regularly.

2. Food service owners hire contractors that pick up the grease trap waste on a regular basis and deliver it to the recycling plant.

3. The recycling plant processes the waste and separates it into reusable components.

4. The resulting components are vegetable oil, which is used for the production of soap, bio diesel and oil burners; bio-solids, which is used as a fertiliser; and water used for irrigation purposes.

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