Focusing The Lens
Anne Kilgore on Eastman’s Heritage of Sustainability
Spotlight - It's a fitting analogy for a company whose roots lie in chemicals for photographic processes - focusing the lens. Eastman has sharpened the focus on its sustainability efforts in recent years, which has earned the company a spot in the Newsweek Green Rankings two years running. The Tennessee-based maker of chemicals, fibers and plastics material also launched its first sustainability review last year and joined the U.S. Department of Energy's Save Energy Now initiative. Brandi Schuster spoke with Eastman's Global Sustainability Director Anne Kilgore about how sustainability affects every aspect of the company's business, from process improvement to organic and inorganic growth.
CHEManager Europe: Anne, as director of global sustainability at Eastman, what's your take of the use of the word "sustainability" in the industry?
Anne Kilgore: I always try to be careful when I use that word; when used too much, it gives people the idea that companies are just greenwashing when they talk about how sustainable they are. At Eastman, we have always had a focus on process improvement when it comes to eliminating waste. This is something we excel at, because it's good for cost, efficiency and the environment.
Under its environmental goals, Eastman is shooting for annual 2.5% energy-efficiency improvements and a 20% reduction in greenhouse gas intensity over the next 10 years. How does the company plan on doing this?
Anne Kilgore: This is part of our Save Energy Now leader pledge we made with the U.S. Department of Energy. As only one of 11 chemical companies participating, this commitment will be challenging for our company, but it was very important for Eastman to be a part of this program. With this being a 10-year goal, we don't yet have a clear line of sight of how we're going to get there, which makes it all the more ambitious. We are bringing a level of focus and internal funding to make this happen, and it's being driven from the very top of the company to make sure we stay on track.
One thing we are doing in light of the pledge is conducting assessments and surveys across our facilities. Going in at the actual site level helps those manufacturing areas better pinpoint sources of energy intensity and loss, through things like steam leaks and other sources of degradation. These are just a few aspects that will keep us on track and make sure we reach our goals.
As I said, Eastman has always had a focus on waste elimination process improvement, so we have a natural focus on process excellence. It isn't a surprise to any of our manufacturing sites that they can improve their throughput and their costs by improving the way they deal with energy, be it consumption, capture, recycling, reduction or elimination. In the end, this pledge is about how we can improve our footprint for our customers, and how we can run our plants more efficiently. The combination of these two factors will help us achieve this goal.
Eastman launched its first sustainability review last year, which outlines the company's strategy for using sustainability as a primary driver of growth and innovation. The goal for economic growth states that two-thirds of the revenues from new product launches will offer sustainability benefits compared with the prevailing alternatives in the market. What does this mean specifically for Eastman's product line up and what are some "sustainability benefits"?
Anne Kilgore: We strive to help our customers deliver safer products that maximize value and minimize environmental impact. For us, sustainable attributes include enhanced safety, reduced carbon footprint, decreased water usage, and renewable raw material sourcing, among many more. Moving forward, a number of our new product lines will offer an improvement in one of those areas compared to alternative products.
One example of our advantaged product lines is the Solus family of performance additives that offer superior performance, productivity and aesthetics for more sustainable VOC-compliant paint and coatings.
Solus is based on Eastman's cellulosic chemistry, which we have been pioneering over the past several decades for use in a variety of paint and coating applications. Because cellulose is nature's most abundant biopolymer, we are able to build the Solus line from renewable and sustainable raw material feedstock.
Would you say that for Eastman, sustainability is more of a term that has to be adapted depending on what area you are talking about, what products, what customers you are working with?
Anne Kilgore: Sustainability is what it is. I truly believe it is a very broad and holistic way of running a company, and actually participating in the value chain. When companies begin to consider concrete things they want to do to achieve a more sustainable footprint, that is the point where adaptability has to come into play.
Companies have to listen to what their customers and value chains need and what solutions they want. Then a company has to leverage against its own technical expertise, and what it is able to achieve through its own portfolio, within its R&D pipeline and through its inorganic growth focus.
When it comes to inorganic growth, what does Eastman look for in an acquisition or joint venture, particularly with the sustainability concept in mind?
Anne Kilgore: When we look at our inorganic growth opportunities, the lens that we apply has four high-level criteria to it: region, product offering, feedstock and sustainability.
Eastman is trying to disproportionately invest in fast-expanding regions. Acquisitions and joint ventures that help us meet the growing demand in these emerging economies are very interesting for us. Particularly in geographies such as BRIC countries, discretionary income is on the rise and with it the demand for more consumer products.
Another aspect we look at is differentiated products. We have a solid core of products that we're driving, and we have our R&D pipeline. We then ask ourselves: How can we go with adjacent technologies through acquisitions in order to differentiate our portfolio?
We also look at advantaged feedstock, which is defined as not only being in a low cost position, but also as being sustainable, such as from a cost of transport point of view. We also take into consideration the kinds of raw materials that would be involved in an acquisition or in a joint venture.
Sustainability is the fourth of these criteria, and it serves as an umbrella for the other three. We want to make sure that the differentiated products in any potential offering have sustainability benefits. This takes us back to the criteria Eastman uses when accessing its own products - carbon footprint; lifecycle assessment within the factory gates down to the final product; water usage; demand on other kinds of raw materials; feedstock origin; recyclability, etc.
In the end, we ask ourselves: Is this a nice offering from a financial point and feedstock point of view? Are the products in the portfolio in question going to deliver sustainability benefits? Will it offer differentiation from the current products in the Eastman portfolio?
Has the company made any recent acquisitions that met all of these criteria?
Anne Kilgore: In June of this year, we announced the acquisition of Sterling Chemicals, a North American manufacturer of plasticizers and acetic acid. We plan to modify and restart Sterling's currently idled plasticizer manufacturing facility to produce non-phthalate plasticizers.
In March 2010, we also acquired Genovique Specialties, a global producer of benzoate non-phthalate plasticizers and sodium benzoate. Eastman has continued to see a growing customer demand for non-phthalate plasticizers over the past couple of years. Through the Genovique acquisition, Eastman is uniquely positioned to offer customers a broad range of general purpose and specialty non-phthalate plasticizer solutions that meet regulatory requirements throughout the world.
Both of these acquisitions fit perfectly with our business strategy to grow our family of non-phthalate plasicizers, and we feel it has positioned us to lead the industry by providing a wide range of solutions.
In Newsweek's 2009 Green Rankings, Eastman was no. 95 out of 500 companies, and no. 2 in the category basic materials. The company seems to have slipped in 2010, coming up no. 143 overall and no. 7 in basic materials. What do you attribute this to?
Anne Kilgore: We are still pleased with the ranking. While the parameters didn't change, but the companies included in the ranking did, and that can affect the average score for the total companies in the population and the relative position against the average. That means that in 2010, the average went up because the companies that were included in the ranking changed.
However, it should be noted that our reputation scoring from them actually went up. We were given credit for more transparency in our reporting and our willingness to talk about where Eastman is on its journey and what we are trying to do to improve the overall sustainability of our plants, our facilities and our products.
In that regard, how important is looking for alternative feedstock for Eastman?
Anne Kilgore: This is something very important to Eastman, and we are actively researching it through our sustainable materials platform. We also have a legacy of cellulose technology, and this still feeds a significant part of our current portfolio. Therefore, we're always looking ways to leverage and accelerate adjacent product development using this kind of technology.
We also have new innovation products in our growth pipeline that are sourced from natural materials. For example, we are working to apply acetyl technology and our expertise in acetylation onto wood products in order to apply an acetylation process to lumber and wood products to increase their durability and lifetime.
We are also researching the more traditional bio-based route to chemicals using non-edible natural feedstocks. In general, the area of alternative feedstocks is something we look at growing both organically and inorganically.
In light of the reform of the Toxic Substances Control Act in the U.S. and the rollout of Reach in Europe, how does Eastman stay ahead of environmental regulations?
Anne Kilgore: Staying ahead just for the sake of staying ahead could be money wasted. We pay close attention to external trends and changing perceptions; we are also very active in non-governmental and governmental associates alike. That way, we get a sense of what might be coming down the line in terms of regulations. Then we can find out what we can do to help shape them with our expertise and how we can also adjust our strategy to actually benefit from any forthcoming regulations.
Looking at Reach, we've taken the European regulation as an opportunity to drive business growth rather that seeing it as another bothersome compliance requirement. We've been very active in determining what products we were going to register, where we were going to register them and how we were going to leverage them.
How did Eastman deal with products that could be problematic under Reach?
Anne Kilgore: We have very few products that we were disadvantaged as a result of the registration, mainly because Eastman has always worked to remove products that we considered to be problematic from our portfolio. We have assessment criteria we use when we try to understand how sustainable our products are; we look at aspects such as toxicity, hazard, footprint, material consumption, waste stream, etc. Over the years, we've intentionally moved away from "problematic" products and have moved into other areas to create a fairly benign portfolio.
Also, Eastman's infrastructure certainly also helped: With a 90-year history and 25 years of Responsible Care, we already had a lot of things documented.
So Reach hasn't posed any real problems for Eastman.
Anne Kilgore: Well, it has posed all sorts of costs for us, which is normal when it comes to regulations. We clearly had all of the challenges all other players have. The bottom line is that it is not inexpensive to comply with all of these broad-range regulations that are happening all over the world. In the end, however, we actually grew in some areas as a result of Reach, and the regulation didn't present any problems in terms of our relationships with our customers.
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