A Decent Factory

A Decent Factory and the Holling Cycle
Last week in class we saw a documentary called A Decent Factory. Some clips of this documentary can be found by clicking on 

http://www.youtube.com/watch?v=uRYu4nwRjos&feature=related 

or

http://www.youtube.com/watch?v=JPenUV55f90

In this documentary Hannah Kaskinen, an ethical auditor of Nokia visits their Chinese supplier of mobile phone chargers for a sustainability audit. She is accompanied by Louise Jamieson, a British consultant. They are shown round the factory and the living quarters of the employees and are given an insight into their lives. They are confronted with the fact that working conditions are very, very different from those of the Nokia employees, to say the least. Watch the clips and see for yourself.  

We were asked to place this audit in the Holling cycle (cf. C.S. Holling (2001) Understanding the Complexity of Economic, Ecological, and Social Systems, Ecosystems 4; 390-405). 

Before positioning the trip in this cycle we must define what cycle we are looking at; the relationship of Nokia and their Chinese supplier or the Nokia sustainability awareness cycle or maybe the diffusion of sustainability criteria cycle, to mention only a few of the possibilities. Once we have defined the subject of our cycle, we need to assess it in terms of active/passive use of capital, of weak or strong connectiveness and of weak or strong resilience.

Let us start with the relation between Nokia and their supplier. The documentary does not suggest that this is a new business relationship, so I assume that the business relation is well established, although this may be the first visit of a Nokia person. When the business relationship is being established this is the time to discuss and define what the business partners may expect from each other. Normally, this is also the stage when most resources (capital) are invested in the relationship. In this period the focus may have been on prices and technical specifications rather than sustainability. Once the specifications (of any kind) have been made it is much more difficult to change things. Now that the relation is there the companies are to some extent tied to each other. 
In short; capital is becoming passive, connectiveness is becoming strong and resilience is becoming weak. The relationship is in the conservation stage of the Holling cycle. 
This is also shown in the meeting with the managers before Hannah leaves for China. She is given a chance to perform an audit, but it is not clear what for; do Nokia really wish to change things or do they simply wish to show the world that everything is okay?  Hannah is going to perform an audit, but against which norms? This vagueness is the ultimate passive use of capital.

But why not look at it from a different angle, from the sustainability awareness aspect of the Chinese supplier? Imagine for a moment that you are the manager of the Chinese factory. You have done a great job so far, you have established a business and found a big European customer for your products. Your compliance with legislation may not be 100%, but it is good enough for the government officials that visit your factory. Of course you are using cheap labour, that is what makes China an economic super power, and that is what your European customer requires; reliable supply and a low cost price.
Now you are visited by two ladies from a different world who look at your factory from a different perspective. No quality control and yield figures, no profit and loss sheets but personal protection equipment, minimum wages and housing conditions. What are they, aliens? 
This takes some getting used to, especially if these subjects have not been discussed between the business partners before, but it also creates opportunities. It is not very clear what Nokia want, but at least the consultant gives a few hints. 
If there is no follow up from Nokia this will simply be a visit without consequences, but if Nokia bring up the subject later this visit can be the beginning of an improvement of working conditions. If Nokia are serious, their supplier can calculate the cost of paying minimum wages or working shorter hours and review prices. Let us suppose that is the case. In that case both Nokia and their supplier have to make investments, to activate their captal to make this work. This will take time but it can benefit both parties. Nokia will achieve (more) sustainable sourcing and their supplier will be ahead of his competitors. His customer will be less likely to find another supplier who is both cheap and sustainable, so this will increase the connectedness and decrease the adaptibility. In that case they are now in the beginning of the growth stage of the Holling cycle.     

Is this an effective way of diffusing sustainability criteria?
My first reaction when seeing the audit feedback in China was disappointment. They find a situation which is unacceptable from our point of view. If you treat your employees in this way in the Netherlands you are sent to jail. (See http://nos.nl/artikel/274273-aspergeteelster-voor-de-rechter.html )

Then I thought again. I am an internal auditor myself and I recognized her method of beginning with the positive comments. Louise did not give a complete list of what should be improved, but indicated the priorities and she did so in a friendly and polite manner. Perhaps she knows better than we do how to behave in China. Besides, this was not a negotiating but an auditing process, that is to say observing and reporting. In her report to Nokia she will have been more explicit. It is not up to the auditors to change things. It is up to the decision makers to decide on the follow up.

But is it effective? Let us compare alternative reactions. 
1. Nokia decide to go for it and demand dramatic changes. If these changes cannot be met they walk out (this is not the most likely scenario). Would that improve the lives of the factory women? I do not think so. They would either lose their jobs or continue the same life producing for another customer. 
2. Nokia decide to go for it and demand rigorous changes and their demands are met with (an even more unlikely scenario). I am afraid that the factory management might have a problem with local authorities. They would be endangering China's position as workshop of the world and causing unrest amongst workers. The continuity of the factory may be at risk. It is to be doubted if this were to improve their lives. 
3. Nokia decide to forget about it and leave things as they are. This would not improve matters and what is more, it would harm future attempts to change things; the worst possible solution.
4. Nokia decide to change things, but step by step. Based upon this first report their management define sustainability priorities and targets which are to be discussed with their suppliers at an executive level and to be evaluated on a regular basis. They are the customer, they are not without power, but first they must make it clear that this is a real business issue and divide the gap into achievable steps.  It is true, if they take this course life will not change overnight for the factory girls, but it will improve in the end. 
It may not seem very effective, but in the circumstances this is the most effective approach. 

How could another coordination system help?
In the case of a Decent Factory the working conditions are to be improved by self coordination. This depends highly on the individual companies' approach, which in turn also depends on the consumers' priorities. As long as the consumers do not mind companies do not care.
Now what else could work? Self-governance could work as most mobile phones are made by a small number of companies. If the five biggest companies would join forces and agree on minimum labour conditions for suppliers, they could really improve things, as Friwo and other similar companies would have no choice but to move. But would the companies do this? Only if the consumers demand it.
As the producers of mobile phones are in different countries and even continents of the world I do not think that any government would directly or indirectly force the companies in their country to demand sustainable products from their suppliers. The only governments that could demand improvement are those that are in a position to enforce better working conditions, that is the national governments of the low wage countries. These are not very likely to do this as it would weaken their companies' competitiveness.

If things are to be changed it is up to us, consumers, to initiate the changes. But do we really want change? Do we follow our hearts or do we follow our wallets?

PS Yesterday I finished this blog. Then someone on tv said she might buy a fairphone, so I googled fairphone and guess what? 

source; http://www.nrc.nl/tech/2012/09/19/fairphone-bellen-met-een-schoon-geweten/ 
Today, that is 30 September 2012, googling fairphone does not result in any hits in English, but that will no doubt change soon. In short, a small business was founded earlier this month, which aims at producing a fair trade variety of the mobile phone, better for workers and the environment. First products expected to be available in 1 1/2 years. They realize that you cannot change everything at once and plan to use their profits to make future versions more sustainable.

Polder model

Polder model

                     source;  http://www.ahn.nl/viewer  


This is a map of the Netherlands indicating field levels as compared to the average sea level. Everything blue or bluish is below sea level, yet some of the bigger cities were built there, thanks to the polders.

Would you like to know how high above or how deep below sea level you live in the Netherlands? Find out for yourself. Go tohttp://www.ahn.nl/postcodetool and type your postal code in the box. For the TU building that would be 2628CJ. The average height in this postal code area is -0.9 m, that is 0.9 m below N.A.P (N.A.P. more or less equals the average sea level)

You may think of the Netherlands as a tiny little country, but it would have been much smaller without dikes and polders; the Dutch have been 'creating' the Netherlands for ages. 

source; http://www.heardutchhere.net/duoutdoors.html 

A polder is created by separating lower land (e.g. a lake or part of a river bed) from the surrounding higher land by means of a dike and pumping the water to the other side of the dike. In this way the water level in the polder can be controlled. This water management relies on a network of ditches and drainage canals, which must be maintained by the inhabitants, that  is why all the farmers must inspect and maintain the ditches bordering their land twice a year. Only if everybody does this the system works, that is why from an early stage the farmers in the polders were united in water boards, which are said to be the earliest democratic institutions in the Netherlands. These water boards still exist to this day and have become seperate legal entities with their own elections and taxes. They are the competent authorities who issue permits with respect to ground water usage, sewage systems and emissions into the waterways. It is the water boards who decide on the water levels within the polders. The system works so well that we even have water boards in the higher parts of the country where there are no polders.

Although polders are not unique to be the Netherlands, they tend to be associated with our country. So much so that the Dutch version of consensus politics became internationally known as the Polder Model. In recent years polder has become a prefix meaning the Dutch (consensus) variety of, resulting in expressions such as poldermoskee (polder mosque) and polderimam (imam educated in the Netherlands). In the Dutch language the word has been turned into a verb polderen, meaning discussing (or for some; endlessly discussing) a subject with the intention of coming to an agreement which is acceptable to all parties.

How is it that as early as the middle ages the polder system with its water boards worked and that it still works? For an answer I turn to 'Á General Framework for Analyzing Sustainability of Social-Ecological Systems' (2009) by Elinor Ostrom, in which she states that the users of a resource invest time and energy to avert a 'tragedy of the commons' when the expected benefits of managing a resource exceed the perceived costs of investing in better rules and norms for most users and their leaders.  

The polders could only be built and maintained by joint effort, even if some invested more than others. Once the polder was in place all  the dikes and ditches needed continuous maintenance. Your neigbour's ditch was essential to the water level in your land and vice versa. Just like in the SES described by Ostrom all profit from the individual's investment, but, unlike these, in the polder model the first to suffer in case you do not pull your weight is yourself. You will drown you own land first, and your neighbour's next. There is no reason for the individual to lean back and let the others do the work. On the other hand, if you neighbour is unable to maintain his ditch properly, for whatever reason, it is in your own interest to help. You do not only share in his benefit, but also in his loss, because the water levels cannot be managed properly. In addition to that there is a joint interest in the dike. One weak point in the dike can flood the entire polder, which is everyone's immediate loss. The same holds if the windmill breaks down.  The common interest is also each individual's interest. The dike is too big for the individual to maintain, so a joint effort is indispensable. As each individual's part is of importance to all, this gives him some individual power, on the other hand each individual depends on the others. Unlike the classic case of the tragedy of the commons, there is no profit for the individual which will harm the community.The farmers in one polder are like siamese twins, they have no choice but to co-operate.  

As a result the polders are a mix of private and public goods. The land is privately owned, but the water level, which is indispensible for the land to be inhabitable, is a public good. 

Elinor Ostrom defines 10 variables which determine the perceived  benefits and costs of self organization, which in turn determines whether self organization is going to take place. I shall apply these variables to the development and sustainability of the water boards. 

size of the resource system. When polders were first made, long before the age of industrialization, they were relatively small, yet too big for individual farmers. They were small enough for each participant to be important, yet big enough to require organization. The dikes were manmade, yet 'natural' boundaries to the entities. In later ages the smaller polders were joined together to bigger ones and so were the water boards. Nowadays there are only 25 water boards left. This is possible only because they have been professionalized and formalized in legislation (Waterschapswet 1992). The farmers still have to maintain the ditches bordering their land and these are inspected by the water board twice a year. The inhabitants have to pay taxes, so that the water board can take care of water levels and the sewage treatment plants. There are elections for the water boards, but most people do not vote. For the non-farmers the water board has become a public service. One has to pay for it and it takes care of things. This allows for much bigger organizations. 

productivity of the system. The growing population in the middle ages required more land. This was found by turning inhabitable land into agricultural land. This new land was very productive and could remain so with proper management. Uniting the smaller polders to bigger ones increased the efficientcy, as fewer kilometers of dike were required per hectare. Having the water board as a professional organization that was paid by the citizens who had neither the knowledge nor the equipment to do what is necessary was a further efficiency step up, necessary when cities were built in the polders.

predictability of system dyamics. The polder system was reasonably predictive as water levels rose and fell with the tides and the seasons. When the average water level on the outside of the dike went up, a higher dike was made. However, there were a few cases when nature surprised the Dutch. The latest big one was in 1953, when a combination of high tide and a heavy storm flooded large parts of the Netherlands. Some 1800 people were killed, but the system did not falter. This flood paved the way for the Delta Works. The polders were restored and maintained, but on top of that a national plan was made to reduce potential future flood damage. 

resource unit mobility. Unlike many other resources, land is definitely immobile. This increases the chances of self organization to the maximum. The alternative is moving elsewhere in search of land. This was also widely practised. Especially second half of the 20th century a great many people emigrated.   

number of users. Polders were initially made for small groups of users, but the numbers increased with the years. The growing numbers meant that the cost of organization rose, but the cost per individual fell. For many citizens the water board is just another tax to pay now. The service they get in return is invisible because it works. Yet, as soon as there is even a minor chance that a dike might give way, camera teams from all over the world flood in.

leadership.  Creation of the odlest polders required lots of manual labour and could not be accomplished without cooperation. The much bigger polders in the later centuries required huge financiel investments which would take years to bring profits. This meant that they required  knowledge, investments and leadership, either natural or hierarchical. This did not mean that everything went smoothly all the time. For those of you who read Dutch this is illustrated by the following excerpt from Oren van Steen, which describes the different interestst that different parties in the Aarlanderveen polder area had and how they came to an agreement.

norms/social capital. The first polders were small scale in a society was was not very dynamic, built by groups of people who knew each other very well and might be related by family ties. They knew what to expect from each other. In later years outsiders also stept in, which may have complicated matters. The excerpts from 'Oren van Steen' are an illustration of the fact that even in the water boards (and between water boards) there was a tension between public interest and private interests. 
Nowadays the water boards system is embedded in legislation which means there is no excaping from your duties. Even the solidarity principle has been formalized; if you cannot afford to pay the municipal taxes you can apply for tax freedom (that is to say; it is the case where I live)

importance of the resource to users. Farmers do realize what the water board does, because a rise or fall in water level immediately influences their crops. Companies do because they have to obtain permits from the water boards. Civilians, however, hardly ever think of the fact that without proper water management their houses would  be flooded. They simply take dry feet for granted. Does that mean that this resouce is not important? On the contrary, as soon as their floors get wet people feel that they have been treated wrongly, let alone if their polder is to be ontpolderd, which means that it is flooded again so as to create room for nature. The debates about the ontpoldering of the Hedwigepolder on the Belgian border show how important the resource is to the users. It also shows that the water board is no longer the 'natural' way for people to organize themselves. The opposition of the users against the ontpoldering has been organized via political parties and pressure groups, rather than the water board, which had its own way of defending their interests.. 

source: http://nos.nl/artikel/378639-ecprocedure-om-hedwigepolder.html 

This brings us to the tenth variable mentioned by Elinor Ostrom, the collective choice rules. In the early water boards people knew each other and enforcement of the rules was easy. One could simply see what the others were doing every day. Nowadays both rules and enforcement have been formalized and the water boards have become much bigger. Although the inhabitants can vote for the water board their real influence is limited and they do not feel they 'are' the water board. It has simply become another type of government.

If we describe the social-ecological system of polders and water boards in the way Elinor Ostrom analyses SESs there has been a shift between the middle ages and now. The resource  unit is still the water level but the resource system is not only the polder but increasingly also the water board area. Now that decisions on poldering and ontpoldering are taken on a national level (see http://www.ruimtevoorderivier.nl/) in some cases the resource system is the whole of the Netherlands. The users are not only the land owners and their servants but also companies and citizens and all kinds of organizations. As a governance system the water board is still in place and doing a good job, but its scope has been changed from one polder to about half a province. The users do make use of the existing water boards but when they feel the need to self-organize they will very probably use other governance systems, such as environmental societies, pressure groups or political parties. 

source; Elinor Ostrom (2009) A General Framework for Analyzing Sustainability of Social-Ecological Systems

Would you like to know more about water boards? See the website of the Scheldestromen water board (also available in English) 
http://www.scheldestromen.nl/algemene_onderdelen/talen/english

Why do people and organizations do what they do?

Newton's First Law of Motion states that objects continue to move in a state of constant velocity unless acted upon by an external force. If there is a change in motion, therefore, there must be a force acting upon the object, and it is up to the physicist to find this force.  Similarly, an actor acts for a reason and it is up to the social scientist to find the  motivation for the actor’s moves.

In this blog entry I shall use two models to try and explain a company’s decision to have wind turbines; the rational actor model and the bounded rationality model.

  

source; http://www.leidschdagblad.nl/regionaal/leidenenregio/article15301593.ece/Windmolens-Heineken-gaan-hoogstwaarschijnlijk-door

The case is as follows; a big brewer decides to have wind turbines placed on in one of the company’s production sites. The motivation to do this is published in the company’s website:

http://www.heinekennederland.nl/_sana_/handlers/getfile.ashx/3dbcbe0a-179e-437e-9926-45588ab434ee/Windturbines+op+locatie+Heineken+Zoeterwoude2.pdf

Rational actor model

In the rational actor model, actions are intentional, they can to a certain extent be explained from the beliefs and desires of the actor. The action is optimal, given the actor’s beliefs about the world. These beliefs are supported (as well as possible) by evidence, which results from an optimal investment in information gathering. (Elster, Explaining social behaviour, 2007)

Why have wind turbines?

The company that decides to have wind turbines believes this is the best way to reduce its CO₂ emission and at the same time improve its competitiveness. The first is supported by the evidence given; the placement of four wind turbines results in more CO₂ emission reduction than the other options shown. The memo does not give any evidence how the wind turbines are improving the company’s competitiveness, this information may be considered confidential. (In their sustainability report the cost of wind energy is said to be close to the grid price, suggesting that it is a little above the grid price)

Why have wind turbines in their production site?

The memo gives good reasons for this choice; it is less expensive, it is more secure and it is approved of by the authorities.

Why have four wind turbines instead of three or five?

It is possible that four is the maximum for the size of the site, but if three had been the technical maximum, would the company have preferred the biogas plant? The memo only compares the potential CO₂ reduction, not the investment required.

Why not purchase renewable energy instead of building wind turbines?

The same company’s brewery in ‘s Hertogenbosch decided to purchase green energy (8% of the total energy consumption) . The Zoeterwoude brewery could have done the same, but that option is not mentioned in the memo. Why is that? It is hard to believe that this option was not considered.

All the evidence presented supports the decision made. However, it all started with the will become a ‘greener’ company (like just about every other company in the Western world) and look for opportunities to achieve that goal. Once you desire to become ‘greener’, CO₂ reduction is in the air.

Bounded reality at the organizational level

There are plenty of arguments for more sustainability (I will not go further into that) but you will see them only when you are willing to consider them. How does that happen? What is it that makes companies turn ‘green’? The bounded rationality model, applied at an organizational level (see Jones, 2003), can be used to explain this. This bounded rationality model focuses on six aspects, (which will be added in italics).

Organizations develop (more or less) standard reactions to certain types of stimuli (organizational memory). In many companies the first reactions to any idea will be questions such as; ‘will it generate a profit?’ and ‘Will it increase our sales’ or ‘What will be the return on investment?’ Sustainable ideas are no exception to this rule. They stand a much better chance if they are not only beneficial to the planet or the people but also to the company.  Renewable energy must have a trade off in terms of cost down or image up. Renewable energy from wind turbines on the brewery site may have both. Purchasing renewable energy may be a lot easier to arrange, but it is much less visible to the general public. The image effect will be nil.

In hard times for the company the management focus will be on survival. Sustainability will not be very high on the agenda (agenda setting). When all processes are under control and the company is making a decent profit, such plans stand a much better chance.

Once the idea of a sustainable plant has been embraced, different ideas for improvement may have been generated (parallel processing),offering a choice of options.

Once the wind turbine plan has been approved and launched this will require available resources in manpower and money, so that other ideas such as the biogas plant may have to wait till a later date (serial processing).

A project such as the wind turbines is not accepted solely on logical grounds. It can trigger positive and negative sensations (emotional contagion). Having a project like this may give the people involved a feeling of great achievement.

Employees of the brewery may feel a sense of pride of their company striving for a better future (identification), which may have a positive effect on their attitude.

Exercise; build an Environmental Management System

Last week we simulated the development of an Environmental Management System in class. We were divided into small groups representing different departments in a company. We were asked to develop a  vision of environmental excellence and to make  lists of both information that we needed from other departments and useful information that we could supply to other departments. I was in the production department.

It was not so difficult to agree on the vision of environmental excellence in a production department. Less waste and less energy consumption are core business for production. It was far more difficult to define de boundaries of our responsibility. In our opinion (based on the basic information we had) the company should diversify its business, but who is to decide on that?  Is it Production?

I work for a manufacturing company and similar discussions occur between the various departments. The result so far; other departments may advise but production is to decide.

One thing was clear from this exercise; the first step in starting an EMS is the definition on each party’s responsibilities.

Crying out in a wilderness of noise

I wonder if mentioning a brewery will increase the number of people reading my blog.

maiden blog

First impressions

To be honest, thinking of Industrial Ecology, taking a Social Systems course was not the first thing that entered my mind, let alone blogging about it. No, I was not born in a cave, and I do live in the 21^st century, but to me blogging feels like thinking out loud. Why should I do it and why would others need to know what I am thinking?

I do see, however, that it is sensible to acquire communication skills and to learn to use the communication systems available. If we are to be agents of change, as it says in the Industrial Ecology website, we cannot do that on our own. We shall have to convince others and for that we need communication. Else we would be like the voice crying out in the wilderness, wouldn’t we?

But then again; if all of us a blogging in a world that is full of blogs, aren’t we calling out in a wilderness of noise? Who will hear us then? Let us find out.

My theoretical knowledge of social sciences is best described as basic. I have acquired some in works council courses some 25 years ago and in the bachelor programme of applied environmental science at Hogeschool Utrecht (in the past three years). I trust that will be compensated for by years of practice.  

Industrial Ecology inspired puzzle

The graph shown below is from a study by Wageningen University. It shows the percentages of the respondents who say they have meat in their hot meal never, 1 or 2 times a week, 3 or 4 times a week, 5 or 6 times a week or 7 times a week.

http://www.lei.wur.nl/NL/publicaties+en+producten/LEIpublicaties/?id=1413

Comparing the figures for 2009 and 2011 the percentage of vegetarians and vegans is fairly stable, but more people have become part time vegetarians or so-called flexitarians. However, the average annual meat consumption per person remained stable at some 43 kilograms.  (Source http://www.pve.nl/pve?waxtrapp=suefHsHsuOpbPREcBlBKHM) 

Why is it that more people are part time vegetarians but the average consumption of meat remains the same?

• ·         Are the portions per meal becoming bigger? More and more meat is purchased in supermarkets where it is pre-packed and portioned.  Customers do not ask for the quantity you would like to purchase but choose from what is there. Besides this there is an abundance of ready to make – only add meat packets in the supermarkets, usually made for considerable quantities of meat, e.g. 350 grams for 2–3 persons.
• ·         Is more meat consumed between meals, e.g. in the form of snacks or in sandwiches?
• ·         Do people really reduce the number of meatless meals or are their replies based on wishful thinking?