ThyssenKrupp Elevator Company was born from the merger of two German steel companies that each started in the 1800s. Today, the company is the largest producer of elevators in the Americas with more than 13,500 employees, 200 branch and service locations, and over $2.7 billion in sales.
The Americas covers the region from Argentina to Canada, and the company has two main factories in Tennessee and Brazil. Around eight years ago, the company’s VP of sustainability for the Americas, Brad Nemeth, started pursuing material transparency. For Nemeth, sustainability includes product development to ensure what the company is producing today will be viable well into the future — socially and environmentally.
“How do we define if our products are sustainable?” he asked at the time. Getting the answer turned out to be a significant challenge involving dense data reports, proprietary materials, and product supply chains as opaque as steel. Nemeth will be speaking about material transparency at the Environmental Leader & Energy Manager Conference in Denver next week. Recently we caught up with him to find out what it means for ThyssenKrupp.
What was the impetus for pursuing material transparency?
When I started with the company in late 2009, sustainability was governed by environmental footprints. We started doing lifecycle assessments (LCAs) and environmental product declarations (EPDs). We knew our carbon footprint, the different elements that the LCAs cover, the classifications, but not if that’s good or bad. There was no benchmark, and elevators are relatively unique.
On top of that, our customers were asking what’s in the products — are you red list compliant, RoHS compliant, REACH compliant? They were all looking at what the materials actually contained. I was still missing the benchmark part. When we did a deep dive, there are 20 or 30 different red list chemical lists, and not all the lists were synced up. Then we started mapping the health product declaration (HPD). That opened my eyes to material transparency.
Then what did you do?
We are required by law to have material safety data sheets. Everything is supposed to be disclosed — all the chemicals, what the personal protective equipment is supposed to be, what happens when it spills. But we found that if certain elements are proprietary, the companies that publish those sheets don’t have to disclose the ingredients. For some products, like electronic components, maybe 50% of the materials are disclosed.
The health product declaration I’m creating is limited to what’s available on the safety data sheet so I knew I had to go further. We contacted Cradle to Cradle for an assessment of all of our materials. We give them the material safety data sheets, then a Cradle to Cradle-certified independent third party company called ToxServices can contact the suppliers for 100% disclosure down to 1,000 parts per million.
The way they assemble it, we don’t get the formulation or list of ingredients. ToxServices summarizes it as far as the ingredients have been defined from a toxicology standpoint. ToxServices tells us what’s good and what’s bad, and why it’s bad.
Why go with Cradle to Cradle?
I chose the Cradle to Cradle organization because we can get full disclosure and they put the human element on it.
Our elevators are primarily steel. When we did the material transparency, there may be traces of chromium, arsenic, nickel, and other elements in steel, but they’re in small quantities and there’s no way you can get it out. The ToxServices group says that, based on how it’s being handled and where it’s being used, there’s no human health impact. Not everybody has a toxicologist sitting next to them. That’s why we went with Cradle to Cradle.
When you say human health impact, what does that mean?
We know that the individuals riding in our elevators will never come in contact with the trace elements embedded in the steel, but we’re still worried about people handling it within our factory. Are we exposing them to something? In the supply chain, maybe it’s safe to use in our manufacturing facility, but are the people processing it exposed?
Now we have a very transparent view through our supply chain to make decisions. We can be a better steward.
What is the business case for having material transparency?
The business case is understanding the risk within our supply chain. When something happens anywhere in the globe, we have a better understanding of how it might impact us so we can make intelligent decisions, whether it’s buying up inventory or looking at how to eliminate a component from our elevators. We not only manufacture new elevators, but make sure we can keep all the elevators we installed up and running.
Are there still challenges with getting full material transparency?
Yes. This movement of material transparency is very new. Private companies say, ‘There’s no reason I need to disclose — it doesn’t hurt me.’ We still run into vendors where we have difficulty. Then it’s a business decision. Do we switch vendors because we can’t get the information? Is it a major component or just an aesthetic wall covering? Could we ask our customers, ‘Are you OK if we move away from this vendor?’
What kind of difference has material transparency been making?
About eight years ago, architects were hiring individuals who wanted all this information and their job was to compile it. The architectural firms quickly learned that it’s so much data and there’s no context for the people using it.
That huge hurdle that took us several years to get over. We’re now seeing customers saying, ‘You can’t come present your products to us unless you have these types of certifications.’ The certifications help because now we don’t have to give them 100 pages to go through.
Material transparency has given us incredible insights into our products so we can use that to stimulate innovation. What’s the next bad thing everybody has to eliminate? We can be ahead of the curve, eliminate those things, and have better products going forward.
Brad Nemeth will be speaking at the Environmental Leader Conference & Energy Manager Summit in Denver May 15 – 17, 2018. His plenary session, Innovations in Material Transparency, starts at 1:30 pm on May 15.