Michael Lucki, Chief Financial Officer, CH2M Hill Companies, Ltd., and Rich Clayton, Vice President of Business Analytics & Big Data Product Group, Oracle, on sustainability in business practices.
RICH CLAYTON: As a global project delivery company that really focuses on eco-friendly solutions, how do you describe your philosophy on balancing business with sustainability?
MICHAEL LUCKI: That’s always an interesting challenge. We’re fortunate to do a lot of work with many companies in manufacturing sustainable electronics as well as intensive industries in energy, chemicals and power. We’re always working with our clients to find ways to be more sustainable and, by having that vision, better overall. We can apply that vision to ourselves as well. We’ve been very focused on looking at these ideas — such as how we can make the way we perform our jobs every day in our office environment sustainable and friendly to the environment — in terms of ROI return. That is a nice training ground for us internally that has allowed us to bring similar solutions to our clients; inversely, we can take the things we do with our clients and apply them at CH2M Hill.
One of the areas that we’ve done a lot of work in is virtualizing our data centers. We are reducing our server quorums and our accounts. As a professional services firm, we have over 270 offices across the world and another 500 project offices, and each one would normally have a server. Through virtualization, we’ve been able to reduce that number dramatically, somewhere around a 30:1 reduction. So we’ve really been able to reduce costs and, more importantly, our carbon footprint, which has been tremendous for us.
It’s clearly a part of your corporate strategy to have a sustainable, socially responsible business. Can you comment a little more about how you see that evolving over time?
Sustainability is an integral component of our overall strategic plan, and we strive to weave sustainability into the fabric of everything we do. We support the U.N. global compact principles, and we measure and report our performance annually through our environmental management system (EMS) program and issue an annual sustainability report that shows how we’re progressing in all of the key metrics. Everything else is driven by that accountability. Once you set the metrics and goals as an organization, you can achieve very positive outcomes by having those goals out there and focusing on actualizing them. For example, by remaining focused on the U.N. global compact principles, we’ve created our own sustainable leadership board within the organization that includes a number of key people in our business groups, including presidents of boards and other folks that take this very seriously and are passionate about driving it throughout the organization.
We always look at how we can do things sustainably. We use natural lighting
I read a large part of your sustainability reports and continue to see improvements along many of the metrics. Your governance strategy and the accountability that you’ve achieved are particularly impressive to me. It’s clearly a part of the culture. You spoke a little bit about how data centers and virtualization are technologies that help you become more sustainable. Are there others that can help in that area?
Very much so. As I’ve said, we are a global professional services business. We have 28,000 employees around the world. That’s a lot of offices, desks, and buildings. So we’re very focused on trying to use sustainable materials in all of our offices and to use natural and LED lighting versus halogen and other energy-inefficient lighting systems. When we look at those types of things, one of the key things that we always keep in mind is safety, as we’re also an engineering, design and construction firm. Safety is one of our key cultural mantras — we live and breathe it every day. So a lot of the things we look do from a sustainability perspective probably wouldn’t pay for themselves on their own, but we pull what we call intangible metrics, like safety, into our ROI calculations. A prime example is in one of our parking lots; I hate to say this, but this is probably one of the most unsafe places in our organization due to the icy roads and steps in the winter and other things of that nature. To prevent some of those risks, we decided to replace our parking lot lighting with LED lights, which are much more efficient in the long term but are a costly replacement in the short term. However, the lighting is so much better for our employees and creates a much safer environment overall.
"We’re always working with our clients to find ways to be more sustainable and, by having that vision, better overall. We can apply that vision to ourselves as well."
That culture of accountability, the diversity of your workforce and your focus on safety have resulted in creating one of the best companies to work for. And you’ve been recognized for that for many years. Let’s switch gears. CH2M Hill oversaw the construction of the 2012 Olympic venues in London, the expansion of the Panama Canal and many other large-scale programs around the world. How do you balance the large-scale projects while simultaneously focusing on sustainable practices in your organization?
As I mentioned earlier, our roots are in water and environmental solutions. Overall, we’re what I call a solutions company. Clients come to us with problems, and we try to answer their problems with a very good solution. The biggest issues we see in the future are the axes between water, energy, the environment and food. When many of our major customers come to us, the first question they ask is what their water source will be for the next 20 years. How do they make sure that they have good-quality water and, at the same time, have a way to recycle that water so that it can be reused? Water is the most important thing for any energy resource whatsoever. If you look at power plants, chemical plants or refineries, it’s their water source that runs the facility overall. So sustainability is at the core of what we do every day with our clients, helping them to reach solutions for their business challenges.
We do around 10,000 projects a year and generate about $6 billion a year in revenue. We do have the London Olympics and the Panama Canal in our list of programs and manufacturing facilities, but on average, a lot of our projects are half-a-million dollars in size, and they mainly involve consulting, understanding client issues and coming up with a long-term, sustainable solution. We help them to determine how they can be long-term players in a world that’s evolving with increasingly limited natural resources.
I certainly share that passion for ethics. Currently, I sit on the board of regents for a private college in Iowa called Loras, and our program is focused on business analytics with a high emphasis on ethics, using information and understanding the implications of data. It goes far beyond the legal aspects and looks more at the moral and ethical decisions about the data we have and how we use it. How do you see your role as a CFO at CH2M Hill being different from those that don’t have that sustainable focus?
There are a lot of ways to answer that question. First of all, CH2M Hill is an employee-owned company. We have roughly 2,000 employee owners out of a total of 28,000. So I’m somewhat fortunate; I have 18,000 people at the company with me who are very passionate about a lot of things, and sustainability is one of them. One of the other big areas we address is risk management. I always say that I have 18,000 risk managers working side-by-side with me because if we have a bad project or a project loss, it affects the stock price. So they’re intimately involved with the business and much more focused on doing the right thing every day for our clients, the environment and the world.