6th African International Business and Management (AIBUMA) Conference 6 th African International Business and Management (AIBUMA) Conference 2015 Entrepreneurship, Resource Management and Sustainable Development in Africa. 8/25/2015 1

Strategic Response on Environmental Conservation for Enhancing Performance of Cement Manufacturing Industries in Kenya: A Case of East African Portland Cement Company Presented by Nancy Marangu E: 8/25/ th African International Business and Management (AIBUMA) Conference

Introduction Concrete is the second most consumed substance on earth after water. Three tons of concrete are consumed on the planet annually. It is estimated cement production is growing by 2.5 % annually, and is expected to rise from 2.55 billion tons in 2006 to billion tons by China produces half of the world’s cement accountings for 45 percent of global cement production. East African Community, Kenya - the largest market for cement with an annual production of 53 per cent of the region’s total capacity, followed by Tanzania and Uganda whose production represent 30 per cent and 15 per cent respectively. 8/25/ th African International Business and Management (AIBUMA) Conference

8/25/ th African International Business and Management (AIBUMA) Conference

Annual growth projected estimated to be 7.9% Despite growth cement companies need to devise ways to mitigate challenges such as:  high cost and irregular supply of electricity and raw materials  high distribution costs and influx of cheap imports  Implement sustainable cost management measures focusing on low-cost technology to mitigate environmental impacts, alternative fuels and value adding models’ to remain competitive. 8/25/ th African International Business and Management (AIBUMA) Conference

Strategic Response to Environmental conservation Inclusion of environmental planning in production processes, beginning with product and process design, to prevent pollution at the source, instead of managing waste at the end of the production process. Globally, regulations enforced such as Montreal protocol, Kyoto protocol and the environmental impact assessment guidelines for cement manufacturing plants. International standards such as International Standards Organization (ISO 14001) demands enforcing standardized practices for environmental management and eco-labeling of products 8/25/ th African International Business and Management (AIBUMA) Conference

Corporate environmental management (CEM) and environmental policies that include environmental objectives in production planning and operations. In developing countries -established laws and formal governmental structures to address environmental problems. In Ghana for example, the National Environmental Action Plan (NEAP). In Kenya, the Environmental Management and Co- ordination Act (EMCA) of Under the Act, the National Environment Management Authority (NEMA) is the principal government instrument in implementation of all policies relating to the environment. 8/25/ th African International Business and Management (AIBUMA) Conference

The NEMA Environmental Impact Assessment and Audit Regulations (EIA/EA) - Legal Notice No.121 of The goal of the EIA : ensure decisions on proposed projects and activities are environmentally sustainable. The EIA is conducted in order to: evaluate impacts of the various alternatives on projects and propose mitigation measures for the significant negative impacts of projects on the environment. generate baseline data for monitoring and evaluating impacts during projects cycle highlight environmental issues with a view to guide policy makers, planners, stakeholders and government agencies to make environmentally and economically sustainable decisions. 8/25/ th African International Business and Management (AIBUMA) Conference

Cement Industries in Kenya Five Main Cement industries in Kenya  Bamburi Cement Limited  Athi River Mining Cement Ltd  Savannah Cement  National Cement Company Ltd  East African Portland Cement Company Ltd 8/25/ th African International Business and Management (AIBUMA) Conference

Air Pollution -construction sites generate high levels of dust (typically from concrete, cement, wood, stone, silica) and this can carry for large distances over a long period of time.  cement industries are responsible for about three percent of the global anthropogenic greenhouse gas emission, and for five percent of the global anthropogenic carbon dioxide emission causing global warming  from the cement kiln include carbon monoxide, nitrogen oxide, sulphur dioxide, lead and total suspended particulates which include dust, smoke, pollen and other solid particles. Environmental Impacts of Cement Manufacturing Industries 8/25/ th African International Business and Management (AIBUMA) Conference

Noise Pollution - Construction sites produce a lot of noise, mainly from vehicles, heavy equipment and machinery. Soil Pollution - Sources of water pollution on building sites include: diesel and oil; paint, solvents, cleaners and other harmful chemicals; and construction debris and dirt. 8/25/ th African International Business and Management (AIBUMA) Conference

Mitigation of Environmental Impacts by Cement Manufacturing Industries Technologies:  physical conversion of wet kilns to dry kilns;  upgrade of dry kilns and pre-calciner systems to more efficient versions;  replacement of wet kilns and vertical shaft kiln with, modern, preheater-pre-calciner dry kilns  optimization of kiln burner designs;  upgrade of clinker coolers  installation of computerized control technology - expert systems ; and  Carbon dioxide emissions can be captured after they are produced through carbon Capture and storage (CCS). 8/25/ th African International Business and Management (AIBUMA) Conference

Blended cement to replace limestone-based clinker with other materials, primarily coal fly ash and blast furnace slag. Alternative fuels - including natural gas, biomass and waste-derived fuels such as tires, sewage sludge and municipal solid wastes. These less carbon-intensive fuels could reduce overall cement emissions by 18-24% from 2006 levels by /25/ th African International Business and Management (AIBUMA) Conference

Law enforcement, are the key mitigation measures different countries have adapted to mitigate environmental impacts within the cement manufacturing industries. Kyoto Protocol is its requirement that countries limit or reduce their greenhouse gas emissions.  To help countries meet their emission targets and to encourage both developed and developing countries to contribute to emission reduction efforts, negotiators of the Protocol include: three market-based mechanisms  International emission (IE) trading  Clean development mechanism  Joint implementation. 8/25/ th African International Business and Management (AIBUMA) Conference

Methodology Descriptive research design was used to assess Strategic Response on Environmental Conservation for Enhancing Performance of Cement Manufacturing Industries in Kenya. East African Portland Cement Company studied as a case study since out of the five main cement manufacturing companies in Kenya, it is the only cement company that has an enforced corporate environmental management that is compliant with the Environment Management and Coordination Act (EMCA, 1999) towards mitigating environmental pollution and is also a signatory of the credit trading agreement. Quota and purposive sampling designs were used to select 60 respondents. Self administered questionnaires were the main research instruments and coded and analyzed using percentages and frequency tables using the Statistical Package for Social Sciences (SPSS) 20.0 version of windows software. 8/25/ th African International Business and Management (AIBUMA) Conference

Results and Analysis  The study sought to answer the following questions:  Assessment of East African Portland cement Company strategic response to environmental conservation for enhancing performance,  Challenges East African Portland Cement Company encounters in its strategic response towards environmental conservation,  Explored best practices on alternative production that is environmental friendly; and  weaknesses of East African Portland Cement Company corporate environmental management. 8/25/ th African International Business and Management (AIBUMA) Conference

EAPCC perceived by respondents as effective towards strategic response towards environmental conservation as indicated by 14% respondents whereas 75.4% indicated that the company was very effective. 8/25/ th African International Business and Management (AIBUMA) Conference

Assessment of EAPCC Strategic Response to Environmental Conservation for Enhancing Performance ISO certification % Corporate environmental management -50.9% Signing of carbon trading agreement % were stated by respondents as common techniques of strategic response towards environmental conservation. 8/25/ th African International Business and Management (AIBUMA) Conference

Assessment of the corporate environmental management as a tool for monitoring competitive advantage:  71.9% CEM influenced decision making,  68.4% vision and mission of EAPCC.  Also, 61.4% CEM had influenced EAPCC products towards market alignment,  43.9% pricing power EAPCC products,  43.9% value chain activity of EAPCC products  54.4% customer satisfaction. 8/25/ th African International Business and Management (AIBUMA) Conference

Challenges East African Portland Cement Company encounters in its strategic response Dynamic technology % Cost of training % Cost of system implementation % Cost of system assessment and monitoring -61.4% Expertise of the human resources % 8/25/ th African International Business and Management (AIBUMA) Conference

Position on Exploring the Best Practices on Alternative Production EAPCC :  fairly committed %  Very Committed – 12.3%  Not committed – 29.8% Way forward: New technology such as investing in bag filters used for dust control, rehabilitation of quarries tree planting. 8/25/ th African International Business and Management (AIBUMA) Conference

Recommendations Increased management support on investing in dynamic technology used for the manufacture of cement would not only improve EAPCC efficiency but it would also promote eco-friendly production of EAPCC products. Additionally, instituting systems of control by benchmarking the existing CEM against local and international standards would enable EAPCC to monitor its effectiveness. 8/25/ th African International Business and Management (AIBUMA) Conference

Conclusion Lack of specific industry based legislated frameworks in Kenya on environmental conservation creates loopholes Calls for Kenya Association of Manufactures and NEMA to design dynamic best practices within the cement industry. 8/25/ th African International Business and Management (AIBUMA) Conference

Thank You Think Sustainable; Conserve the Environment 8/25/ th African International Business and Management (AIBUMA) Conference