The company
Rockwool UK Ltd was established in 1978 and is the UK’s leading manufacturer of mineral wool insulation for thermal, fire and acoustic protection. Rockwool UK is based in Pencoed near Bridgend in Wales, where its factory currently employs 440 people. Not surprisingly, the company’s vision is to increase sales of its products and continue to build the business.
The parent company, Rockwool International A/S, whose headquarters are based in Denmark, was established in 1937. It has grown and now has 22 factories in 14 countries around the world and employs more than 7,000 people.
Rockwool is a family business that has a strong sense of being part of a local community. This translates into having a responsibility and an obligation to that community. Despite its growth, the business continues to be driven by these values and the family still controls the group’s overall direction. Indeed, Rockwool UK’s stated values emphasise the need for continuous improvement, improving profitability and the fostering of good relationships with employees and customers and the community.
These values originate from Claus Kähler who joined the business in 1948 and retired as the Group president in 1986. Up until Mr Kahler’s death in 2002 the values were referred to within the business as the ‘Claus Kähler values’. They were developed to make sure that the company was engaged in business that was beneficial to the environment and society; and to ensure good communication in the whole organisation.
The impact of the Kähler family runs throughout all its operations and is the driving force of the organisation. This is substantiated with a rationale that these values are good for business. Kähler’s son, Tom, is the current president and chief executive.
The focus of this case study is on how the environmental performance of Rockwool has helped make the company’s values count.
The drivers
Kähler’s values are described in company policies that cover ethics – they way in which the company interacts with society both locally and globally; social responsibility covering issue such as staff training, health and safety and equal opportunities, and the interaction with the communities in which Rockwool operates; environmental responsibility – covering the impacts of Rockwool’s operations and the application of its products; and economic responsibility covering the way in which Rockwool does business.
The controlling interest of the company is the Rockwool Foundation, an independent charity. This was set up by the family to act as a ‘safety net’ ensuring that throughout the organisation there was the governance in place to ensure that these values were not lost.
To do this Claus Kähler and his brothers and sister donated a large proportion of their Rockwool shares to the Rockwool Foundation. Today the research unit is probably Denmark's most respected non-political think tank for social and economic studies. These studies, for example, on the efficiencies and inefficiencies of the health care system, are used actively by governments on both sides of the political spectrum to make a better society.
Taking action
This conviction to society and the environment came long before CSR. It started in the 1950s when Kahler became the No.2 in the company. For example, he helped set up social terms and conditions for employees such as pension schemes that were well ahead of their time.
More recently, in 1997, still before the term CSR was coined, Rockwool UK was involved with the community and was an active member in local partnerships such as The Prince’s Trust. Its community work involved donating part of its premises to the Groundwater Trust. This land provided a site for people with learning difficulties from the Bridgend Day Centre to clear the ground, grow plants and trees, and create a woodland walk.
So just how is this driving ethos and its resulting policies being translated into actions?
To deliver the environmental corporate policies Rockwool has specific action plans with annual goals that are monitored and reported yearly. As a result new goals are set for subsequent years. For example, Rockwool in the UK realise it has an obligation to minimise its impacts on neighbours and the local environment. Since 1995 Rockwool actively measured and improved its environmental performance. To do this they committed to produce Life Cycle Inventories of its products. The inventories were surplus to legal requirements and are a total audit of how Rockwool’s products are produced covering amongst others; energy use, sourcing of raw materials and transportation.
The inventories record the amount of energy and materials required to make the products and the waste generated. Other impacts, such as noise, have also been recorded. This regular monitoring has helped the company identifying ways to improve its performance by revealing where levels are high, and how the application of new technology could help. As a result the group announced in 2003 that it had, in 2002, improved annual water consumption efficiency by 2 %, reduced annual dust emissions by 20%, and improved annual energy efficiency by 7%.
Looking specifically at the operations of Rockwool UK, the company’s custom made factory is built on a former open cast mine. The office and amenity services are warmed by waste heat from the manufacturing process. Around the site Rockwool has developed a nature study centre and woodland walk for local schools and colleagues to learn about the environment in an enjoyable setting. The development of these facilities has been in collaboration with other organisations such as the Forestry Commission and Bridgend County Borough.
Within the operations Rockwool has set targets for continuous improvements to reduce the company’s impact on the environment. Rockwell has been able to improve the recycling of waste on site at Pencoed. This has resulted in a rapid six year decline in the volume and costs associated with waste disposal. In 1997 the cost of taking waste to landfill was £555,000. In 2001 it was down to £136,000, even though landfill costs had significantly increased. Improving recycling has also resulted in an additional 1,041 tonne of product being generated from waste. This has led to improved efficiency of around 2%.
The fitting of a new combustion and filter system, not required by law, in 1997 has led to emissions of carbon monoxide reducing from 500 tonnes per annum to less than 10 tonnes per annum. In 1996 Rockwool set up a closed loop system for its process water, as a result its water use is more efficient and has brought annual cost savings of £20,000.
Rockwool’s investment in environmental abatement technologies ran into millions of pounds, and as such represented a risk. With hindsight it was a risk worth taking but at the time there were some detractors that wanted investment in production and productivity.
The business benefits
Rockwool has been in a strong position to use its environmental performance to demonstrate the company’s values originating from Kähler’s values. This improved performance has resulted in increased profits and sales. Savings have been made in costs through energy reductions. In addition, customer loyalty and generation have been important, helped by Rockwool’s track record. “Environmental performance is increasingly being rated of paramount importance by our customers” said Brian Roberts, Rockwool UK’s Managing Director.
Improvements in Rockwool UK’s environmental performance was recognised by winning the Wales Environment award 2002. This resulted in positive publicity both externally and within the Rockwool group.
Additional benefits include improvements in staff morale and access to a new and expanded set of stakeholders. The latter is a direct result of the shift in focus from inward to outward, away from the factory and onto community groups and schools. The former has been vital in implementing Rockwool UK’s change programme as it hinges on staff support to action the changes.
Why is it CSR?
Aside from the business manufacturing a product that is environmentally friendly, the company has demonstrated the value of being committed to effective communication and of working with a wide range of stakeholders. The overall result has been improved environmental performance.
What next?
Rockwool recognises the need to sustain and improve its performance. To do this the company sets new annual goals. For 2004 these include an assessment of all gases that cause climate change from its operations; the full integration of its chemicals policy into the factory management systems; and the number of factory accident rates per million working hours reduced to 19.
For more information on Rockwool UK Ltd please contact Craig Bligh by email craig.bligh@rockwool.co.uk.
© Article 13 and CBI – CSR Case Study Series, December 2003
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