Linking Economic and Environmental Performance: Translating an EMS Into the Language of Business

Presented by Edward L. Quevedo Pillsbury Madison & Sutro LLP Environment & Land Use Group

Overview of Session

 EMS as a Business Tool/Making the Business Case  Internal EMS Business Linkages  External EMS Business Linkages  Identifying and Overcoming the Inevitable Barriers  Maintaining Momentum and Chasing the Future

EMS As A Business Tool and Making the Business Case

Eco-Efficiency - An Alternate Environmental Lodestar

 Existing Terminology is of Limited Value  Environmental Compliance  Always necessary  Basis for innovative use of EMSs  Public, and innovative organizations, depend on it  We acknowledge its limitations  Environmental “Performance”   Overused, poorly (or un-) defined ISO 14001 3.8: “measurable results of the EMS, related to and Org.’s control of its E aspects, based on its E policy, Os & Ts”  “Strategic” Environmental Management   Too often a code-word for process over results Frequently masks a program meaningful to management but meaningless to the valve-turners and product-assemblers

Eco-Efficiency - 2

 Proposed Definition of Eco-Efficiency

Each dollar spent and each person hour invested by the environmental function of the organization must be justified as simultaneously aiding both the environment (or Human Health and Safety) and the business

 Else, what does it to say that environmental protection and good business go hand in hand, or are not inconsistent  Activities (including compliance behaviors) which do not meet the test should at least be subject to scrutiny, presumed suspect, and perhaps eliminated  Not a perfect metric

Case Study 1 Semiconductor Manufacturer, Pennsylvania

 Starting Place   material compliance is just out of reach, sibling facilities recently fined, frustrating regulatory interface inefficient EMS design and operation; management skepticism  Goal   Eco-efficient operation simultaneous with EMS redesign New regulatory relationship  Method  Diagnose compliance and EMS using Eco-efficiency  4 person years (+10) + 1.2 million spent on compliance and EMS  Results  2 persons years (+3) + ~$500k to compliance and EMS   Alignment (through redesign) facilitates zero air emissions program Trust based regulatory relationship, material compliance, management support

Internal EMS Business Linkages

Eco-Efficiency in Industry

 Regulatory based activities must be realigned to come closer to the Eco-Efficiency target  Result: net gain in operational efficiency  Translated: I now have person-hours and infrastructure dollars to spend on pursuit of “unregulated aspects” or “superior E Performance”  New definition of superior E performance: Continuous reduction of E impacts and risks, over time, to the vanishing point (EMAS I & II, Art. 3, Annex 1(C))

Case Study 2 - Pharmaceutical Firm, California - Compliance Assurance    EMS Design for Eco-Efficiency  problems: Superfund liability, enforcement actions pending, competitive limitations, skeptical/uninvolved management  objectives: become industry leader EMS design considerations (1993)  diagnostic on current state   achieve material compliance with 50% of current resources leverage EMS principles  distributed responsibility  enhance visibility  prioritization of risks  identification of inefficiencies EMS design results (1998)  compliance assurance (integrate into performance program); no Superfund liabilities (alone in industry); involved and supportive management; industry leader (Allergan); client promoted to Corp. VP

Case Study 3 - Storage Manufacturer, California - Pollution Prevention    EMS Design for Pollution Prevention (Product Stewardship)   problems: customer queries, process intensive manufacturing, competitive limitations, skeptical/uninvolved management objectives: become industry leader EMS design considerations (1994)    diagnostic on current state and define product stewardship achieve material compliance with 25% of current resources leverage EMS principles  prioritize risks (product-based EMS)  study new p 2 options (criteria)  set aggressive implementation goals (programme)  redesign organization/submit products to EMS (programme - Sec.4.3.3

EMS design results (1998)  compliance assurance; customer support and involvement; involved and supportive management; industry leader (Quantum Corp.)

External EMS Business Linkages

 Customer Demands  Competitive Pressures  Financial Sector Expectations  Traditional Regulatory Pressure  New Regulatory Opportunities  Additional Regulatory Complexity (the Global Market)  Holding The Second Most Precious Resource  Making More of the Most Precious Resource

Available Tools and Models

   Eco-System Design  Common Denominator - Environmental Management at Plant level  Best Practice - EM at Industrial Estate Level  Next Generation - EM at Regional Level Environmental Management   Common Denominator - ISO 14001 EMS Best Practice - EC Eco-Management and Audit Scheme  Next Generation - Sustainability Management Value Chain Management  Common Denominator - Compliance Management  Best Practice - Active Management (coaching, EMS registration)  Next Generation - Deep Management (align environmental priorities; co-reporting; restricted substances lists (Holland))

  

More Tools and Models

Facility Design Criteria  Common Denominator - Consistent Criteria  Best Practice - Green Design (US Green Building Counsel)  Next Generation - Integrated Design (Recycled content, manufacturing process linkages) Procurement Guidelines  Common Denominator - Cost Criteria  Best Practice - Environmental Responsibility  Next Generation - Scorecards and Continuous Improvement Area-Wide Planning - Community Involvement  Common Denominator - Environmental Review  Best Practice - Shared Responsibility  Next Generation - Survey, Involve, Feedback Information

Identifying and Overcoming the Barriers

Barriers

 It will cost too much money  We are already in compliance  No one else is doing this  Let’s study it some more  This is not a good time  You already have too much to do  Who is going to pay for this?

EMSs, Eco-Efficiency, and the Public Trust

         Premise of C&C is lack of trust Premise for regulatory authority is public trust Public trust is fundamentally breached when compliance is the basic regulatory metric The public trustee is first a steward of resources, and this necessitates preservation and restoration Eco-efficiency pursues this objective E 2 is easy to explain, and can win favor with public EMSs, well-designed, can be an E 2 tool EMS + E 2 = Win-win-win Methodology: Systems based approach, learning organization tools, reward innovation, plan for the future

Maintaining Momentum and Chasing the Future

Conclusions

 Uncertainty and risk is at heart of embracing change  We must meet these with courage, creativity, and trust  Just as we don’t trust too much or categorically in bureaucracy or legislative mandate, don’t trust the market to accomplish everything unassisted  The market is not a force of nature or of humans -- we have the responsibility to influence and work to design the market, to direct the application of new technologies and the private embrace of civic priorities  Learn from the Story of New College

“Great spirits have always encountered violent opposition from mediocre minds.”

Albert Einstein

Edward L. Quevedo Pillsbury Madison & Sutro LLP Environment & Land Use Group

San Francisco: 415.983.1125

Silicon Valley: 650.233.4766

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http://pillsburylaw.com

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