BSE BWEFING

PROACTIVE AND RESPONSIBLE: ONE COMPANY’S PATH FROM GREEN POLICY TO GREEN PRACTICE

Ken Knight Director, Environmental Management Programme, Brunel University

We believe that our company has the i-espon- sibiiity to conduct our business as proactive and responsible stewards of the envimnment and to seek profits through businesses that provide quality and value to our customers in an environmentally sound manner.

’Emerald’ Group’s Environmental Policy

Introduction

Emerald UK Ltd (not its real name) is a subsidiary of Emerald Inc., a multi-national company with its headquarters in the USA, which manufactures and markets its well-known range of household products in over 30 countries. The President and the top management of the group have a history of skong commitment to environmental excellence, and the group is a member of the international Business Council for Sustainable Development. The group’s impressive Environmental Policy and Mission Statement contains some challenging and ambitious goals.

Emerald UK agreed to collaborate with the author in a study of the implementation of the group’s environmental policy in the UK company. In the course of this study we were able to interview almost thirty managers of Emerald UK, ranging from shop floor chargehands to the Managing Diivctor.

We found that there were, in effect, two processes of implementation going on simultaneously: one proceeding fmm the top down; the other from the bottom up. We also found that while the policy tended to focus attention particularly on the manufacturing area and this was where the most action was taking place, it posed important questions for other management areas, and these were not always easy to answer.

The Top Down Process

The Policy

The environmental policy itself is couched in

very general terms (an extract is quoted at the head of this report) but is expanded by an environmental mission statement and a set of environmental principles which commit the company to same unusually far-reaching coals, including amongst others:

a commitment to ’environmental leadership’

informing customers of the environmental impact of the company’s products

developing and designing products, processes and packaging to be, ‘compatible with the environment ... and manageable in their disposal‘

seeking technologies and technological innovations to promote clean air, water and e a r t h and p r o v i d e ’ d e m o n s t r a b l e environmental improvements’

minimizing the volume and toxicity of waste

conserving non-renewable resources and using renewable resources in a sustainable manner

safeguarding habitats

minimizing the contribution to acid rain, smog and ozone depletion

supporting and participating in the develop- ment of public policy and educational initiatives

commitment of resources to, and monitoring of implementation, by the Executive Committee of the Company

These are some of the ways in which the company has chosen to spell out what it sees as the implications of its general commitment to ’proactive and responsible stewardship of the environment’. At the very least they Seem to be signalling that the company means business.

From Policy to Objectives

The Executive Committee, through the Corporate Environmental Council, sets specific objectives

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with target dates for their achievement. These are of three kinds:

absolute levels to be achieved: % of waste to be recycled % recycled content in packaging

improvements against a reference period: % reduction in source material in packaging % waste reductions (air, land and water) % reduction in VOC's

qualitative objectives: product redesign phasing out of undesirable materials

Some problems have been noted, arising from the absolute and specific character of some of the objectives. The baseline of a reference period (the same for all the companies) is perceived to create difficulties for the UK company which sees itself as already more advanced than most at the time of the reference period and therefore having to achieve improvements from a higher baseline.

There are seen to be possible trade-offs between source reductions and recycled content, which the very specific character of the separate targets seems to rule out. But in spite of these objections, the corporate objectives send out a clear signal and produce a useful discipline for local management.

From Objectives to Plans

The formulation of strategies and plans to achieve these objectives is left to local management and becomes part of the 'bottom UP'

process described below. One of the first requirements highlighted by the corporate objectives has been the creation of a comprehensive database of all materials used in products and packaging.

Reporting

The Corporation has set up a system of annual and quarterly reports on environmental performance and progress against the objectives set.

The Bottom Up Process

Perhaps 'middle up' would be a more accurate description. We are not talking of initiatives from the shop floor (though these would be welcomed) but about management at both UK company and departmental levels, going ahead in parallel or in advance of corporate requirements - examining their practice and taking initiatives in accordance

with the environmental policies and principles.

Creating a Framework

To create an organisational and information framework for these initiatives the UK company took the following steps:

setting up an Environmental Committee, chaired by the Managing Director

appointing an Environmental Officer, reporting to the Technical Manager of the Manufacturing organisation (who had previously been directly responsible for environmental issues)

appointing a Waste Controller with special responsibility for waste reduction, recycling and disposal (including Duty of Care)

an Environmental Review of the UK Manufacturing site, carried out by the Environmental Officer.

Local Initiatives

Within this framework the company has been undertaking a wide range of environmental improvement initiatives, partly in response to, and partly in parallel with, the corporate objectives, e.g.:

segregation of waste for recycling by a coloured bin system, so as to systematically reduce the volume of waste going to landfill

reduction of the volume and toxicity of liquid effluent from the site by changes in washing\ decontamination methods between batches

recovery and reuse of materials and lubricants which previously went out as effluence

changes in formulation and packaging to eliminate undesirable materials, reduce packaging and incorporate recycled plastic material

a pilot project in applying Life Cycle Assessment to one of Emerald's leading products

co-sponsoring and helping the Local Authority to set up a new recycling collection facility (including plastics recycling)

turning 40 acres of unused land adjacent to the plant into a wildlife conservation area in conjunction with a local wildlife charity

supporting and participating in environmental initiatives at national ('Business in the Environment') and trade association level

In addition the company is currently working on:

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- extending the environmental policy to suppliers

- incorporating environmental objectives in the ’Management by Objectives’ system

- consolidation of existing environmental strategies, plans and reviews into comprehensive environmental management systems

By going ahead with many of these initiatives before incorporating them into ovei-all plans focused on achieving the corporate objectives, the UK management has probably generated a greater sense of ’ownership‘ than would have been the case in a uniform and logical ’top down’ process of implementation.

Many of the strategies developed here and in other companies of the group have been pulled together into regional strategies for Europe which are fed back to all the companies in the region.

the company’s tradition of community and educational involvement and the earmarking of funds to support it (their support for the present project was part of this)

* the existence of designated roles in Manufacturing and R&D, with responsibility for assisting and following up implementation of the policy

* the personal commitment, knowledge and enthusiasm of a number of key people, inc luding the Manag ing Director, Environmental Officer and Waste Controller

Issues

Management found the study useful in throwing light on some particular issues, and although the actual questions raised are specific to Emerald, we felt that some of them might be of interrst to other organisations.

General Management Strengths and Issues Arising

In agreement with the company we adopted the following approach:

* identlfying those parts of the Policy, Mission Statement and Principles which seemed to have particular relevance for each area of management (i.e. General Management. Manufacturing, Marketing, R&D, etc.).

- stating the requirements which (in our view) might follow from those policies for the respective areas of management, and reviewing the extent to which these requirements were being met in practice.

This approach helped to highlight the company’s, particular strengths in environmental implementation, as well as drawing attention to a number of issues implicit in the policy which had only recently emerged or had still to be addressed.

Strengths

Among the factors that are helping the company to be effective in implementing environmental policy the following seem to stand out:

- the strong and active lead given by Corporate and UK top management, both internaily and through its public stance

- management’s willingness to commit resources and incur costs in support of the policy (e.g. being willing to pay a premium for recycled material at a time of scarcity)

Arguably for so demanding an Environmental Policy to be effective there needs to be some alignment between it and the Company’s Business (or Competitive) Strategy. In a marketing-led company, such as Emerald, this requires some the grasping of some nettles.

Where the selling message to the customer is based on unique product attributes, environmental statements can seem an unwelcome dilution of a concentrated customer appeal. Emerald’s history of environmental concern has been one of doing good by stealth.

Only recently has it become clear to top management that an ambition to provide environmental leadership implies a degree of own-trumpet blowing which is foreign to their traditions. This has resulted in a minor programme of stakeholder communications, addressed to many groups, but not, so far, to customers and even less to end users.

Although the company has taken some hard decisions in the past, even to the point of discontinuing a profitable policy which cannot be regarded as secure as long as it stands in implicit contradiction of basic business strategy.

Marketing Management

This lack of alignment of the Business and Environmental Strategies is reflected in the area of marketing. Here there has been much less sign of the proactive approach to environmental

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improvement (called for by the policy) than has been the case for manufacturing and design.

In the past business plans for individual brands have not incorporated any environmental objectives, nor have selling communications to customers included environmental messages. A minimum of environmental information is now only now beginning to appear on product labels in the UK. The company has not, as yet, set up any joint environmental initiatives or recycling agreements with any of its major customers.

There is no manager assigned environmental responsibility within the marketing function, although the Marketing Manager for New Products sits on the Environmental Committee in

a liaison role.

Financial Management

There is at pwsent no separate budget for the environmental programmes nor any attempt to monitor their costs. The costs of environmental improvements are not separately picked up or reported, but are absorbed into normal departmental operating costs, as are savings fmm waste-reduction and recovery.

We are aware that there are strong arguments both for and against a separate system of budgeting and controlling environmental costs and savings.

In Favour

Creation of an environmental budget ensures clarity about the size of the commitment the company is taking on. The existence of a separate environmental budget and cost control system can enhance both the effectiveness and efficiency of environmental action. Thus it ensures that the necessary resources are available when required, but that costs are contained within sound guidelines.

Failure to record both the costs and the savings resulting from environmental initiatives can lead to misperception of their costliness.

Against

Environmental Performance is not an optional extra, and should not be paid for as such. Managers are expected to achieve environmental goals within their normal operating budget.

Establishing a separate environmental budget can

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create the illusion that a decision is called for to spend EX on the environment, when the real task is to satisfy specified environmental requirements for each of the company’s products while maintaining its commercial viability.

Certain imponderables, such as effects on sales, make realistic estimates of financial impacts difficult to achieve.

Energy

Energy Efficiency has been given a rather lower priority in the Company’s plans than other aspects of environmental performance. The= is no direct reference to energy in the Environmental Policy and Principles, though its importance is implizd by goals for conservation of non-renewable resources and reduction in atmospheric emissions.

I t is possible that the lower emphasis given to this type of environmental action may reflect the apparently lower profile of energy economy measui‘es in the United States.

Training /Awareness

The Policy calls for all employees to know the company’s environmental policies and to demonstrate ’excellence in job performance on environmental matters’. In our opinion this suggests a need for specific training to raise awareness both of the companies policies and of environmental issues generally.

The view that such a need exists throughout business seems to be shared by many institutions concerned with environmental management, including the CBI, the British Institute of Management and the British Standards Institute (in its new BS 7750).

Emerald, in common with most of British industry, has so far given low priority to environmental awareness training. It is arguable, of course, that in practice only a few managers and specialists need this kind of training, and that all that most people need is to know about the specific issues and instructions that apply to their jobs.

As providers of training ourselves we may have a biassed view on this question, but it seems to us that there is a great need for individual ownership of good practice in the environment as there is in such areas as quality or safety. This calls for participative training approaches. These are the most likely to lead to truly ’bottom up’

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initiatives for environmental improvement, whether from marketeers, technicians, office staff or the factory floor.

Conclusions

The developments at Emerald are of particular interest, because the company has deliberately set out to provide leadership in environmental performance, going well beyond compliance with current legal requirements, in the context of a long term commitment to sustainable development.

In developing a set of practical ways of implementing their policy, Emeralds have been greatly helped by a very powerful top management commitment to it, and by their success in harnessing the enthusiasm of a number of key individuals.

The issues that have arisen in the course of implementation are examples of some of the genuine quandaries that managers in the developed world are going to have to resolve if the goal of a sustainable yet developing economy is ever to be achieved.

The author grutefdly acknowledges the exfensizw help and support with this study from the rnany individuals he contacted at Emerukf.

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