Corporate Environmental Strategy

1. Corporate Environmental Strategy Creating the Culture/Values Paul Hawken notes, "We are far better at making waste than at making products. For every 100 pounds of product we manufacture in the United States, we create at least 3,200 pounds of waste. In a decade, we transform 500 trillion pounds of molecules into nonproductive solids, liquids and gases."

2. Corporate Environmental Strategy Why Pursue “Environmental Strategy”? • Risk management (reduce potential losses) • Compliance assurance • Contingency management and corrective action • Process management (reduce relative costs) • Cost control • Improving yield

3. Corporate Environmental Strategy Why Pursue “Environmental Strategy”? • Corporate image management (improve reputation) • Stakeholder communications • Corporate environmental reporting • Market advantage (increase sales) • Product attribute

4. Corporate Environmental Strategy Why Pursue “Environmental Strategy”? • Strategic sustainability (improve longevity) • Environmental condition assessment • Life cycle impacts

5. Corporate Environmental Strategy Why Pursue “Environmental Strategy”? • Based on a study by business researchers, not environmental researchers. • Looked at cross section of firms in UK and Japan, which had “ecologically responsive initiatives”

6. Corporate Environmental Strategy Why Pursue “Environmental Strategy”? • Three general motivations arose, none surprising: • Competitiveness—improve long-term profitability • Legitimation—complying with established norms • Social responsibility—concern for social obligations and values

7. Corporate Environmental Strategy Why Pursue “Environmental Strategy”? • Competitiveness (7 companies) • Green marketing, products • Process intensification

8. Corporate Environmental Strategy Why Pursue “Environmental Strategy”? • Legitimacy (24 companies) • Regulatory compliance • Network with environmental interest groups • Impression management

9. Corporate Environmental Strategy Why Pursue “Environmental Strategy”? • Environmental responsibility (4 companies) • Donations to environmental causes • Life cycle analysis • Unpublicized initiatives

10. Corporate Environmental Strategy History of Corporate Environmental Strategy Generation 1 • Driver: Compliance • Objectives: Risk management • Primary audiences: Sr. Management, environmental staff • Indicators: Regulated emissions, hazardous wastes, violations & fines • When: Mid 70s to mid 80s

11. Corporate Environmental Strategy History of Corporate Environmental Strategy Generation 2 • Driver: Stakeholder management, process management, pollution prevention • Objectives: Drive continuous improvement, communicate eco-efficiency targets & progress (image), avoid costs, preempt regulations, gain competitive advantage • Primary audiences: Stakeholders, line management, regulators • Indicators: Resource efficiency, emissions & waste, financial, implementation • When: Mid 80s to mid 90s

12. Corporate Environmental Strategy History of Corporate Environmental Strategy Generation 3 • Driver: Stakeholder partnership, sustainability, life-cycle management • Objectives: Strategic effectiveness, credibility, business sustainability, product friendliness (DfE, LCA) • Primary audiences: Broad stakeholder set • Indicators: Balanced scorecard, environmental condition, resource efficiency, toxicity reduction, products • When: 2000 and beyond

13. Corporate Environmental Strategy Corporations pursuing “Sustainability” • Proctor & Gamble • Dow Chemical • ABB Asea Brown Boveri Shareholders pressing Social and/or Environmental Issues • Interfaith Center for Corporate Responsibility • Portfolio 21

14. Corporate Environmental Strategy Environmental Management Systems (EMS) An EMS is a continual cycle of planning, implementing, reviewing and improving the processes and actions that an organization undertakes to meet its business and environmental goals.

15. Corporate Environmental Strategy Most EMSs are built on the "Plan, Do, Check, Act" model.

16. Corporate Environmental Strategy Environmental Management Systems This model leads to continual improvement based upon: • Planning, including identifying environmental aspects and establishing goals [plan]; • Implementing, including training and operational controls [do]; • Checking, including monitoring and corrective action [check]; and • Reviewing, including progress reviews and acting to make needed changes to the EMS [act].

17. Corporate Environmental Strategy Environmental Management Systems ISO 14001: requires implementation of an Environmental Management System (EMS) in accordance with defined internationally recognized standards (as set forth in the ISO14001 specification). • establishing an environmental policy, • determining environmental aspects & impacts of products/activities/services, • planning environmental objectives and measurable targets, • implementation & operation of programs to meet objectives & targets, • checking & corrective action, and • management review.

18. Corporate Environmental Strategy Environmental Management Systems Firms using ISO 14001: • International Business Machines • Baker Hughes Number of ISO 14001 registrations by country

19. Corporate Environmental Strategy • Life Cycle Analysis • Taking a holistic environmental view of a product or service, from raw material through production to distribution and final disposal.

21. Corporate Environmental Strategy • Stages of Life Cycle Analysis 1. Definition of Goals and Scope 2. Life Cycle Inventory Analysis: measure materials and energy used and environmental releases that arise along entire continuum of the product or process life cycle 3. Life Cycle Impact Assessment: examine actual and potential environmental and human health effects associated with use of resources and materials and with the environmental releases that result. 4. Life Cycle Improvement Assessment: systematically evaluate and implement opportunities to make environmental improvements based on previous assessments.

22. Sustainable Development as Corporate Strategy Applying Corporate Environmental Strategy to the Value Chain IKEA identified five key areas to focus the task of integrating environmental criteria and awareness into its business operations: 1. The Environmental Adaptation of the Product Range • first, to identify what material is being used today and, • second, which materials they will need to eliminate over both the short and long term to improve environmental performance.

23. Sustainable Development as Corporate Strategy Applying Corporate Environmental Strategy to the Value Chain IKEA 2. Sustainable Forestry: Approximately 75 percent of the raw material for IKEA's products, packaging and catalogs comes from forests. IKEA's ultimate goal is to use wood products sourced only from sustainably managed forests.

24. Sustainable Development as Corporate Strategy Applying Corporate Environmental Strategy to the Value Chain IKEA 3. Environmental Work with Suppliers: IKEA directly manufactures less than 10 percent of the products it sells. The balance is produced by some 2,300 suppliers in more than 60 countries. Many suppliers, particularly in Eastern Europe and Southeast Asia, have lower environmental standards than in Western Europe or North America. IKEA is encouraging its suppliers to institute environmental management systems in their operations and many suppliers have already fulfilled the requirements according to ISO 14001

25. Sustainable Development as Corporate Strategy A peek in to the future: • Fuel cell technology at Toyota