Corporate Environmental Strategy

1. Corporate Environmental Strategy Bren School of Env. Sci. & Mgt. Magali Delmas

2. 2 ECHO Four key components of the enforcement process at regulated facilities are documented in EPA databases for larger facilities and many smaller facilities: The occurrence of a monitoring event such as an inspection/evaluation or a self-report; The determination of a violation (noncompliance); The occurrence of a government enforcement action to address violations; and Penalties associated with enforcement actions. 

3. 3 ECHO The data provides a snapshot of a facility’s environmental compliance record. The data indicate a facility’s record of compliance with environmental regulations Data updated every month ECHO focuses on violations/actions at Clean Air Act (CAA) stationary source facilities, Clean Water Act (CWA) major direct discharge facilities, and Resource Conservation and Recovery Act (RCRA) hazardous waste handlers.

4. 4 What is not included Most violations at Clean Water Act direct discharge minor facilities Violations of the Safe Drinking Water Act (for information, go to http://www.epa.gov/safewater/), CAA mobile source and asbestos violations, Toxic Substances Control Act and Federal Insecticide, Fungicide and Rodenticide Act violations, Superfund violations, CWA wetlands and pretreatment violations. State enforcement actions shown in the ECHO site are focused exclusively on CAA stationary sources, CWA direct dischargers, and RCRA BUT Federal enforcement actions shown in ECHO do include a wider range of data, encompassing all environmental statutes. Criminal enforcement action data are not included in ECHO.

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6. 6 Who is inspected? It is not possible to inspect every regulated facility every three years. EPA and States consider several factors in determining what facilities to inspect facility size, potential for environmental harm, citizen tips, geographic initiatives, statutory requirements, protection of sensitive ecosystems, demographics, industry type, Violation history. Smaller facilities may receive inspections less frequently than every three years. In addition, inspections conducted at smaller facilities may be tracked only in the state database and not be entered into the federal database.

7. 7 Emergency Planning and Community Right-to-Know Act (EPCRA) 1988 What is the purpose? To create emergency response plans to prepare for accidental chemical releases. To create an information database so that the public can know what types of chemical are being released by manufacturing facilities in their communities. What is the scope? Any facility that produces, uses, or stores any of the substances listed on the EPA’s List of Extremely Hazardous Substances. Who implements the Act? The State Emergency Response Commission, which are created in each state under the Act, implement the emergency planning requirements. The EPA receives submissions of the Toxic Release Inventory (TRI) reports with the authority to inspect and verify the reports. For more details on the EPCRA, see Section II of the reference text. For more details on the EPCRA, see Section II of the reference text.

8. 8 EPCRA and TRI Community Right to Know Provisions (Sections 311, 312, 313): Toxic Release Inventory –Under TRI, an individual facility reports to EPA if it meets the following criteria: It employs the equivalent of at least 10 full-time workers. It "manufactures" or "processes" at least 25,000 pounds of a listed chemical or it "otherwise uses" at least 10,000 pounds of a listed chemical. According to EPA, approximately 30,000 facilities must file reports. In 1999 addition of more than 6,000 new facilities from mining, electrical utilities, hazardous waste treatment… http://www.hepn.com/tri/q&a.htm For more details on the EPCRA, see Section II of the reference text. For more details on the EPCRA, see Section II of the reference text.

9. 9 Use of TRI Communities: to begin dialogues with local facilities to encourage them to reduce their emissions Industry: to identify P2 opportunities, set goals for toxic chemical release reductions, and demonstrate progress to reducing emissions Federal, state and local govts: to set priorities and allocate environmental protection resources to most pressing needs Insurance companies: one indicator of potential environmental liabilities Investment analysts: to provide recommendations to clients seeking to make environmentally sound investments Consultants: to identify business opportunities such as marketing P2 and control technologies to TRI reporting facilities

10. 10 California Silicon Valley Toxics Coalition Uses TRI data to display toxic chemical releases and other information increasing public awareness. http://www.svtc.org/ecomaps/svtc_ecomaps/index.html

12. 12 Scorecard Environmental Defense http://www.scorecard.org/

13. 13 Government use EPA 33/50 program targeted 17 priority TRI chemicals for 33% and 50% reductions from 1988 release levels to be attained in 1992 and 1995 More than 1200 companies joined the program which provided recognition to participating companies The program reached its goal 1 year early

14. 14 IRS Use TRI data in order to identify companies releasing CFCs in order to enforce a tax imposed on CFC releases

15. 15 Dupont http://www2.dupont.com/Sustainability/en_US/Performance_Reporting/data_summary.html

16. 16 Boeing http://www.boeing.com/aboutus/environment/eval_results.htm

17. 17 Investment Green Century Funds screens out companies with the worst environmental and social records http://www.greencentury.com/ Investor Responsibility Research Center (IRRC) http://www.irrc.org/ Etc…

18. 18 Academia Impact of TRI on financial performance (Khanna, Hamilton, Arora etc…) Impact of TRI on environmental performance (Khanna, Frances Lynn)

19. 19 Issues with TRI: Aggregation Harm caused by a particular amount of chemical depends on a number of factors the properties of the chemical Medium to which it is released Main common method is aggregation and unweighted sum of hazardous pollutants

20. 20 Weighting schemes Weight toxic emissions in terms of relative harm Based on their toxicity to humans relative to a reference chemical before aggregating them Include the medium of release (e.g. air, water; physical and demographic characteristics proximate to the release)

21. 21 US EPA Risk Screening Environmental Indicators (RSEI) the amount of chemical released, the location of that release, the toxicity of the chemical, its fate and transport through the environment, the route and extent of human exposure, and the number of people affected. This information is used to create numerical values that can be added and compared in to assess the relative hazard and risk of chemicals, facilities, regions, or industries. The values are for comparative purposes and only meaningful when compared to other values produced by RSEI.

22. 22 Next week Monday GIS lab. Work with RSEI Wednesday discussion of results and use of TRI by investors

23. 23 Assets Assets: Assets are any property owned by a person or business. Tangible assets include money, land, buildings, investments, inventory, cars, trucks, boats, or other valuables. Intangibles such as goodwill are also considered to be assets. Capital Assets, also known as Fixed Assets, are those assets such as land, buildings, and equipment acquired to carry on the business of a company with a life exceeding one year. In financial records these Fixed Assets are usually expressed as the cost of the asset minus depreciation. Current Assets are items such as cash, inventory, and accounts receivable that are currently cash or expected to be turned into cash within one year. Asset Turnover may be used as a broad measure of asset efficiency. It's calculated by dividing sales revenue by the total assets.

24. 24 Revenue Total amount of money received by the company for goods sold or services provided during a certain time period. It also includes all net sales, exchange of assets; interest and any other increase in owner’s equity and is calculated before any expenses are subtracted.

25. 25 Profit Gross profit is profit before Selling, General and Administrative costs (SG&A), like depreciation and interest; it is the Sales less direct Cost of Goods (or services) Sold (COGS), Net profit after tax is after the deduction of either corporate tax (for a company) or income tax (for an individual). Operating profit is a measure of a company's earning power from ongoing operations, equal to earnings before the deduction of interest payments and income taxes

26. 26 ECHO (1) Inspections Indicates the number of federally reportable inspections that have taken place at the facility over the twelve most recently completed Violations Indicates the number of quarters that a facility has been in violation during the last twelve quarters (3 years). Current significant violations Indicates that the facility is currently designated as a High Priority Violator under the Clean Air Act (CAA) or is in Significant Noncompliance under the Clean Water Act or the Resource Conservation and Recovery Act (RCRA).

27. 27 ECHO (2) Notices of violations and Informal enforcement actions Indicates the number of informal enforcement actions/NOVs that have been taken against the facility within the twelve most recent complete quarters (3 years). Enforcement actions Indicates the number of enforcement actions that have been taken against the facility within the twelve most recent complete quarters (3 years).

28. 28 Profitability ratios Accounting profit is defined by the accounting principles. It depends on which accounting principles and which country Ex when Daimler-Benz obtained a listing on the New York Stock Exchange in September 1993, the recalculation of its net income using U.S. accounting principles resulted in what was a sizable profit (under German accounting principles) becoming a loss. You can choose the ratio according to the industry you are in. Assets: will depend on the importance of asset for the industry. Ex Steel… Equity investment. Sales: retailing industryAccounting profit is defined by the accounting principles. It depends on which accounting principles and which country Ex when Daimler-Benz obtained a listing on the New York Stock Exchange in September 1993, the recalculation of its net income using U.S. accounting principles resulted in what was a sizable profit (under German accounting principles) becoming a loss. You can choose the ratio according to the industry you are in. Assets: will depend on the importance of asset for the industry. Ex Steel… Equity investment. Sales: retailing industry