Corporate Environmental Management - Chapter 2 pps

Chapter 2 Environmental Management Assessment Given the uniqueness of environmental management issues and its position outside the mainstream of the company’s day-to-day operating activi

Chapter 2 Environmental Management Assessment

Given the uniqueness of environmental management issues and its position outside the mainstream of the company’s day-to-day operating activities, it can be difficult for corporate management to assess the state of its program One way to garner such independent assessment is to engage an

provides a unique perspective that encompasses a senior management viewpoint along with a critical, technically astute, regulatory agency per-spective As such, the environmental management assessment can provide

a critical assessment of the integrated fit of a company’s environmental man-agement program, an independent measurement of its effectiveness, and the timely identification of any potentially serious deficiency, as well as specific recommendations for programmatic improvements

The central question that must be asked is, “What will be the role of the environmental health and safety (EHS) function?“ Is the EHS function a mere commodity to achieve efficient compliance or is it a growth function based

on a resurgence of societal pressures and regulation? Taking the latter point

a step further, it can be argued that EHS has become a critical element of a successful 21st-century business strategy Furthermore, as depicted in Exhibit 3 there are potential business consequences for the “efficient com-pliance” approach

It is our view that the “best practice” EHS operating model is the

“business partnership” model This model calls for creating a strong EHS component in strategic planning and investigating beyond required compli-ance In short, the company incorporates a design for environment philos-ophy into product development and process design Under this approach, EHS issues are recognized as meaningful components of overall value propositions There is also a concerted effort to not only measure EHS returns over time but to understand that, as noted in Exhibit 4, a severe lack

of aggressive EHS compliance can result in even greater long-term costs

CORPORATE ENVIRONMENTAL MANAGEMENT

The environmental management assessment analysis should employ tested methodologies for extracting key issues that may be adversely influ-encing the company’s environmental management program As discussed

in the text and shown in Exhibit 4, the company’s environmental manage-ment program can be strongly influenced by the degree to which the effort

is integrated It is our hope that the environmental management assessment analysis will enhance both the understanding and the implementation of such integration

To be successful, the environmental management assessment should be

an upper management exercise, preferably a board of directors-generated exercise While significant day-to-day coordination and cooperation will be needed at both the operating and environmental management levels, it is essential that results be transmitted directly and freely to the highest corporate levels to ensure independence

Exhibit 3 Business consequences of the “efficient compliance” approach.

Exhibit 4 Few environmental restoration chains are effectively integrated.

Lower Share Valuation

Efficient Compliance

Growth Constraints

Missed Product Innovation Opportunities Costly Retrofits & Penalties

Missed Production Innovation Opportunities

Potential Public Image Damage

Missed Renewable Energy Opportunities

High investigation costs?

Will technologies

be delivered?

Supplier’s suppliers

(vendors)

Customer’s customers

( public)

Suppliers

(A/Es) Company Customers (EPA) Design

Acquire Process Remediate

Negotiate

Will deadlines

be met?

Waste disposal requirements/

restrictions? NRD claims?

Cleanup levels?

Fast track rods?

Environmental Management Assessment

Recognize that CEOs and board members face significant responsibili-ties and liabiliresponsibili-ties with regard to environmental management performance

An independent environmental management assessment provides both a practical method for minimizing exposure to liabilities as well as a sound legal defense for making appropriate efforts to ensure successful environ-mental management performance and the assessment of exposures Also recognize that at first glance, some uncertainties may lie outside the control of environmental management These uncertainties relate to unresolved issues, undeclared agendas, or responses by parties to the environmental management process Effective environmental management seeks to identify, early-envelope, and convert these uncertainties into known factors that can be included in the overall management plan Besides dealing with uncertainty, the objective of the environmental management process should also be to increase the overall effectiveness

by which organizational resources committed to environmental programs are used In essence, environmental management programs must effec-tively integrate regulatory, technical, and management issues to provide well-rounded, cost-effective environmental management solutions

The focus of the environmental management organization should not

be limited to overall environmental management goal setting (i.e., the

“bully pulpit” or sermonizing) but should include detailed technical planning responsibilities, regulatory documentation preparation, and establishing environmental cost estimation and training protocols to ensure the desired results are achieved The process should also encom-pass the detailed preparation of critical environmental regulatory documents and corporate positions as well as technical support informa-tion that provides a strategic value to the company and the company’s cost, financial, schedule, and regulatory objectives Select activities should not be treated as individual events but as part of the total view to the environmental management problem identification and resolution process As a result, the process generates a greater understanding of potential resource requirements and the impact of technical and regula-tory hurdles to meeting environmental management goals

Proactive Corporate Environmental Management must recognize that environmental risk is more than the assessment of individual company risks due to accidents, major incidents, unexpected regulatory cost impacts, or unexpected damage to brand reputation True environmental risks are the bottom-line impacts on the stock of the company To that end, the objective is to provide the investment community with environmental information that accurately reflects the company’s environmental manage-ment performance and that can be translated in hard financial terms