Corporate Environmental Management - Chapter 2 pps

9 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 environ- mental management assessment. An environmental management assessment 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. 55461_C002.fm Page 9 Friday, March 30, 2007 7:28 AM © 2008 by Taylor & Francis Group, LLC 10 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? 55461_C002.fm Page 10 Friday, March 30, 2007 7:28 AM © 2008 by Taylor & Francis Group, LLC 11 Environmental Management Assessment Recognize that CEOs and board members face significant responsibili- ties and liabilities 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. 55461_C002.fm Page 11 Friday, March 30, 2007 7:28 AM © 2008 by Taylor & Francis Group, LLC . greater long-term costs. 55461_C0 02. fm Page 9 Friday, March 30, 20 07 7 :28 AM © 20 08 by Taylor & Francis Group, LLC 10 CORPORATE ENVIRONMENTAL MANAGEMENT The environmental management. 9 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. 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