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  1. 1. The Business of the Environment – factors motivating industry to take up environmental initiatives A Report for ‘Business And The Environment’ by Maria Simonelli June 1999 Business and the Environment -an organisation of business people committed to sustainable development
  2. 2. THE  BUSINESS  OF  THE  ENVIRONMENT         2   This project was made possible due to the support of the following organisations. Special thanks to the host and all the organisations participating in the Advisory Group and the interviews. Advisory Group: BP Amoco (Host) City of Melbourne EcoRecycle Victoria Environs Australia University of Melbourne Participating Organisations: Banksia Environmental Foundation Box Hill Hospital BP Amoco Australia Business Victoria Corporate Environmental Management Pty Ltd Geoff Donnelly, ex Norwich Financial Services EcoRecycle Victoria Energy Efficiency Victoria Epworth Hospital Greenworld Office Products Interface Australia Pty Ltd Kodak Australasia Pty Ltd Melbourne Patagonia Store Moreland City Council Sheraton Towers at Southgate About  BATE:   Business  And  The  Environment  (BATE)  was  founded  in  1993  by  a  group  of  business     managers  and  environmental  professionals  to  promote  sound  environmental  business  practices.     Its  members  have  successfully  pioneered  new  and  better  practices  within  their  own     organisations  and  have  joined  forces  to  share  ideas  and  progress  continuous  improvement.     See  Appendix  5  for  further  information  about  becoming  involved.  
  3. 3. THE  BUSINESS  OF  THE  ENVIRONMENT         3   CONTENTS Preface 4 Acknowledgements 5 Executive Summary 6 Scope of Paper 8 Methodology 9 Creating Change 10 A Snapshot of Each Organisation 13 Interviewed The Key Motivational Factors Emerging 15 from the Interviews The Interviews In-depth Cost Savings 16 Continuous Improvement 18 Staff Alignment 20 CEO and Upper Management 22 Leadership and Support Reputational Gains 24 Compliance with Regulation 25 Barriers to Implementation Identified in 26 the Interviews Lessons Learnt Checklist 29 Building Sustainable Business Practices 30 Conclusion 31 Appendices 33 References 46 Footnotes 50
  4. 4. THE  BUSINESS  OF  THE  ENVIRONMENT         4   “Business is on the verge of a transformation, a change brought on by social and biological forces that can no longer be ignored or put aside, a change so thorough and sweeping that in the decades to come business will be unrecognisable when compared to the commercial institutions of today. We have the capacity and the ability to create a remarkably different economy, one that can restore ecosystems and protect the environment while bringing forth innovation, prosperity, meaningful work and true security. The restorative economy unites ecology and commerce into one sustainable act of production and distribution that mimics and enhances natural processes. It proposes a newborn literacy of enterprise that acknowledges that we are all here together, at once, at the service and mercy of nature and each other.” Paul Hawken The Ecology of Commerce Preface From mid 1998 to mid 1999 I was in the unique position of being a participant in a Commonwealth program which provides outstanding professional development opportunities. The program known as “Senior Women in Management” (SWIM) provides participants with challenging experiences to learn and add depth by working with various sectors, including government, industry, business and non government sectors. This wide ranging learning experience is further broadened with coursework aligned to core competencies and an overall environment of feedback and coaching. This time has personally been one of professional growth and exploration. During the SWIM year I had chosen to work specifically with industry and business sectors to explore to what extent they were achieving sustainable development and gain a further understanding of the role organisational culture plays in the take up of environmental best practice. So why this paper? The opportunity to work with members of Business And The Environment (BATE) and other industries, has allowed me to investigate further a number of areas of interest. The basis for this study was that of exploring the motivational factors driving industry to take up environmental programs. Linked closely to this is an examination of the extent environmental issues are being seen as an external threat to company operations or part of mainstream business practices. In other words, what particular features are found in organisations that have incorporated environmentalism into their organisational culture, and how can an understanding of organisational culture assist in achieving environmentally conscious practices in organisations.
  5. 5. THE  BUSINESS  OF  THE  ENVIRONMENT         5   In developing this paper, I struggled to find an appropriate title that would reflect both the views of the participants and the need for a catchy phase that would grab the reader’s attention. Examples of those rejected include “How I found God…….and maximised business profits” and “How I achieved environmental best practice on the road to…. (insert destination depending on religious persuasion eg. Damascus, Mecca, Melbourne Cricket Ground…..)’. While the links between religion and business were unintentional, I found many examples of how the environmental epiphany of top CEOs, is transforming business practices worldwide. While in the end the only title which appeared to capture the intent of the paper was “The Business of the Environment”, it is hoped that this paper may provide some further insight into the business logic behind the take up of the environmental programs and act as catalyst for debate on how business managers can overcome barriers in establishing and maintaining such programs. It should also be remembered that this study was conducted over a four month period and is the result of my interpretations of views of managers collected during interviews and in general observations of the organisations and thus does run the risk of being a superficial analysis. While this paper is not intended as a comprehensive or qualitative thesis on each company, its management nor its industry performance, it does provide some current opinions of those at the coal face attempting to balance the even increasing demands placed on them as managers. Acknowledgements This study was made possible due to the joint efforts of BATE, Environment Australia and BP Australia. My services as project manager were provided by the Federal Department of the Environment through “Senior Women In Management” (SWIM), a Commonwealth program, and I thank Environment Australia for supporting me in investing in my own education. I also gratefully acknowledge the assistance of an advisory group, whose different backgrounds and views helped guide the paper. Thanks to Steve Malcolm from EcoRecycle, Ian Mitchell from Melbourne University, Susan St Lawrence from BP Australia, Anne Spurritt from the City of Melbourne and Wayne Wescott from Environs Australia. Special thanks also to BP Australia, Office Facilities Management Team, who provided invaluable project support and inspiration. BP Australia has been a long term member of BATE and has a commitment to the BATE objectives of sustainable development and continuous environmental improvement. Credit for much of the content of this paper belongs to the individuals in the many organisations interviewed over this four month project and I express my appreciation for contributing their time and opinions to this study. They should also be acknowledged for their ongoing work in turning sustainable development from vision into reality.
  6. 6. THE  BUSINESS  OF  THE  ENVIRONMENT         6   Sustainable  Development  is  development  that  meets  the  needs  of  the  present  without  compromising  future   generations  abilities  to  meet  their  own  needs.   Our Common Future 1987 Executive Summary As we move towards the new millennium, the concept of sustainability is progressing from being associated with purely economic growth towards one which includes environmental protection and social justice. This so called ‘triple bottom line’ is increasingly observed in many companies world-wide as they attempt to integrate sustainable development into their business strategies. As more companies discover that environmental programs make good economic sense, they are recognising that environment performance can be compatible with their business objectives. Similarly business leader have recognised that opportunities exist for companies through progressing sustainable development. Ecological sustainability, the so called ‘next green surge’, will be a key strategic driver for business over the next two decades. (I) A recent Business Leaders Forum on Sustainable Development acknowledged that significant environmental pressures on the world can create business opportunities and will require leadership, and partnerships among government, business and the community. (2) The greenhouse debate, particularly highlights the shifts that have occurred over the decade of the 90s in regard to industry acceptance of its impact on the environment and the business opportunities this market transformation can create. In 1999, it’s fair to say that very few companies would publicly say that we need more science as proof that global climate change is occurring, in fact many have become advocates of the precautionary principle. Hundreds of organisations have joined up to government programs like the Greenhouse Challenge or the Victorian Energy Smart program (3) and actively promote better environmental practices in their organisations. The debates have matured and industry is acknowledging that their own practices must improve and in many cases, that environment programs provide economic and other business benefits. While there has been a significant shift from a state of denial regarding the impact of business on the environment, to a gradual acceptance of their responsibility to do no harm, it must also be acknowledged that there still lies an enormous challenge in developing a ‘sustainable global economy’. Whether it be the lure of the green dollar or growing environmental business consciousness, it is difficult to provide a definitive answer as to what is driving this transition. This study set out to examine the motivational factors at work for those organisations that have made the shift to integrating environmental principles into their business objectives. It did not set out to provide a quantitative comparison of each sector’s performance or success based on environmental criteria, but to look for Environment programs that make good ‘cents’ - how companies have maximised business benefits and achieved environment best practice
  7. 7. THE  BUSINESS  OF  THE  ENVIRONMENT         7   trends across sectors in acknowledging the importance of environment in their decision making processes. A total of 27 interviews were conducted across 16 organisations (industry, business, government and now government), with a number of managers and staff within the organisations interviewed to gain a company wide view. The type and scale of programs in place ranged from small scale projects focusing on energy or waste minimization, to larger scale redesign of whole operations. Of those interviewed the motivational factors emerging as the most prominent were: • Cost savings; • Continuous improvement; • Staff alignment and staff concerns; • Chief executive officer leadership; • Reputational gains; • Compliance with regulation; and • Environmental ethics. While the degree of importance of these factors varies across the organisations interviewed, it was clear that cost savings and continuous improvement, as part of good business practice, were both a major influence. The strategic importance of staff concerns and reputational gains were also significant factors for the majority of organisations. The leadership role played by the Chief Executive Officer (CEO) in the organisation was a driver for the multinational organisations and the Local Government sector. In regard to the role regulation plays in driving organisations, its importance varied across the organisations interviewed, and was more evident in the multinationals and hospital sector. Environmental ethics were the most difficult motivating factor to quantify. While there was clearly an awareness with managers of the magnitude of environmental problems and a scientific understanding of environmental threats facing the planet, its priority could not be clearly distinguished from amongst the other factors. This study was also particularly interested in the methods approached by organisations to ensure program success and the barriers encountered along the way. The internal organisation organisational barriers identified were largely related to human resistance and the various attempts to sign people onto behavioral and attitudinal change programs. Another consistent barrier identified across all organisations, particularly small to medium size, is that of the challenge to achieve environmental improvement in times of economic downsizing, continued increasing demands on staff resources and tightening budgets. External barriers also identified continuing negative market perceptions in the use of remanufactured products and the non ease of use of recycled materials. There was also clearly a mismatch with the vision some organisations have for the future and their ability to reach this via current technology. Are the current debates and programs, highlighted in this paper, a signal that environmentalism and sustainability are being incorporated into organisational and
  8. 8. THE  BUSINESS  OF  THE  ENVIRONMENT         8   business thinking? This small study can not answer this definitively, although it does provide a number of consistent indicators across organisations that appear to be making genuine efforts to integrate environmental policies into aspects of their business practices. The critical role that the business and industry sectors play in creating wealth and employment, generating new markets, products, services and technologies, encouraging competition and initiating change and innovation, provide powerful and far reaching impacts. If the recent Business Leaders Forum on Sustainable Development (4) is an indicator, then there is also a growing recognition by industry of the responsibility they have as major users of natural resources and heavy producers of waste. What is also being recognised is that future belongs to industries that can find new ways of optimising their positive impacts and minimising those that are negative. Scope of this paper In designing the methodology for this study it became clear that due to the limited time and resources available an in-depth analysis of Australian and transnational organisations would not be possible. While it began with a simple question about motivational factors, the more the study progressed, the more it became clear that there were many more questions this paper should focus on. In the end it was decided that a qualitative and descriptive work, conducted through an interview format, across various organisations and focusing on specific motivational questions, would provide a valuable snapshot of the business sector. It was not within the scope of the study to provide qualitative data on the organisations, their environmental programs nor comparisons within each of the sectors of their individual performance. Because the study relied heavily on existing company case study profiles, it has an in built bias towards those organisations that have demonstrated a record of achievement in their environmental programs. Once organisations had been shortlisted the study was not overly concerned with the programs themselves, but rather with why the programs had been established. In some cases companies were chosen because the programs established early in this decade had reached a plateau and it was here that barriers and lessons could be highlighted, thus even the definition of the criteria ‘record of achievement’ was very broadly used. It will also become evident that some organisations are used to highlight particular views more frequently than others. Again this is due to the depth of comments and material made available during the interviews and study period. In the case of BP, my placement within the organisation provided access to senior managers on a regular basis. I had also recently completed a study on organisational culture change where BP had been used as a case study. (5) Any bias in commenting on BP is unintentional and due more to a greater understanding of the organisation. It should also be remembered that in some organisations only limited access was possible, again primarily due to time constraints, and it would be presumptive to
  9. 9. THE  BUSINESS  OF  THE  ENVIRONMENT         9   assume that the views expressed by some individuals in an organisation are the views of the whole organisation. The choice of BATE as a vehicle to explore this relationship between business and the environment was because its members know first hand the balancing act required to be successful business managers and promote environmentally sound practices. While the project utilized the first hand experience of past and current members of BATE, it also interviewed other managers where case study material had highlighted new or better practices in their organisations. This paper does not provide details on each company environment program, as this material is easily available through numerous case study profiles. See Appendix 4 for more information on obtaining these. Methodology The scope of the study was to interview a range of middle to senior level mangers from different sectors, varying in size and function. It includes examples from the following sectors: hotel, manufacturing, retail, extractive industry, hospital, university, finance and Local, State and non-government. Due to limitations in project funds and travelling time, these companies were located in and around the Melbourne area. A range of selection criteria was devised to assist in shortlisting, but companies were not strictly chosen according to this criteria and in some cases, a determining factor was their availability to participate in the study within the very tight timeframe. In shortlisting phase, the advisory group was particularly interested in what appeared to initiate the environmental programs and what various approaches had been used in establishing them. In a number of cases, companies were chosen which had an established program from the early to mid 1990s, to examine the lessons learnt. Companies were also chosen that had only recently commenced a program to highlight the driving factors of the late 1990s, as well as finding companies where comprehensive case study material had not yet been written. The study relied heavily on previous company case study profiles to provide background reference material to assist in listing the companies for potential follow up. This included case studies written by EcoRecycle Victoria highlighting waste minimization programs, the Australian Conservation Foundation (ACF) and Australian Council of Trade Unions (ACTU) Green Jobs Unit featuring waste and energy programs and further material from the Victorian Environmental Education Council and BATE. The Australian Greenhouse Office website highlighting companies who have signed onto the Greenhouse Challenge Agreements also provided valuable information. Overall the advisory group was particularly interested in examples which included demonstrated environmental improvement, approaches to problem solving, degree of maturity of the program and the extent to which the program highlighted multiple benefits including cost saving, reputation, alignment of company staff and culture,
  10. 10. THE  BUSINESS  OF  THE  ENVIRONMENT         10   involvement of staff, improvement in management process and overall industry leadership. See Appendix 2 for a full list of shortlisting criteria. A series of interview questions were devised to explore these themes. A number of key questions were asked of all participants with further supplementary questions included to help guide interviewees in their responses. The key questions focus on why the program was established, how the program was approached, what were the actual and perceived benefits of the program, what barriers needed to be overcome to establish programs, what were the lessons learnt and what was the relationship between the program and the organisational culture. A full list of the sample questions is found in Appendix 3. The interviews attempted to highlight the organisation itself and the climate in place for the program to be established and maintained, rather than focusing on the programs themselves. Where possible to obtain a company-wide view, a number of key players in the organisation were interviewed and included the main officer driving the program, their supervisor, a senior manager or general manager and staff involved in the implementation of the program. In total twenty seven interviews were conducted, twenty with business and industry, two with Local Government, three with State Government, one with a non government organisation and one with a consultant. A list of interviews is provided in Appendix 1a. All interviews were approximately 45 – 60 minutes duration and were taped. Transcripts were provided back to interviewees for minor editing. The participants all approved the interview material used and the final draft of this paper. To ensure the finished product is of greatest value, participants were also asked about what form the presentation of the material should take. Most agreed that a short paper and access to the paper on various websites was sufficient. Many agreed that the use of the paper to stimulate debate and discussion within BATE and other forums would be most valuable. It should be noted that over 40 companies were examined for short listing in this study and all demonstrated, in some form, an advanced environmental program. Their omission from this study should not be interpreted in any way as a criticism of their programs. Even  if  all  the  companies  in  the  developed  world  were  to  achieve  zero  emissions  by  the  year   2000,  the  earth  would  still  be  stressed  beyond  its  carrying  capacity.  (6)   Creating Change “The world we have created today as a result of our thinking thus far has problems which cannot be solved by thinking the way we thought when we created them.’ Albert Einstein (7)
  11. 11. THE  BUSINESS  OF  THE  ENVIRONMENT         11   In researching this topic there were two clearly prevailing views which emerged from the business lobby sector, business leaders and green entrepreneurs about the relationship between business and the environment. The traditional view is as one of environmental protection and profitability being as natural opposites. Improving the environment is associated with reduced profitability for business and increased costs for consumers, while profitability is thought to require environmental degradation. (8) The assumption is that we can either have a healthy environment or a healthy business sector and trade offs are required to keep these opposites in a proper balance. In this context responses to environmental issues by business are reactive and involuntary. ‘In general, during the last 20 years business has tended to be overcautious and conservative in its approach to these challenges, underestimating the possibilities for positive change.’ (9) This view is clearly being challenged and there is a growing recognition that environment and economy are intertwined. Many writers acknowledge that the environment contributes to economic output so degrading the environment, at the very least, can reduce and undermine its economic growth and thus productivity. (10) Further the assumption that economic forces can only exploit and destroy may have been true up until now and will continue for some time into the future, but that this behavior is not the inherent nature of business, nor the inevitable outcome of a free market system. It is the result of the present commercial system’s design and use and thus can be redesigned and mature into something more. (11) To what degree business has progressed towards sustainable development is difficult to quantify and not within the scope of this paper to answer. Even the CEO and Co- founder of Interface Carpets, Ray Anderson, one of the world’s largest interior furnishings companies with a well progressed sustainable development model in place, believes that his company has moved only 25 percent towards becoming a sustainable enterprise. (12) Other authors like Paul Hawkens, while they acknowledge the shift is occurring, add a cautionary note and still believe there is a ‘yawning gulf between the kind of friendly ‘green’ environmentalism that business wants to promote – one that justifies growth and expansionary use of resources – and the kind that actually deals with the core issues of carrying capacity, drawdown biotic impoverishment and the extinction of species. Business, despite its newly found good intentions with respect to the environment, has hardly changed at all. ‘ (13) A recent paper by the World Business Council for Sustainable Development (WBCSD) also notes that it is impossible to answer to what degree progress has been made towards sustainable development by the business sector, due to the vast spectrum of business size and type, as well as the difficulty in deciding on a time frame over which to judge progress. It also notes that there has been very little progress made in developing sustainable indicators for business. (14) At the same time they do acknowledge there are some signals of change, most notably in the direction of environmental improvement. This is stronger in some areas than Business is a large vessel. It will require great common effort and planning to overcome the inertia of the present destructive course, and to create a new momentum towards sustainable development.’ (16)
  12. 12. THE  BUSINESS  OF  THE  ENVIRONMENT         12   others, with the big strides being made in waste reduction. The signals also reflect progress by the big industrial, service and retail companies rather than small to medium sized enterprises. (15) While this reflects the membership of WBCSD, the difficulties experienced by small to medium sized business in taking up environmental practices in Australia were reinforced during the interviews. While in many cases the environmental initiatives undertaken may be largely a piecemeal of projects aimed at controlling pollution, there a recognition that focusing on sustainability requires that environmental considerations become part of the decision making process. The WBCSD believes that this does add up to a change in course and signals a paradigm shift in the way in which business does business. ‘It is a shift from fractured view of environment and development issues, to a holistic view of business and sustainable development.’ (17) It also reinforces that these shifts are occurring at different speeds and in different places worldwide. More specifically this involves shifts from: • Seeing only costs and difficulties in the concept of sustainable development to seeing savings and opportunities; • End of pipe approaches to pollution to the use of cleaner, more efficient technology throughout entire production systems; • Linear, ‘through – put’ thinking and approaches to systems and recycling approaches; • Seeing environment and social issues as responsibilities only for technical departments to seeing these issues as company-wide responsibilities; • A starting premise of confidentiality to one of openness and transparency; • Narrow lobbying to more open discussion with stakeholders; and • Seeing sustainable development as integral to business development. (18) Do these shifts identified by the WBCSD equate to a change in business culture or rather signal that improved business practices will acknowledge environmental impacts and possible benefits, only when cost reductions are to be gained? While the shifts in physical and technological processes are beginning to be measured, there is also a need to look for indicators which refer more to cultural and organisational change, as means of demonstrating how far an organisation has moved along the path to sustainability. Again the limited scope of this paper can not provide a quantitative response to this aspect with each organisation interviewed. While cost reduction is a major factor influencing business thinking, the interviews do indicate that other factors are strongly at work. What did become clearer as the study progressed was that the organisations which were reflecting on the following the questions, were the ones that are demonstrating major shifts in their approach to environmental management.
  13. 13. THE  BUSINESS  OF  THE  ENVIRONMENT         13   Measuring Culture Change How does one decide if the changes underway point to genuine organisational culture change process? Policy: look for • Policy statements which lead to implementation plans which are regularly reviewed, are part of a corporate strategy and have commitment from the senior managers. Organisation: look for • Environmental management systems which are integrated into all aspects of the management and corporate structure; • Clear line management responsibly for environmental issues; • The messages given to suppliers and evidence of environmental purchasing policies; and • Environmental performance criteria included in performance contracts and staff appraisals. Motivation: look for • Formal and informal channels of communication regularly utilised by staff. Information Systems: Look for • A comprehensive system of key result areas and monitoring which quantities results and tracks progress. Promotion and education: look for • The messages sent within an organisation to staff and the value given to environmental performance. Investment: look for • Positive discrimination in favour of environment programs which provide budgets and reasonable pay back periods. (20) It may well be the combination of social necessity and business opportunity driven by community concern for the health of themselves and the environment, and urged on by proactive governments, that rework the market so that no company can be immune from the changes taking place. (21) The current literature suggest that competitive pressures and commercial opportunities will become so powerful that companies that remain inactive and disengaged are likely to experience this ‘revolution as a continuing nightmare… In large measure the choice is in the hands of every business’. (22) World  Business  Council  for  Sustainable  Development  (WBCSD)   The  WBCSD  is  a  coalition  of  120  international  companies  united  by  a  shared  commitment  to  the   environment  and  to  the  principles  of  economic  growth  and  sustainable  development.  Its  members  are   drawn  form  35  countries  and  more  than  20  major  industrial  sectors.  It  provides  a  powerful  business  voice  on   sustainable  development  issues  and  plays  an  important  role  in  developing  closer  cooperation  between   business,  governments  and  others,  and  in  encouraging  high  standards  of  environmental  management  in   business  itself.     For  further  information  visit  the  WBCSD  website  at  (23)  
  14. 14. THE  BUSINESS  OF  THE  ENVIRONMENT         14   A Snapshot of Each Organisation Interviewed An initial criteria for inclusion in this study was a company’s demonstrated record of achievement based on environmental management programs. What was found was a spectrum of company practices ranging from environment projects focusing on waste or energy minimization, to more sophisticated and integrated sustainable management goals and programs. Box Hill Hospital is a 312 bed hospital located in Melbourne’s eastern suburbs. The hospital increased its focus on waste management in 1995 in an effort to improve its performance in terms of costs savings and environmental impact. They are currently reviewing the program in the light of changes in the recycling area and more efficient methods of waste disposal. BP Amoco, a multinational hydrocarbon and energy company has taken up the challenge of putting the precautionary principle into action. The company, very strongly focused on performance, is demonstrating that this means more than just financial performance, but is linked to environmental and social impacts of the company’s operations, the so called triple bottom line. Eastman Kodak, is the world’s largest manufacturer and processor of photographic film and paper. The company’s Australasian headquarters and manufacturing centre are located in Coburg, Melbourne. The interview process focused on the environmental activities in place via the health, safety and environment policy and management systems. Epworth Hospital is a private, not for profit hospital operating under the auspices of the Uniting Church located in Richmond, Melbourne. In a short time they have put in place a successful energy management program and demonstrated substantial cost savings. They are committed to reducing their energy consumption and greenhouse gas emissions by 10 percent by Year 2001. Greenworld Office Products is a distributor of environmentally beneficial office products and began operations in Victoria in 1993. The office products are designed to assist business to cut costs and reduce waste. The interview focused particularly on the challenges of providing high technology remanufactured office products in a market where perceptions still equate recycled with inferior quality. Interface Carpets operates in 100 countries, makes 40 percent of all carpet tiles worldwide and is the largest producer of commercial carpets. Since the mid 1990s, the company has redesigned its operations and is seeking to become the first sustainable and restorative corporation. In the process the company has saved millions, is creating a new company culture and, as the CEO describes, has ‘lead the company into another industrial revolution’.
  15. 15. THE  BUSINESS  OF  THE  ENVIRONMENT         15   Moreland City Council, located in Melbourne and including inner and middle suburbs, is an amalgamation of the former Brunswick and Coburg Councils and part of the former Broadmeadows Council. With a strong background in local conservations strategies and environmental programs, the council is currently revising how it can build on this and create a sustainable urban environment. The interview focused on how Local Agenda 21 is assisting in this process. Norwich Union Financial Services embarked on a wide ranging environmental improvement program in the early 1990s. A past general describes how environmental programs fit comfortably into the concept of continuous improvement. The interview also demonstrated the advances made in office improvement programs and how the use of external consultants can assist in staff education programs. Patagonia is an international outdoor clothing company with two stores located in Melbourne and Sydney. The company’s very strong environmental stance is built into all facets of the company’s production, retail and marketing operations. Their core charter states their purpose as ‘…… To use business to inspire and implement solutions to the environmental crisis.’ Sheraton Towers Southgate, located in central Melbourne, has successfully demonstrated that environmental practices can work in conjunction with the principles of a five star hotel. Its program to reduce waste and energy consumption have reduced costs and contributed to staff alignment, without impacting on the quality of service. The interview highlighted the importance of recognizing organisational culture in achieving environmental goals. University of Melbourne, Hawthorn Campus demonstrated leadership in environmental office improvement in the early 1990s as a way reducing operating costs and providing an environmental role model for its student. The interview focused particularly on the need for adequate infrastructure to be in place for higher order behavioral changes to succeed. State Government departments interviewed Business Victoria operates the Cleaner Production Planning Program as one of a number of enterprise improvement services it offers to assist companies in becoming internationally competitive. Energy Efficiency Victoria offers a range of services to business to reduce energy costs, operating expenses and environmental effects associated with excess energy consumption. EcoRecycle Victoria aims to eliminate waste, promote sustainable use of resources and to manage better the disposal of residuals. It works with industry to encourage viable long term solutions to waste management. Other organisations interviewed The Banksia Environmental Foundation is a not profit foundation with a charter to recognize and encourage environmental achievement by applauding excellence via an awards program. For further information contact the foundation on ph 03 9428 7567. For further information on assistance and funding opportunities offered by these and other State Government departments, see the contact details in Appendix 4
  16. 16. THE  BUSINESS  OF  THE  ENVIRONMENT         16   Corporate Environmental Management is a consultancy service that advises companies on environmental best practice. Its objective is to assist companies operate in an environmentally sound manner, with reduced operating costs and with the support of its staff. For further information contact CEM on ph 03 9525 1900. The Key Motivational Factors Emerging from the Interviews While the organisations interviewed varied in many different ways, there were still many similarities in what were motivating factors for take up of environmental policies, programs and practices. The first and probably most important similarity which was evident was the positive approach all companies interviewed had in relation to environmental improvement. According to some authors, this mirrors the global trend in corporate attitudes to environmental issues which has changed significantly from the aggressive high profile environmental debates of the 1980s, where environmentalists were regarded as enemies and regulation something to be fought. (24) The following responses were the major reasons given in the interviews for this motivational turn around. • Cost savings – there is clearly significant cost reductions in environmental improvement, including savings from the reduced use of raw materials and energy, to decreases in the cost of waste disposal; • Continuous improvement – while this varied depending on the size of the company, there was a significant view that environmental management is considered part of improved management and business practices and can provide a competitive advantage. • Staff alignment – in many companies the pressure to adopt environmentally sound business practices is coming from workplace staff. • Chief Executive Officer leadership - this was more evident in the multinational companies where the CEOs have instigated environmental programs and cultural change processes. • Reputational gains- while the extent to which publicity for the programs was sought varied, in most cases respondents claimed that reputational gains relating to good environmental and corporate citizenship, were important for the program’s success. • Compliance with regulation – all companies believed that compliance with government regulations and legislation was important, while many viewed that moving beyond these was equally as important. Related responses also noted the significant cost of environmental damage from both clean up costs to loss of company reputation. • Environmental ethics – although a difficult response to measure since most responses intertwined environmental ethics with other factors above, there were some exceptions apparent from the interviews. A number of factors also provided mixed responses from the companies interviewed and the following appeared to be seen as non-motivational factors. Some companies spoke about the reluctance to use their environmental programs as a promotional or marketing advantage. They have become conscious of the need to maintain credibility in the market place which has become cynical about ‘greenwash’ promotion.
  17. 17. THE  BUSINESS  OF  THE  ENVIRONMENT         17   Another significant factor was the related to customer tastes. While on one side, the market for environmental goods and services is growing, there was also a view by the larger companies like BP and Interface, that customers are still unwilling to pay more for so called environmentally sound products and processes. The interviews In Depth Cost Savings ‘I believe that profit is not only a positive goal, but one of the most powerful long term incentives to ensure our resources and a regenerating ecosystem. Self interest is a very strong motivator…, it is human desire that has brought the world to where it is today. That same desire and self interest will determine the future. ‘ Richard Pratt, Chairman, Pratt Industries (25) Cost saving was undoubtedly a very significant factor and identified by all companies interviewed as a major incentive to continuing with their environmental programs. Companies such as Kodak and the Sheraton Towers Hotel mentioned the current economic conditions and the Asian downturn as impacting on their profit margins, thus any financial gains from Health, Safety and Environment (HSE), waste or energy minimisation programs go straight into profit. Ian Porter, Energy Efficiency Victoria believes that cost savings, in particular, from energy reduction activities can be dramatic and are intelligent and easy ways to save costs with often good pay back periods. Often these financial benefits need to be pointed out to business. Helen Lewis from EcoRecycle Victoria says that many businesses aren’t looking for cost savings, but once a serious audit points out the cost benefits, they will adopt changes quite enthusiastically. Interface Carpets’ CEO Australia and Pacific, Rob Coombs, cites an example of the real business impact of their waste minimisation program. In the 4.5 years leading up to March 1999, a worldwide waste reduction program has saved the company $88 million US. This is a seen a significant saving where global sales are in the order of $1.3 billion US. Major savings were achieved in the Sydney factory where it was found that $5.20 of product cost was related to wasteful processes. Today this figure has been reduced to 0.70 cents and has turned the business in Australia from break even to becoming a profitable part of the international business. Coombs believes ‘our gross margins and sales levels are almost the same, the major difference has been though our lowered costs by this war on waste. Furthermore, the real champion of these savings is our financial director who is the leading voice in environmental issues and can see the real and pure business benefits to this approach.’ Hospitals too are under pressure to control costs and at Epworth an innovative energy management program is being driven by the cost reduction benefits. Steve Scott, Engineering Services Manager explains that the paybacks from their energy efficiency and environment program were immediate and enabled them to employ a full time energy manager to ensure continued implementation to the program.
  18. 18. THE  BUSINESS  OF  THE  ENVIRONMENT         18   Cost reduction in business and the associated maximum use of scarce resources, are definitely major factors in providing the impetus to take up environmental programs. While not explored in the interviews, emerging environment industries are growing. Clearly profit motives will drive markets to be created, business to be more competitive to increase its market share and generally turning environmental problems into business opportunities. The Environmental Management Industry Association of Australia says the environment industry is currently worth $500 billion globally and $8 billion in the Australian domestic market. (26) Continuous Improvement Environmental improvement is all part of continuous improvement- like anything, if you don’t measure it, it’s very hard to change or improve it. The first step we took was to measure and understand the impact of our activities on the environment. From this point we set targets which are published monthly to allow the 29 plants worldwide to see where they sit in relation to the targets. These measures are as important as any financial measures we use to gauge our business success’. Rob Coombs, CEO Australia and Pacific, Interface Carpets Environmental management as the key to good business was a major thrust of responses and many noted that a focus on one aspect of companies environmental activities, could act as catalyst, highlighting other areas for improvement. The Eastman Kodak Company provides an example of how health, safety and environment management practices have been incorporated into the concept of continuous improvement. Claus Dyck, Manager Health, Safety and Environment (HSE) at the Coburg plant, believes it is fundamentally driven by 3 key elements. Epworth’s Energy System The centerpiece of Epworth Hospital’s approach is a Building Automation System (BAS) which is used to improve the facility’s overall efficiency. The BAS enables Nigel Wolstencroft, Energy Manager, to examine in real time, how the main heating and cooling systems are performing. A total reprogram of the main chiller and plant’s control sequence and adjustments to the buildings air handling units has resulted in a 13.25 percent reduction in electricity used for air conditioning. Epworth’s program also includes major electricity, water and natural gas saving as well as an education program for staff and suppliers. It’s all part of a continuous improvement management model known as the “Quality Circle’. Energy Smart News (27) EcoRecycle Victoria Case Study Series There are numerous case studies highlighting cost savings in various sectors produced by EcoRecycle Victoria. Each shows real and significant savings achieved by the introduction of waste management strategies. These are demonstrated by reduced costs in collection and disposal charges, hidden costs found in time and effort expended in manufacturing, double handling through transport charges or loss of raw materials. For further information about these and other publications available contact EcoRecycle Victoria on ph 03 9639 3322.
  19. 19. THE  BUSINESS  OF  THE  ENVIRONMENT         19   ‘Kodak has a clear position and direction from its head office in the United States regarding its commitment to carrying out all business activities in a way that is sensitive to the environment, it also resources the plants worldwide to implement these policies and it has fundamentally formal approach to environmental planning and improvement. In manufacturing at the Australian level, the Key Thrust Program is an important driver and describes a structured improvement planning process with measured key result areas.’ It is expected that all levels of the company integrate HSE management practices into the key business processes which include strategic planning, product development, service delivery, material purchasing, and the design and operation of manufacturing processes. Likewise, Kodak suppliers, site tenants and partners are encouraged to adopt similar principles and practices. To provide leadership and direction, the HSE Management Council sets policy and reviews progress against goals for Kodak’s worldwide health, safety and environmental program. A team of Kodak specialists visit each plant on a 3 yearly basis, to assess operations and ensure these match worldwide HSE expectations. (28) Multinational companies like BP, Kodak, Interface and Sheraton Towers relate continuous improvement to economic efficiency. While again it is not in the paper’s scope to outline how each organisation puts continuous improvement into practice, it is clear that all organisations saw their importance as a management tool and their environmental programs sitting comfortably within this framework. Interface Carpets Within Interface Carpets, a program has been laid out designed to achieve sustainability on seven ambitious fronts: 1.Eliminate Waste – The first step to sustainability, QUEST is Interface’s campaign to eliminate the concept of waste, not just incrementally reducing it. QUEST stands for ‘Quality Utilising Employee Suggestions and Teamwork’. 2.Benign Emissions – Prioritized focus on the elimination of molecular waste emitted to natural systems that have negative or toxic effects. 3.Renewable Energy – Reducing the energy demands of Interface processes while substituting non-renewable sources with sustainable ones. 4.Closing the Loop – Redesigning Interface processes and products into cyclical material flows. 5.Resource Efficient Transportation – Exploring methods to reduce the transportation of molecules (products and people) in favour of moving information. This includes plant location, logistics, information technology, video conferencing, e-mail, and telecommuting. 6.Sensitivity Hookup – Creating a community within and around Interface that understands the functioning of natural systems and our impact on them. 7.Redesign Commerce – Redefine commerce to focus on the delivery of service and value instead of the delivery of material. Engage external organisations to create policies and market incentives encouraging sustainable practices. (Sustainablility Report) (29) Pollution – Inefficiency Pollution should be seen as another form of economic waste. ‘When scrap, harmful substances or energy are discharged into the environment as pollution, it is a sign that resources have been used incompletely, inefficiently or ineffectively. Moreover companies then have to perform additional activities that add cost but create no value.. eg handling, storage and disposal… There are also other hidden costs buried in the life cycle of a product… Environmental improvement efforts have traditionally overlooked these system costs… they have focused on pollution control through better identification, processing and disposal – costly approaches. In recent years, more advanced companies and regulators have embraced the concepts of pollution prevention or source reduction.. to limit pollution before it occurs. While this is an important step, ultimately companies must learn to frame improvement in terms of resource productivity… and focus on the actual costs of eliminating or treating pollution. They must their attention to include the opportunity costs of pollution – wasted resources, wasted effort and diminished product value to customer.’ (30)
  20. 20. THE  BUSINESS  OF  THE  ENVIRONMENT         20   Note: in some organisations the concept of eco-efficiency was mentioned and while the study could not ascertain to what extent this was being practiced in the organisations, it was acknowledged as a tool for business to contribute to sustainable development. As a management philosophy, it is a logical extension of the total quality management process, which companies already practice to reduce and eliminate process and product failures and achieve higher quality at lower costs. The key is its significant change from a business as usual philosophy to one which calls for business to adapt current practices and systems to achieve higher levels of economic and environmental performance through continuous improvement. Producing more from less Eco-efficiency embraces concepts such as pollution prevention, source reduction, waste reduction, waste minimization and cleaner production. It captures the idea of pollution through process change, as opposed to end of pipe approaches, to tackling the problem of pollution. Globally companies already acting and adopting eco-efficiency principles and practices are: • building environmental stewardship and excellence into corporate philosophy; • setting targets for improved performance and introducing systems to track, measure enforce those targets; • taking responsibility for their product throughout their life cycles; • being innovative in developing new processes and products; and • putting the priority on preventing pollution, rather than paying for clean up. (31) The concept makes seven main demands on companies • reduce material intensity of goods and services; • reduce energy intensity of goods and services; • reduce toxic dispersion; • enhance material recyclability; • maximise sustainable use of renewable resources; • extend product durability; and • increase the service intensity of goods and services. (32) Staff Alignment A key motivator expressed by most interviewees was that of the importance of aligning staff values with those of the company, to encourage ownership and a more participatory approach in the workplace. It was also broadly recognised that stakeholders include not only employees, but customers, shareholders, suppliers, government and neighbours and including them, with all their differing views and concerns, usually leads to better decisions and more universal support for their implementation. Successful staff involvement in environment programs was shown to have many benefits including employee support, personal responsibility and overall improved morale.
  21. 21. THE  BUSINESS  OF  THE  ENVIRONMENT         21   BP Amoco’s Environmental Improvement Program (EIP) began for very personal reasons for a member of staff in the Office Facilities Management Team, who saw an opportunity to adapt her role in security and customer service into one which incorporated environmental building improvements. Kathleen Esdaile, Environment Program Coordinator, acknowledges the support of her line managers in implementing a program which involves its Melbourne Central office in a resource reduction program. By setting reduction targets of waste to landfill and reduced consumption, the program builds on the global HSE commitment to take ‘constructive action to reduce the impact of our office on the environment’. The program had 8 months of development and trialing before its launch in May 1998. ‘Over 40 percent of staff were consulted in the early phase of development and this effort has paid off. It reflects people’s genuine interest in reducing our impacts and the need to have an infrastructure to support them to do so.’ EIP’s success depends upon staff taking personal responsibility for reducing the environmental impacts of their day-to-day work practices. The program is designed to raise awareness of environmental issues and educate them about specific skill needed to reach the EIP targets. EIP facilitator, Susan St Lawrence, says feedback from staff indicates they are excited about being able to do something concrete instead of just talking about environmental issues. An eco-committee member told her that … it has been personally satisfying and has made me more aware that we can all make a difference’. Susan echoes this by saying that the EIP provides an avenue for her to put her personal values into action within her working environment. ‘BP management needs to be congratulated on their brave stance over EIP. They allowed time for the dream to become reality – to build trust and relationships, trial and explore, grow each step as we went. That’s really money where your mouth is, ‘Susan St Lawrence. Globally, timing was right too. The push out of London head office was for BP Amoco to meet the greenhouse challenge. EIP provided managers with another vehicle with which to reach their environmental objectives and contribute towards the company’s drive for sustainable development. BP’s Chief Financial Officer and General Manager of Shared Services, Ian Palliser, says that an important aspect of the EIP is that it makes BP’s stance on environment relevant for the office based staff, who may otherwise think these programs are only relevant ‘ out there’ in the refineries. ‘It’s not hard to be a sponsor of this program as it provides positive win – win’s on all aspects… we can feel good as individuals, help the environment and reduce the costs of the business. Its about good personal logic being in alignment with commercial logic and, in fact EIP, helps with the business direction.’ Many of the companies interviewed also noted the importance of staff participation in the success of their environment programs. This was a key factor identified in the environment program introduced at the Sheraton Towers which generates the ideas via an Environment, Safety and Security Committee and the ‘Act on it Scheme’. Ray Galea, Safety, Security and Environmental Services Manager, believes that while cost savings have clearly been a driver for the program, staff participate because of the
  22. 22. THE  BUSINESS  OF  THE  ENVIRONMENT         22   degree of consultation, regular briefings and training programs that are carried out. ‘Ideas for improvement are trialed and appraised using many criteria, not the least being its impact on our guests… But it’s a very fine balancing act between customer perceptions, quality service and environmental improvement.’ Fred Matti, General Manager, believes staff participation is high because of the Sheraton’s culture, degree of staff delegation and the program results, which have helped to motivate staff further. This is all tied up with a continuous improvement process which has spin offs in regard to culture, costs savings and staff alignment.’ Both the Sheraton and BP also mentioned the impact young employees are having in their organisations. In Sheraton’s case with hospitality staff of an average age of 22, they are more environmentally aware and encouraged to speak their mind. In BP, it was the young graduates asking questions about the company’s environmental stance and its compatibility with personal values, that managers claim has helped shift the company culture. ‘The triple bottom line of sustainable development simultaneously captures progress in terms of economic prosperity, environmental quality and social justice.’ (34) CEO and Upper Management Leadership and Support ‘Our program is being driven by Ray Anderson, who was inspired in the 1990s after being in business for 35 years to change the course of the company – he calls it his ‘mid course correction’. After having built the company in a way that plunders the earth, he wanted to devote the rest of his working life to putting back more than we take out. You can’t create this type of innovation unless you have that type of commitment. Rob Coombs talking about Ray Anderson, the CEO of Interface Carpets. There are a growing number of examples where exceptional leadership has been displayed in promulgating environmental changes within companies. Most recently the CEOs from the multinational Interface Carpets and BP Amoco, have been recognised internationally as leading the debate on policy issues on sustainable Sheraton Towers Southgate Environmental Policy Sheraton Towers Southgate is committed to minimizing the environmental impact of its operations and observes the following principles: 1. To conduct its operations in a manner which complies with regulations and in their absence, to operate in an environmentally responsible manner. 2. The efficient use of energy throughout its premises. 3. To reduce and recycle wastes generated by the hotel’s activities. 4. A commitment to continual improvement and pollution prevention. 5. To implement a quality purchasing program by working with suppliers to minimise environmental impact of operations and products. 6. To provide training for all staff to facilitate successful implementation of best environmental practice. 7. To support environmental accountability by introducing on going monitoring of environmental targets. 8. To regularly review environmental objectives. 9. To encourage guest participation in the hotel’s environmental program. (Sheraton Towers Southgate Environmental Policy) (33)
  23. 23. THE  BUSINESS  OF  THE  ENVIRONMENT         23   development as well as driving their corporations into a new era. Both were recently awarded 1999 Earth Day Environmental Leadership Awards from the United Nations Environment Program. (35) Two further interesting and contrasting examples were highlighted during the interviews. Patagonia’s company philosophy began when it’s founder Yvon Chouinard, decided in the 1960s that his outdoor clothing would be known for its durability and quality, and his company for its respect of the environment. Scott Edwards, Melbourne Store Manager, says that the company’s motivating factor is still driven by the CEOs environmental directive and, while its continuingly reviewing itself, this philosophy is embedded into the company culture and structure. ‘It links aspects of the company from what we choose to sell, to where we obtain the raw materials from, to how the energy to manufacture the product is generated, to marketing the product. While Yvon still owns the company, he has surrounded himself with a Board and managers who have the same ethics.’ It is this same philosophy that drives Patagonia to sell cotton clothing made without synthetic chemicals and polyester fleece clothing made entirely from recycled plastic bottles. These production decisions are not taken lightly and for the company, demonstrate its preparedness to invest in efficient operations that provide products that move them a step closer to a more sustainable system. Leadership demonstrates itself in various forms and in Moreland City Council it was the efforts of proactive councilors both before and after council amalgamation, followed by a like minded Commissioner during amalgamation, that have set the scene for this Council’s approach to environmental issues. Council has used a process known as Local Agenda 21 (LA21) to provide a holistic approach to achieving sustainable solutions. Since 1996, managers have developed internal departmental action plans and an external community action plan. These have been bought together into a corporate plan of action under LA21 covering social, economic and environmental principles and goals. (36) Peter Mollison, Manager Urban Strategy, says that it was the support and leadership of the key decision makers in Council, in combination with analysis, information and workable programs that has allowed this to come together as a well organised and consistent approach to local governance. ‘The primary motivator is the ‘think global, act local’ imperative. At the political leadership level, their commitment to the long term issues that have to be tackled, has provided the strength to develop the strategic direction required.’ These CEOs, general managers and councilors have defined sustainability to include financial, social and environmental responsibilities. Individuals, like Ray Anderson from Interface, have become advocates for sustainable enterprises and the triple bottom line message is being promoted to other corporate executives via business leaders forums worldwide* to help accelerate understanding about business opportunities and the role business leaders have in addressing the challenge of sustainable development. If we are able to take responsibility for the future of our planet, then it falls to us to begin to take the precautionary action now ‘John Browne, BP Amoco Chief Executive, Stanford May 1997
  24. 24. THE  BUSINESS  OF  THE  ENVIRONMENT         24   * Business Leaders Forums on Sustainable Development exist in the US, Canada, UK and a recent forum has been established in Australia. For more details contact the Australian Forum Convener Molly Harriss Olson ph 02 6236 8437 (38) Reputational Gains ‘Until a number of the more dominate players ‘break away from the pack to pursue ecological sustainability as a serious source of competitive advantage, the bulk of firms will not see sustainability as having more than a public relations significance. A small but influential band of large multinationals are now moving tentatively in the direction of such transformation…’ (41) Most of the companies interviewed saw that maintaining credibility with stakeholders was necessary to sustain business operations. While many also saw the close link to marketing, they were conscious about the risk of using their environmental policy to improve their image. The sentiments are summarized by ‘let the merit of what we do Patagonia There is a small, family owned dye factory in Portugal. Its sits on a river downstream from a number of other dye factories. Most of the factories in the area use the traditional methods – chemically based tints, loads of copper to fix the colours, and so on – with the effect that the river is heavily polluted. The last factory in line, with the most polluted river water, produces shirts for Patagonia. The buyers at Patagonia chose this factory at the end of the river for a very serious reason. The water leaving the dye factory is treated so well that it is cleaner when it rejoins the river than when it entered the factory. Scott Edwards believes this is a simple and yet powerful illustration of the way Patagonia does its business. Its integral to the business philosophy that is proactive in reducing energy use, wastage and its overall environmental impacts. (Energy Smart News) (39) Moreland City Council Tools and Techniques – Environmental Auditing – Moreland Local Agenda 21 (LA21) An environmental audit is a valuable tool in developing an action plan under LA21. An audit was undertaken of the organisation as a key component of the internal stream of the Council’s LA21 and has resulted in recommendations on how Council can reduce waste, save energy, save water and improve its purchasing policies. It also covers resource and environmental management issues such as improving office practices, contract development and customer services. The Council also took a lead in awareness raising and education amongst its own staff and continual staff education sessions were integral to the audit process. This collaborative approach has resulted in positive responses by Council staff to changes in Council practices. (40) For further information on LA21 see Appendix 4.
  25. 25. THE  BUSINESS  OF  THE  ENVIRONMENT         25   speak for itself and if it’s newsworthy we will look for benefits, but we don’t want publicity to drive our actions.’ (42) Many responses mirrored those obtained from a 1998 case study of BP Amoco. These responses mentioned the close connection between environmental issues and reputation and recognised to have the right to operate the business; BP must have the support of the community. ‘It’s about where people want to be and where the company needs to be. Our licence to operate is driven by our reputation and public perception. We need to feel, and the world needs to feel, comfortable with what we are doing. The most dangerous thing you can do is make claims and then not back them up with action’. (43) Companies like Kodak and the Box Hill and Epworth Hospitals, all located within residential zones, reiterated this comment. Claus Dyck, HSE Manager Kodak summarised it with ‘one important aspect of our HSE program is driven by our location. With a residential area and school close by, we need to continually earn the right to operate here. We strive to ensure that the impact of our operations on our neighbours in minimal. Companies must align themselves with changing and more sophisticated environmental stakeholder views. In BP’s case, its customers include some corporates who may be inclined to be more open in their environmental behaviour. ‘It’s good for BP’s business to be able to attract corporates who know that environmental performance is now part of how they will be judged. The good spin off is that if they are buying fuel from us, they can say to their customers what BP is doing in regard to the environment like low emission fuels and energy management programs.’ (44) Compliance with Regulation ‘Industry leaders will always be driving new products in response to new regulations. Regulation creates the market and leading companies then jump into that opportunity to create new products and systems to respond. They need the regulations to mop up afterwards because they’ve taken the risk of going out in front and they need to be rewarded for that by having the whole marketplace in that situation… I would hope we’ll get to the situation where companies are actually arguing for regulation, in self interest, to drive the standard across the marketplace. ‘ Paul Gilding, Ecos Corporation, ex Greenpeace Director (46) Many of the interviewees from larger companies saw regulation as important but often misguided. The strongest responses came from BP Amoco and Interface Carpets, whose senior managers, while stressing the need for sensible regulation, also place much of the responsibility and opportunity arising from change, back onto industry. BP  Amoco’s  Triple  Bottom  Line  Approach             ‘What   is   sustainable   development?   To   many   economist   it’s   about   having   economic  stability  and  growth…  A  more  balance  view  comes  from  getting  economic  development,  environmental   protection   and   social   responsibility..   We   would   be   wrong   to   see   society’s   growing   environmental   and   societal   concerns  as  impediments  which  slow  progress  down.  On  the  contrary,  they  are  the  beginning  of  a  new  path  for  all  of   us….               While   I   acknowledge   it’s   difficult   to   generalise,   I   believe   Australian   corporations  are  a  little  way  off  the  pace  in  terms  of  fully  embracing  the  concept  of  triple  bottom  line…  all  businesses   are  increasingly  going  to  be  faced  with  issues  other  than  the  economic  dimensions  of  their  operations  and  the  way   they  react  to  those  issues,  will  determine  their  longevity.  Certainly  BP  Amoco,  within  the  oil  industry,  has  come  to  the   realisation   that   we   can   provide   energy   needs   of   our   societies   and   contribute   to   environmental   and   social   development.  Not  only  this  shift  in  attitude  contribute  to  sustainable  development  within  society  it  will  reinforce  the   sustainability  of  our  own  businesses.  (Greg  Bourne  BP  Amoco)  (45)    
  26. 26. THE  BUSINESS  OF  THE  ENVIRONMENT         26   ‘In business we make investments and think strategically 20-30 years ahead. In this context, we have realized that we have to do more on the environmental and social fronts…. BP has done the technical part of environmental control and safety, by and large, very well for a long time… We now need to think more holistically about sustainable development… Eventually, all come to the realisation that what society says today, the politicians will say tomorrow, laws and regulation will then follow. We have to abide by those laws and regulations. Typically companies of all sorts have lobbied against changes in regulation to slow the process. The fundamental shift is the realisation that industry are the ones who implement … and… because we are all members of society, if we listen and act proactively and progressively then the regulations are much more likely to be logical and balanced. It’s about embracing regulation and utilising this as a tool to raise the standards… You could call this enlightened self interest. They key thing is that we in industry are beginning to listen to society… The company that is least prepared when the legislation comes in, is usually the one who has to do the most catch up and has the biggest disadvantage. Almost always the first movers have the advantage, so being progressive is the name of the game.’ Greg Bourne Regional Director BP Amoco Australia NZ This also the view from the Australia and Pacific CEO of Interface Carpets, Rob Coombs who stated that ‘… up until 5 years ago our aim was to ensure compliance. We were never less than that and rarely ever more than that. Our aim now is to go beyond this because regulation doesn’t reflect what needs to be done…. But if we leave the major changes to government, then it just wouldn’t happen. The only institution that is strong, wealthy and pervasive enough to make it happen is the institution that caused the problem in the first place, that is business…. We believe that governments don’t lead but follow. The education process while important takes too long, and the church doesn’t appear to be overly committed to this concept. This leaves business as the only institution to make it happen… Anything government can do to offer sensible guidelines and regulation are welcomed. They can play a very active role in providing incentives and ensuring that taxes in place reflect appropriate rewards to those businesses that are tying to design processes that are sympathetic to the wider environment. They also need to penalise companies that are operating in ways that generate hidden environmental costs.’ Helen Lewis, Market Development Manager at EcoRecycle Victoria believes that government policies, like the Greenhouse Challenge, and regulation are important drivers. ‘If initiatives are seen as a high priority for government, then this can assist industry take up. For example there is a lot of discussion and debate about the packaging covenant and while no regulations are in place yet, this has already had some impact. Companies in the packaging sector are already thinking about how this will impact on them and their relationship with customers etc., and are developing corporate strategies to meet the requirements of the covenant. These types of debates build up a momentum and eventually become a normal part of doing business. They assist in shifting corporate culture. It’s clear in some quarters that industry prefers a voluntary approach to change, to allow the freedom to choose how they will implement the changes. But it helps if there is a threat of regulation if change does not occur…. It was the threat of container legislation that got companies involved in
  27. 27. THE  BUSINESS  OF  THE  ENVIRONMENT         27   kerbside recycling over 10 years ago. Recycling has never been regulated in this State, but Victoria has some of the highest recycling rates in world.’ It is not within the scope of this paper to analyse the pros and cons of regulatory processes as a means of enforcing a company’s environmental responsibilities. What was clear from the interviews was business recognition of the need for appropriate regulation and the growing use of less traditional command and control techniques, to more co-regulatory approaches, the use of voluntary codes and environmental management systems or environmental standards like ISO 14000, within business. What is also interesting is the environmental requirements large companies are placing on their suppliers and the impact this will have in driving suppliers to examine their environmental policies and procedures. Barriers to Implementation Identified in the Interviews While acknowledging that there are many positive factors in the take up of environmental programs, those interviewed also discussed some of the inherent barriers they confronted, even in small scale waste or energy minimisation projects. The following are brief responses in relation to this topic. Internal Organisational Barriers • One of the most consistent responses was that related to human resistance and whether it be staff, managers, suppliers or customers, this was put down to people’s inability to think long term and strategically. Related to this were comments about people’s tendency to want more proof about problems such as climate change, and how the media’s superficial approach to some stories has helped to feed this reluctance to change. ‘Often you are asking people to change behaviours that are routine, mundane and of a lower order.. so they may appear insignificant. A lot of sustainability issues are about incremental change and people find it difficult to see the benefits of this and thus resist change. ‘Peter Mollison, Moreland City Council. • An interesting anecdote came from BP’s Ian Palliser who sees females as early adopters of their environment programs. ‘Our company has a 30 percent female Making Markets Work for the Environment- Inducing Change Three basic mechanisms can be used to move business to internalize environmental costs, to pay for the cost of pollution, or to limit damage to the environment by other means. • Command and Control – these are basically government regulations, including performance standards for technologies and products, effluent and standards etc. • Self-regulation – These are initiatives by corporations or industry sectors to regulate themselves through standards, monitoring pollution reduction targets and the like. • Economic instruments – These are the efforts to alter the prices of resources and of goods and services in the marketplace via some form of government action that will affect the cost of production and/or consumption. (47)
  28. 28. THE  BUSINESS  OF  THE  ENVIRONMENT         28   and 70 percent male spilt, buy typically the early adopters were 90 percent female and 10 percent male. The females in our company seem to make links between personal and company alignment without having to be convinced. I’m not sure if there is such a thing as “maleness barrier” or if the barrier is just apathy.’ • Many companies also noted the need to find interesting and innovative ways to educate, train, maintain enthusiasm and sign staff onto programs, where both behavioural and attitudinal changes are required. • Another consistent response across all companies, particularly small to medium, was the challenge of resource allocation, in terms of staff time and budgets. Related to this is ongoing business restructures and consequential staff preoccupation with job security. Many people neither have the time or energy to take on new programs that may require a behavioural change and in many cases momentum is difficult to maintain. • Access to practical and relevant information can also act as a barrier. ‘Often smaller business don’t employ full time environmental managers and are not linked into the same networks as larger companies, whose industry associations provide them with regular information about government regulation, trends and best practice examples. If you’re not part of the networks, then you’re often not conscious of the shifts and debates underway.’ Helen Lewis, EcoRecycle Victoria. • Responses also noted the need to embed environmental roles into job descriptions to make this part of staff accountability and to provide adequate recognition, rather than relying on staff’s goodwill and voluntary efforts. Staff continuity was also important for a continuing program where often inadequate staff induction and training contributed to program failure. • The need for an appropriate infrastructure is essential for programs to progress. The environment program established at the Hawthorn Campus of Melbourne University in 1993 had to overcome the adhoc nature of recycling collection services and in essence the temptation to just shift the problem from one area to another • Related to this is the barrier of ignorance. Ian Mitchell, Campus Manager at Hawthorn, says that in the early days ‘many of us were still ignorant about what could be realistically achieved in office environments and what the benefits were. There could also be barriers if cost savings could not be demonstrated and we may have been able to save further if better budget reporting and consumption reporting systems had been put in place.’ External Barriers • A major barrier is the market perception of the quality of recycled products. Remanufacturers noted that customers place a more critical eye and have a higher expectation of recycled products. Often these negative perceptions are based on history that is no longer true. Greenworld Office Products have found that ‘if a customer hasn’t used recycled products or has had a bad experience, then they
  29. 29. THE  BUSINESS  OF  THE  ENVIRONMENT         29   tend to regard them as inferior and assume there has been no improvement in quality.’ Rob Jolly, Co-founding Director, emphasizes that their products go through a whole series of quality controls and new components are used when required. ‘Its not a matter of getting an old cartridge and putting new toner in it …. I have also found that technicians for major suppliers have mistakenly told users that warrantees are not guaranteed with recycled products ….. or some regulations have specifically excluded the use of recycled products ….. this is all works to form a negative attitude to influence buyer behavior patterns ….. I don’t see that the market has matured much in terms of its understanding of what can be achieved with recycled products. In case of laser cartridges only 30 percent are recycled and 70 percent are still heading for landfill.’ • Another consistent response related to resource allocations was the impact of current economic conditions working against environmental improvement. In relation to the use of recycled materials, one of the biggest barriers identified by Eco Recycled Victoria is the low cost of virgin materials. ‘There is no incentive in cost savings, for example raw materials for plastics are at a 25 year low, so the lower costs of virgin materials and the extra difficulty some recycled materials create in production, makes it impractical for companies.’ Helen Lewis. • When you are attempting to break new ground and be innovative there are many lessons to be learned. The first barrier was thus one of knowledge and how to assemble this knowledge in order to move forward … There are also huge technological barriers in attempting to create a new business approach. We are attempting to close the loop and to get to the point where our inputs equal our outputs. We are long way from this and much of this is because we don’t have access to the technology to make it happen.’ Rob Coombs, Interface Carpets. • Hospitals also have the challenge of dealing with suppliers. ‘The higher costs of disposing of waste could act as a collective driver for hospitals to approach suppliers and have more influence on product packaging to minimise hospital waste….’ Carol Sainsbery, Corporate Services Manager, Box Hill Hospital. ‘Many environmentally unsound (office) products have generated huge profits for suppliers because environmental pollution was never treated as a production cost. This highlights the issue of the hidden costs that technology waste imposes on a community. The environment never charges when waste by products are dumped on it – the cost of pollution is externalised from the supplier’s balance sheet and put onto the user’s shoulders. Indeed we have all become the underwriters of these consequences.’ (49) Lessons Learnt Checklist Greenworld Office Products A growing number of prominent organisations in the public and private sectors have overcome the recycling psychological barrier and use quality recycled products as a matter of course. Greenworld’s rapidly expanding customer base reflects the move to recycled products in the business community. Products include remanufactured laser cartridges, refilled ink jet cartridges, degaussed and reformatted Greendisks and efficient and durable Kyocera Printers. (BATE Case Study Series) (48)
  30. 30. THE  BUSINESS  OF  THE  ENVIRONMENT         30   The cumulative experience of those interviewed is summarized in this checklist of success factors in driving environmental programs and sustainable development in their organisations: • See environment as a normal part of business and a continuous improvement management model; • Understand your waste processes and inventory all unused, emitted or discarded resources; • Get senior management onside and make them part of the process – use regular communication forums to get support and leverage; • Establish a management action plan, this demonstrates public commitment to action and should be signed off by appropriate management to demonstrate their support; • Start by benchmarking yourself against others and then aim to be industry leaders to get a competitive advantage; • Consult, communicate, educate and train your staff to increase involvement and encourage ownership; • Be proactive, innovative and spend more time on communication; • Build tasks into job descriptions and performance and bring the responsibility back to the individual; • Use incentives and bonuses to meet higher standards; • Get an external consultant in to do a full audit and start with an internal office improvement program: • Make use of government programs and funding potential to save time getting the information you need; • Network to get up to date and relevant information to assist you in decision making. • Health, safety and environment is a formally structured management process – this does ensure staff take it seriously; • Monitor program process and put in a place better information and evaluation methods; ensure targets are current, performance is measured and the reporting process is relevant; • Build responsibility for programs into a line management function; • Remember that relationships, trust and capacity all take time to build; • To engage people in a potentially emotive program, they need to be told the benefits of change according to their own value set; and • Celebrate your successes. Building Sustainable Business Practices While many of the examples used in this paper consisted of projects aimed at minimizing waste, pollution or energy, there are a few companies that are attempting
  31. 31. THE  BUSINESS  OF  THE  ENVIRONMENT         31   to incorporate sustainability into their strategic thinking. Focusing on sustainability requires a new vision which goes beyond an internal, operational focus on greening to a more external, strategic focus on sustainable development. One model provides a three stage approach to guide companies to an environmental strategy. Stage one: Pollution Prevention – this first step requires companies to make the shift from pollution control to prevention and focus on minimizing waste before it’s created. Much like Total Quality Management, prevention strategies depend on continuous improvement efforts to reduce waste and energy use and is driven by the logic that ‘pollution prevention pays’. Stage two: Product Stewardship – this step focuses on minimizing not only pollution from manufacturing but also from all environmental impacts associated with the full life cycle of a product. Reducing the use of materials and production of wastes requires companies to look at fundamental changes in the underlying product and design process. A tool known as Design for Environment (DFE) examines all possible environmental effects of a product at the design phase. This cradle to grave analysis includes a full assessment of all inputs to the product and examines how the customers use and dispose of it. Stage three: Clean Technology – companies with an eye on the future can begin to plan and invest in tomorrow’s technologies. Clearly many of the today’s technologies are not environmentally sustainable and by relying on these they have major difficulties progressing towards sustainability. The focus will be on new research and technology that develops and commercializes clean technology. (50) Pollution prevention, product stewardship and clean technology all move a company towards sustainability. These in conjunction with a framework to give direction to activities provide a ‘road map to the future’. (51) See figure ‘The Sustainability Portfolio’ for a tool to develop this strategic framework. A clear and fully integrated environmental strategy should also shape the company’s relationship to customers, suppliers, other companies, policy makers and shareholders. ‘Companies can and must change the way customers think by creating preferences for products and services consistent with sustainability. Companies must become educators rather than mere marketers of products.’ (53) While many senior executives will focus only on the risk associated with investing in unfamiliar markets, outweighing the potential benefits, there are many others as seen in this paper who will embrace the need for change.
  32. 32. THE  BUSINESS  OF  THE  ENVIRONMENT         32   The Sustainability Portfolio This simple diagnostic tool can help companies determine whether its strategy is consistent with sustainability. (52) Clean Technology Is the environmental performance of the products limited by existing competency base? Is there potential to realize major improvements through new technology? Sustainability Vision Does the corporate vision direct towards the solution of social and environmental problems? Does the vision guide the development of new technologies, markets, products and processes? Pollution Prevention Where are the most significant waste and emission streams from current operations? Can lower costs and risks by eliminating waste at the source or by using it as a useful input be achieved? Product Stewardship What are the implications for product design and development if one assumes responsibility for a product’s entire life cycle? Can lower cost or value be added while simultaneously reducing the impact of the products? INTERNAL EXTERNAL Conclusion and personal learning’s In exploring the themes of this paper it became clear that while some companies focused on a particular motivational factor during the interviews, most saw the need to consider all factors in their decision making processes. Cost reduction and smarter business practices are influencing managers, but the interviews do indicate that other, less easily quantifiable, drivers are strongly at work. While some organisations had commenced with an office improvement program, others had seen the need to look more closely at the overall waste question, while others were analyzing even more deeply the actual product they sold and its impact on the environment. The spectrum of companies was wide and while the degree of change varies greatly, all had a commonality in the recognition, importance and in some cases the opportunity, they gave to environmental issues. T O M O R R O W         T O D A Y  
  33. 33. THE  BUSINESS  OF  THE  ENVIRONMENT         33   This paper can only provide a snapshot of motivational factors and as described earlier, the in built biases in the project make it impossible to determine the extent of environmental recognition throughout Australian business. Although it is fair to say that the managers interviewed do see environmentalism as part of doing business better, the degree to which this indicates a significant change in environmental business ethics or company culture cannot be answered. There are still great hurdles as indicated by the barriers to program implementation, focusing on human resistance and perceptions to technology and balancing budgets. The strong theme emerging from the literature is that the more industry is assisted to redefine the environmental imperative as part of mainstream business concerns, the greater the opportunity for both business, society and the environment. The theme of don’t green your company : commercialise environmentalism (54) is catching on and linking the economic and environmental crisis with a commercial opportunity. It is also clear that we still have a long way to go and global climate change demands new ways of conceptualizing opportunities and new ways of implementing strategies that will drastically reduce the environmental burden, in particular in the developing world. As has been reiterated in this paper, a final lesson is captured by this quote…. ‘Like it or not, responsibility for ensuring a sustainable world falls largely on the shoulders of the world’s enterprises, the economic engines of the future. Clearly public policy innovations … and changes in individual consumption patterns will be needed to move towards sustainability. But corporations can and should lead the way, helping to shape public policy and driving change in customers’ behaviours. In the final analysis, it makes good business sense to pursue strategies for a sustainable world.’ (55) Appendix 1a A list of those interviewed from each organisation Banksia Environmental Foundation Graz van Egmond, Corporate Affairs Manager Box Hill Hospital Carol Sainsbery, Corporate Services Manager BP Amoco Australia Greg Bourne, Regional Director Australia & New Zealand Kathleen Esdaile, Environment Co-ordinator Kerry Lodge, Office Facilities Manager Ian Palliser, Chief Financial Officer and General Manager Shared Services Susan St Lawrence, Environmental Improvement Facilitator.
  34. 34. THE  BUSINESS  OF  THE  ENVIRONMENT         34   Business Victoria Brian Waters, Industry Specialist Consultant and ex Norwich Financial Services Geoff Donnely Corporate Environmental Management Pty Ltd Anne Marie Devine, Managing Director EcoRecycle Victoria Helen Lewis, Market Development Manager Energy Efficiency Victoria Ian Porter, Manager Business Energy Services Epworth Hospital Steve Scott, Engineering Services Manager Nigel Wolstenscroft, Facilities Technician Greenworld Office Products Rob Jolly, Join Managing Director Interface Australia Pty Ltd. Rob Coombs, CEO Australia and Pacific Kodak Australasia Pty Ltd Claus Dyek, Manager Health, Safety and Environmental Services Ron Guest, Environment Technical Specialist Melbourne Patagonia Scott Edwards, Manager James Roger, Sales staff Moreland City Council Peter Mollison, Manager Urban Strategy Richland Jennings, Conservation Team Leader Sheraton Towers at Southgate Fred Matti, General Manager Ray Galea, Security, Safety and Environment Manager Brett Richardson, Stewarding Shift Leader Trish Wunderlich, Promotions and PR Manager University of Melbourne Ian Mitchell, Campus Manager, Hawthorn Campus
  35. 35. THE  BUSINESS  OF  THE  ENVIRONMENT         35   Appendix 1b – Contact List Greg Bourne Fred Matti Regional Director Australia & NZ General Manager BP Amoco Australia Sheraton Towers at Southgate 360 Elizabeth St Melbourne 3000 1 Southgate Ave. Southbank ph 03 9286 4111 ph 03 9626 3100 fx 03 9626 6581 Rob Coombs Ian Mitchell CEO Australia and Pacific Campus Manager Interface Australia Pty Ltd Hawthorn Campus Unit 1 City Close University of Melbourne 37-40 O’ Riordan St Locked bag 12, Hawthorn 3122 Alexandria NSW 2015 ph 03 9810 3346 ph 02 9698 3303 fx 03 9810 3315 fx 02 9698 3396 Anne Marie Devine Peter Mollison Managing Director Manager Urban Strategy Corporate Environmental Management Moreland City Council Pty Ltd Locked Bag 10 Suite 706, 81 Queens Rd Coburg 3058 Geoff Dommelly Ian Palliser Consultant and ex Norwich Chief Financial Officer and Financial Services General Manager Shared Services ph 03 9529 3474 BP Amoco Australia fx 06 9529 3476 360 Elizabeth St Melbourne 3000 (now located in USA) Claus Dyek Ian Porter Manager Health, Safety & Manager Business Energy Services Environmental Services Energy Efficiency Victoria Kodak Australasia Pty Ltd 215 Spring St 173 Elizabeth St Coburg 3058 Melbourne 3000 ph 03 9353 2599 ph 03 9655 3244 fx 03 9353 2023 fx 03 9655 3255 Scott Edward Brett Richardson Manager Stewarding Shift Leader Melbourne Patagonia Sheraton Towers at Southgate 37 Little Bourke St 1 Southgate Ave. Southbank Melbourne 3000 ph 03 9626 3100 ph 9642 2266 fx 03 9626 6581 fx 9642 2277 Kathleen Esdaile James Roger Environmental Co-ordinator Sales staff BP Amoco Australia Melbourne Patagonia 360 Elizabeth St Melbourne 3000 370 Little Bourke St ph 03 9286 4206 Melbourne 3000 fx 03 9268 3133 ph 9642 2266 fx 9642 2277
  36. 36. THE  BUSINESS  OF  THE  ENVIRONMENT         36   Ray Galea Carol Sainsbery Security, Safety and Environment Manager Corporate Services Manager, Sheraton Towers at Southgate Box Hill Hospital 1 Southgate Ave. Southbank Nelson Rd., Box Hill 3128 ph 03 9626 4029 ph 03 9895 3261 fx 03 9626 4027 fx 03 9895 5176 Ron Guest Susan St Lawrence Environmental Technical Specialist Environmental Improvement Co-ordinator Kodak Australia Pty Ltd BP Amoco Australia 173 Elizabeth St Coburg 3058 360 Elizabeth St Melbourne 3000 ph 03 9353 3247 ph 03 9286 4206 fx 03 9353 2023 fx 03 9268 3133 Richard Jennings Steve Scott Conservation Team Leader Engineering Services Manager Moreland City Council Epworth hospital Locked Bag 10 89 Bridge Rd Coburg 3028 Richmond 3121 ph 03 9240 1111 ph 03 9420 5234 fx 03 9240 1212 fx 03 9428 6882 Rob Jolly Graz van Egmond Joint Managing Director Corporate Affairs Manager Greenworld Office Products Banksia Environmental Foundation Unit 3, 14 Miles St 61 Gipps St Mulgrave 3170 Collingwood 3066 ph 03 9796 2413 ph 03 9419 7188 Fx 03 9707 4738 fx 03 9419 7911 Nancy Krause Brian Waters Conservation Coordinator Industry Specialist Moreland City Council Business Victoria Locked Bag 10 Level 11, 55 Collins St Coburg 3058 Melbourne 3000 Ph 03 9240 1138 ph 03 9651 9846 Fx 03 9240 1186 fx 03 9651 9304 Kelly Lodge Nigel Wolsteacroft Office Facilities Manager Facilities Technician BP Amoco Australia Epworth Hospital 360 Elizabeth St Melbourne 3000 89 Bridge Rd ph 03 9286 4324 Richmond 3121 fx 03 9268 3133 ph 03 9420 5234 fx 03 9428 6882 Helen Lewis Trish Wunderlich Market Development Manager Promotions and PR Manager EcoRecycle Victoria Sheraton Towers and Southgate Level 4, 478 Albert St 1 Southgate Ave. Southbank Melbourne 3000 ph 03 9626 4127 ph 03 9639 3322 fx 03 9810 3315 fx 03 9639 3077 Advisory Group