Strategic Direction in a Competitive Environment

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Ask the Experts Content 2004

December 2004

Which companies have the most influence over ISO environmental standards?

I'm not close enough to the process to "name names." I was under the impression that, indeed, companies set the agenda and controlled the process with the International Organization for Standardization staff doing the coordination. An October 2004 report by the Pacific Institute changed my naive view. "Who Develops ISO Standards? -- A Survey of Participation in ISO International Standards Development Process" reveals that industry representatives comprised only one-third of participants in international meetings. Consultants, registrars and representatives from standard bodies constituted almost 40%.

Stakeholders in developing countries are significantly underrepresented. Western Europe dominates the voting base yet it represents only 6% of the world's population. This should all prove interesting during the development of a social responsibility standard, now in the proposal stage.

Without trying to sound too Machiavellian, I wonder if this lopsided representation may be one of the reasons we find ourselves still arguing over whether or not ISO 14001 adds value. It certainly is the bread and butter of its staunchest defenders: the consultants, registrars and representatives from standard bodies. This subject of value can become a heated discussion with some of these individuals.

For example, a senior manager from one of the registrars threatened me with a libel suit if I published anything negative about how his company operates. (The publisher decided not to include the name of the firm even though I supported the idea.) Recently, an executive from a standard setting organization got apoplectic when I suggested that an independent body review and critique a planned EPA proposal to study the effectiveness of management systems. He walked away in frustration and anger; he could not fathom that his own organization might be biased.

To me, all this "value challenge" is much ado about nothing. If you design any management system correctly and implement it as intended, you will gain value. Unfortunately, that is not the way that many of these systems are built -- it's all about checking off the certification box. Period. Bill Tokash, a consultant based in Chicago with Domani said it succinctly, "Paying for certification but not fully utilizing the benefits of the EMS is a lot like joining an expensive health club, not working out and then blaming the health club for not improving your fitness!"

What is your impression of the current slate of EH&S conferences and workshops? Are they worth the time and money?

Some are excellent; others are definitely a waste of resources.

For-profit conferences and workshops can be a mixed bag. Some organizers try to maximize profits by selecting speakers who may have little to offer, but are willing to pay their own way. They pass over the best speakers who are the recognized subject-matter experts on topics covered, but require compensation. Check to see who has been teaching the course and for how long. If the course has been around for many years and has been given by the same individual, it is a sure bet that it will be good.

Professional society and trade association conferences also vary widely. Organization Resources Councilors and the Conference Board carefully select their speakers to ensure that the material is of good quality and the delivery is done well. I recently attended the NAEM meeting in Orlando (formerly the National Association for Environmental Managers, now the Premiere Association for EH&S Professionals) and it was definitely worth the trip. The Auditing Roundtable is another meeting that is a sure bet.

But even with these "sure bets," there is a continuing problem with company-centric agendas which can include a parade of spokespersons engaging in public relations for their companies. Yes, they offer an optimistic vision of how great some things can be handled, but they also can be a depressing reminder to most attendees who are struggling just to maintain their basic programs.

For example, I recently talked to one EH&S VP who indicated that he does not go to professional or trade meetings because he is tired of hearing the upbeat, essentially, public relations presentations -- he wants substance and a deeper understanding of the issues and the "how-to." The point is that conference organizers need to urge their speakers to reveal not just the successes, but the challenges and issues these companies faced along the way; otherwise, these presentations will lose their relevance to the audience. The meetings offered by the World Resources Institute and the Global Reporting Initiative often address cutting-edge, sometimes controversial, issues and are very well attended.


November 2004

What are glaring examples of "affluenza" relative to the environment?

For those readers that may not be familiar with the term, here is the definition: affluenza (af-floo-en-zuh) n. an extreme form of materialism in which consumers overwork and accumulate high levels of debt to purchase more goods (affluence + influenza). The term grew in prominence after a book by that title and a PBS television show.

Most uses of this term are in the context of the social phenomena of materialism and the psychological damage that it can inflict. However, over consumption is at the core of this "affliction" and, for that matter, many of the world's environmental problems. Consumption as an environmental issue is receiving increasing attention. For example, a recent article by John Ehernfield, "Searching for Sustainability" in Reflections makes the argument that industry's current approach to sustainable development focuses on the symptoms with quick technical fixes; but this mind-set ignores the root causes, namely conspicuous consumption.

Getting back to your question, I consider the notion of space tourism completely "over the top," literally and figuratively. Those rockets don't pump out perfume, folks. Some are predicting that a multi-million dollar industry could emerge from the work by entrepreneur Burt Rutan. Three minutes in space for $190,000. A close second might be the offer by Zero Gravity Corporation -- a few minutes of weightlessness for $2,950.

Press reports never mention the environmental consequences of such blatant consumerism. I suppose that this omission is a bit like press coverage of smoking in the 50s. No stigma, in fact, just the opposite; smoking was sophisticated, even "healthy." Today you are a pariah if you light up in public.

I predict that in the not-too-distant future NGOs will start to put metrics associated with these perfectly legal activities in the hopes of enlightening the public to the long term environmental consequences. For example, Professor Ann Rappaport at Tufts University shocks her students by relating the fact that a New York to London round trip flight in a 747 at 78% occupancy results in 2,780 pounds of CO2 per person. That's 440 tons for the 747's round trip. On the other hand, the grand total of annual emissions for the Tufts diesel shuttles operating daily on a constant loop between campus and the Davis Square transit stop is 70 tons.

What are the best magazines and journals in which to publish articles as a means of marketing my consulting firm?

The "where-to" dimension of your question has been covered previously in an "Ask the Experts" column we wrote in December 2003. In addition, there is an excellent analysis of the options available to writers in the August 8, 2001 issue of "Eco-Management and Auditing." It primarily covers journals of interest to academics, but it is so well researched that it includes journals of broader reach in which Steve and I publish.

But there are other considerations. The publishing industry has undergone a revolution over the past decade due to the ease by which PDF files can be shipped around. Everyone is familiar with the tremors that Napster caused over file sharing of copyrighted music. Well, similar jolts have shaken the publishing industry. In the past, journals were hardcopy only and it was awkward and expensive to copy and distribute articles -- better to just pay a fee and get the publisher "in the loop." Today, articles can be posted on the Internet or distributed to thousands of people for free at the push of a button.

Initially, some publishers were reluctant to change and sent authors onerous copyright agreements severely limiting the use of electronic files. But authors pushed back and demanded that they be allowed to distribute their articles to colleagues and post files on their personal webs. Today, this appears to be the norm, but not always. You need to find out exactly what you are allowed to do.

Another consideration is that publishers typically generate high quality, high resolution files. This is understandable, but for distribution via e-mail it can be problematic. Through trial and error I have found that files of less than 200kb are not a problem, but when they exceed 400kb some recipients will object. Providing the article as an e-mail attachment is superior to providing a web link; it's right there -- people don't have to click to get at it.

Some editors and publishers are great to work with -- Joel Makower (Tilden Press, Inc.), Ginger Griffin (John Wiley & Sons, Inc.) and Angela Nevel (Stevens Publishing) accommodate such needs.


October 2004

What is a "non-governmental organization" (NGO)?

"NGO" is a broad term encompassing a wide array of diverse organizations that are beyond any simple definition. NGOs can be private agencies that support international development or can be indigenous groups organized nationally or regionally. They can be citizen groups that raise awareness among the public and influence government policy. Various charitable and religious associations that mobilize private funds and use them for the development of society also are considered NGOs.

They are typically nonprofit, voluntary organizations structured to provide a service or provide development support to communities or to some greater societal goal. They're also often independent, non-sectarian organizations working for the empowerment of economic and/or socially marginalized groups. In our profession, I suppose one might consider "the environment" as a marginalized group with NGOs acting to protect the flora and fauna that obviously don't have the wherewithal to send a lobbyist to Washington, D.C. At the UN, private bodies that do not have any of the following fundamental features are recognized as NGOs:

  •  Commercial organizations

  • Organizations that engage in violence or advocate violence as a political tactic

  • Organizations that have the stated goal of replacing existing governments

  • Organizations that are under direct control of any government

There are also "NGO pretenders" that may be registered legitimately as NGOs but serve none of the intended purposes. They even have acronyms and some of the more amusing are:

  •  BRINGO (Briefcase NGO) -- nothing more than a briefcase carrying a well-written proposal

  •  ComeN'GO (Come & GO NGO) - appears spasmodically; only used by the owners when the NGO pasture looks greener

  •  CONGO (Commercial NGO) - sets up businesses in order to participate in bids, helps win contracts and reduce taxation

  •  CRINGO (Criminal NGO) - Organization established for illegal purposes, especially import-export (i.e., smuggling; common in transition economies

Although these acronyms are amusing, the fact remains that some NGO pretenders have been created for questionable or illegal reasons. The scrutiny over the creation of such organizations has increased dramatically since the 9/11 terrorist attack. For example, I created a university-based environmental research organization, Center for Environmental Innovation, back in 1997. It took an effort spanning six months and two thousand dollars in legal fees to get through the IRS hurdles to receive the converted 501 (c) (3) status as an educational NGO. Today, it would take several times that effort.

I heard that DuPont reorganized their EH&S department after Paul Tebo retired. What's going on?

DuPont is ranked as having one of the best EH&S organizations in industry (DuPont calls it "SHE" to emphasize safety first). After Tebo retired, some senior EH&S professionals were surprised that they did not just replace him; instead, the company made a number of changes, some major and others more subtle. I suppose one could say it represents continuous improvement in action.

The first change involved creating the position VP Safety, Health, Environmental and Engineering to lead the SHE Excellence Center; this position was filled by Jim Porter, the former Engineering VP. It previously had reported administratively up through engineering, but under the functional direction of Tebo. Functional and administrative responsibilities are now combined. Prior to the reorganization, the Excellence Center was "on demand," billing its services essentially the same way as an external consulting organization (i.e., hourly tracking for specific projects). It now uses a chargeback system based on a number of factors, including historical and projected usage. The businesses have the option of going outside. This is the same route that a number of EH&S shared service-type organizations have taken.

Second, Linda Fisher was hired into a newly created position of VP and Chief Sustainability Officer reporting to the CEO. She is an attorney who was at the EPA and, prior to that, a D.C. law firm and Monsanto. Under her direction are several functions related to sustainable growth including three new groups: Product Stewardship Council for governance, Product Stewardship Steering Team for strategic direction and a Network for execution and technology exchange. EH&S VPs are fairly common among large corporations, but having two, one of which reports to the CEO, is unique.

Finally, the operations leadership team was realigned to match DuPont's transition from 23 strategic business units to five platforms. Specialized EH&S resources scattered among the businesses were brought under the SHE Excellence Center to be shared among all businesses. They remain in their original regional office locations. Each of the five business platforms has an EH&S leader plus embedded plant-level resources (typically 1 - 6 individuals, up to twenty at the largest facilities). DuPont has chosen a hybrid organizational structure with a decentralized philosophy, yet with centralized resources to promote governance, strategic focus or resource sharing.


September 2004

Many companies are entering their 2005 budget planning cycle. What should be high on the priority list?

Identifying and closing any "credibility gaps." There is a new generation of issues being driven forward by non-governmental organizations that are checking to see if there is any substance behind company claims. In general these claims fall along one or more of the following four tracts: (1) statements in 10K or annual Security and Exchange Commission (SEC) filings concerning the materiality of EH&S liabilities; (2) certifications, standards or codes of practice that operations or products conform to; (3) assertions of responsible corporate citizenship; and (4) regulatory compliance status.

EH&S managers historically have paid close attention to regulatory compliance, the last item listed. This is one budget-line item that rarely gets overlooked and is one with which EH&S managers can most readily counter outside challenges. It's the other three in the preceding list that are becoming problematic. The first, the materiality question, has been elevated to new heights because of the Sarbanes-Oxley Act of 2002. A number of well-respected companies with excellent auditing systems are under the gun. For example, Dow is facing scrutiny by shareholders who are asking the SEC to investigate "a number of inadequacies and irregularities" in public claims. Both 3M and DuPont are facing messy product-safety issues.

The second issue involves some of the companies that were quick to sign onto industry initiatives such as the U.N. Global Compact, Equator Principles, Responsible CareŽ and ISO 14001. These companies now are being challenged to demonstrate substance behind all the hype. The administrators of these initiatives are beginning to react to public and NGO pressure to eliminate "free riders" that "game the system" by implementing the programs with minimal effort and with no intent of delivering the stated long-term objectives.

The third claim - responsible corporate citizenship - is the hardest to address since there are few social responsibility performance thresholds that can be quantified precisely and that conclusively define responsibility. Unfortunately, business management may view social responsibility narrowly as an issue handled by increased public relations and philanthropic activities within the community. A lot of effort can go into generating slick EH&S and community reports, but where is the thoughtful evaluation of what really matters for a company operating in or selling to a particular region?

The bottom line is that the relatively comfortable world of EH&S regulations is rapidly being augmented by a very fuzzy new world of governance concerns that must not be overlooked.


August 2004

Which are the most reputable Green Tag companies?

Richard: First some background. Green Tags are a type of certificate representing the environmental and social benefits of renewable generation. They are used to support the development of new sources of renewable energy generation. As such, they are tax deductible, if purchased through a non-profit such as the Bonneville Environmental Foundation. The system differs from directly purchasing "renewable electrons" in that green electricity is not always available in the region in which you may live. In effect, Green Tags separate the benefits of renewable generation from the electricity itself. The vital question is not the reputation of the companies either generating the electricity or selling Green Tags, but the soundness of the verification system itself. There are organizations, such as the Center for Resource Solutions, that offer "Green-e" certifications for companies that supply renewable energy. They conduct a formal audit of the generator's records to verify that the quantity of the renewable generated or purchased, as a minimum, equals what was actually sold under the Green Tag program. In a perfect world, everything would be done according to the intent of the program and all companies would be on an equal footing. Since renewable energy commands a premium price, there may, however, always be the chance that some company may get "creative."

Years of financial scandals have demonstrated that when it comes to finding loopholes and "cooking the books" to make a short term buck, nothing quite beats highly motivated individuals, even when faced with external certifications, stacks of professional guidelines, SEC regulations, and criminal penalties. Enron (in the energy business) is Case Study #1 in this regard.

So, how does one find a reputable green tag company? My suggestion is to do some due diligence: (1) check to make sure that there is a verification system in place; and (2) through an internet search, look for any major issues brewing with the companies involved with the Green Tags of interest. Beyond that, there really is not much else you can do, aside from making the commitment to buying the Tags in the first place. Which brings up the essential point: if every single customer were buying Green Tags, the generators and the government would, I believe, take notice and implement even stricter assurance systems and greater transparency.

Industry has made much progress improving the environment, yet environmentalists refuse to acknowledge this success.  What's going on here? 

Richard: I suppose the crass answer is that environmental activist organizations are in the business to point out industry's failures - both real and alleged - and push their own agenda. It is big business in and of its own right, employing thousands and raising millions in donations. They are behaving as expected and building their support base.

I think the real answer is, however, related to how these two groups -- industry and environmentalists -- perceive the world. The operative question might be, "Just how much (environmental progress) is enough?" or "Is the proverbial glass half full or half empty?" The answer is obvious: it depends if you are the waiter (company) pouring (out resources) or the customer (stakeholders) waiting for the drink (benefits to society). It also depends on just how big the glass is.

There are currently major differences in perceptions of where things stand vis-ŕ-vis the environment. Viewed from the perspective of companies that are proud of their efforts, the glass is overflowing. But the dilemma soon becomes apparent if the size of their glass is no bigger than regulatory compliance. Confusion is added to the mix if companies are using terms such as "environmental excellence" to tout their efforts when an objective, independent evaluation may reveal that they are barely doing more than baseline compliance. From the perspective of activists, the glass is much bigger. They define it not just by regulations but by progress toward preventing long-term environmental issues facing the world. To some activists the glass is not even partially filled and it is leaking faster than it is being replenished (unsustainable). It is a very big glass, indeed.

Who is right? In the long run, what matters is what stakeholders perceive the situation to be. Ultimately, the "customer" who pays the bill has the last word. The waiter's opinion is of secondary importance. The key point is: companies need to evaluate where they stand according to stakeholder expectations. Their own opinions of their performance, even benchmarked within their sector, and the opinion of regulatory agencies are narrow dimensions in this evaluation. The "wild cards" in this game are the well-respected, nongovernmental organizations (NGOs) that have a higher trust level with the public than the corporations and even the regulators.


July 2004

What impacts will Non-Government Organizations (NGOs) have on EH&S organizations?

Richard: Potentially substantial. The past thirty years was all about regulations. The coming decades may be all about voluntary (but de facto) standards, certifications and partnerships with NGOs. Current EH&S organizations were established to handle mandatory government regulations. Where is it written that the next generation of "EH&S and social responsibility activities" will be run by these same departments? Indeed, it may be more likely that other functional areas within companies take over these responsibilities. It's already underway.

The next generation of EH&S and social responsibility issues will influence companies in unconventional (i.e., non-regulatory) ways. Unfortunately, management's focus has been on positive ones (e.g., competitive advantage green products and processes). Nonetheless, business management recognizes the powerful bottom-line impact that these issues can have on companies.

Contrast this with the current state of regulatory compliance. EH&S departments have grown increasingly efficient at handling these obligations. EH&S regulations, for the most part, impact processes within the fence line and thus, affect areas that are under management's control. Management may not like regulations, but they are much more familiar with the EPA and OSHA than this loosely-defined universe called NGOs over which they have no control.

In the first half of the past century, EH&S obligations were met by generalists typically within the plant utility or human resource departments. Specialized departments sprouted with the buildup of regulations. NGO-driven activities may be at a point comparable to the emergence of regulatory activity in 1970. Business management may view EH&S departments as the technicians handling the same old mundane regulations. On the other hand, they may view emerging NGO-related issues as where the really serious action will be. Faced with these dynamics, how might management respond?

There is already some movement to put EH&S governance-related activities (a hot button of NGOs) under the corporate audit staffs. EH&S and social responsibility reports are being taken over by communication departments; the EH&S departments are the data gatherers. New, high-level positions with titles such as "VP of Sustainable Development or Social Responsibility" are being created outside the chain of command of traditional EH&S organizations. Product certification efforts are being driven by sales and marketing groups or at the highest levels within the company.

So what does this mean to EH&S departments? Change your image and expand your business acumen, or be resigned to be the equivalent of the technicians handling the same old regulatory stuff.

Will the movie The Day After Tomorrow have a positive or negative impact on support for global action to curb greenhouse gas emissions?

Richard: Lots of people have weighed in on this question. It certainly has sparked controversy. NASA issued a directive to its employees not to talk about the film and once that leaked out, they promptly backed away from their gag order. Environmentalist George Monbiot commented," The Day After Tomorrow is a great movie and lousy science." The liberal spin doctors at Moveon.org have positioned the movie as another indicator of "the enormous threat that President Bush is not dealing with." And on and on it goes.

I have not seen the movie and will not until I can rent the DVD (I've read the story line, however). I'm already overdosed on special effects substituting for a script of substance. Yes, the movie will at least inform people that the record-breaking cold spell in New England is an indicator of global warming instead of just the opposite. But, I suspect that the number of enlightened folks will be more than offset by those who will believe that this is another vivid demonstration of environmentalists touting wacky theories.

My feeling about this movie is one of utter disappointment: Hollywood flash, predictable plots and rationalizations over why science had to be sacrificed to keep the audiences' attention. There are screenplay techniques that could have been used to represent a more realistic period of time. Citizen Kane, considered the greatest movie ever, spanned the life of an individual from childhood to death. Consider the Star Wars trilogy and its expansive time frame. The award-winning television series Roots covered a time period spanning generations. With the right script, the movie could have turned the issue of slow climate transformation into a compelling story that illustrates each generation's responsibility for protecting future generations.

Marlon Brando playing the boxer, Terry Malloy, in the Academy Award winning movie On the Waterfront tells his brother, "I coulda had class. I coulda been a contender. I coulda been somebody, instead of a bum, which is what I am." The Day After Tomorrow "coulda" had class instead of expensive special effects. It "coulda" been a contender to rival the impact of Rachel Carson's Silent Spring for awakening international environmental consciousness. It "coulda" been something to stimulate serious debate instead of tacky controversy and political swipes. Instead, it is just a movie that eventually will be forgotten. But, it will make a lot of money quickly ($400 million worldwide and still counting) which is what matters to the producers who will be long gone when the real effects of climate changes begin.


June 2004

According to principles of good business practice, how should companies staff and structure their EH&S organizations?

What an intriguing way to ask this question. Nearly all of the literature that I have read on EH&S staffing and organization approaches this question from either the perspective of EH&S managers (i.e., what they think it takes to get their job done) or from current practice (i. e., an examination of case studies or benchmark data). You have approached it from a more basic level centered on business performance and efficiency.

EH&S managers can sometimes wrap themselves up in a flag of self-righteousness, but in reality, there are many other functions that require attention to governance, employee and community concerns, legal issues, operating efficiency, and political sensitivities. Maybe EH&S has one of the broadest mixes of these concerns (which certainly makes it interesting work!), but it should be governed by the same business fundamentals.

There are scores of books which deal with staffing and organizational design. None are specific to EH&S. All of these are based on core principles of how individuals, teams, and broad organizations function together. The very best information has come out of two recent research studies that did not set out to examine staffing and organizational design, but nonetheless, found that the most successful companies today have several fundamental characteristics that lead to success.

The first research study is summarized in Jim Collins' Good to Great. He found that the successful companies had created a "culture of discipline" which allowed freedom and responsibility within a set framework. Key to this was "the right people on the bus, the wrong people off the bus, and the right people in the right seats." Successful companies avoided hierarchal, bureaucratic structures in a culture that was not overbearing.

The second study by a team lead by Professor Nitin Nohria at Harvard found that no particular organizational structure is the "right structure" that defines the winners. The research team found that it was important to trim layers of management and bureaucracy and that simple structures and processes were best. Streamlined rules and regulations with a high degree of sharing using the latest information technologies were important.

So what does all this mean in the context of EH&S? Many EH&S organizations are almost the antithesis of good business management practices. Traits of some EH&S organizations include an unwillingness to deal with problem employees, a preference for rigid rules instead of a focus on employee competency, complex structures (e.g., safety and health separated from environment because the managers are at odds), functionally isolated, rudimentary information systems, and so on.

For EH&S managers wishing to make fundamental changes, they might consider referencing these core organizational principles as justification for moving to something more in line with current business thinking.

Why is the rest of the world focused on sustainable development while the U.S. seems to ignore it?

The words "focused" and "ignore" imply that the U.S. is at opposite ends of the spectrum from other countries. I think it is a question of degree and no country is either truly focused on or ignoring sustainable development, in spite of all the rhetoric you may read or hear. That said, the U.S. certainly seems to be lagging behind.

This opinion is based on conversations with leading EH&S professionals from other countries and the trends in emerging research, non-government organizations' activities, and company programs. Some of the very best work and literature articles on sustainable development originate outside the U.S.. For example, I think that it was more than just coincidental that CERES, based in Boston, headquartered the Global Reporting Initiative to Amsterdam. As they say, you need to "go where the action is" and most of the top reports are coming out of Europe.

In some respects the U.S. is a victim of its own success in solving highly visible and acute problems in the second half of the past century. Opinion surveys confirm that the environment is still a concern, but it just does not have the immediacy that the economy, jobs, and the war on terrorism have. Emerging environmental issues are complex, chronic, long term, and most significantly, "over there." Developing nations are facing the kinds of problems the U.S. faced in the past century. And developed countries such as Japan and those in the European Union have historically been faced with population densities and resource issues on a different scale than the wide open and resource rich U.S..

A more subtle aspect is that although the U.S. consumes like no other country on the planet, the "smokestack" industries have shifted overseas. The pollution that was in Allentown, PA, is now in China. Out of sight, out of mind. When we are done with all this stuff, we still have vast areas to dispose of the refuge. So what if we have depleted the North Atlantic; we can always import fish from the South Pacific.

Clearly, this is an unsustainable path for the U.S., but the political climate will not support a realistic assessment of where this might be headed. In the absence of leadership out of Washington, I'm afraid that it will take an environmental crisis or major resource shortage to re-calibrate the public's perception of the need for more sustainable practices.


May 2004

With so many attempts at adding business value through pollution prevention, environmental management systems and other initiatives, why are EH&S staffs and budgets still shrinking?

GEMI's first booklet on the topic, Environment: Value to Business, focused on the traditional sources of environmental value such as pollution prevention projects or other manufacturing or service programs along the supply chain. Often these efforts can be justified based on the "hard numbers" (i.e., they meet threshold financial hurdles set by the company). Most of the effort over the past twenty years has been in these areas and as a result, most of the "easy wins" (a.k.a. low hanging fruit) have already been realized. I detect a significant drop off in pollution prevention-type activities led by environmental departments since the enthusiastic mid-1980s through mid-1990s. In part, this is a positive indicator since design engineers have assumed greater responsibility to build these considerations in at product or process conception. The earlier flurry of activity by environmental professionals was often focused on retrofits.

Much of the interest in environmental value creation today, however, is at the enterprise or shareholder level. Not surprisingly, this is the focus of GEMI's third, recently released booklet that Steve mentioned above. In the distant past, corporate value was all about tangible assets: plant and equipment. Today, a company's shareholder value can be as much as 75% intangible assets: alliances, innovation, brand equity, leadership, strategy, and so on. The environmental reputation of a company can be a positive augmentation or a major destroyer of shareholder value. Think Johnson & Johnson and Union Carbide.

Environmental professionals are sometimes under the mistaken impression that unless the numbers show a positive return, it's a no go. That's not necessarily true if they can articulate the intangibles. Plant managers are usually the hardest to sell the benefits of intangibles, but the closer you get to the top, the more amenable they may be. In the final analysis, executives are especially responsive to activities that enhance the following four broad categories:

  • Access to competitive natural capital (property, materials, and licenses)
  • Access to competitive human capital (development, reputation, and relationships)
  • Strengthening the supply chain (reliability, low cost, value added to customers, etc.)
  • Product and process reliability, efficiency, and liability reduction

What are the best universities to seek a Ph.D. in Environmental Management with a focus on business practices? 

I suggest you study the literature from the World Resources Institute, and note specifically the "Beyond Grey Pinstripes 2003" booklet. This booklet is free and ranks schools around the world by their environmental programs related to their MBA programs. Although this is about MBA programs, it gives you a good idea of which colleges are very active in the area of business and the environment. 

There are, of course, many other factors you will need to take into consideration such as the quality of their Ph.D. program, cost, availability of scholarship funds, and location preference. These evaluations have to be done individually, but this initial reference booklet can really narrow the field considerably. Obtaining a graduate degree is a major investment in time and financial resources, not to mention lost income during the time you spend getting your MBA or Ph.D. in which you could have been gaining practical experience. My recommendation is to invest some effort in tracking down some recent graduates from the university you are interested in and determine if they think it was worth the effort to attend that particular program.

There are some occupations that require advance degrees to progress professionally; research or university positions are the obvious examples. But for most others, it can be a much more difficult evaluation. Ivy League schools such as Harvard and Yale offer prestige and networking opportunities, but they are expensive and may be no better than several years at an "Ivy League" company, non-government organization or government agency with a reputation for excellence in employee training and experience. General Electric, Microsoft, and DuPont are obvious company examples, and do not overlook experience with the EPA, a state or foreign environmental agency, or a NGO such as Environmental Defense.


April 2004

We are facing another cutback - Question 1: Any suggestions on how to go about doing more with less?

Cutbacks are ubiquitous nowadays, especially among groups viewed as staff overhead. EH&S departments are almost always characterized as such. It reminds me of the classic I love Lucy episode with Ethel and Lucy trying to keep pace with the assembly line at the chocolate factory. Something's got to give. EH&S professionals are deeply committed and do not want compliance issues, injured employees or their company's reputation jeopardized. They work all the more frantically, resorting to superhuman feats just trying to keep up, just like Ethel and Lucy. 

EH&S professionals are so busy that they rarely step back and critically examine what they are doing and why. They assume that they do not have enough direct control and discretion to change the current situation. They become boxed into a narrowly defined role that paradoxically provides personal satisfaction for several reasons. First, the "I'm so busy!" complaint is a code word for "I'm so indispensable -- therefore I should not worry about being laid off." Second, it is very gratifying to solve the crisis and save the day. Third, by doing the same things the same way, it releases individuals from having to make the really hard decisions that they could ultimately be held accountable for. 

Taking direct, deliberate action takes courage. It means saying "no" to some demands. It means prioritizing activities and dropping the lower value-added ones. It means dealing with poor performers. It means going to upper management and clearly laying out what can and can not be done and why. It means relinquishing control and trusting others to do what they promise to do. 

For example, I have seen a number of EH&S organizations take over responsibilities that should be done by others, but would not say "no" because they "just knew" that those others would "screw it up." In reality, this is a variation of the "I'm indispensable" mindset. A better approach is to put energy into clarifying roles and responsibilities, supplying training, and then -- here is the key point -- auditing and reporting the results to management. If things do get screwed up, there will be ample warning. 

Meetings are another area that consumes a lot of wasted time. Set aggressive time limits. Start them precisely on time, chastise those who are late, and end them exactly on time no matter what. You will be amazed at how quickly things will change. The analysis paralysis that is so often present at meetings is reflective of the deeper problem: the inability to make decisions based on the facts available and move on. In the final analysis the problem is less about headcount and budget and more about competency, accountability, decisiveness, courage, and leadership.

We are facing another cutback -- Question 2: What periodicals are the essential ones we should continue to subscribe to?

Technical journals are generally linked to professional society memberships. You should assign at least one member of your staff to each of the major professional societies to access their journals. American Institute of Industrial Hygiene has The Synergist, Air and Waste Management Association has EM and The Journal, the Environmental Law Institute has the Environmental Forum and so on. These primarily focus on North American issues. International operations would need to subscribe to the appropriate country or regional publications. 

There is a plethora of Web-based newsletters, but most are just cutting the same stuff off the web. For general news and developments, GreenBiz.com is very good due to its search engine and easy access to Reports and Tools. European-based Environmental Expert (free/electronic) also has a good search engine and access to a wealth of information. One of the very best for international news is the International Corporate Environmental Reporting Site (free/electronic), but don't let the name mislead you -- it contains a much broader mix of environmental news with links to source material. For news and analysis The Green Business Letter (subscription/electronic) is good. 

One of the hottest news and analysis sites is Crosslands (subscription/electronic) published by Victor House News. Although it is new, the editor, William D'Alessandro, is one of the most respected environmental journalists with thirty years of experience. I highly recommend this site. 

For general environmental management articles Corporate Environmental Strategy (subscription -- recently changed to electronic) and Environmental Quality Management (subscription/hardcopy) are both good. Another excellent resource is Environmental Protection (free/hardcopy) because it contains my fantastic monthly column, Management Newsletter (Note to self: Control ego). 

Probably the most important resources are business-oriented journals and newspapers. Technical people may think that they don't need to keep abreast of this information, but they are doing themselves a great disservice. When all is said and done, we have to sell our programs and prove the value of our services to management. There is no better way to do this than to understand evolving business issues and techniques. Two of the most essential resources are the Wall Street Journal (subscription/newspaper) and Harvard Business Review (subscription/hardcopy). Another excellent resource is the MIT Sloan Management Review (subscription/hardcopy).

Postscripts: Where are the bright lights?  

A number of bright lights have illuminated the path to sustainable development over the past decade. Three of the brightest according to surveys such as the one recently published by the Center for Environmental Innovation are DuPont, Dow and Baxter International. That was then, but how is the illumination nowadays? 

DuPont is undergoing a major reorganization that will eliminate the Corporate SHE Center of Excellence. Paul Tebo, VP Safety, Health & Environment, will be retiring and other members of the group are seeking jobs within the company. Dow has been undergoing major consolidations and Sam Smolik, VP EH&S, will be retiring. Baxter recently cut back its top EH&S staff, including Bill Blackburn, VP & Chief Environmental Counsel. Other bright lights may be dimming, too. Christian Aid's January 2004 report, Behind the Mask, criticizes Shell for not delivering on their promises of social responsibility. Friends of the Earth's Failing the challenge -The Other Shell Report 2002 is also highly critical of Shell's performance. Bright lights such as Ford, Procter & Gamble, and British Telecom have also been under attack by groups such as the New Economics Foundation (see their report Corporate Spin). 

So where are the really bright lights nowadays? We'd like your opinion, because we're having a difficult time identifying them. The flip side of all this is that with the lights possibly dimming, now may be the perfect time to turn on your own company high-beams and build a solid reputation. But be warned: superficial efforts will not be tolerated in a world filled with distrust and sophisticated scrutiny.


March 2004

From a practical standpoint, how can a new EH&S manager undertake a high-level strategic risk review of a company's operations when it has hundreds of facilities?

It is essential for someone new on the job to discover quickly the hidden skeletons in the closet because within a year or two they will become their skeletons. You may survive if one or two of these issues erupts unexpectedly. No one is perfect. Beyond that, top management will begin to wonder if you have the situation under control and whether you have an adequate grasp of the issues. Management should be informed of these pre-existing issues and assured that you will be working on strategies to reduce their risk. 

You do not need to review every facility, only those that are most critical and a statistically significant representation of the others. In most companies and especially in large corporations, senior EH&S staff members have a good idea of which facilities represent the most risk. Typically, these are the sites that have: (1) handled toxic materials for decades; (2) had numerous problems in the past; (3) poor EH&S competencies, management systems, or understaffed EH&S departments; and/or (4) recently joined the company and have never undergone a thorough evaluation. 

Hopefully, all of these high-risk facilities can be evaluated. For the others, use a risk profile to prioritize the issues and take a statistically significant cross-sectional representation: many at the top, some at the middle, and a few at the bottom of the risk profile. Do not sample only high-risk sites, since this presumes that you already know the risks. Some of the low-risk facilities may have significant, heretofore unknown, issues. For some companies or business units that have scores of similar sites, consider doing a process map of the common processes and review a few representative sites.

There is an old saying that there are few resources to prevent problems but unlimited resources to fix them. The point is that if your assessment uncovers significant issues, budget constraints may suddenly evaporate and the resources you need for a more thorough investigation may be placed at your disposal. Management may not be happy, but they will be more receptive than being blindsided at some future point. After all, you were not the person who created these problems or let them fester out of sight for years.

How do EH&S departments demonstrate that they are adding business value?

Companies such as 3M and Baxter International have tracked the cost savings that EH&S activities have brought to the business. This gives a general indication of EH&S department value but, arguably, it is not necessarily a measurement of how a specific EH&S group is meeting business management's expectations and needs. For example, many of the pollution prevention projects for which 3M is famous were initiated by process engineers that were not in the EH&S group. In addition, tracking EH&S cost savings will not insulate a group from significant cutbacks, as Baxter International's recent EH&S staff reductions sadly demonstrate.

EH&S groups can "demonstrate their mettle" through a number of methods beyond just identifying cost savings. The most common is good (internal) client interaction - quality executive face time is important. Also, some groups conduct internal, written surveys of client satisfaction. If done properly, issues can be identified before they erupt.

The budget review process is another prudent time to get the issues out in the open. If the people paying the bills believe that they are not getting their money's worth, these discussions can be an early warning indicator. Client team meetings (to periodically check on how things are progressing) are another technique. Since corporate EH&S groups sometimes provide EH&S services to other EH&S departments, it is important that the EH&S groups get together on occasion to discuss how things are going.

Client points-of-contacts can act as an early warning radar for potential issues. These client points-of-contacts and written service agreements are often used in EH&S shared service departments. When these departments first formed (about a decade ago), written agreements tended to be quite formal. The paper work is less burdensome today, but the face-to-face discussions at the beginning of each new business cycle are still essential. A few (very few) companies have conducted formal value reviews to examine exactly how EH&S staff members spend their time. The objective is to drop low-value activities. 

Much of the value proposition is about management's awareness of what the EH&S group does. The best companies have systems to measure and monitor performance of the group and provide executives feedback on how well the company is providing EH&S services.


February 2004

Is Office Depot's announcement that they have issued the first office supply catalog consisting solely of environmentally preferable products that big of a deal?

I hate to sound like the two-handed lawyer, but on one hand it is and on the other it is not.

From a purely environmental impact standpoint, it is insignificant. I do not think that highlighting environmentally preferable products in a catalog printed on 100% post-consumer recycled content paper will have a measurable shift in the planet's well-being. Cynically, one might think that Office Depot has used an environmental message to do nothing more than market their products. Even though small regional "eco-friendly" office products suppliers have published similar catalogues for several years, Office Depot is the first major supplier in their industry to market in this manner, so they get the bragging rights and a little leverage.

That said, the planet is suffering "death from a thousand cuts." Maybe it can be helped by a thousand Band-Aids. If every company in the world promoted a positive environmental marketing strategy and offered eco-friendly products, the environment would undoubtedly be much better off. Not only would environment-friendly practices be promoted, but these messages would also serve as another form of public education.

Although Office Depot's effort may have a tiny positive environmental impact, similar efforts have had significant impacts, literally changing the way companies do business around the globe. Indeed, Office Depot's move may have been influenced by The Home Depot. In 1999, The Home Depot issued a wood purchasing policy that gave preferential treatment to suppliers who offered certified wood products. They were the first major home improvement retailer to pioneer the US market for wood products certified under the principles of the Forest Stewardship Council (FSC).

There are other examples. McDonalds worked with Environmental Defense and changed their food packaging techniques, affecting fast food packaging throughout the world. Chiquita teamed up with the Rainforest Alliance in an environmental certification program called the Better Banana Project. Many of these efforts started as less-than-friendly discussions between environmental organizations and industry. Nonetheless, they have resulted in positive changes that, in total, have had a major environmental impact.

Maybe, as one of the largest office products suppliers Office Depot effort will spawn other actions that, as a whole, will have a real impact.

How do I select the right environmental, heath, and safety metrics for my company?

A well-developed metric set is the result of a six-step process:

1. The first, and most critical, step is to interview the business executives to determine their concerns, priorities and the type of information they would like to review. This may be an iterative process; they may not know what the key issues are and some management education may be necessary.

2. After conducting a thorough EHS risk assessment, prioritize the most significant issues and develop key performance indicators (KPIs) around these issues. In ISO 14001 jargon, this is called an "aspect and impact" analysis. This step includes a forced ranking based, in part, on interviews with top executives and the company's policies and standards. Progress on the KPIs determines if your programs are really working and getting results on the most important issues.

3. Benchmark within your industry sector and determine what metrics other companies are tracking and reporting. Management does not want to be at the bottom on the heap -- it looks bad in the media. The "usual suspects" get identified in this effort (compliance, wastes, injuries, spills and emissions).

4. Next, utilize a forward-looking perspective and determine what metrics might be indicators of where the company stands relative to emerging issues. These may be the metrics that other companies do not track or are not even aware of. This takes some research, such as asking thought leaders, knowledge experts such as scientists what issues are on the cutting edge for your industry. The December 2003 column provided insights into the development and use of such 'leading' performance indicators.

5. Examine your overall management goals. How quickly do you want the environmental management system (EMS) fully implemented across the company? Include metrics for how well the programs are set in place. This step could also include opinion surveys of customers or employees on how well the company is doing. These metrics are typically leading indicators of performance and, in some respects, the most important ones. If you do well on these, the lagging indicators, such as accidents and spills, improve with time and stay improved.

6. At this stage, the metric set is developed and you will need to finalize the administrative issues. Hopefully, you can convince management to set specific targets and link at-risk-pay to a few of these. Certain metrics should be tied to operational areas to show top management what business units are "with the program." A universal problem is getting cooperation from the businesses "feeding the system" -- often one of the greatest challenges and another reason why it is so important to get management support and involvement from the very beginning.

You will need to carefully select what gets reported up the chain and how frequently. In total, management might need/want to see only half a dozen or so parameters. Many companies report KPIs up to the executives using a one page monthly summary with highlights, targets and trends so they can instantly see if things are off-track.


January 2004

Q:   I just received a direct solicitation from a well-established, older non-government organization that has never asked for contributions in the past. Are these groups running out of money?

Non-Government Organizations (NGOs) are facing increased financial pressure, just like the federal government, state governments and corporations. Many NGOs were well off in the late 90s because foundations were awash in money from investments. Before the economic downturn, foundations were literally scrambling to find worthy projects. In addition, direct contributions from businesses and individuals reached new heights. This is no longer the case.

From my own experience when recently seeking foundation money for an educational research institute, the Center for Environmental Innovation, it is exceedingly difficult to get even an expression of interest for projects that would have received immediate funding five years ago. NGOs are at a serious disadvantage unless they have long-established relationships with the organizations or individuals being pursued.

These financial difficulties extend to trade associations and professional societies. After cutting costs in every conceivable manner, corporations are now reaching into the bottom of the barrel to chop further. Corporations are asking tough questions such as, "Why do we belong to this or that organization?" and "What value do these organizations bring to our business model?" Professional society memberships are also declining. The word is out that EH&S job opportunities are not the best right now. It should come as no surprise that if fewer students are going into the EH&S professions, there will be fewer people interested in joining professional organizations, especially if they have to join on their own dime. Companies rarely sponsor individual memberships today. 

Some of these NGOs, trade associations and professional societies have built up extensive infrastructures that can no longer be supported. The number of societies with overlapping interests has grown substantially. For example, a health-related association is in the process of deciding if they should include the word "environment" in their name to increase membership. They are trying to sell this idea under the rubric that some members are taking on environmental-type work (multi-tasking is another factor in corporate cost cutting).

I doubt seriously if something as simple as a name change will draw in more members. The problem is more systemic than many are willing to believe. The market, so to speak, is saturated and these organizations face the age-old economic rule of supply and demand -- and what they supply is in diminishing demand. 

How can I determine if my salary is appropriate for the EH&S responsibilities I have?

Richard: A number of professional society surveys and magazine surveys provide this information. For example, Air & Waste Management Association and Environmental Protection magazine conduct annual salary surveys. There is also extensive information on the web. The best source is Monster.com's Salary Wizard. "Environment" is a designated job category that also includes health and safety responsibilities. It can be searched by an amazing array of delineators: locations, job title (about 25 are listed), job description, degrees, certifications, industry sector, size of company, to whom you report (by title), number of employees you supervise, and working conditions such as hazardous duty and shift work. One wonders, however, if the input data are sufficiently robust to support this fine differentiation, but the system does highlight the considerations involved in salary structure. 

A full, personalized Salary Wizard report is about $70. The most basic report (location and title) is free. Even this basic report includes salary range, bonus and benefit information. The U.S. Department of Labor Bureau of Labor Statistics Occupational Outlook Handbook is another resource filled with useful information, including salary data. An additional helpful site is EcoEmploy.com, which has several links to salary surveys for EH&S professionals. Local job ads are another fairly reliable benchmark. 

The most significant surveys are the benchmark studies commissioned by your company's employee relations department and conducted by consultants such as Mercer Human Resource Consulting. These salary surveys are often grouped together by   overall categories such as "facilities support" so they may not have precisely your job title. These studies are very expensive (tens of thousands of dollars) and confidential, but they are the definitive guide used by management to determine what your company may be willing to pay for different types of internal services. In other words, if you come to your next salary discussion armed with information from the web, management may not be convinced that your sources are the most reliable.

The bigger issue, however, is that it is a buyer's market and many EH&S people are just happy to have a job, let alone wanting more money. There may not be much leverage with management. The hardball approach is to do your research and then benchmark with contacts at professional meetings to see what the going rate may be in your general area of expertise. Unless they are a close friend, do not directly ask a colleague what they make; it's rude. Ask them what the word is "out on the street" for the type of jobs of interest. If you think you are getting short-changed, start looking for a new job and see what you come up with. If you can get much more elsewhere, tell your management and be prepared for them to say, "Fine - best of luck with your new endeavor." Then do it. But, remember there is a lot more to job satisfaction than just money.


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