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European Affairs
Special Report: The Rocky Road to Johannesburg
How Companies Can Achieve Environmental Leadership
Wayne S. Balta
Vice President, Corporate Environmental Affairs and Product Safety, IBM Corporation
For most businesses, traditional environmental management largely involves complying with laws and regulations and responding capably to crises. In other words, it means doing what is required by others (and doing it well), but not necessarily doing more. That kind of approach is essential, but it is also limited, because simple environmental management plans can often be tactical and reactive, instead of strategic and preventive.
Environmental leadership goes well beyond this. It involves developing strategic plans that are integrated into basic business operations. It means open dialogue, constructive work with interested external constituents, and creating positive changes that others can accept and follow.
There are many compelling reasons to pursue environmental leadership. They include: employ-ee, customer and stockholder interests, the complexity of laws and regulations and the prospect of new legislation, pollution prevention, business efficiency, business opportunity, and global image and brand value.
As global markets increasingly look for products that minimize impact on the environment or for completely new ways of doing business that also happen to minimize impact on the environment, the companies practicing environmental leadership will be better positioned to succeed. Not only is environmental leadership the right thing to do, it also makes good business sense.
An essential element of such leadership is the execution of a common global environmental management system (EMS). This means performing in the same manner no matter where in the world the company operates.
There are many aspects to a common global EMS. The first should be a comprehensive set of internal and external audit programs. This requires candid acknowledgment of past mistakes and prompt corrective action. Another is the practice of "design-for-the-environment," which also reduces costs and ensures flexibility in manufacturing operations.
A third aspect is a commitment to doing business with environmentally responsible suppliers. Another element is active participation in voluntary programs, which can often produce better environmental benefits at a lower cost than regulations that prescribe exactly how something must be accomplished - and suppress innovation in the process.
Examples of voluntary programs include the World Wildlife Fund's Climate Savers program and three programs managed by the U.S. Environmental Protection Agency: the Energy Star program, the National Environmental Achievement Track and the Climate Leaders program.
A fifth component of a global environmental management system is voluntary disclosure of information on a company's environmental performance.
A second area of environmental leadership involves technology. Here, we should think in terms of "eco-efficiency" as defined by the World Business Council for Sustainable Development - in essence, creating products and services with increasing usefulness or value and decreasing environmental impact.
As new breakthroughs are made in microelectronics and data storage technology, these technologies have become more eco-efficient by enabling greater performance with the same or less energy consumption.
A third area of environmental leadership and commitment to best practices involves the design of products. Companies should focus on using recycled and recyclable materials; improving energy efficiency; selecting environmentally preferable materials and finishes; and designing for disassembly in order to support reuse and recycling.
A fourth area of environmental leadership is the application of technology and products by customers to help solve complex environmental problems. In my company's experience, this occurs through deep computing, simulation and modeling and visualization. Deep computing, computing power, advanced software and sophisticated algorithms can be applied to analyze and address increasingly complex problems such as climate change.
With simulation, digital solutions can replace their less preferable physical alternatives, such as chemical reactions. And with modeling and visualization, we can forecast environmental impacts and better communicate them for improved policy and decision-making about the environment and natural resources.
Finally, the fifth area of environmental leadership concerns the advent of e-business and the tremendous implications it can have for economic development and environmental protection.
Simply stated, e-business in a networked world can remove traditional barriers for people around the globe to start or reinvent businesses and participate in economic development.
It can enable resource-efficient practices in the supply chain and in the workplace, such as telecommuting, the use of virtual teams and distance learning. And it can open up access to information for millions of people, allowing them to engage new global resources never before available to them.
In the supply chain, e-business enables products to be built on the basis of actual orders rather than forecasts. For business, this increases speed, efficiency and customer responsiveness whilereducing inventory. For the environment, it can save resources by reducing energy consumption and waste associated with the unnecessary building and warehousing of materials and finished goods.
Opening up access to information also benefits the environment and supports sustainable development. Education is a great example. It is an imperative for sustainable development. By providing access to remote sources of information and instruction, network computing can enhance the scope, reach and quality of education. It can also be a great equalizer, enabling more people to join the economic mainstream and contribute to the world's future.
A couple of current European policy matters will significantly affect business over the next five years, the first being provisions for product take-back and recycling. Much of today's concern involves increasing numbers of low-end products - namely, PCs and related peripheral equipment - that may end up in landfills without having been recycled.
My company generally supports the goals of the EU directive establishing shared responsibility of member states and retailers for collecting used electronic products from households, and of manufacturers for subsequent recycling.
Product owners, however, must also be actively involved in the recycling process. In addition to their responsibilities for returning products to collection centers, consumers should be required to pay clearly identifiable fees to fund the costs of product recycling programs. These fees can be collected from consumers at the time of sale, as is currently done in countries like Switzerland and Belgium, or at the time of disposal.
In the United States, my company offers a PC recycling service through which owners of personal computers and peripheral devices can recycle unwanted equipment. Owners of any brand of computer equipment can return their products to a designated recycler for a flat fee of $29.99.
The directive, however, also includes prescriptive treatment requirements, which may add substantial cost for all involved without commensurate environmental benefits. We are also concerned about the extremely confusing financing requirements and how they will be implemented. Current language in the directive may be at odds with existing, working systems, and we need to be careful that we do not end up with 15 different interpretations by the 15 EU member states.
The second important policy issue is the banning of materials as currently exemplified in the
EU's Restriction of Hazardous Substances Directive. It would ban lead, mercury and other materials from being used in electronic products. We recognize concerns about these and many other materials in our day-to-day lives, and we are certainly researching and trying to develop safe and effective substitutes for them. That includes the very difficult phase-out of lead from the world's most advanced and complex information technologies and products.
We will do all we can to address the directive's current requirements, but we must be very careful with legislation that seeks to ban entire classes of compounds. This "one size fits all" approach to the management of chemicals typically stems from an inadequate understanding of the benefits of these materials and their real environmental impact.
Eliminating lead involves far more than finding substitutes for the tin/lead solder that is used in electronic assembly operations, where there have been a few successes. Thousands of components and processes will require evaluation, changes, and re-qualification to ensure that they can withstand new processing parameters associated with lead-free systems. In addition to these quality concerns, eliminating lead from all electronic products is likely to be very costly.
There are also safety impli-cations to consider. For example, eliminating lead in certain cable applications can result in product safety impacts that are not fully understood. And there are still very few data on the impacts of potential substitutes.
Moreover, society has over 40 years of data on the reliability of information technology products made with lead. There is insufficient knowledge on the reliability of lead-free substitutes. Substitutes may be adequate for low-end circuit cards in games and toys, but not for high-end servers, with the most advanced internal technologies, supporting global medicine, banking, transportation, energy, security and the armed forces.
It would be prudent to start on low-end consumer products like games and CD players and learn from those applications before tackling the higher-end technologies and products that stand behind the world's most mission-critical applications.
In short, the January 2006 phase-out date under the EU directive is extremely aggressive. Existing exemptions within the directive are critical, and it is likely that more exemptions will be needed as we all learn more about the transition to lead-free electronic systems.
It is hoped that the European Commission's process for granting exemptions and establishing minimum thresholds will function expeditiously so we can avoid major disruptions as we change to new processes that will meet EU requirements. For corporations on both sides of the Atlantic, time is of the essence.