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Linking Science and Technology to Society's Environmental Goals Setting Environmental Goals: The View from Industry A Review of Practices from the 1960s to the Present JOHN R. ENRENFELD * and JENNIFER HOWARD † Director, MIT Program on Technology, Business, and Environment, * and Doctoral Candidate, † MIT Technology, Management, and Policy Program, Massachusetts Institute of Technology CONTENTS INTRODUCTION 284 Stages of Evolution of Corporate Environmental Management, 285 Environmental Management as Problem-Solving, 285 Environmental Management as Compliance, 286 Proactive Environmental Management, 286 Managing for the Environment, 288 The Nature of Goals, 288 Environmental Goals and Stages of Corporate Environmental Management, 290 GOAL-SETTING IN THE STAGE OF ENVIRONMENTAL COMPLIANCE 291 GOAL-SETTING IN THE STAGE OF PROACTIVE ENVIRONMENTAL MANAGEMENT 294 Goal-Setting by Individual Firms, 297 Goal-Setting by Industry Groups, 302 Coordinated Action to Establish Legitimacy, 302 Coordinated Action to Promote an Environmentally Attractive Product, 305 Coordinated Action to Signal Environmental Leadership, 306 Coordinated Action to Seek Regulatory Relief, 307 Goal-Setting by Government-Industry Coalitions, 308
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Linking Science and Technology to Society's Environmental Goals GOAL-SETTING IN THE STAGE OF MANAGING FOR THE ENVIRONMENT 309 Industrial Ecology and Design for the Environment, 311 National Goals for Sustainability: The Dutch Covenants, 316 CONCLUSION 318 Measuring Performance Against Goals, 318 Outstanding Questions (and a Few Guesses as to the Answers), 320
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Linking Science and Technology to Society's Environmental Goals In this paper, a model of a four-stage evolution of corporate environmental management is used to structure a discussion of changes in the environmental goals of industry. As companies move from treating environmental management as a case-by-case problem-solving issue, to a regulatory compliance issue, to an issue for proactive management, and finally, to a central element of business strategy, the environmental goals they set necessarily change. What trends are discernible in corporate goal-setting over the last 30 years? And, since most U.S. firms are currently at the compliance or proactive phases of environmental management, what goals should be set to help them move towards the final stage? Prior to the 1980s, few firms actively set their own environmental goals. Typically, government regulations served as an embodiment of society's environmental expectations, and companies responded by complying with (or at least claiming to comply with) regulation. In the mid-1980s a number of high-profile incidents—the Bhopal toxic chemical release, the Valdez oil spill, and the assertion that ozone thinning was linked to CFC use—inextricably linked environmental degradation to the actions of industry. In response, companies took steps to articulate their own goals for environmental performance, which, in some cases, went beyond actions required by regulation. The internalization of responsibility for environmental protection demanded a significant shift in corporate attitudes and organization for some firms. Early corporate goals that went beyond regulatory compliance primarily targeted waste and emissions reduction. Over several years, goals set by individual companies began to include process-oriented goals in addition to targets for desired "end-state" conditions. Goals began to include commitments to reduce waste at its source, rather than at the end of the pipe. Several leading companies publicly committed to targets (e.g., zero emissions) that were clearly beyond their current technical and organizational capabilities in order to push the internal development of environmentally sound alternatives. Coordinated efforts on the part of industry groups and industry/government coalitions to define voluntary environmental codes of practice for their members emerged in the late 1980s. The goals set by such groups were different from individual company goals in that they aimed to set out new norms and values that would guide the actions of all firms in an industry. Rather than specifying particular performance targets or demanding strict compliance to specific standards, such codes allow companies to develop their own practices consistent with the guiding norms. While there is plenty of evidence that voluntary codes may reflect primarily a desire to legitimize the actions of an industry, or to preempt regulatory action by demonstrating the industry's leadership and commitment in environmental matters, the type of normative principles they espouse may lay the groundwork for a new approach to managing for the environment. In order to reach the final stage of environmental management, a firm must begin to "manage for the environment" in the sense of bringing environmental
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Linking Science and Technology to Society's Environmental Goals concerns into every aspect of business strategy, product and process design, and supply chain management. Furthermore, goals at this stage must acknowledge broader issues of sustainability and orient the firm towards energy and resource conservation, dematerialization, and elimination of substances harmful to the global environment and human health. The challenge for companies, industry groups, and governments at this stage is to set goals that can be put into practice at the company level but aggregate in a consistent fashion to the multi-dimensional and complex goals of environmental sustainability. The Dutch Covenants are an example of such a coordinated attempt, while industrial ecology and design for environmental are systematic approaches that can be taken by individual firms to reduce their environmental impact in a manner consistent with norms of sustainability. Environmental goal-setting by industry, while it has changed drastically over the past 30 years, remains problematic. We may question the extent to which environmental concerns really can become a central strategic concern for business in the face of competitive and financial pressure. Furthermore, environmental goals are inherently difficult to set. There is no single "customer" who can specify demands (as in, say, the case of quality targets), there is little scientific agreement on the ecological consequences of many economic activities, and the prospect for a rational, technical solution to many complex environmental problems is dim. A broad, normative set of principles that embodies process considerations (i.e., emphasizing loop-closing or dematerialization) may be one way to guide change. Industry cannot generate such norms in a vacuum, however. It is the role of government, industry, and the public to jointly and continuously articulate norms for environmental practice. INTRODUCTION Historically, industry has played a minor role in setting broad environmental goals in the United States. Environmental policy in this country is based on a notion of the environment as a public good whose protection and development lies beyond the individual concerns of private business. U.S. industries have traditionally held a short-term and myopic view towards environmental goal-setting. In a sense, the laissez faire economic paradigm is antithetical to broad, long-term goal-setting at all. The last three decades, however, have witnessed a shift in corporate environmental goal-setting practices. Paralleling social sentiment, industry goals for environmental performance have become more aggressive, more explicit and more far-reaching, as the rise in environmental consciousness in the 1960s spawned current concerns over global sustainability. This paper traces changes in corporate environmental goal-setting in the context of the overall evolution of corporate environmental management. It examines characteristic patterns and examples in each stage and presents an assessment of the potential for industry to set broad environmental goals.
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Linking Science and Technology to Society's Environmental Goals Stages of Evolution of Corporate Environmental Management Distinctive, evolutionary patterns of corporate environmental behavior have been observed by many authors. Hunt and Auster presented an artifactual description of five stages of corporate environmental development starting with "beginner," and progressing through "fire fighter," "concerned citizen," "pragmatist," and ''proactivist."1 Shrivastava referred to this process of environmentally directed self-renewal as "greenewal." That process, he states, is initiated by a strategic threat from regulations, public pressures, public safety concerns, or social expectations. The embattled firm then forms ad hoc strategic programs, testing their competitive benefits and, if necessary, expanding the organizational systems through institutionalization and cultural changes.2 The five stages shown in Figure 1 have been used by researchers at MIT to classify observed and anticipated changes as corporate environmental management evolves. A brief description of the attitudes and practices is given for each stage. For consistency with the latter part of this paper, we combine the third and fourth stage into a single one, "Proactive Environmental Management," in the discussion below.3 Environmental Management as Problem-Solving At this, the most basic level, the underlying assumption of the firm is that environmental protection is of little or no concern to corporate decision-making. Figure 1 Historical evolution of environmental management.
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Linking Science and Technology to Society's Environmental Goals Instead, it is viewed as an ancillary aspect of conducting business. Regulations are perceived as an unfamiliar nuisance. As a result, the organizations characterized by the lack of a permanent staff or budget for dealing with environmental issues. Very often, the plant engineering staff is called upon to handle environmental issues on an ad hoc basis. For example, when faced with the flood of environmental laws in the 1970s, Allied-Signal managers admitted to viewing the resulting expenditures as merely "a cost of the way we did business." 4 Few firms presently exist in this stage. Given the all-pervasive nature of today's environmental regulations, every company must have an understanding of environmental law, either in-house or through outside consulting services, in order to survive. Environmental goal-setting is virtually absent in this phase. Some smaller companies and larger laggards may still exhibit this type of behavior and management structure. Environmental Management as Compliance Advancing to this stage, the firm perceives environmental regulation as important enough to merit full-time attention. However, the firm views regulation, and not concern for the environment per se, as the motivator of new practices. Certain parts of the organization are altered, but the basic structure remains untouched. Dedicated compliance staffs labeled "government affairs" or "regulatory compliance" behave as buffers, limiting the collection of information and the impact that environmental regulation will have on the inner workings of the firm. These departments can exist on many levels, such as the operating level in the form of environmental engineering, the corporate level in the form of environmental counsel, or the political level through lobbyists who fight environmental statutes and regulations. Most publicly held U.S. corporations can count themselves in this stage while also moving toward the next. For example, an Office of Technology Assessment study determined that the standard industrial thinking was to treat process wastes and emissions as separate and distinct from the process itself.5 A few years ago, a Conference Board survey found that 65% of U.S. firms put resources into lobbying to change environmental regulations.6 The survey also found that while some U.S. firms located their environmental affairs function in either manufacturing or engineering, the legal department was listed slightly more often. When rating the factors that reflected in environmental policy decisions, 69% of the companies were motivated in response to legal or regulatory requirements, 21% were motivated in response to liability pressures, and 32% were motivated by social responsibility. This emerging social responsibility may be what is driving companies on to the next stage of the greening process. Proactive Environmental Management At this stage, the firm believes that environmental protection has certain strategic
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Linking Science and Technology to Society's Environmental Goals advantages, as well as significant cost reduction opportunities. Requirements for public disclosure of emission levels forced companies to examine their environmental practices from the point of view of the public and other stakeholders. By reducing their emissions below permissible levels, companies could perhaps influence the attitudes held by the public and government regulators towards their products and operations. At this stage, the goals of the firm transcend mere compliance with government standards and encompass the voluntary establishment of stricter standards. Often such actions result in profit increases through lowered operating expenses. Organizationally, this shift is often accompanied by the establishment of an executive level individual who is responsible for matters concerning the environment, and the beginnings of the diffusion of responsibility for environmental protection throughout the company. Environmental management staffs move away from their alignment with regulatory compliance and begin to associate with quality control and corporate strategy. Generally, such moves are accompanied by public statements of broad corporate commitments to protecting the environment. This is the transition through which market-based incentive regulations are attempting to push industry. By creating an economic value for pollution reduction, government, theoretically, will entice companies to reduce pollution below the stated requirements in an attempt to increase profits. As a result, many companies are beginning to enter this stage. According to a survey by Arthur D. Little of the top 100 companies in the Fortune 500 index, 49 had environmental Vice Presidents in 1991.7 Several widely publicized stories, some of which are detailed below, tell of companies reducing pollution beyond compliance levels while at the same time increasing profits.8 Later in this stage, companies may expand the scope of their proactive environmental management beyond mere pollution prevention at the end of the pipe. They may consider further reductions through materials substitution, process improvements, product reformulations, and waste recycling. At this point, the objectives of pollution minimization become diffused throughout the organization, becoming a responsibility of each operating department, not just of a select environmental or corporate management staff. In essence, environmental management becomes integrated into corporate quality management plans. Relatively few companies are at the stage of deeply examining their products and processes and making environmental considerations a priority at the design stage. It is difficult to determine whether a significant shift in corporate attitudes has occurred in those companies who do initiate such practices. Although corporate managers proclaim that "quality and pollution prevention are in the same boat," the corresponding underlying assumption appears to be lacking as evidenced by the reluctance of the operating staff to adopt this process change.9 This example exemplifies the need to understand the dynamics of cultural change fully. Some argue that the transition to this stage will be a difficult hurdle, as evidenced by virtually all of the billions spent on environmental equipment and on services
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Linking Science and Technology to Society's Environmental Goals to industry and government going for pollution control rather than pollution prevention.10 Managing for the Environment, A Transformation to the Green Company Since very few companies have made it to this point of managing for the environment, it is difficult to identify the corporate practices and beliefs of this stage through corporate example. This stage is reached when environmental concerns become a core strategic factor in corporate decision-making, infiltrating quality functions, financial measures, and performance criteria in a manner that leads rather than follows public policy. Companies will move beyond concern for the protection of the present environment, to considering the environmental impacts of their activities on future generations. Concerns about sustainable development are fundamentally different from the essentially compliance-related actions that characterize all of the earliest stages of corporate environmental management. Wise resource use and product life-cycle analysis become the instruments for firms to augment short-term goals with efforts at long-term sustainability through the design of new environmentally sound process and product technologies. There is much uncertainty as to how far or fast companies will go in this final transition step. In many ways the transition is deeper and more wrenching than the shift to total quality management has been. In the TQM case, the field is still littered with firms that are struggling to move TQM into their core competence and culture. For most companies, the management of the greening process becomes a carefully controlled process, and requires continuous monitoring of changes in the overall industry and guiding their own actions accordingly. It is for these companies that trade associations play such an important role. By outlining the industry-wide definitions of what the environmentally responsible company ought to be, they are providing assurances that the industry as a whole is moving together. Each participating firm will expend comparable effort, face similar liabilities, and reach the new paradigm at roughly the same time and rate. Therefore, it is from these trade associations that we can see the beginnings of a forecast of the definition of a green company. The Nature of Goals Prior to discussing specific industry environmental goals, it is necessary to clarify what we mean by goals. Goals for industry may take the form of specific targets (to increase market share to X% by year Y) or general statements of intent (Hewlett-Packard's corporate objective on citizenship is a commitment to "honor our obligations to society by being an economic, intellectual, and social asset to each nation and each community in which we operate"11). In many cases the distinction between these more general "visions" of a desirable future and specific
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Linking Science and Technology to Society's Environmental Goals targets is dim or becomes ambiguous. The forthcoming ISO Environmental Management Standard (ISO 14001) makes a distinction between the two types that is worth mentioning here12 environmental objective—overall environmental goal, arising from the environmental policy that an organization sets itself to achieve, and which is quantified whenever practicable. environmental target—detailed performance requirement, quantified wherever practicable, applicable to the organization or parts thereof, that arise from the environmental objectives and that needs to be set and met in order to achieve these objectives. In contemplating the setting of goals, one should examine these distinctions very carefully. Broad, policy-like statements or goals are fundamentally the exposition of a vision of a desirable future. They set a direction, but not specific actions to be taken to move in that direction. They are declarative13 in nature and their power to create action rests on the authority of the person or body issuing the goal. There is no promise in such goals, although they have strong normative power. The actualization is left to members and functions of the organization. Targets represent promises to achieve a determinable end-state by some certain time. Promises fall into a different category of speech acts, commissives,14 which commit the speakers, individually or as a group, to meet some explicit set of conditions by some time. The completion of a promise can be observed by examining the degree to which the target is satisfied at the time set. Fulfillment of promises depends on the resources available to the actors, their competence, and the strength of their intention to do what they have said. Goals and targets may be set by individual firms, by industries as a whole, or by external agents (i.e., regulators set targets for environmental and safety performance, and government consortia set goals for economic or trade performance of certain industries). The key feature of a corporate target is that it is a (public) statement that reflects a promise by an agent (the firm or industry) to take action to deliver a result to an external party (typically shareholders or the general public). Goals and targets, particularly those articulated in general terms, are not always met and it is often difficult to judge when a target has been achieved because there may be no metric by which to make this judgment. Some goals, like sustainability, that create a broad vision of the future are not intended to be met in a specific way, but to serve as symbols directed to the many actors and stakeholders that new meanings and values should replace or be added to the old set of cultural drivers. If a target is not met, the organization or actor loses legitimacy in the eyes of the party to whom the promise was made. The action of setting explicit targets thus in some way commits the agent to a course of action, validates this action, and punishes the agent for not acting consistently with the target, providing a weak enforcement mechanism. Confusion over goals and targets by both the acting
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Linking Science and Technology to Society's Environmental Goals agents and the listening publics has frequently led to loss of trust and legitimacy. The public tends to hear declarations of broad goals as targets and looks for specific accomplishments when none were promised. Whatever processes are to be adopted in setting goals and targets, firms need to be very clear as to their distinctive nature in public disclosures in order to avoid negative consequences later. Even with the potential down-side of setting goals and targets, there is still considerable value in the activity of goal-setting per se, regardless of outcome, because most players with environmental concerns believe that the setting of goals encourages a type of behavior that is favorable. In other words, working towards a goal may be as valuable as achieving the goal. This feature will come up later in the discussion of what we shall call "process" goals—i.e., goals set to encourage a way of doing things rather than a particular end-state. For the purposes of this paper, then, corporate goal-setting means the commitment of a firm or group of firms to a certain course of action or end-state, which may be tightly or loosely defined. Environmental Goals and Stages of Corporate Environmental Management Few, if any, environmental goals can be identified in the early, problem-solving stage of corporate environmental management. Companies at this stage interpret environmental problems as fitting into a more traditional area of concern. For example, when one company was faced with an explosion of some waste drums that had washed up on a public beach and caught fire (obviously that had been mishandled by their waste management contractor), it gave the job to the PR department because this was perceived as a threat to its image as an innovative consumer product company.15 It would appear that the company saw this incident as belonging to a different category from environment. The same firm, today, has a highly elaborated set of environmental functions and would give this problem to them, as well as to the PR department. The compliance stage in the overall evolution has been characterized by indirect environmental goals, manifest primarily in commitments to comply with regulations that, by and large, set the path a company needs to follow as mandated by the "command-and-control" regulatory system. This was a period in which environmental concerns were considered to be externalities that, in terms of the dominant economic theory, were not incorporated into the firm's cost structures and, thereby, were out of its strategic ambit. Explicit technology goals were infrequently established during the legislative and regulatory process, but generally not by the industry (except in opposition to the proposed mandates). Environmental goals were set by the public bodies. In terms of goal-setting, industry response was often to argue its case during the legislative debate and regulatory proceedings. Its environmental goals might be cynically stated to cut the best deal it could.
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Linking Science and Technology to Society's Environmental Goals In the compliance mode, industry ultimately accepts the goals set by the government and promises to comply with whatever implementing regulations follow. By far the bulk of past industrial efforts have been expended to keep such promises. There is an important set of secondary goals that accompany these formal promises of compliance. They are to comply as cheaply as is possible, taking account of normal capital and operating costs and also the costs of non-compliance. Penalties for non-compliance have been severe in terms of civil and criminal penalties and loss of public image. In this regard, industry reacts no differently to environmental rules than to any other set of public mandates. As we shall see, corporate environmental goal-setting becomes much richer in the proactive phase of environmental management. Cost-cutting and other rationalizing actions remain a strong driver, but environmental goals begin to reflect what are underlying broad social environmental concerns more explicitly. This is the period in which environment emerges as an explicit area of concern in corporate policies and public communications. In the last stage, managing for the environment, companies broaden goals to deal with problems such as global warming, ozone depletion, excessive resource depletion, and loss of productivity. With the publication of the Brundtland report in 1987, the overarching paradigm has become sustainability, even while no consensus on its operational meaning has been reached. The change towards aggregate goals such as the prevention of ozone depletion is problematic in terms of establishing discrete industry or firm goals as so many sectors and firms are causal agents. (See, however, the discussion of the Dutch target group approach, below.) At this stage, sectoral and collective approaches to goal-setting become more important. The following sections discuss trends in and examples of corporate environmental goal-setting in the final three stages of environmental management. Much of the information presented below has been obtained from phone interviews and literature provided by industry associations and firms, corporate annual reports, and a number of recent books on the subject of corporate environmentalism. While it is by no means a comprehensive study, it is intended to provide an outline of some of the trends in environmental goal-setting and some conjectures for the future. GOAL-SETTING IN THE STAGE OF ENVIRONMENTAL COMPLIANCE The natural environment has been inextricably linked to human society since the earliest stages of human development. Much of what we call civilization consists of the technological artifacts that humans use to gain both sustenance and protection from the natural world. For much of human history, the environment was just there, to be treated as a regenerative resource for human use. Social consciousness about the environment in the United States became organized late
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Linking Science and Technology to Society's Environmental Goals TABLE 1 Generally Recognized Environmental Problems Depletion Pollution Disturbances Abiotic resources Biotic resources Ozone depletion Global warming Smog Acidification Human toxicity Ecotoxicity Eutrophication Thermal impacts Noise Odor Worker health and safety Desertification Ecosystem degradation Landscape degradation Direct human impacts likely that any near-term practical system for identifying and acting to embed environmental goals into design and policy will fix on the immediate, tangible physical inventory of controllable inputs and outputs without much sense of how these actions will actually impact the world. National Goals for Sustainability: The Dutch Covenants The Dutch have taken a, some would say, radically different tack towards environmental goal-setting for industry, away from the firm-by-firm model of LCA, ISO, and some of the other approaches discussed above. After the Brundtland report was issued, the Dutch government began to look seriously at the implications of sustainable development on its own economy. Following the publication of a national assessment of the state of the environment,83 the government issued a sweeping National Environmental Policy Plan (NEPP).84 The Plan recognized that the kind of future that was desired could not be achieved through the normal policy route (regulation) nor through business-as-usual practices (end-of-pipe). Deep structural transformation of the economy was critical if the necessary reductions in loadings of 70–90% were to be achieved in the 20–25 year time frame for the Plan. It was an explicit target that such change was to occur in a single generation. The plan sets forth concrete measures for the initial period (1990–1994) and broader goals for the next several decades. Following a change of government, which was to a considerable degree influenced by debate over the Plan and its significance, the initial Plan, which focused on specific areas of environmental concern, was replaced by a new one (NEPP Plus). 85 This plan adopted sustainability as one of the basic pillars of government policy. Closing cycles (integrated chain management), reducing energy consumption by 50% by 2000, and improving product quality to double the
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Linking Science and Technology to Society's Environmental Goals time materials stay in use were the primary routes by which the Plan's targets were to be realized. Ambitious overall reduction targets have been set, for example, 90% reduction of SO2 and NOx (relative to 1985) by 2010, 3–5% reduction (relative to 1989) of CO2 by 2000, 60% reduction (relative to 1985) of VOCs by 2000, and 80–90% reduction (relative to 1985) of heavy metal emissions by 2010. This broad strategic framework has been segmented into target groups representing selected economic spheres of activity. Eight were selected initially: Agriculture Traffic and transportation Industry Energy Oil refining Construction Public waste utilities Consumers and retail trade These categories may be broken down further into specific industrial sectors; for example, the chemical industry and the primary metals industry, have moved to develop targets for action. The process of setting targets—that is, explicit objectives for reductions of environmental impacts—involves a long series of consultations among the key stakeholders—industry, government, and NGO8. These public dialogues were begun shortly after the Plan was announced. In the 1992–1993 period, sectoral targets were agreed to by associations representing the chemical, printing, and primary metals industries. Their agreements have been converted to ''covenants" or promises to abide by the agreement, signed by both governmental and industry authorities. Most of the 150 or so Dutch chemical companies have signed their sectoral covenant. The covenants are voluntary, but the potential for regulation always looms in the background. Each company must then prepare a plan showing how it will contribute to the overall sectoral goal and submit its plan to the reviewing authorities who will determine whether or not the aggregate actions will achieve the objective for the entire target group. The covenant approach, which rests heavily on a broad and extensive open planning process, is designed to provide certainty to the target sectors over a long time frame so that each company can make wise choices without expecting a change in the targets or means by which they are to be achieved. Each business is substantially free to choose its own target and approach, so long as the overall target is met. There is ample room for negotiation all along the way. The establishment of sectoral goals should minimize the risk of strategic competitive actions by individual firms.
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Linking Science and Technology to Society's Environmental Goals The Dutch approach addresses one of the more problematic aspects of setting environmental goals, particularly for the "global" issues, that is, how to translate aggregated targets into goals for individual actors like firms or consumers. How does each firm, for example, decide how much it needs to reduce carbon dioxide emissions as its contribution towards some agreed upon international or regional target? It is too early to assess the actual results from the process. CONCLUSION The concluding section discusses, very briefly, the issue of measuring performance against corporate goals and finishes with a short analysis of a set of questions that must be addressed in looking at goal-setting in the current scientific, economic, and political context. Measuring Performance Against Goals Several mechanisms for monitoring a company's performance against its environmental goals have been mentioned in previous sections. Individual firms, like Monsanto and AT&T, publish annual environmental reports that make public their achievements against certain goals. These reports contain factual information on emissions, releases, and transfers, sometimes listed by site, chemical, or medium. Some of the data they contain is identical to that required by U.S. government reporting requirements, namely the toxic release inventory (TRI) required by the EPA. Industry associations also publish environmental performance reports of a similar nature, but they generally aggregate the data at the level of the industry, rather than report on performance by individual firms. The American Petroleum Institute started publishing annual reports on aggregate environmental performance around 1992. The most recent of these, published in May of 1995, provides data on chemical releases, refinery residuals, oil spills in U.S. waters, underground storage tanks, used oil, gasoline vapor controls, workplace safety, and environmental expenditures. Chemical release data for the industry were obtained from TRIs, and other data were collected through surveys of voluntarily participating API members. As noted earlier, key publicly available metrics for tracking the environmental performance of firms are TRI data submitted by industrial companies as required by SARA. While they track the releases and off-site transfer of more than 300 named chemicals, it gives a narrow view of overall corporate environmental performance. First, they are limited to toxic chemicals and say nothing about material recycling efforts, product and process redesign, or a number of other "broader" environmental issues. Second, until recently, TRI data have not been normalized for production volume and thus cannot accurately track waste reduction per unit. Despite this, there are several interesting trends identified by INFORM, a non-profit environmental research organization, in its study of TRI and BRS (Biennial Reporting System) data submitted to the EPA.86
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Linking Science and Technology to Society's Environmental Goals INFORM found that there was no net reduction in aggregate TRI waste between 1991 and 1992 (the last year for which a comprehensive data set is available). While several facilities, companies, and industries achieved significant reductions, the gains were more than offset by increased releases from other industries. Only 5 of 22 industry groups showed a net production-related decrease in TRI waste between 1991 and 1992. Projected data for 1992 through 1994 show that 16 of 22 industry groups reported lower TRI levels, but increases in the Primary Metals, Chemicals, and Stone/Clay/Glass groups offset these. INFORM expects that aggregate TRI levels between 1992 and 1994 will have remained fairly constant. The chemical industry dominated all production-related waste reported in 1991 and 1992 TRIs. It was responsible for 53% of all TRI waste in 1992 and 69% of all carcinogens in TRI waste. Five industry groups were responsible for 85% of TRI waste Chemicals, Primary Metals, Petroleum, Paper, and "Multiple Codes in 20–39 (SIC code) Range." TRI waste is also highly concentrated at a relatively small number of facilities within each industry. The five facilities reporting the largest production-related waste within each industry group contributed 36% of all TRI waste. Two firms were responsible for one-third of the chemical industry's TRI waste and 18% of total production-related toxic waste. What does this mean for the setting and achieving of environmental goals? First, it emphasizes why waste reduction and pollution prevention goals have been so important to certain firms and industries, but does not support the conclusion that all firms should focus on waste reduction as their first environmental priority. The dominance of a few firms and industries in the creation of toxic waste and the inability of efforts of the past few years to make significant reductions in aggregate levels point to a need to reexamine goals and actions against them in certain industries. The TRI data presented above, because they aggregate release of some 300+chemicals, do not indicate where progress has been made in eliminating the most toxic substances. Progress reported by firms participating in the EPA's voluntary 33/50 program suggests that many industries have met the goal of 50% reduction in the release of 17 toxic chemicals. For example, the American Forest and Paper Association reports that the pulp and paper industry's participation in the EPA's 33/50 program resulted in its achieving a 50% reduction in the use of the listed chemicals by 1993, two years ahead of the EPA schedule.87 INFORM's report indicates that this level of achieved reduction may not be isolated to this industry. It states that "the progress reported by the 33/50 participating companies towards the Program's goals has been substantial, but suggests that these goals were not as ambitious as was thought at the outset."88 According to TRI reports, the 33% reduction had been met by 1991 (one year early) in an aggregate measure of all industries, and by 1992 total releases exceeded the 1995 goal by only about 20%.89 In the future, the ISO Standards are likely to add a significant new onus to the overall environmental management functions of an individual firm both in the
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Linking Science and Technology to Society's Environmental Goals setting of its own objectives and targets and in measuring its progress towards meeting them. Many hope that all of the several monitoring and reporting requirements set by internal and outside institutions can be integrated. The current status in ISO that would not require public disclosure of the results of progress assessments tends to make such a move problematic. On the other hand, some of the regional standards that will live side by side with ISO (the EU EMAS system) do require such public disclosure. Outstanding Questions (and a Few Guesses as to the Answers) This survey of corporate environmental goal-setting raises a number of questions that must be addressed before the effectiveness of goal-setting by industry can be speculated upon. First, the firms that have taken proactive steps to define environmental goals are typically large industry leaders. To what degree have the firms' size, resources, and public visibility impacted their desire and ability to set environmental goals? If these factors are important in motivating environmental goal-setting, what can be expected from firms or industries who have fewer resources or are less visible in the public eye? Second, the benefits of products of some industries are more clearly valued by the general public, and this differential perception necessarily impacts public response to the environmental costs of the industry. For example, the petroleum industry has "bounced back" from severe environmental accidents (spills, pipeline leaks), and the automobile industry resists most efforts to limit air pollution due to the perceived balance between public benefits and costs. An industry like the chemical industry manufactures products that are largely not directly visible in consumer goods, and consequently the associated benefits may not be appreciated by the public. If we speculate that environmental goal-setting by industry actors represents a new trend in environmental management, we must consider its prominence relative to other corporate goal-setting activities. It seems that even the most pro-active company in environmental goal-setting still implicitly places environment on a lower level than other strategic goals. AT&T, despite its ambitious environmental goals and commitment to adoption of green processes, its publication of an annual environmental and safety report, and the presence at its most senior levels of management of professionals with responsibility for environmental issues, mentions virtually nothing about these commitments in its 1994 annual report to shareholders. The focus of CEO Robert Allen's address in this document is on traditional strategic business objectives—financial performance, alliances and partnerships with related businesses, R&D leadership in the development of new products and services, and market share.90 Allen sees the major challenges facing AT&T as the selection of product offerings and strategic alliances to cope with new competitive pressures in the information market. He does not mention environmental goals or performance in his letter, although he does refer to other
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Linking Science and Technology to Society's Environmental Goals initiatives (the corporate diversity program and a commitment to quality and continuous improvement). Environmental performance comes up on the last page (page 20) of the text section of AT&T's 1994 annual report and shares the page entitled "We Keep Our Word" with other goals that "better position (AT&T) to serve customers and the communities in which we live and work." Of the five achievements listed, two report on environmental performance (air emissions reduction and waste paper recycling) and the other three report on the hiring of women and minorities, and the support of non-profit and charitable groups. When a leading company chooses to relegate its substantial commitments to environmental performance to such a position in a report to shareholders, it begs the question whether environmental responsibility really will "become as integral a strategic element of the business as product performance and cost-effectiveness."91 Besides these questions that bear on "social responsibility" and concomitant commitments of companies to meet environmental norms, setting goals has many complex technical aspects. First, it is difficult to set norms. The ecological connections and consequences of economic activities are poorly understood at present, particularly for phenomena of large scale. But even at the molecular level, scientists agree on the effects in humans and other species for only a handful of the 80,000 or so chemicals in commerce. Setting goals for the use of chlorine-containing or chlorine-related chemicals, for example, has precipitated a global controversy, with some parties calling for a wholesale ban on chlorine use while others argue that insufficient data now exist with which to make rational choices about setting targets and limits. One way out of the analysis/paralysis dilemma is to set broad goals that do not rely on large quantities of information and a traditionally "rational process." The notion of precaution, for example, is embodied in the ICC principles and permeates the calls for bans and other targets that do not need data to set intermediate numerical levels. Another approach is to drive innovation and change by a set of "process" principles such as those described above in the section on industrial ecology. Pushing change that embodies the principles of dematerialization or loop closing, for example, should, in most cases, move the continuous innovation-investment-implementation-consequences-assessment cycle towards sustainability or equivalent societal environmental goals. Continuous improvement is the cornerstone of TQM and is similarly applicable to meeting environmental goals, with some inherent difficulties. The environmental equivalent to product quality is, as already noted, much more loosely connected to the technical characteristics of products and processes, reflecting the imperfect state of knowledge today. Environmental quality targets must be set through some sort of "scientific" assessment as designers and analysts cannot ask the environment the key question about quality, Are you satisfied with what we are doing? And even if there appears to be sufficient evidence, the myriad of parties who claim an interest in setting societal goals regarding the environment rarely
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Linking Science and Technology to Society's Environmental Goals agree on specifics. Setting environmental goals inevitably creates some kind of spillover to other arenas, requiring changes in patterns of production and consumption. This same problem is a major hindrance in private actions as well. Setting a company's environmental goals always impacts other norms held by the firm. Environment is often the new kid on the block, and any commitments in this arena that would limit a firm's activities in the more traditional and familiar domains tend to be viewed with suspicion, thereby setting up barriers. These barriers should continue to fall, as they have been doing for quite some time, while environment becomes more and more familiar and gains acceptance alongside the traditional elements, such as the bottom line, in the basic set of corporate values. The combination of great uncertainty as to the connection of human actions and their environmental consequences and the diversity of values as to what is the right environmental goal suggests, if not demands, that whatever goal-setting process becomes established, that process should be continuous. Last, the problem of parsing out targets to individual firms so that the aggregate results achieve a broad societal goal is technically and politically very complicated. The rules for doing this need to be established. Should the shares be meted out proportionate to some measure of output? Or to the resources that a firm can bring to the problem? Or should there be some consideration of past use of environmental capital? The ongoing arguments about how to allocate whatever reductions in carbon dioxide are to be made to avoid global warming reflect these three options among others. The Dutch target group approach is extremely interesting in this regard as it is a conscious and deliberate attempt at both goal-setting and implementation. The open process involving all interested parties accepts the inherent differential values of these parties and the inability to set goals through purely analytic means. But the Dutch society is relatively small and less diverse than ours in the United States. Open planning, with strong governmental leadership, has been long used in many social domains besides environment. Nevertheless, the fact that a society can come together and set remarkably tough goals—goals that would fundamentally change the way the economy and the system works—should serve as a target in and of itself for the United States. These efforts are reminiscent of the observation made on the first moon landing—a small step for man, a giant leap for mankind. The path to ecological and social sustainability is certainly as daunting a task as reaching the moon ever was. NOTES 1. Christopher B. Hunt and Ellen R. Auster, "Proactive Environmental Management: Avoiding the Toxic Trap," Sloan Management Review, Vol. 31, No. 2, 1990, pp. 7–18. 2. Paul Shrivastava, "Strategic Responses to Environmentalism," Business Strategy and the Environment, Autumn, 1992, pp. 9–21. 3. John R. Ehrenfeld and Andrew Hoffman, "The Importance of Culture in the Greening Process," Designing the Sustainable Enterprise Conference, Boston, MA, November, 1993.
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Linking Science and Technology to Society's Environmental Goals 4. Edward Prewitt, "Allied-Signal: Managing the Hazardous Waste Liability Risk," Case Study #N9-793-044, Harvard Business School, Cambridge, MA, 1992. 5. U.S. Congress, Office of Technology Assessment, Serious Reduction of Hazardous Waste, Washington DC, Government Printing Office, 1986. 6. Catherine Morrison, "Managing Environmental Affairs: Corporate Practices in the U.S., Canada and Europe," The Conference Board, New York, NY, 1991. 7. Hilary de Boerr, "Green Jobs at the Top," The Financial Times, June 17, 1992, p. 12. 8. David Sarokin et al., Cutting Chemical Wastes, Inform, New York, NY, 1985; Stephan Schmidheiny, Changing Course, MIT Press, Cambridge, MA, 1992. 9. Mary Melody, "Boatmaker Finds Solvent Substitute, Cuts Emissions, Costs," Hazmat World, February 1992, pp. 36–39. 10. George W. McKinney, "Environmental Technology for Competitiveness: A Call for a Cooperative Pollution Prevention Initiative," presented at the National Technology Initiative Conference, Massachusetts Institute of Technology, Cambridge, MA, February 12, 1992. 11. Hewlett Packard 1994 Annual Report, CEO's letter written by Lew Platt. 12. Unofficial ISO Draft International Standard 14001 (ISO/DIS 14001), June 26, 1995. 13. See Chapter 1, "A Taxonomy of Illocutionary Acts," in John Searle, Expression and Meaning, Cambridge University Press, 1979. 14. Ibid. 15. Yiorgos Mylonadis, "The Green Challenge to the Industrial Enterprise Mindset: Survival Threat or Strategic Opportunity?" Doctoral Thesis, MIT, 1993. 16. Paul Portney, ed., Public Policies for Environmental Protection , Resources for the Future, Washington, DC, 1990, p. 20. 17. Ibid., p. 20–21. 18. CAA §202(b); 42 U.S.C. § 1857f-1(b), 1970. 19. Ibid., p. 22. 20. Bruce Smart, Beyond Compliance: A New Industry View of the Environment , World Resources Institute, Washington, DC, 1992, p. 121. 21. Issue Activity Report of the Society of the Plastics Industry Management Staff, May, 1995, available from Lew Freeman, Vice President of Government Affairs. 22. Smart, op. cit., p. 102. 23. Several recent books provide case-studies and discussion of the environmental goals and actions of these and other major firms. See Smart, op. cit.; Bruce Piasecki, Corporate Environmental Strategy: The Avalanche of Change Since Bhopal, John Wiley & Sons, New York, 1995; Schmidheiny, op. cit.; and J-O. Willums and Ulrike Goluke, From Ideas to Action: Business and Sustainable Development, International Chamber of Commerce, Oslo, Norway, 1992. 24. For a discussion of the CERES principles, see Jennifer Nash and John Ehrenfeld "Private Codes of Management Practice: Assessing Their Role in Environmental Protection," Working Paper, MIT Technology, Business and Environment Program, May, 1995. ICOLP, GEMI, and the ICC initiative are discussed in Smart, op. cit., and Piasecki, op. cit. 25. Schmidheiny, op. cit., p. 190. 26. Ibid., p. 265. 27. Richard Mahoney, "People, Commitment, Results: The Monsanto Pledge," remarks made at the Annual Meeting of Monsanto Shareholders, April 27, 1990. 28. Smart, op. cit., p. 98. 29. Mahoney, op. cit., p. 3. 30. Elizabeth Rose and Arthur FitzGerald, "Free in Three: How Northern Telecom Eliminated CFC-113 Solvents from Its Global Operations," Pollution Prevention, Summer 1992, p. 297. 31. "AT&T to Eliminate Ozone-Depleters from Product Manufacturing," in E&S Report, a publication of AT&T E&S Engineering, Vol. 5, No. 2, 2nd Quarter, 1993, p. 1.
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Linking Science and Technology to Society's Environmental Goals 32. Detail on the goals and features of the 3P+program are given in case studies in both Smart, op. cit., and Schmidheiny, op. cit. 33. Smart, op. cit., p. 16. 34. Noranda Annual Report, 1993, Management Discussion section, A. Powis, Chairman, and D. Kerr, President. 35. Smart, op. cit., p. 123. 36. Monsanto Company, Environmental Annual Review, 1994, p. 7. 37. Schmidheiny, op. cit., p. 116. 38. Smart, op. cit., p. 123. 39. Ibid., p. 129. 40. AT&T, 1994 Environment and Safety Annual Report, p. 4–7. 41. Ibid., p. 16. 42. Ibid., p. 12. 43. Ibid., p. 15. 44. See Lois Ember, "Responsible Care: Chemical Makers Still Counting on It to Improve Image," Chemical and Engineering News, May 29, 1995, for a full discussion on the pros and cons of third-party verification. 45. "Responsible Care Product Stewardship Code of Management Practices," Chemical Manufacturers Association. 46. Ibid. 47. "Responsible Care Distribution Code of Management Practices," Chemical Manufacturers Association. 48. Ember, op. cit., p. 18. 49. "Responsible Care Guiding Principles," Chemical Manufacturers Association, April, 1991. 50. Ember, op. cit., p. 10. 51. Phone interview with J. Eldon Rucker, Deputy Director, Health and Environmental Affairs, American Petroleum Institute, June 12, 1995. 52. "Environmental Management Systems—Specifications with Guidance for Use," ISO/DIS 14001, June 26, 1995, Unofficial version. 53. "Guidelines on Environmental Performance Evaluation," ISO 14031, Draft proposal from Swedish working group experts, June 19, 1995. 54. "Agenda 2020: A Technology Vision and Research Agenda for America's Forest, Wood, and Paper Industry," Prepared by the American Forest & Paper Association, November, 1994, p. 2. 55. Ibid., p. 3. 56. The Society of the Plastics Industry, 1995 Issue Accomplishments, May 1995, p. 3. 57. "1995 Public Policy Agenda," Steel Manufacturers Association. 58. Telephone interview with Donald Edmunds, Manager, Pollution Reduction, Facility Environment Department, American Automobile Manufacturers Association, June 12, 1995. 59. Automotive Pollution Prevention Project, Progress Report, February, 1994, available through the American Automobile Manufacturers Association. 60. Ibid., p. 1. 61. Telephone interview with Bob Strieter, Aluminum Association, June 7, 1995 62. Lee Neal, op. cit. 63. Anonymous, Our Common Future, New York, Oxford University Press, 1987. 64. The Rio Conference also added a set of social dimensions, centered on equity and justice, to those more directly related to the global ecosystem. The discussion in this paper has touched on the latter set only. 65. Schmidheiny, op. cit. 66. Ibid. p. 10. 67. Willums and Goluke, op. cit., p. 322. 68. Anne Gelfand, "The CERES Principles: Does Adopting a Voluntary Code of Management
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Linking Science and Technology to Society's Environmental Goals Produce Corporate Accountability?" M. S. Thesis, MIT, June, 1995; Andrew Hoffman, "The Environmental Transformation of American Industry: An Environmental Account of Organizational Evolution in the Chemical and Petroleum Industries (1960–1993)," Ph. D. Dissertation, MIT, February, 1995. 69. This section is adapted from Michael Lenox and John Ehrenfeld, "Design for the Environment: A New Framework for Making Decisions," Total Quality Environmental Management, Vol. 4, No. 4, 1995, p. 37. 70. Ernest Lowe, "Industrial Ecology: A Context for Design and Decision," in Joseph Fiksel, ed., Design for Environment: Principles and Practices, to be published by McGraw-Hill. 71. L. W. Jelinski, T. E. Graedel, et al., "Industrial Ecology: Concepts and Approaches," Proceedings of the National Academy of Sciences, Vol. 89, February, 1992, pp. 793–797. 72. Chihiro Watanabe, "Japan's Approach to Energy Issues," Industrial Ecology: U.S.-Japan Perspectives. National Academy Press, Washington D.C., 1994. 73. Braden R. Allenby, "Achieving Sustainable Development Through Industrial Ecology," International Environmental Affairs, Vol. 4, No. 1, 1992, pp. 56–68. 74. Thomas E. Graedel and Braden R. Allenby, Industrial Ecology, Prentice-Hall, New York, 1995. 75. Bette Hileman, "Industrial Ecology Route to Slow Global Change Proposed," Chemical and Engineering News, August 14, 1992. 76. Anonymous, To Choose or to Lose, The National Environmental Policy Plan (NEPP), Netherlands Ministry of Housing, Physical Planning and Environmental, 1989. 77. John R. Ehrenfeld, "Industrial Ecology: A Strategic Framework for Product Policy and Other Sustainable Practices," in Green Goods , E. Ryden and J. Strahl, eds., Ecocycle Delegation (Kretsloppsdelegationen), Stockholm, Sweden, 1995. 78. Lowe, op. cit. 79. Introduction to the 1994 Monsanto Corporation Environmental Report. 80. Jean Parker and Beverly Boyd. "An Introduction to EPA's Design for the Environment Program," IEEE Symposium on Electronics and the Environment, Washington, D.C., May, 1993. 81. Frank Consoli et al., eds., Guidelines for Life-Cycle Assessment: A "Code of Practice," SETAC, Pensacola, Fla., 1993. 82. Jeroen B. Guinée et al., "Quantitative Cycle Assessment of Products, 2. Classification, Valuation and Improvement Analysis," J. Cleaner Prod., Vol. 1, No. 2, 1993, p. 81. 83. Anonymous, "Concern for Tomorrow," National Institute of Environmental Protection, The Hague, 1988. 84. NEPP, op. cit. 85. Anonymous, The National Environmental Policy Plan-Plus (NEPPPLUS) , Netherlands Ministry of Housing, Physical Planning and Environment, The Hague, 1990. 86. INFORM's comprehensive study and analysis is entitled "Toxics Watch 1995" and is available through INFORM, Inc., 120 Wall Street, New York, NY 10005. 87. American Forest and Paper Association, "Pulp and Paper Industry Commitments to Improve Environmental Quality." 88. INFORM, Inc., op. cit., p. 504. 89. Ibid. 90. CEO Robert Allen's letter, AT & T 1994 Annual Report. 91. Smart, op. cit., p. 121
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Representative terms from entire chapter: