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The Ecology of Industry.  1998. Pp. 45-47
Washington, DC:  National Academy Press.

Manufacturing

ROBERT A. LAUDISE AND THOMAS E. GRAEDEL

Of all industrial activities, manufacturing is the one that can most easily be environmentally responsible and innovative. Manufacturers are in a unique position. They are not the resource extractor, digging or drilling whatever raw materials have a market; they are not materials processors, forming the powders, crystals, or liquids needed by manufacturers; and they are not marketers, making available to customers whatever goods are produced. While those sectors can exercise some influence, they do not have the freedom of the manufacturer, whose sole constraint is to produce a desirable, salable product. In this regard, the manufacturer can choose to make an automobile body from sheet steel, composites, aluminum, or plastic. Cost, manufacturability, and consumer acceptance are constraints, of course, but the choice of materials per se is not. A telephone transmission system can be coaxial cable, optical fiber, microwave, submarine cable, or satellite. Thus, the designer's role in the manufacturing industry is central, both in the choice of materials and in the choice of process.

Although there are substantial commonalities among the manufacturing sectors, there are great diversities as well, as indicated in Table 1. An important distinction among the sectors is the lifetimes of their products. Some are made to function for a decade or more. Others have lives measured in months or weeks. Still others are used only once. A designer of manufactured goods obviously must adopt different approaches to these different types of products in terms of durability, materials choice, and recyclability.

Regularly in manufacturing, materials and activity trade-offs are evaluated on the basis of market values and regulatory imperatives. Seldom is there a very explicit evaluation based on factors causing an environmental problem. However,



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Page 45 The Ecology of Industry.  1998. Pp. 45-47 Washington, DC:  National Academy Press. Manufacturing ROBERT A. LAUDISE AND THOMAS E. GRAEDEL Of all industrial activities, manufacturing is the one that can most easily be environmentally responsible and innovative. Manufacturers are in a unique position. They are not the resource extractor, digging or drilling whatever raw materials have a market; they are not materials processors, forming the powders, crystals, or liquids needed by manufacturers; and they are not marketers, making available to customers whatever goods are produced. While those sectors can exercise some influence, they do not have the freedom of the manufacturer, whose sole constraint is to produce a desirable, salable product. In this regard, the manufacturer can choose to make an automobile body from sheet steel, composites, aluminum, or plastic. Cost, manufacturability, and consumer acceptance are constraints, of course, but the choice of materials per se is not. A telephone transmission system can be coaxial cable, optical fiber, microwave, submarine cable, or satellite. Thus, the designer's role in the manufacturing industry is central, both in the choice of materials and in the choice of process. Although there are substantial commonalities among the manufacturing sectors, there are great diversities as well, as indicated in Table 1. An important distinction among the sectors is the lifetimes of their products. Some are made to function for a decade or more. Others have lives measured in months or weeks. Still others are used only once. A designer of manufactured goods obviously must adopt different approaches to these different types of products in terms of durability, materials choice, and recyclability. Regularly in manufacturing, materials and activity trade-offs are evaluated on the basis of market values and regulatory imperatives. Seldom is there a very explicit evaluation based on factors causing an environmental problem. However,

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Page 46 TABLE 1 Manufacturing Sectors and Their Products Manufacturing   Product Sector Product Examples Lifetime Electronics Computers, cordless telephones, video cameras, television sets, portable sound systems Long Vehicles Automobiles, aircraft, earth movers, snow blowers Long Consumer durable goods Refrigerators, washing machines, furniture, furnaces, water heaters, air conditioners, carpets Long Industrial durable goods Machine tools, motors, fans, air conditioners, conveyer belts, packaging equipment Long Durable medical products Hospital beds, MRI testing equipment, wheelchairs, washable garments Long Consumer nondurable goods Pencils, batteries, costume jewelry, plastic storage containers, toys Moderate Clothing Shoes, belts, polyester blouses, cotton pants Moderate Disposable medical products Thermometers, blood donor equipment, medicines, nonwashable garments Single use Disposable consumer products Antifreeze, paper products, plastic bags, lubricants, nonwashable garments Single use Food products Frozen dinners, canned fruit, soft drimks, dry cereal Single use in-plant materials and process decisions can be made on the basis of environmental preferability. In addition, a manufacturer may buy its subsystems elsewhere and thereby exert at least a modest influence on upstream environmental activities. Similarly, the manufacturer may choose to perform downstream recycling or at least to enter into cooperative arrangements for doing so. In these ways, the manufacturer can examine and influence trade-offs over the complete product life-cycle, including initial materials choice, product design, processes used to manufacture, in-service impacts, ease of disassembly and reuse, and strategy for recycling and disposal. Thus, even though the manufacturer does not generally have full control, the product life cycle is more solidly under its purview than under that of the processor, the service provider, or the consumer. Therein is the manufacturer's great challenge and opportunity. Environmental Stewardship The Role of Management Effective management is essential if manufacturers are to meet the challenge of environmental stewardship. One effort at improving management has been

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Page 47 integrated product development (IPD). IPD is aimed at avoiding delays in getting a product to market by incorporating as many external factors as possible in the design stage. As the competitive pressure to get products to market quickly continues to grow, manufacturers are becoming more adept at anticipating problems and designing products to avoid compromising on quality and delays during manufacture, testing, or delivery. Within IPD, a "design-for-X" (DFX) regime has emerged, where X addresses such factors as manufacturability, testability, or maintainability. Design for environment (DFE) is a module within the DFX regime that allows the manufacturer to consider systematically environmental factors, such as concurrent engineering, that can be used in IPD practices. The DFE module is intended to incorporate traditional concerns about health and safety as well as more contemporary environmental concerns. This approach not only avoids delays that result from overlooking environmental permitting or compliance requirements, but also results in design innovations that meet multiple environmental goals. For example, reducing the mass of a product contributes to resource conservation, since less material and energy are used per unit product, and to health and safety, since less pollution is emitted per unit product. And switching from white bleached-paper packaging to recycled-content packaging avoids the use of chlorine in the bleaching process and can reduce environmental impacts in the large industrial system in which a company operates. Box I provides examples of recent innovations in the electronics industry designed to further environmental stewardship. Stages in the Product Life Cycle The practice of environmental stewardship is perhaps most conveniently examined against the backdrop of the different stages of the product life cycle (Figure 1). The stages in the product life cycle and associated improvements that can be made at each stage illustrate some of the more common DFE strategies practiced in industry today. ·      Stage 1—Acquisition of raw materials, components, and subassemblies. It is a routine practice, though logistically complex, to consider the sources of materials or components and subassemblies from which a product is made to assure product quality. Similarly, with some planning and foresight, the supplier chain can be managed to leverage environmentally preferable inputs and practices in addition to traditional concerns of quality. cost, and performance. Purchasers of goods, particularly if they are large customers, such as the government or large service or manufacturing companies, can demand from their suppliers environmentally superior products through procurement documents such as standard-component or stock lists. These documents can be used to specify components that are as environmentally be-

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Page 48 BOX 1   Environmental Stewardship in the Electronics Industry Recent actions by the electronics industry illustrate the manufacturing approach to environmental stewardship. The electronics sector is neither energy nor materials intensive. Some electronics-based products, such as computers, enable people to avoid traveling, and thus prevent pollution. Even so, in response to the suggestions of environmental groups in Silicon Valley, California, Arizona, and elsewhere, SEMATECH (a semi-conductor industry consortium) has been directed by Congress to specifically address environmental issues to minimize toxic waste and emissions. Current industry successes include the following: ·      Virtual elimination of chlorofluorocarbons in printed circuit board cleaning, to comply with the Montreal Protocol on substances that deplete the ozone layer. This was made possible through a combination of solder flux minimization, the use of water-soluble fluxes, the use of naturally occurring organic solvents such as limonene and closed-system cleaning. ·      Elimination of glycol ethers in clean rooms. The driving force was evidence of a statistical correlation between increased miscarriages and possible exposure of clean-room workers to glycol ether. The solution was the substitution of ethylethoxypropionate and similar nontoxic compounds as solvent. ·      Development of in situ generation of arsine, a highly toxic but industrially vital gas traditionally manufactured elsewhere and transported to electronic manufacturing facilities, with all the potential hazards that accompany the movement, storage, and use of a toxic chemical. In addition to these successes, there are a number of specific actions that would improve environmental stewardship in the electronics sector. For example, the desirable but yet-to-be-accomplished elimination of silane (SiH4) and phosphine (PH3) in processing facilities represent a potential opportunity. Silane is a crucial raw material used in the production of polycrystalline and amoprhous silicon. It is also highly pyrophoric and poisonous. Can other, less hazardous sources of silicon be found? Similarly, phosphine is the source of phosphorus in III-V semiconductor epitaxy. It is extremely poisonous, too. Can nonpoisonous phosphorus sources, which are used to produce high-quality light-emitting diodes and lasers, be found? Another area for attention is the very large quantities of water used in integrated circuit wafer processing. Given the likelihood of increasing demands on water resources, water should no longer be considered a negligible factor; rather, its availability and level of use should be scrutinized.

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Page 49 FIGURE 1  Incorporating environmental considerations in development at different stages and of the product life cycle. SOURCE: Richards and Frosch, 1997. nign as possible. Purchasing contracts can similarly be used to influence suppliers' behavior by requiring environmentally preferable practices. ·      Stage 2—Product Manufacture. Environmental strategies in product manufacturing are well-known: minimize air emissions; minimize solid and liquid waste generation; conserve water and energy; reduce toxicity (ensuring worker health and safety during production); and avoid compromising the health and safety of customers, recyclers, and waste handlers. Companies can also seek new uses for waste or ways to convert a waste into a material or energy resource by changing a production process. ·      Stage 3—Product Packaging and Transport. Many industries have focused on packaging to improve environmental stewardship. Efforts have included less over-packaging using styrofoam peanuts and bubble packs, elimination of toxic inks from product cartons, reductions in the size of packaging containers, and materials choices designed to enhance the recyclability of packaging. ·      Stage 4—Product Use. Environmental options include conserving energy and minimizing waste associated with maintenance and service (particularly for long-lasting products). A company may also want to consider selling product functions instead of product hardware. The company's product then becomes pest control instead of pesticides, for example, or communication instead of phones, computing power instead of computers, refrigeration instead of refrigerators, transportation instead of auto-

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Page 50 mobiles. This idea is not new and it does not apply to all products. It does, however, reflect both a past practice and a growing trend. It was not too long ago that the phone company owned the phones. And the utility industry is now beginning to see itself as a seller of energy-efficient systems rather than kilowatts. ·      Stage 5—Recycling and Disposal. Attention to the fate of a product can result in product innovation. Omitting toxic materials from a product would be prudent for a product destined to be discarded. If a product is viewed as inventory to be recovered and reused or refurbished, it may be designed for longer life and ease of upgradability. If the product is to be recycled, it would be desirable to limit the diversity of material. For example, it is preferable to construct the product with one type of plastic rather than several different types. This reduces the amount of separation and sorting needed for recycling. It also helps if the material can be clearly identified for recyclability, such as by molding identification marks into plastic parts. These are examples of strategies that are emerging as the environmental life-cycle approach is applied to product design. If products are to be returned to the manufacturer, their recovery and associated logistics would have to be managed in much the same way that supplier chains are managed. Type, size, and life of product influence the needs of the recycling infrastructure. In the United States, for example, a recycling infrastructure has developed that recovers 75 percent, by weight, of the materials in automobiles (Klamisch, 1994). Creative solutions are also being developed to address the question of what to do with the electrophotographic cartridges used in laser printers and fax machines. Although the cartridges are used in large volumes, and some larger customers provide a single point for recovery, many customers are small-scale users. The challenge has been to amass sufficient volumes of cartridges for economical and efficient recycling. In the United States, direct collection from users through prepaid parcel services has been used, while in Europe dealers serve as collection points. Collection, however, is just part of the equation. Companies that sell these electrophotographic cartridges have also invested in recycling centers and new recycling and remanufacturing processes. Life-cycle stage 2 and, perhaps, life-cycle stage 3 have been regarded customarily as falling within industry's responsibility, but the evolving view is that an environmentally responsible product minimizes external environmental impacts in all five life cycle stages. To date, few manufacturers have looked at the whole life cycle of their products and asked questions such as, Do our products use abundant resources rather than scarce ones?, Are our products made from recycled rather than virgin materials?, Do our products minimize energy use?, and Are our products designed to be efficiently disassembled at obsolescence? The manufacturing sector has traditionally computed the energy efficiency of its pro-

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Page 51 cesses (though substantial room for gains in efficiency remains). The sector must now begin to consider the materials efficiency of processes, with the goal that every molecule entering a manufacturing facility goes where it is needed to perform a useful function. The movement toward environmental stewardship could be extended from products and processes to manufacturing facilities. All such facilities might be expected ultimately to consider the environmental impacts of the site during site selection and development; participate in industrial infrastructures, sharing excess heat and process by-products; and operate with a focus on environmental stewardship in such areas as heating, lighting, property maintenance, and waste disposal. Effect of Regulations and Standards "End-of-Pipe" Laws Much current environmental law, as it affects manufacturing, reflects the perception that environmental problems as localized in time, space, and media (i.e., air, water, soil). For example, it was not uncommon in the recent past for organic-solvent of groundwater contamination to be eliminated by "air stripping," or simply releasing the solvent to the air, where it contributed in many cases to the formation of tropospheric ozone. Similarly, many hazardous waste sites in the United States have been "cleaned" by shipping the contaminated dirt somewhere else, which not only does not solve the problem, but also creates the danger of incidents during removal and transportation. As a consequence of this perception, environmental regulations have focused on specific phenomena and adopted a "command-and-control" approach, in which restrictive and highly specific legislation and regulations are implemented by centralized authorities and used to achieve narrowly defined ends. Such regulations generally prescribe very rigid standards, often mandate the use of specific emission control technologies, and generally define compliance in terms of "end-of-pipe" emissions limits. Examples in the United States include the Clean Water Act (by EPA interpretation applied only to surface waters), the Clean Air Act, and the Comprehensive Environmental Response, Compensation and Liability Act, or "Superfund." Many environmental laws are based on assumptions appropriate to a linear flow of materials to waste, rather than the internal cycling characteristic of a sustainable economy. For example, the Resource Conservation and Recovery Act defines almost any by-product of a linear manufacturing process as a hazardous waste and subjects it to burdensome regulation, thereby limiting the incentives to recycle or reuse the material. The regulation thereby tends to institutionalize the linear manufacturing paradigm, rather than guide industry toward sustainability. If properly implemented, command-and-control can nonetheless be effective in addressing specific environmental insults. For example, U.S. rivers such as the

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Page 52 Potomac and Hudson are much cleaner as a result of the Clean Water Act. Moreover, where applied against particular substances, such as the ban on tetraethyl lead in gasoline in the United States, the command-and-control approach has clearly worked well. Such regulations, however, are characterized by a burgeoning of mandatory requirements, a relative lack of concern for economic efficiency, a focus only on the manufacturing stage of industrial activity rather than the life cycle of materials or products, and, because specific technologies are prescribed, a strong bias against technological innovation. Moreover, in practice, it has proved very difficult to modify such regulations to reflect advances in scientific understanding. Activities of International Standards-Setting Organizations Given its record of formulating international standards, the International Standards Organization (ISO) was a natural place to begin the process of generating standards for sustainable industrial development. Accordingly, 1991 saw ISO establish in coordination with the Geneva-based Business Council for Sustainable Development, its Strategic Advisory Group on the Environment (SAGE). SAGE subgroups focus on life-cycle assessment (LCA), environmental guidance for product standards, environmental management and auditing, and environmental labeling. Over the next several years, standards will begin to emerge from these efforts, probably along the lines of the ISO 9000 Quality Standards and Methods program. Another international organization with an interest in environmental stewardship is the International Electrotechnical Commission (IEC), an independent body that has a long record of generating standards and protocols to assist in the globalization of technology. Focusing on international telecommunications technology, particularly electronic equipment, an expert group of the IEC has been concerned with several issues related to environmental standards: ·      the primitive state of LCA; ·      pollution prevention, particularly actions to eliminate solder cleaning and minimize the use of deionized water; ·      environmental impact assessments, especially of ozone-depleting substances, batteries, consumables, packaging, and emissions; and ·      design for disassembly, with attention to fastening and joining and on decorative paints and finishes. The main question with international environmental performance standards is not whether they will be put in place, but how soon. Farsighted corporations would be well advised to prepare so that the imposition of standards will place them in a favorable position with respect to their competitors; and participate in standards-setting activities, so that the standards that do emerge are a reasonable consensus of the positions and desires of all concerned.

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Page 53 Waste Minimization, Packaging, and Product Take-Back In many countries and among many customers, corporate environmental stewardship is receiving increasing attention, but the focus is turning toward setting goals for performance rather than regulating specific actions. In parts of Europe where this effort has been most vigorously pursued, complete packaging take-back is required. A customer buying a tube of toothpaste in Germany, for example, can immediately hand the empty box back to the merchant and, if he or she wishes, return in a month to hand back the empty tube. Packages are becoming smaller, are featuring less diversity of materials, and are being more efficiently recycled. The next step, and one likely to occur first in Europe, is the requirement that manufacturers take back their products if they become obsolete or need replacement. Products that have been designed with take-back in mind will at that time be efficiently disassembled and their components and materials readily reused. Products not so designed will, in all probability, be landfilled at substantial cost. Labeling Programs A number of labeling systems designating environmentally responsible products and/or activities are being developed around the world. Some of these systems are designed by marketers whose goal it is to advertise the environmentally beneficial characteristics of individual products or of the corporation itself. While these ''first-party" systems are useful in demonstrating an environmental focus, many of them are viewed by experts as self-serving and potentially inaccurate. These activities may nonetheless provide stimulus either for customers or corporations to change their purchasing decisions. More visible and more effective are environmental labeling programs. Some are quasigovernmental; others are strictly private. In principle, seal-of-approval labels (Figure 2) are awarded as a result of some sort of life-cycle assessment. (See section on LCA, p. 55.) The standards tend to be set so that a modest fraction of existing products, perhaps 10 or 20 percent, can successfully qualify. Since LCA in its full embodiment is complex and contentious, labeling organizations tend to use a simplified LCA, especially as far as the impact analysis stage is concerned. In practice, one life-cycle stage or one product characteristic (toxic content, say, or diversity and volume of packaging materials) often controls the labeling decision, so labels seldom reflect the overall environmental impact of a product. In many cases, the criteria for obtaining environmental labels for specific products are far more stringent than existing regulations or standards. Nonetheless, corporations are often driven by competitive pressures to satisfy the labeling requirements. The advantage of labeling systems is that they harness market forces and consumer preferences to achieve better environmental performance. At a stage of industrial ecology when life-cycle assessment methods are still relatively unfamiliar, labeling programs offer the promise of rapidly accelerating the use of

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Page 54 FIGURE 2  Some of the labels established to designate environmentally responsible products; (a) German "Blauer Engel"; (b) Nordic Council "White Swan"; (c) Canadian "Environmental Choice"; (d) Japanese "Ecomark''; (e) Dutch "Stichting Milieukeur"; (f) United States "Green Seal"; (g) Singapore "Green Label"; (h) European Community "Ecolabel"; and (i) United States "Energy Star." SOURCE: Graedel and Allenby, 1995. LCA methodologies. However, a potential disadvantage of labeling programs is that unless their criteria are carefully chosen, environmentally suboptimal performance might be encouraged. Environmental Metrics As companies report on their environmental successes, they face external pressures to prove these claims. A range of environmental metrics are emerging for both external reporting purposes and internal management needs (Torrens and Yeager, this volume). The simpler metrics relate energy, mass, and volume measured in absolute terms or normalized with respect to production unit. These measures can be further refined to provide better information. For example, total

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Page 55 energy use in manufacturing can be broken down in terms of renewable and nonrenewable sources; total material use can be broken down into toxic or nonhazardous material used; and total industrial waste generated can be broken down to get risk exposure information for ambient concentrations of hazardous waste by-products in water, air, or soil. As reuse and recovery take hold, other measures are being used, such as time taken for disassembly and recovery; percentage of material or product reused, recycled, or disposed; and percentage of recycled material used as inputs. Useful operating life can also be translated as an environmental measure. Businesses respond most strongly to profits and cost savings, and so translating savings associated with design improvements can be a strong motivator for further change. More difficult are the measures needed to compare the consequences of selecting among functionally equivalent materials and processes. "Environmental preferability" depends on the boundary conditions of the analysis as well as on value judgments. Functional equivalency is more complicated when attempts are made to balance costs and benefits. For example, how do the environmental consequences of manufacturing electronic switches and computers rate compared with those of using switches and computers in systems that facilitate telecommuting and thus reduce substantially environmental impacts of travel? Life-Cycle Assessment An LCA involves doing an inventory of materials and energy inputs and outputs, analyzing the impacts of inputs and outputs, and prioritizing actions that may be taken to address these impacts. In practice, it has been difficult for corporations to carry out detailed life-cycle inventories, more difficult to relate those inventories to a defensible impact analysis, and still more difficult to translate the results of those LCA stages into appropriate actions. The principal problem has been that comprehensive life-cycle inventories are expensive and time consuming. Another difficulty is that impact analyses connected with an assessment are inevitably contentious, and numerical assignments of impact are not accepted as adequate guidance. Finally, it is hard to rank one new product design against another or an old product against a new product. Although it is easy for managers to support the principle of integrating environmental factors into decision making, committing the organization to doing so as a matter of course requires developing a standard approach and a standard measuring system. Experience seems to demonstrate that the process works best when it is purposely done in modest depth and in a semiquantitative manner. The goal is to do the LCA rapidly, perhaps within 2 days for a typical product and within 1 week for a typical facility. One LCA method has as its central feature a five-by-five Environmentally Responsible Product Assessment Matrix, one dimension of which is life-cycle stage and the other of which is environmental concern (Figure 3). Using this matrix, the design-for-environment assessor studies

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Page 61

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Page 62 the purview of manufacturers; others have much more to do with society at large. This paper examines three aspects of this change: managing environmental costs, altering the structure of demand, and recognizing the key role of the designer. Managing Environmental Costs Developing acceptable methods to guide product and process designers in selecting low-environmental-impact materials and production methodologies is not a trivial matter. If environmental costs were reflected in the market price of goods and services, environmental preferability would be apparent. However, environmental costs are often ignored in the national accounting system and are at best hidden as overhead in corporate accounting practices. The financial characteristics of any manufacturing activity are understandably of interest to industrial managers, and such information is generally captured in management accounting systems. Traditionally, such systems have treated environmental costs—even real, quantifiable environmental costs, such as those associated with residue disposal as overhead and have therefore not broken them out by activity, product, process, material, or technology. Without access to environmental cost information, managers have had neither the incentive nor the data to reduce costs such. The solution, sometimes called "green accounting," is conceptually simple: Develop management accounting systems that break out such costs, assign the costs to the causative activity, and then rationally manage them. One example of such an approach is activity-based costing (ABC) (Macve, 1997; Todd, forthcoming). In practice, however, green accounting has proved difficult. For one thing, managers tend to resist taking on additional responsibilities. A bigger hurdle in many complex manufacturing operations, however, is developing sensors and systems to provide data on the contributions of different processes and products to a liquid residue stream. In addition, firms may resist assigning potential costs, such future regulatory liability for current residue disposal practices because of the fear of legal liability. (A company that considers potential future liability may be seen as admitting its planned behavior was inappropriate or illegal.) Nonetheless, it is clear that the addition of green elements to management accounting systems and their supporting information subsystems is critical to completing a necessary feedback loop for environmentally appropriate corporate behavior. Continued research into so-called full-cost accounting by the accounting community would be most useful to industrial ecologists. Altering the Structure of Demand A different perspective on environmental stewardship occurs once ownership of a product is conveyed to a customer. Decisions concerning environmentally beneficial actions tend to differ according to whether the decision makers are

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Page 63 individuals or a group. Individual owners of automobiles, for example, have less ability to influence the environmental fate of the vehicle they own than owners of electricity generating facilities have influence on the environmental practices and operation of their power plants. It is obviously easier to undertake voluntary or mandatory corrective action if ownership and decision-making are centralized than if ownership and decision-making are widely distributed. Thus, chances for improving the environment could be enhanced if trajectories of development could be designed to concentrate sources of environmental impacts in the hands of fewer decision makers and in fewer locations. Doing so involves what social scientists term "altering the structure of demand." In the last few years of the twentieth century, substantial change is anticipated in the structure of demand as a result of corporate and political actions. The result will be to place the ownership of many goods, such as automobiles and refrigerators, in fewer hands. The goods will then be leased to individual customers and businesses. Once the structure of demand is changed, many factors within and outside the restricted-ownership circle will produce actions leading to fewer environmental impacts. This change turns out to be natural once human preferences are considered. Customers do not buy 1,000 kilograms of metal, 100 kilograms of plastic, and an assortment of mixed materials because they have an innate desire to own them; they buy a bundle of functionalities manifested in the form of an automobile. One interesting effect of this anticipated transformation is that companies that used to think of themselves as manufacturers—providers of things—will become service companies. To stick with the automobile example, it seems likely that vehicles will increasingly be leased rather than owned. Customers will pick up a leased vehicle, use it as they need to, and return it to the automobile leasing center. The leasing agency, meanwhile, will be responsible for the flow of materials into the vehicle, its manufacture, all maintenance and life-extension activities, and the eventual dismantling of the automobile for appropriate recycling of subassemblies, components, and materials. A shift in corporate focus to selling function instead of hardware will require organizational and information systems that offer superior inventory or fleet operation. It will require designing systems, products, and components that require minimum maintenance. Such strategies might include developing modular designs that accommodate changes in technologies or user requirements through upgrades. Finally, the shift will also require managing risk and consumer satisfaction at all levels within the complex manufacturing, delivery, use, and disposal systems of which the product is a component. It may prove to be more economical and effective to improve system performance than product performance. The transition from sales to service will be an enormous culture shock for many manufacturing companies. It will involve the addition of service-oriented marketing practices to more traditional technologically driven corporate practices. The conglomerates of the twenty-first century will be built upon the remains of corporations unable to manage the transition.

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Page 64 Recognizing the Key Role of the Designer In order to effect major progress in the environmental stewardship of the manufacturing sector, corporate culture will need to be realigned so that the designer of products and processes is both the target of change and the beneficiary of corporate enlightenment. It is not unrealistic to regard the designer as the nexus of environmental decisions in the industrial corporation. Designers choose the systems and subsystems needed to perform the required functions, the components from which to manufacture the systems, and the materials and manufacturing processes. In the past, the constraints on the designer have generally been to achieve the required function while minimizing cost. Engineering education, handbooks for designers, professional support systems, and corporate reward structures have reinforced these constraints. Environmental concerns have typically been addressed only if legally necessary. The industrial ecology life-cycle ethic will demand of the designer a different educational background and new and expanded databases and tools. Concurrently, new corporate support and reward systems will be required. A central focus of environmental and engineering education, law and regulatory practice, and corporate management practices will be to provide these necessary new tools and incentives for the product and process designer, whose choices will determine to a great degree the environmental performance of the corporation. Breaking Barriers and Creating Opportunities Critical barriers to lessening the impact of manufacturing on the environment have to be addressed at least on two levels: those that fall within manufacturing organizations themselves and external societal and institutional factors that affect the manufacturer. The line between the two is blury, as the following discussion illustrates. Intraorganizational Barriers 1) A commitment by management to environmental stewardship is not always evident. One way a company can demonstrate its responsibility for the effects its products and processes have on the environment is to articulate clearly its policy to the public and to make sure that the policy is backed by a plan to achieve specific goals. Demonstration of a commitment to environmental goals can be further strengthened through membership in appropriate industry organizations that have well-developed principles of self-regulation and oversight. The commitment to these principles must come from the most senior levels of the firms; in most instances, the CEO signs an agreement to abide by the principles and commits to disclose publicly the results of annual reviews by peer member companies.

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Page 65 2) A focus on financial performance may lead to inappropriate short-term environmental decisions. Metrics and reward systems must be revised to support the organization's commitment to make manufacturing decisions in light of their impact on the environment. These metrics and reward systems should encourage rational examination of alternative decisions that may result in lower financial performance in the short term but higher environmental and economic rewards over the long term. Improved methods of manufacturing cost accounting are available to support these decision processes. Activity-based costing is one methodology that can be used to help identify and collect the appropriate data by which alternatives can be evaluated. 3) Insufficient information is available for making environmentally responsible decisions. To address this deficiency, handbooks and literature can be assembled to provide the information needed by product designers, engineers, and the managers of manufacturing firms. This collection of guidelines and data must reveal costs throughout all stages of the product life cycle. Designers, engineers, and managers require a rational basis on which to select materials; consider alternative product configurations; compare different production processes and packaging schemes; understand energy use at each stage of the product's life; and consider remanufacture, disposal, or recycling costs at the end of the product's useful life. In larger organizations, the environmental health and safety office could provide this information, but the same issues must be addressed by smaller firms as well. Again, better accounting methods for allocating costs are available to ensure more environmentally responsible decisions. 4) Externalizing costs has been an acceptable way for manufacturers to transfer to the customer the responsibility (i.e., costs) for a product's environmental impact. Changes in accounting standards and methodologies are needed before most organizations are able to determine the costs associated with internalizing what are currently treated as external costs. Activity-based costing can help, but it is not as simple as its acronym suggests. ABC increases the volume of data collected and may require accompanying organizational changes and adjustments to accommodate those needs. While accounting practices can support the operational aspects of internalizing external costs, the encouragement for doing so is unlikely to come from the manufacturing enterprise. Motivation for these changes is more likely to derive from regulatory actions. One option is to place taxes on materials (e.g., mercury) that are of particular concern. Legislative models that may be more effective at internalizing previously external costs should be developed and tested. Government, industry, and the public need to work collaboratively to identify opportunities to minimize the impact of manufactured products on the environment by examining the influence of the

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Page 66 product at each stage of its life. However, these analytical life cycle models can be used inappropriately. LCA can provide useful information for planning purposes within industry, but methodological problems and uncertainties make LCA entirely inappropriate as a regulatory mechanism. Take-back laws, which require the manufacturer to recover the product from the customer at the end of its life, are also worth examination. But it is not clear what impact this change in responsibility will have on the upstream suppliers of components and subassemblies, or manufacturers will communicate their new approach to the public (e.g., manufacturers of office chairs in Germany advertise that they ''want their products back"). Societal and Institutional Barriers 1) Regulatory response often occurs too late to prevent environmental damage. Institutional response can lag behind the initial environmental damage caused by economic, technological, demographic, or behavioral pressures by 10 to 20 years (Rejeski, 1997). One solution to this dilemma is for government agencies and industry-sector consortia to work to anticipate the consequences of emerging technologies. For instance, by the year 2010, about 52 million batteries will have to be recycled, disposed of, or remanufactured as a result of the California electric vehicle initiative. Now is the time to examine the battery technology to be used, the methods of manufacture, and the eventual end-of-life issues for the power sources. Another example relates to the "green" lightbulb, which was rushed into production by U.S. firms in the 1980s without due consideration for the eventual disposal of the product. The mercury content of the lightbulb was found to cause significant landfill problems, and manufacturers who believed they were producing an environmentally responsible product were ultimately fined. By contrast, a predictive, preventive approach was taken by the Dutch. They investigated the mercury content of the lightbulbs and recognized a possible disposal problem. They developed a bulb with a lower mercury content before commercializing the product and put in place a reclamation structure for recapturing used bulbs. The goal of approaches like this is to examine a product's "toxic fingerprint" before it is placed on the market. It requires a strong scientific base for environmental decisions and an understanding of technological innovation. The early-examination approach introduces a barrier of its own, however. Companies may be reluctant to participate because there is no assurance that the regulatory environment will not change, and if it does, information about their new development of products (on a 15-year time scale) could be used against them in the future. Still, participation in such efforts can help a company avoid investing in products that are headed for the "endangered" list. 2) Businesses too readily acquiesce to accusations of environmental irresponsibility. Manufacturers and their industry representatives must play a stron-

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Page 67 ger role in informing and educating the public about the environmental consequences of their products, manufacturing processes, and distribution methods if they expect to remain competitive. They must work to move public discussion of environmental issues away from confrontation toward consideration of trade-offs among desired but conflicting objectives. 3) The evaluation of environmental risks in the context of the entire product life cycle is not well understood by the public. Significant efforts have been devoted to the development of educational materials, based on case studies and data bases, that introduce life-cycle-based assessment of environmental risk into K-12 and college curricula. Better outreach is needed to advise teachers of the availability of these resources and to help them include a balanced presentation of the issues involved. 4) The public mistrusts business because in many instances companies have not taken responsibility for problems others felt they were liable for or have presented conflicting information about the "greenness" of their products. Businesses need to be open with the community in which they are located about their environmental efforts. While there are national and international industry organizations that can provide educational materials and assistance, direct contact with local business leaders is the most effective way for manufacturers to establish their credibility and make clear their contribution to economic development and environmental quality. Manufacturers can also engage the public in discourse about the relationship between industry and the community. 5) Confrontational relationships exist among business, regulatory agencies, and environmental organizations. There are several ways to promote anticipatory, nonconfrontational problem solving among all interested parties. These include improving the credentials and salaries of government officials; developing lists of environmental action items; and providing incentives to encourage collaborative problem solving. Upgrading the credentials and compensation of agency officials will be a slow and difficult process. In the meantime, industry sponsorship of travel and registration costs could encourage these officials to participate more in meetings, conferences, and other forums. These meetings would provide opportunities for the joint identification of issues whose solution would provide substantial benefits when cooperatively undertaken. Immunity from future regulatory action is an important requisite for companies that agree to participate in reducing confrontational relationships with regulators and other concerned groups. Such a provision will help to ensure that companies are forthcoming and engage in frank conversations about problems and suggestions for solutions. 6) The most effective means of sharing responsibility for environmental stewardship between communities and manufacturers is not articulated. Since the

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Page 68 responsibility for the environment does not lie solely with industry but requires broad-based involvement of the community, it is useful to build linkages for cooperative action among industry, the community, elected officials, and environmental organizations. A systems view could be encouraged, such as studying whether optimized traffic control is more important for the local environment than a certain type of emission control on an industry. 7) The increasing influence of national regulatory actions and proposed international metrics and standards could adversely affect the manufacturing community. The many existing environmental standards and regulations around the world adds complexity to the task of environmental management for globally competitive companies. This will likely remain a concern into the future. At the same time, international efforts to develop standards for environmental management (i.e., the International Standards Organization's ISO 14000 program) are running into conflict with local and regional voluntary schemes. For example, the ISO 14001 standard for environmental management systems is sufficiently different from the European Union's voluntary ecomanagement and auditing scheme (EMAS) that the European standards body has plans to draw up a document to bridge differences between ISO 14001 and EMAS. If successful, these efforts will document public outreach practices that encourage greater environmental responsibility by firms. The benefit to assembling industry-sector-specific as well as generic best-in-class information is that the data can be used in a manner similar to the algorithms developed for quality improvements. Unresolved Questions The manufacturing sector is currently in a period of transition as it wrestles with whether (and how) to close material loops and create a more sustainable industrial ecology. As this process unfolds, it may be useful for those involved to ponder the following questions: ·      How accurate and detailed must life-cycle assessments be in order to support the crucial life-cycle costing activity? ·      Under what conditions should external environmental costs be internalized? ·      What can be learned from past successes and failures? ·      What opportunities exist to harvest the "low-hanging fruit" (i.e., simple and inexpensive activities yielding substantial benefits) of environmental improvement in the manufacturing sector? ·      Can the manufacturing industry really know what actions constitute environmental stewardship without close collaboration with environmental scientists?

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Page 69 ·      Is it realistic to expect the creation of global standards for environmental performance? ·      Can manufacturers truly expect to become suppliers primarily of leased items (i.e., providers of function) rather than of products for sale? What roadblocks stand in the way of such a transformation? ·      Can groups with a vested interest in maintaining the status quo be convinced to change? Individuals with corporate environmental compliance and control responsibilities may feel threatened by initiatives, such as pollution prevention, that may eliminate the need for their positions. ·      Is there real value in green labeling? The value that the public places on green labels depends on whether they trust the source of information. There is currently no method for regulating such labeling programs. In the United States, green labeling is a private-sector activity undertaken by a handful of consulting companies. In Europe, the government role is stronger, and some standards have emerged. However the value of the label is also quickly lost if the green attribute becomes the industry standard. For example, the U.S. EPA Energy Star program to label computers that power down when not in use probably aided the introduction of the innovation across the computer industry. This adoption diminished the value of the label as a differentiator among similar products, although the consequences of not carrying the label remain unclear. ·      Is LCA the ultimate decision tool to aid in determining environmental preferability? LCA is incredibly data intensive and value laden, and it lends itself to differing interpretations (e.g., the disposable diaper industry may find its diapers have environmental advantages over cloth diapers, while the marketers of cloth diapers can argue effectively that cloth is superior). Nevertheless, companies are using scaled-down assessments to guide their decision making. ·      Can general DFE-based tools (including training) for product and process designers be developed? Large companies such as AT&T and Volvo have begun developing their own tools, but there is a dearth of tools for use by small- to medium-sized companies. ·      How can the adversarial relationship between industry and environmental regulatory agencies, which inhibits change, be overcome? A critical element of the cultural and organizational change needed involves a redefinition of the manufacturing industry as one that is environmentally conscious. This will require industry to partnership with customers and government. But such efforts are inhibited by the proliferation of regulatory initiatives. (There were fewer than 50 pages of EPA regulations in 1969, but there are expected to be 11,000 pages by 2010.) In addition, the regulatory system in the United States is one based on a command-and-control approach, which perpetuates a vicious cycle: Government develops the most stringent regulations possible to address a problem (so it can deal

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Page 70 from a strong negotiating position); industry balks and engages expensive lobbyists and lawyers to negotiate its terms while at the same time claiming the action will result in the loss of jobs and undermine competitiveness; industry finds a way to meet the negotiated/lobbied regulations; government follows with ever-more stringent rules; and the cycle is repeated. Throughout the process, time and valuable human resources are expended. More effective partnering is needed to move away from this process toward a flexible systems-based problem-solving mode. ·      How can society avoid national regulatory actions and those imposed by international agreements that have a negative impact on innovation and the ability to compete? Market-based regulations have in some instances encouraged innovation (as in the case of finding replacements to ozone-depleting substances). In most instances, however, companies burdened by additional rules and procedures are unable to respond as quickly to changes in markets because of the time and resources consumed with permit and regulatory compliance. Companies from countries not imposing the same limits and not adhering to the same standards of conduct can have an unfair competitive advantage. Conclusion The sea change occurring in the manufacturing sector regarding environmental concerns is reminiscent of the change that occurred with the quality movement. Quality was first viewed as a cost and then became a necessity. Today, it is a critical element of competitiveness. Environmental concerns appear to be following the same trajectory, and companies are learning to better integrate these concerns into their core operations. Still, barriers remain, and many questions are unanswered. As with the shift toward quality, the environmental initiatives may initially require a leap of faith: "Do it before measuring what it is worth." The process of identifying, measuring, and disseminating information about the incremental paybacks that accrue will follow. Environmental stewardship in manufacturing is poised to move into an era of competitiveness. The details of this transformation remain uncertain, but there seems little doubt that the successful manufacturers of the twenty-first century will be those for whom environmental stewardship is a primary focus. References Allenby, B. R. 1994. Integrating environment and technology: Design for environment. Pp. 137-148 in The Greening of Industrial Ecosystems, B. R. Allenby and D. J. Richards, eds. Washington, D.C.: National Academy Press. Graedel, T. E., and B. R. Allenby. 1995. Industrial Ecology. Englewood Cliffs, N.J.: Prentice-Hall. Horkeby, I. 1993. Environmentally compatible product and process development. Paper presented at

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Page 71 the NAE Workshop on Corporate Environmental Stewardship. August 10-13, 1993, Woods Hole, Mass. Horkeby, I. 1997. Environmental prioritization. Pp. 124-131 in The Industrial Green Game. D. J. Richards, ed. Washington, D.C.: National Academy Press. Klamisch, R. L. 1994. Designing the modern automobile for recycling. Pp. 165-170 in The Greening of Industrial Ecosystems, B. R. Allenby and D. J. Richards, eds. Washington, D.C.: National Academy Press. Macve, R. 1997. Accounting for environmental cost. Pp. 185-199 in The Industrial Green Game. D. J. Richards, ed. Washington, D.C.: National Academy Press. Rejeski, D. 1997. Metrics, systems and technological choices. Pp. 48-72 in The Industrial Green Game, D. J. Richards, ed. Washington, D.C.: National Academy Press. Richards, D. J., and R. A. Frosch. 1997. The Industrial Green Game: Overview and Perspectives. Pp. 1-34 in The Industrial Green Game, D. J. Richards, ed. Washington, D.C.: National Academy Press. Todd, R. (Forthcoming). Environmental measures: Developing an environmental decision-support structure. In Environmental Performance Measures and Ecosystem Condition, P. C. Schulze, ed. Washington, D.C.: National Academy Press.