Environmental Management

This article introduces the practice and theory of environmental management. Discussion and analysis will include an overview and history of environmental management practices such as clean production and ecologically sustainable development. This article will also include an introduction to environmental regulation and environmental management systems (EMS). Two corporate case studies will be described and analyzed to illustrate environmental management and green business strategies in practice.

Keywords Clean Production; Ecologically Sustainable Development; Environmental Management; Environmental Management System (EMS); Environmental Regulation; Green Business

Business & Public Policy > Environmental Management

Overview

Businesses of all sorts, such as airlines, oil producers, car manufacturers, and paper mills, impact the environment. As a result, the field of environmental management developed to minimize the environmental impact of business operations as well as to satisfy increasingly strict environmental laws and regulations. Environmental management refers to the process of managing business operations or activities in the best way to minimize the impact, or the potential to impact, on the environment. Environmental management is motivated by governmental regulations, corporate goals, public expectations, environmental and material resources, and the potential for risk and liability.

The management approach that an individual business or industry chooses to manage their environmental issues depends on factors such as government legislation, local and global politics, community and customer expectations, and past history of environmental performance. Environmental management stakeholders include governments, regulators, customers, competitors, community and environmental interest groups, industry associations, and the environment itself (Delmas & Toffel, 2004).

Environmental management is part of the growing economic trend called green business. Green business practices, which refer to largely voluntary efforts at environmentally low-impact business practices, focus on sustainable products and practices. Examples include recycling, renewable energy, sustained-yield forestry, intelligent transportation systems, and healthy buildings designed with "green" materials.

History

Prior to the 1960s, there was no corporate accountability for the costs of environmental damages. Environmental costs were externalized to national governments and local communities. The practice of environmental management began, as a legislated activity and requirement of corporate behavior, in the 1960s and 1970s in response to growing concern about environmental pollution highlighted and publicized by pollution in Lake Erie, smog levels in Los Angeles, and the Rhine River catching fire from contaminants and pollutants. Government agencies, such as the United States Environmental Protection Agency (EPA) established in 1970, were formed, as explained by the Environmental Protection Agency's mission statement, to protect human health and to safeguard the natural environment-air, water, and land-upon which life depends. The U.S. Environmental Protection Agency encompasses environmentally-focused federal research, monitoring, standard-setting, and enforcement activities to ensure environmental protection (Anderson, 1999).

Environmental Regulation

Environmental management, since its beginnings in the 1960s, has been characterized by the need to satisfy environmental regulations. Environmental regulation refers to state and federal statutes intended to protect the environment and wildlife, prevent pollution, save endangered species, and conserve water. Environmental regulations often grant individuals and organizations the right to bring legal actions to enforce the law.

Environmental regulation began in the United States with the Clean Water Act and the Clean Air Act. Regulation to address the problems of future and past hazardous waste disposal include the Resource Conservation and Recovery Act (RCRA) and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) or the Superfund program. Environmental regulation began in Europe with a common environmental protection policy built into the Treaty of Rome (1987) and extended and expanded by the Treaty on European Union (1992). Environmental regulation has been criticized by businesses for ignoring production processes, being expensive, and excessive. Critics argue that environmental regulation has traditionally focused on "end-of-the pipe" solutions (such as emissions or waste control) rather than addressing the basic processes that created the problem initially (Anderson, 1999).

Environmental regulation, both design and content, is evolving to create and promote “gains in corporate environmental performance through the creation of a hybrid system of public regulation, government-supervised corporate self-regulation, mandatory information disclosure, and green procurement” or purchasing (Eisner, 2004, p. 145). In addition, the practice of managing environmental issues is transitioning from a regulatory phase to an increasingly common environmental management systems phase. The following section analyzes and discusses environmental management systems in corporations.

Applications

Environmental Management Systems

Within corporations, environmental management practices are increasingly formalized into environmental management systems (EMS). Environmental management systems, as described by the U.S. Environmental Protection Agency, refer to a set of processes and practices that enable an organization to systematically assess and manage its environmental footprint. Environmental management systems developed during the 1990s as the importance of environmental management increased in response to government and consumer pressure. Environmental management systems complement and, in some cases, substitute for environmental regulations (Jayathirtha, 2001). The Environmental Protection Agency bases its environmental management systems on the cyclical "Plan, Do, Check, and Act" model of management:

• Plan: Identify environmental issues and establish goals
• Do: Implement training and operational controls.
• Check: Monitor and take corrective action as necessary.
• Act: Review progress and act to make needed changes to the environmental management system (“Environmental,” 2006).

Environmental management systems are characterized by proactive activities rather than reactive activities. Environmental management systems, which can be used in factories, small businesses, service industries, and government agencies, come in many forms. Common corporate environmental management practices include clean production and ecologically sustainable development.

Clean production refers to the initiatives undertaken by businesses to reduce the environmental impact of production activities. Examples of cleaner production approaches include conserving of energy, reducing consumption of raw materials, decreasing use of and production of hazardous materials, and reducing waste. Benefits of cleaner production approaches include improved community relations as well as reduced operating costs and liability risks.

Ecologically sustainable development refers to the business practice of using, conserving, and enhancing the community's resources so that vital ecological processes are maintained for present and future generations. Ecologically sustainable development, which requires environmental, social, and economic cooperation, necessitates changes in the nature of production and consumption. Maintaining and conserving biodiversity, one of the main goals of ecologically sustainable development, refers to the variety of life form and the ecosystems in which they live (“Environmental,” 2006).

According to the Environmental Protection Agency, environmental management systems benefit corporate stakeholders in numerous ways (Johnson, 2005):

• Environmental management systems help an organization comply with its regulatory responsibilities and provide a means for addressing non-regulated environmental aspects such as energy efficiency and resource conservation.
• Environmental management systems facilitate assessment of risks and liabilities.
• Environmental management systems increase operating efficiency, create standard operating procedures, and capture institutional knowledge of experienced employees.
• Environmental management systems increase employees' environmental awareness and involvement throughout the organization.
• Environmental management systems offer potential environmental and financial benefits.
• Environmental management systems provide a competitive edge and improve public relations.

Environmental management systems are a generally cost effective approach to improving environmental performance. That said, there are costs associated with developing and implementing an environmental management system. These costs include:

• Investment of internal resources such as staff/employee time.
• Costs for training of personnel.
• Costs for hiring consultants.
• Costs for technical resources to analyze environmental impacts and improvement options.

Environmental management systems are generally part of a corporation's risk management approach or strategy to prevention and control. Corporations create environmental management systems (as well as total quality environmental management (TQEM) systems) within the larger context of environmental risk management. To monitor and ensure corporate compliance and results, corporations establish environmental management systems auditing. Internal compliance audits and pre-acquisition assessment programs ensure that businesses are meeting regulator requirements as well as corporate-established goals and objectives (Bowman, 2005).

Environmental management systems and programs include two main kinds: organization-based and individual company-based systems. The following sections include examples and discussions of these two types of environmental management systems.

Organization-based Environmental Management Systems

Anderson (1999) provides information on several organization-based environmental management systems that provide structure for the environmental management process. Common organization-based environmental management programs include collaboration between national governments, research scientists, non-profit organizations, and corporations. Examples include ISO 14000; Coalition for Environmentally Responsible Companies (CERES); the Responsible Care Program of the Chemical Manufacturers Association; Global Environmental Management Initiative (GEMI); and the United Nations Environment Program (UNEP) (Anderson, 1999):

• ISO 14000: ISO 14000, created by the International Organization for Standardization, is a set of management system standards governing process documentation, training, life-cycle assessment procedures and management reporting, and accountability for environmental performance. Section 14001 of the code creates the specific standards for environmental management systems. ISO 14000 certification is a condition of legal business transactions in many countries.
• Coalition for Environmentally Responsible Companies (CERES): The Coalition for Environmentally Responsible Companies, an American non-profit that began in 1989, developed and promoted 10 environmental principles for member organizations such as General Motors, Sun Company, Bethlehem Steel, Polaroid, BankAmerica, Coca-Cola, and the Body Shop. The 10 principles include: Protection of the Biosphere, Sustainable Use of Natural Resources, Reduction and Disposal of Wastes, Energy Conservation, Risk Reduction, Safe Products and Services, Environmental Restoration, Informing the Public, Management Commitment, and Audits and Reports.
• Responsible Care Program of the Chemical Manufacturers Association: The Responsible Care Program, founded in 1988 by the Chemical Manufacturers Association, establishes standards as benchmarks for environmental performance in the Chemical Manufacturers industry. A similar program based on the Responsible Care Program was started by the Petroleum industry.
• Global Environmental Management Initiative (GEMI): The Global Environmental Management Initiative, formed in 1990 in the United States, developed in response to demands of environmentally-conscious consumers. Corporate members, which include Anheuser-Busch, Bristol-Myers Squibb, Browning-Ferris, Coca-Cola, Colgate-Palmolive, Coors, Dow, DuPont, Eastman Kodak, Georgia-Pacific, Goodyear, Johnson & Johnson, Lockheed Martin, Merck, Motorola, Occidental Petroleum, Olin, Procter & Gamble, Southern Company, and Waste Management, share and explicit commitment to achieve environmental, health, and safety (EH&S) excellence.
• United Nations Environment Program (UNEP): The United Nations Environmental Program, created by the Industry and Environment Centre (UNEPIE) in 1975, works with business and industry, national and local governments, international groups, and nongovernmental organizations to promote cooperation and action to benefit the environment. UNEP primary goals include:

“build consensus for preventive environmental protection through cleaner and safer industrial production and consumption; help formulate policies and strategies to achieve cleaner and safer production and consumption patterns, and facilitate their implementation; define and encourage the incorporation of environmental criteria in industrial production; and stimulate the exchange of information on environmentally sound technologies and forms of industrial development” (Anderson, 1999, p. 118).

Corporate-based Environmental Management Systems

The organization-based environmental programs, described above, provide information and structure for organizations planning to expand their environmental effort. While numerous businesses join established organization-based environmental programs, others develop their own company-specific environmental management systems. Examples of individual businesses that have adopted business-based environmental management programs or systems include Scandinavian Airlines (SAS) and Clif Bar & Co.

Case Study: Scandinavian Airlines

Lynes and Dredge (2006) present a case study on the environmental effects of air travel. Air travel is “responsible for some of the most significant environmental impacts of tourism including high levels fuel consumption, air pollution, and waste production. . . The trends in increased tourism and aviation travel are creating increased demands on the environment” (p. 117). Government regulation of the aviation industry's environmental impact is difficult for two main reasons: airlines operate in international settings and new regulations take so long that they often lag behind new advances in technology. Instead, environmental management programs, characterized by voluntary adoption, may provide the best hope for green management practices in the airline industry. Air travel has increased steadily since the 1970s and is expected to increase steadily in the future. This trend makes environmental management a priority for airlines such as Scandinavian Airlines.

Scandinavian Airlines is the largest airline in Scandinavia and serves approximately 20 million passengers each year. Scandinavian Airlines is an appropriate case study due to its representative size, services, management direction, reporting standards, and openness. Scandinavian Airlines, under the leadership of its CEO Jan Stenberg, focused on environmental management as a strategic factor with the establishment of environmental goals, visions, and a commitment to publish environmental reports on an annual basis. In 1995, Scandinavian Airlines became one of the first airlines to publish an environmental report. Environmental reports are part of a larger trend in open reporting of corporate citizenship and corporate social responsibility reports to stakeholders (Lynes & Dredge, 2006).

Scandinavian Airlines is committed to creating a profitable environmental profile and a sustainable society and environment. Scandinavian Airlines explains that the factors driving them to enhanced environmental performance are a combination of ethical principles, economic efficiencies, passenger interest, better company image, liability concerns of banks and insurance as well as the potential of getting a competitive advantage (Lynes & Dredge, 2006).

Scandinavian Airlines' environmental management system includes tools and mechanisms to report environmental performance. Highlights of their environmental management systems include:

• Annual public environmental reporting
• An environmental index that measures economic efficiencies derived from implementing environmental measures (eco-efficiencies)
• Corporate environmental policy obligating all managers to conduct an environmental assessment as part of their decision-making documentation.
• Supports product stewardship programs and will only deal with suppliers who have environmental policies and management systems
• An emissions calculator that provides a destination specifics calculation of CO2 generated (p. 128).

The last element of their environmental management systems -- carbon-dioxide reduction projects and sustainable development activities -- is featured prominently in their advertising and promotional materials. Scandinavian Airlines offers all customers the possibility to offset carbon dioxide emissions used in airplane travel. SAS promotes a website on which a customer can enter their travel plans and a calculator computes the distance and CO2 contribution. The amount a customer can pay in compensation is invested in projects for renewable energy in other countries. This amount then corresponds to a reduction in the CO2 emissions caused by the customer's flight or air transport (Lynes & Dredge, 2006).

This case study of Scandinavian Airlines illustrates how a corporation in an environmentally-polluting industry can reduce environmental impact and win support as an eco-friendly business. In contrast to the scale in business size and industry of Scandinavian Airlines, the next case study, CLIF Bar & Co., shows how even smaller-scale product-based businesses accommodate environmental management systems into the operations of their company.

Case Study: Clif Bar & Co.

Clif Bar & Co., a California-based energy bar maker that began in 1992, promotes environmental consciousness in their own business practices and the lives of their customers. In 2001, Clif Bar & Co. undertook a campaign to "green up" their business. The company acknowledged that everything the business did had an impact on the environment and created an environmental management system to address their environmental impact. In 2004, Clif Bar &Co. won the General Excellence Award from the Corporate Responsibility Officer Organization for its thorough, on-going commitment to environmental sustainability, employee well-being, and community involvement. According to the company, the main principles and actions of Clif Bar & Co.'s environmental management system include:

• Improved Packaging: Clif Bar & Co. is working toward producing environmentally sound packaging. Changes include redesigned product holders to eliminate 90,000 pounds of shrink-wrap per year.
• Renewable Energy: Clif Bar & Co. offsets office and bakeries energy use with clean, renewable wind energy by purchasing green tags through Native Energy.
• Recycled Paper: Clif Bar & Co. purchases only 100% post-consumer recycled paper for office and use only unbleached, recycled paper and non-toxic inks for printing.
• Organic Ingredients: Clif Bar & Co. purchases organic ingredients for their food products to promote and support sustainable organic farming.
• Organic Cotton: Clif Bar & Co. uses 100%-certified organic cotton for promotional products.
• Reducing Solid Waste: Clif Bar & Co. has an explicit goal to move office solid waste production toward zero waste. Their recycling efforts include cardboard, mixed paper, plastic and glass bottles, cans, non-rigid plastic, wooden pallets, and batteries (“Green Business,” 2007).

In addition to the approaches described above, Clif Bar & Co. created special environmental partnerships with music bands to provide fans a way to offset the CO2 they create by driving cars to attend live shows. Clif Bar & Co. has also created a program that pays workers to switch to biodiesel or hybrid vehicles. Scandinavian Airlines and Clif Bar & Co. share a focus on carbon-dioxide reduction projects and sustainable development activities (Johnson, 2006).

Scandinavian Airlines and Clif Bar & Co. are two of many thousands of companies that are voluntarily addressing the environmental impact of their businesses practices. Environmental business practices, in the form of environmental management systems, are mutually beneficial to the environment and to the corporations themselves who profit through improved public relations and potential financial gains.

Conclusion

Environmental management, at the beginning of the 21st century, is a global phenomenon that attempts to address a global problem of pollution and unsustainable use of natural resources. Environmental issues of shared global concern include global warming, ozone depletion, air pollution, water pollution, land degradation, natural resource depletion, and species loss. As globalization changes business practices, in large part by increasing the number of multinational corporations in existence, environmental impact is not bound and isolated within one country. For example, winds carry pollution over national borders and ground water carries contaminants under national borders. Throughout the world, public sector and private sector stakeholders (such as national governments, corporations, global non-profit organizations, communities, and individuals) are working to increase environmental management education, application, and accountability to benefit the earth. The model of green business, which refers to businesses that solve rather than cause both environmental and social problems, is a growing and important trend.

Ultimately, environmental management practices, in all the forms described in this article, promote the functional ecological processes necessary for sustainable life and development. In the final analysis, the type of environmental management program or system an organization chooses depends on a number of variables such as government legislation, local and global politics, community and customer expectations, and past history of environmental performance. Regardless of the types of environmental management system an organization chooses, opportunities and benefits exist. Substantial business opportunities are present for creative risk managers, insurers, brokers, and consultants to offer their experience and expertise to the growing area of environmental management (Anderson, 1999). Substantial business and environmental benefits exist for organizations that take a proactive approach to managing the effect that business processes and activities have on the environment.

Terms & Concepts

Biodiversity: The variety of life form and the ecosystems in which they live.

Clean Production: The initiatives undertaken by businesses to reduce the environmental impact of production activities.

Ecologically Sustainable Development: The business practice of using, conserving, and enhancing the community's resources so that vital ecological processes are maintained for present and future generations.

Environmental Footprint: The environmental impact associated with an individual's or business' activities, products, and services.

Environmental Management: The process of managing business operations or activities in the best way to minimize the impact, or the potential to impact, on the environment.

Environmental Management System (EMS): A set of processes and practices that enable an organization to systematically assess and manage its environmental "footprint."

Environmental Regulation: Governmental statutes which are intended to protect the environment, including wildlife and land, reduce pollution, deforestation, and protect endangered species, conserve water. State and federal mandates develop and follow general environmental protection plans and intervene in damaging practices.

Functional Ecological Processes: Natural processes that promote clean air, maintenance of soil fertility, reduction of species loss, clean water sources, pest control, disease, and soil erosion.

Green Business: Businesses that solve rather than cause both environmental and social problems.

Total Quality Environmental Management (TQEM): A voluntary environmental initiative that attempts to achieve effective sustainable management of natural resources by transforming organizations into learning organizations.

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Suggested Reading

Dobler, M., Lajili, K., & Zeghal, D. (2014). Environmental performance, environmental risk and risk management. Business Strategy and the Environment, 23, 1–17. Retrieved November 14, 2014, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=93678581

Figge, F. (2005). Value-based environmental management. From environmental shareholder value to environmental option value. Corporate Social Responsibility & Environmental Management, 12, 19-30. Retrieved March 27, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=17077478&site=ehost-live

Inoue, E., Arimura, T. H., & Nakano, M. (2013). A new insight into environmental innovation: Does the maturity of environmental management systems matter?. Ecological Economics, 94156–163. Retrieved November 20, 2013 from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=90213367

Khanna, M., & Anton, W. (2002). Corporate environmental management: Regulatory and market-based incentives. Land Economics, 78, 539. Retrieved March 27, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=9047156&site=ehost-live

Paillé, P., Boiral, O., & Chen, Y. (2013). Linking environmental management practices and organizational citizenship behaviour for the environment: a social exchange perspective. International Journal Of Human Resource Management, 24, 3552–3575. Retrieved November 20, 2013 from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=89552129

Sroufe, R., Narasimhan, R., Montabon, F., & Wang, X. (2002). Environmental management practices. Greener Management International, , 30. Retrieved March 27, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=12175272&site=ehost-live