Making Business Sense of Environmental Compliance

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Companies lose money because they treat pollution control and plant operations

as separate concerns. In this article, the author outlines five strategic,

cost-saving approaches involving the coordination of these two issues.

A truly integrated, holistic approach to environmental compliance and

production concerns requires a plant-wide perspective that simultaneously

reviews new regulations, plant operations, emerging technologies,

changing markets, and fluctuations in product demand. In this type of

holistic approach, the environment becomes a criterion for making business

decisions, and business needs become criteria for making environmental

decisions.

In most firms, the division of responsibilities among departments creates

a rift between production and environmental considerations. But the author

advises that managers must force themselves to make decisions differently.

For example, using a holistic approach, a company might simulate plant

operations, try out various financial models, and apply alternative cost-allocation

methods to reveal a product's true environmental cost.

The author describes five cases that illustrate the use of integrated

strategies to assess cost-effective compliance options. Four of the strategies

are based on real-life enforcement cases in which noncompliance orientations

either lost money or didn't realize the expected gains. The fifth strategy

is a proactive, integrated approach that resulted in cost savings by eliminating

the need for an entire pollution-prevention project.

To save production and compliance costs, managers and environmental engineers

must collaboratively:

• consider changing operations,

• use delayed-expenditure models,

• look for a confluence of problems and conditions (low productivity,

  availability of more-efficient technologies, imminent implementation

  of stringent regulations),

• allocate environmental costs to products equitably, and

• use a systems approach to view plant-wide operations as one unit.

Jasbinder Singh is president of Policy

Planning & Evaluation, Inc., an environmental consulting firm in Herndon,

Virginia. Contact him at jasbinder@pipeline.com.

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