MIT Sloan Management Review

Business Ethics and Public Policy, Corporate Strategy

Proactive Environmental Management: Avoiding the Toxic Trap

By Christopher B. Hunt and Ellen R. Auster

January 15, 1990

THE DIFFICULTY OF MANAGING ENVIRONMENTAL ISSUES tempts many corporations to under-manage and neglect necessary pollution control and environmental protection programs. This oversight puts those firms —not to mention the environment—at serious risk. The authors describe five stages of environmental management program development. They highlight each stage's characteristics, including its potential shortcomings, and offer practical guidelines for program development. This article also includes an SMR interview with C.C. Smith, Jr., Union Carbide's vice president of community and employee health, safety, and environmental protection. *The quotes in this sectum are intended to be characteristic of managers at each developmental stage They are not actual quotes from company executives.

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A BANK. FORECLOSED on a loan and took control of a small piece of real estate. The .property was later found to be contaminated with hazardous wastes and, after a long-drawn-out court case, the bank was held liable for half a million dollars.

  • The manager of a large manufacturing conglomerate's subsidiary was notified by the head engineer that a hazardous waste containment system needed to be replaced. Faced with pressure from corporate headquarters to reduce operating costs, the manager postponed the investment. Subsequent monitoring by the local regulatory authority revealed serious releases of hazardous wastes. Fines, legal fees, and site cleanup cost the company much more than if the manager had invested in the containment system in the first place.
  • A Fortune 500 corporation recently tested soil and groundwater around one of its overseas facilities and found high traces of toxic materials migrating from the site. Fortunately, the company was able to arrest the spread of the pollutants before a major drinking water source was seriously contaminated.

The newspapers are riddled with stories of environmental disasters like the Exxon oil spill, the gas leak in Bhopal, and the nuclear reactor meltdown at Three Mile Island. Yet, despite media attention and regulatory programs designed to curb environmental problems, literally hundreds of events like those listed above occur each day. To the companies facing such problems, the costs can... To read the complete article, login or sign-up using the form below.

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