Making Business Sense of Environmental Compliance

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A major paper manufacturing company built a $500 million plant. Unlike some companies, it had been quite careful about the plant’s environmental requirements. It had painstakingly evaluated its obligations and had installed new environmental controls. The company’s environmental manager had worked with the project manager to get the needed permits in time and to be sure that the pollution control technology satisfied everyone’s requirements. Yet a short time after starting production, the boiler supplying electric power and steam failed the environmental compliance tests, and the facility became the subject of an enforcement action.

At a large steel processing company, the plant manager had received yet another proposal to replace another part of the treatment plant. Over the previous several years, the company had been cited for cyanide, zinc, nickel, and arsenic violations one after another. In each case, the environmental manager had suggested his own solutions and had solicited input from the engineering staff. He had also worked with outside vendors and regulatory authorities to find timely solutions. Still, millions of dollars later, here was another problem, and there was no telling when the next one would occur.

In both of these stories, the companies acted in good faith to comply with regulations. Both had done their jobs, yet they failed to prevent the ensuing problems. What went wrong?

The two environmental managers here are like those in most corporations. They are given responsibility to achieve and maintain environmental compliance, but their hands are tied by the way responsibilities at the plant level are organized (see “Key Players at the Plant Level”). They listen to suggestions offered by the corporate general manager, business staff, and operations manager and must then do their best to find appropriate compliance solutions, which usually means focusing on available technology.

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1. This view is supported by typical articles in almost any issue of Pollution Prevention Review (New York: Wiley), one of the leading journals devoted to pollution prevention.


R.L. Iman, D.J. Anderson, and L.R. Lichtenberg, “Evaluation of a Low-Residue Soldering Process that Eliminates Solvent Cleaning,” Pollution Prevention Review , volume 3, Autumn 1993, pp. 417–427;

F.W. Kirsch, G.P. Looby, and M.C. Kirk, Jr., “How Four Manufacturers Improved Painting Operations to Reduce Waste,” Pollution Prevention Review, volume 3, Autumn 1993, pp. 429–436;

A. Kleiner, “What Does It Mean to Be Green?” Harvard Business Review, volume 69, July–August 1991, pp. 1–9;

S. Barrett, “Strategy and the Environment,”Columbia Journal of World Business, volume 27, Fall–Winter 1992, pp. 203–208;

R.N. Barry and G.B. Sloan III, “Environmental Product Standards, Trade and European Consumer Goods Marketing—Processes, Threats and Opportunities,” Columbia Journal of World Business, volume 30, Spring 1995, pp. 75–86;

S.L. Franchise, “Marketing Green Products in the Triad,” Columbia Journal of World Business, volume 27, Fall–Winter 1992, pp. 269–285;

S. Schmidheiny, “The Business Logic of Sustainable Development,” Columbia Journal of World Business, volume 27, Fall–Winter 1992, pp. 18–23; and

J. Magretta, “Growth Through Global Sustainability: An Interview with Monsanto’s CEO, Robert B. Shapiro,” Harvard Business Review, volume 75, January–February 1997, pp. 79–88; and

H.L. Stuart, “Beyond Greening: Strategies for a Sustainable World,” Harvard Business Review, volume 75, January–February 1997, pp. 67–76.

2. U.S. Environmental Protection Agency, Enforcement Accomplishments Reports, 1990–1997, or any of the EPA’s numerous databases of noncom-pliance information, such as the Permit Compliance System and the AIRS Facility Subsystem (AFS).


I thank my associate, David Fuhs, who was the sounding board for the ideas presented here. Thanks also to an environmental manager (who wishes to remain anonymous) for his views on why integration ideas are not implemented and to two referees who helped in focusing an earlier draft of this article.

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