Business today is operating in a profoundly different world than it did 30 years ago. Environmental management is no longer a relatively simple matter of controlling local pollution. Today, manufacturing companies may be held responsible for the impacts of their operations at every stage from raw material extraction through distribution to consumer use and final product disposal. These impacts are sometimes distant in space and even in time from each other. Managers must also deal with the expectations of a more environmentally aware public and the realization that reduced environmental impacts must come without sacrificing product quality or function.
This new set of ground rules offers progressive businesses fresh commercial opportunities to distinguish themselves from their competitors on the basis of both product quality and environmental performance. For these companies, cleaner production processes, more recyclable designs, and new ways of delivering services with less material throughput represent aggressive investments in a changing marketplace in which environmental values have greater business currency. Yet these companies are still the exception, not the rule.
Industry analysts recognize a natural progression of phases that companies have passed through in terms of their commitment to environmental concerns since the 1970s. Companies begin with basic compliance with environmental regulations, then move to environmental management aimed at reducing emissions beyond basic compliance, to broader concerns with resource efficiency and waste minimization. The last phase involves proactive goal-setting that embraces environmental, social, and ethical concerns . By the mid-1990s, the majority of firms in industrialized nations were still in the compliance phase. One recent estimate is that less than 20 percent of North American and European companies can be described as proactive in their commitment to improving environmental performance in alignment with sustainable development objectives, which hold that today’s wealth and lifestyles should not be achieved at the expense of future generations .
Those companies that have taken a proactive stance are, nevertheless, influential in developing new concepts and practices to reconcile business and sustainability objectives.
The concept of eco-efficiency merges ecological and economic goals. In practice, eco-efficiency involves improving the productivity of energy and material inputs to reduce resource consumption and cut pollution per unit of output – in essence, making more and better products from the same amount of raw materials with less waste and fewer adverse environmental impacts. As such, it represents a win-win approach that benefits both the bottom line and the environment. An early pioneer, 3M Corporation, now claims that its Pollution Prevention Pays program has prevented more than 750,000 metric tons of polluting emissions since 1975 by cleaning up and redesigning processes and products, saving the company more than US$790 million .
Eco-efficiency efforts cover a wide range of activities and often involve reconfiguring a product without degrading its performance. In 1989, Proctor & Gamble introduced concentrated detergent powders—called Ultra detergents—that took up half the volume of traditional detergents. The products cleaned the same amount of clothes, but were more convenient for consumers to handle, used 30 percent fewer raw materials, required 30 percent less packaging, and substantially cut the energy needed to transport them to market .
|Industry Has Gradually Improved Its Energy Efficiency|
|Energy Use Per Million U.S. Dollars GDP Generated by Industry, Selected Countries|
|Source: World Bank, World Development Indicators, 1997 on CD-ROM (The World Bank, Washington, D.C., 1997); International Energy Agency, Energy Statistics and blances, Non-OECD Countries, 1971-1995, and Energy Statistics and Balances: OECD Countries, 1960-1995, both on diskette (Organisation for Economic Co-Operation and Develpment, Paris, 1997).
Notes:: Data for United States not available before 1977. Metric tons of oil equivalent (mtoe) is a measure in which all energy sources are epressed in terms of a metric ton of oil. Countries were selected primarily on data availaility.