information for business decision making - environmental assessments, audits and reviews

Opening thoughts …

“For even as we celebrate tonight, we know the challenges that

tomorrow will bring are the greatest of our lifetime - two wars, a

planet in peril, the worst financial crisis in a century”.

– Barack Obama Victory Speech (2008)

David Cameron promised to lead:'the greenest government ever'.

- David Cameron, 2009

If the federal government had been around when the creator was

putting his hand to this state, Indiana wouldn't be here. It'd still be

waiting for an environmental impact statement.“

- Ronald Reagan, 40th President of the United States, 1981-89

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Lecture 2.2 & 2.3: Information for business decision-making: Environmental assessments, audits and reviewsDr. Miles Weaver,Senior Lecturer in Strategic Management,Leicester Business [email protected]

Join an ongoing debate:With your lecturer: @DrMilesWeaverClassmates & the world using #GreenBiz

Student appointments & availability each week:http://drmilesweaver.our.dmu.ac.uk/appointments/Or via the ‘Green Business’ blackboard site link

mailto:[email protected]

http://drmilesweaver.our.dmu.ac.uk/appointments/

http://drmilesweaver.our.dmu.ac.uk/appointments/

Learning outcomes

After this lecture and independent study you should be able to:-

Discuss how organisations use information to inform decision-making on environmental issues

Describe what an Environmental Impact Assessment (EIA) is and when one should be completed

Understand how an organisation might measure current environmental performance (i.e. environmental review)

Understand how an organisation might monitor and evaluate environmental performance (i.e. environmental auditing)

Describe how an organisation might minimise environmental impact (i.e. life cycle analysis or assessment)

1-3Miles Weaver

Introduction

1. Different responses to environmental challenge: range from do nothing/minimal compliance to pro-activity

2. Decisions and actions need to be based on information about the firm and its operations

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Discussion point

Think of a product and discuss with your partner what activities the producer takes to minimise its impact on the environment?

What types of questions might this producer wish to ask to minimise its environmental impact?

How might this producer measure its environmental impact?

Consider would this be different if it was a service?

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Introduction (2)

3.Key questions include:

current environmental impact?

impact of proposed new projects?

performance against stated objectives/policies/gov’t regulations?

cradle-to-grave impact?

4.Key activities include information gathering; analysing and evaluating; monitoring; managing; formulating and implementing decisions

5.Processes and procedures integral part of shaping environmental policies and strategies and establishing an environmental management system

1-6

Preventing Environmental Damage: Environmental Impact Assessment(EIA) (1)

1. EIA (or Environmental Assessment) basically a procedure for identifying, analysing and evaluating the impacts of a proposed action (e.g. new development) on the environment prior to the action taking place

2. Welford and Gouldson (1993) describe it as a framework or methodology to minimise the potential impacts of new developments at the earliest possible stage - the design and development stage

New Vectra/Astra example (product design)

End of Life Vehicles Directive ( Directive 2000/53/EC - the "ELV Directive")

officially adopted by the EP and Council in September 2000 and was published in Official Journal L269 on 21st October.

EXAMPLE …. NEW VECTRA AND ASTRA

7-7

Let’s frame this week lecture in the context of last week discussion …

Where is the natural environment emphasised in:

Organisational theory? Strategic management?

But ……

Where does the Information for business decision-making

come from?

Environmental assessments, audits and reviews 7-8

Preventing Environmental Damage: Environmental Impact Assessment(EIA) (2)3. Procedure helps decision-makers (e.g. planning

authorities) to decide whether new proposals should be allowed to go ahead (e.g. route of new motorway: new airport/extension to existing airport)

DISCUSSION POINT: HEATHROW EXPANSION? What is the potential

impact of a new runway at Heathrow on the environment?

Who or what might it effect be?

How has the potential impact been measured?

Or HS2?Miles Weaver 1-9


4. Impacts include social and economic as well as environmental consequences of proposed development - expressed in appropriate measures (e.g. habitat loss) - cf CBA which utilises monetary values

5. Anticipatory and participatory EM tool -measures all major elements of proposal and relates to operational environment (existing and future). Baseline information on current position and likely changes if project proceeds

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6. Developer responsible for assessment. Needs to identify impacts and measures to minimise adverse effects

7. Occurs before a decision - allows review, reconsideration, discussion of alternatives, preventative action where necessary

8. Traditionally associated with decision-making on planning applications - formal process of information gathering and analysis on impact of new proposals likely to have significant environmental impact

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9. Came to prominence in EU with Commission Directive of 1985 (implemented 1988) making it compulsory for certain projects (e.g. oil refineries; storage of radioactive waste; chemical institutions; motorways; power stations)

10. ‘Directive’ i.e. implementation decided by national governments (in EU)

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11. Other (non-mandatory) projects subject to planning laws (e.g. in UK-developments in environmentally sensitive areas)

12. Relates to projects but can also be used to assess policies, plans and programmes (i.e. strategically). Welford and Gouldson (1993) say its use can be good business practice (e.g. assists internal decision-making process)

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13. Roberts (1995) suggests 4 basic principles to EIA:

identification of consequences of

proposed action (including possible alternatives/locations)

identification of relevant aspects of environment affected

evaluation of impacts - initially and subsequently

management of beneficial and adverse impacts

Implicit in basic structure of an EIA (see blackboard for document)

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14. Key requirements include:

identifying nature of and reasons for project discussion of alternative sites/processes and justification

for choice provision of baseline data on local environment and

ecosystem assessment of physical, social and economic impact

(e.g. direct/indirect; short/medium/long term; temporary/permanent; positive/negative; cumulative)

identification of mitigating measures (e.g. techniques/technologies/ alternatives/ likely effectiveness)

consideration of contingency measures/ risk assessment etc.,

recognition of difficulties in underlying assessment (e.g. information problems; risk assessment)

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15. Culminates in a statement - subject to public and political scrutiny

16. Can be costly - but can be beneficial to undertake (in simplified form) even if not required by law

17. Welford and Goulson (1993) suggest 4 main areas of benefit: Business benefits (e.g. helps build environmental

awareness; avoid future problems) Operational benefit (e.g. can encourage improved

efficiency, reduced waste, reduced risks, reveal new opportunities/savings, encourage EMS)

Legislative and stakeholder benefits (e.g. avoids possible future problems; encourages better practices; anticipatory behaviour)

External relationships (e.g. better community image)

1-17


Measuring Current Environmental Performance: Environmental Reviews (1)

1.Basically an initial assessment of how a firm is performing environmentally - i.e. impact of its current activities. Also called ‘baseline environmental audit’

2.Aid to policy-making ( e.g. company environmental objectives and policy) and to future planning for improvement - may be undertaken internally or through consultancy

3.Precursor to introduction of EMS and of Environmental Audit

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4.Whereas environmental audits are part of regular cycle, reviews are one-off exercises to provide baseline information for subsequent finalisation of an environmental policy, establishment and implementation of an action plan, introduction of EMS and of regular audit of performance

5.Process often starts with setting preliminary objectives and consideration of extent of programme to be undertaken (i.e. what is to be covered in programme, what are priorities, who should be involved, what methodology, data requirements etc.)

1-19


6. Review process then essentially an exercise in gathering information and data on the environmental situation currently facing the firm (e.g. measuring environmental impact, examining legislative requirements, identifying management systems and their effectiveness)

7. Equivalent to the ‘Environmental Effects Inventory’ under British Standard on Environmental Management Systems (BS7750)

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8. KEY CONCERNS INCLUDE:

identifying current environmental impact (e.g. noise, odour, effect on air/water/land)

waste management processes (incl. recycling)

materials handling, storage, management

sites and buildings (e.g. energy efficiency; potential for contamination of site)

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prevention and mitigation of accidents/health and safety issues

transport and distribution systems (including dangerous/toxic waste)

materials usage (e.g. paper and packaging)

legal liability assessment information on external

pressures, constraints, opportunities


9. Review covers environmental aspects of input, throughput, output and distribution processes and these are subsequently re-examined by the environmental audit

10. Usually culminates in a report outlining findings with recommended actions and targets. May include information on parts/divisions/departments within the organisation. Provides basis for adoption of an environmental policy and introduction of full system of environmental management and auditing

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Monitoring and Evaluating Environmental Performance: Environmental Auditing (1)

1. Auditing is familiar process in business – essentially checking outcomes against stated aims/objectives/policies

2. Environmental audits (‘green’ or ‘eco’ audits) – process for checking, on a regular basis, the environmental performance of the organisation (or activity) in relation to internal objectives/policies and procedures and the need to comply with statutory requirements

3. May be done internally or through consultants

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4. Audits provide a means of: Monitoring performance of EMS Verifying compliance with statutory obligations Verifying compliance with stated environmental

objectives/policies Minimising exposure to risk from the environment Identifying and assessing the risk from potential environmental

problems Providing information on how to improve company performance

Multistage process involving checking records, examining company policy and stated objectives, management processes and systems, interviewing staff, inspecting the site, sifting information/data, evaluating the findings, producing a report and producing an action plan where appropriate (e.g. if deficiencies/problems – see figure 7.2 in handout)

1-24


5.While not a legal requirement in UK, most large companies and organisations now produce an environment report (e.g. state of the environment report) based on some form of audit

6.Welford and Gouldson (1993) claim key benefits include: Insurance – premiums often higher if no audit Market forces/competition -attitude of consumers to

corporate awareness/concern Acquisitions – cost of contaminated land; cost of buying

business with poor environmental record Legislation – information may be needed to ensure

compliance with legislative requirements1-25


7. Also pressures at intergovernmental level (e.g. EMAS)

8. Eco-management and audit scheme (EMAS) came into operation in 1995 – voluntary for companies within EU

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See:http://ec.europa.eu/environment/emas/toolkit/


9. Basic objective to promote improvements in environmental performance by encouraging companies involved in manufacture waste disposal, mining, recycling, power generation to: Establish and implement environmental

protection schemes Comply with legislative requirements Carry out regular audits of environmental

performance

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10. System of regular self-audit with external verification leading to accreditation. Kind of ‘benchmark’ to indicate commitment to high standard of environmental performance (i.e. stakeholder impact)

11. Applicable to both public and private organisations (e.g. in UK – ICI, BP and National Power are registered under scheme)

1-28

Minimising Environmental Impact: Life Cycle Analysis or Assessment (LCA) (1)1. Recognition

that products have impacts on environment throughout life cycle – from ‘cradle to grave’

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Example to read in your own time:Ariel washing powder

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Minimising Environmental Impact: Life Cycle Analysis or Assessment (LCA) (2)

2. LCA is an attempt to identify and evaluate the total environmental impact of providing a good/service from beginning to end (e.g. ultimate disposal)

3. Focuses attention on ongoing impact – provides opportunity to consider how to reduce environmental effects (e.g. redesign of product; marketing of product)

1-31Miles Weaver

Minimising Environmental Impact: Life Cycle Analysis or Assessment (LCA) (3)4. May involve change in materials and/or

production processes, marketing, distribution, packing, disposal methods etc.,

5. In EU ‘Eco-labelling scheme’ based on applications of LCA – seeks to encourage design, promotion, marketing and use of products which have a reduced environmental impact during their life cycle. (other schemes include German ‘Blue Angel’ scheme – see Welford and Gouldson (1993) pp. 168 – 174)

6. Can have important marketing benefits1-32

Umm ….. Far enough (insights from my research)?GM supplier quality procedure only a few years ago …

General Motors European Operations

Worldwide Purchasing2

WWP SUPPLIER QUALITY IMPROVEMENT PROCESS

START OF PRODUCTION

GLOBAL SOURCING

IMPROVEMENT MEETING

QUALITY WORKSHOP

LEVEL II CONTROLLED SHIPPING

LEVEL I CONTROLLED SHIPPING

PR&R (GP-5)

PERFORMANCE MONITORING

CONTINUOUS IMPROVEMENT (GP-8)

LIFE OF PART

TIME LINEEARLY PRODUCTION

CONTAINMENT (GP-12)

RUN @ RATE (GP-9)

PRODUCTION PARTAPPROVAL (PPAP)

PROTOTYPE SAMPLEAPPROVAL (GP-11)

PRE-PRODUCTION MEETING

ADVANCED PRODUCT QUALITY PLANNING (APQP)

SOURCING DECISION

POTENTIAL SUPPLIERASSESSMENT

Addressing Current Quality Problems:

-Monitor Supplier Performance Data-Prioritize and Focus on Poor Performers-Increase Pressure on Suppliers / Management

- Controlled Shipping- Executive Improvement Process- New Business Hold

Preventing Future Problems:-Select Suppliers with Good PPM/ESQES History-Develop Manufacturable Designs-Develop Capable Processes

- Error-Proof Operations- Install Process / System Controls

-Verify Process Capability prior to SOP

Supplier assessment (capability)

Quality assurance and planning

Sample run

Containment measures for poor quality

Improvement action (reactionary)

In 2004 … Environmental impact assessment of supply chain operations?

7-33

GM bidder list in 2003:Any room for environmental impactassessment?

2003 Enhanced Bidders List (QSTP)

10-Oct-02PP

M

SPD

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6 Mo. 6 Mo. 6 Mo. 6 Mo.

Prog. Mgmt Mfg. 3 Mo. 3 Mo.

Aug. 02 Launch Mfg-SPWarr. Open6-Mo. APQP PRRs Warranty Dec 01

G G G G ABC Anytown, IL - 11223344 GME 33 0 0 0 0 0 Y Y N 3 2 G 2

Y G G BCD Sometown, IL - 22334455 NAO 26 0 1 0 1 4 Y Y N 4 1 2 G R

G CDE Notown, OH - 33445566 GME No Data 0 0 0 0 0 Y Y N 0 1

R R G DEF Someplace, 44556677 LAM 5768 0 0 0 0 0 Y Y N 0 R G 1

R G G G EFG Noplace, DE 55667788 NAO 12 1 0 1 0 4 Y Y N 1 1 G 1

G Y Y G ABC Anytown, IL - 11223344 GME 0 0 0 0 0 0 Y N N 3 3 G Y 1

R G G BCD Sometown, IL - 22334455 NAO 73529 0 0 0 0 0 Y Y N 1 1 1

CDE Notown, OH - 33445566 GME No Data 0 0 0 0 0 N Y N 0

R R DEF Someplace, 44556677 LAM 146 0 0 2 0 0 Y Y N 1 R Y

G G G <= 277 0 Y Y N 0 - 2 1, 2 G G 1, 2 >= 95%

Y Y Y <= 396 1 W W 3 Y Y 3, 4 50 - 95%

R R R > 396 > 1 N N Y 3 - 5 4, 5 R R 0, 5 < 50%

T P

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NOTE: Overall Rank of the supplier is determined by the worst rating (R/Y/G) of the combined Q, S, P rating.

Creativity Team Bid List C(with enhanced performance metrics)

Mat

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Data as of:

DRAFT PROPOSAL FOR 2003

(Major Function)

ALL

(Creativity Team)

Quality Performance For:

0

1

> 1

P Location

Performance Criteria

Mfg. DunsSupplier

Quality Service Technology Price

Key measures: Quality defect rate Containment

measures Financial stability Savings

… environmental impact of immediate suppliers?

7-34Miles Weaver

Wider implications ….

"Increasingly, the world around us looks as if we hated it.“

- Alan Watts

I came to your door as a stranger,I lived in your house as a guest,

I leave your door as a friend,

My earthRabindranath Tagore,

- 1st non-European to be awarded a nobel prize for literature in 1913,- Bengali poet, novelist, musician, playwright.

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Learning strategy

READING

Roberts, P. (1995) Environmentally Sustainable Business: A Local and Regional Perspective, London, Paul Chapman Publishing

Welford, R. and Gouldson, A. (1993) Environmental Management and Business Strategy, London, FT Management

CONSIDER …

Research a large organisation to understand what environmental assessment, audits and reviews take place What impact have these had? Could or should this

organisation do more?

Consider a product of your choice, assess how the producer may reduce its environmental impact?

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information for business decision making - environmental assessments, audits and reviews

Technology

impact environmental

environmental impact

environmental review

environmental challenge

environmental issues

environmental auditing

environmental assessments

environmental cradle