Business Catches On
Preventing pollution and saving resources begin to look good for the bottom line, too
`WE must ensure that the polluter pays. Be they private citizens; be they businesses - large or small; be they government agencies; they must pay rather than pass on, postpone, or try to duck the environmental impact of their actions."
This hard-nosed assertion - which sounds like it might have come from an environmental activist - was the key message of Frank Popoff, chairman and chief executive officer of the Dow Chemical Company, at the recent "economic summit" convened in Little Rock, Ark., by President-elect Clinton.
It is a message that is increasingly heard from corporate leaders who see that preventing pollution and conserving natural resources are not only good for the environment but good for business as well. Around the United States, they are setting ambitious goals for merging environmental and economic interests. And they are joining up with fellow executives and environmentalists to find innovative ways to meet these goals while breaking down the old confrontational barriers.
It's not just a matter of their building a "green" corporate image at a time when Americans increasingly identify themselves as pro-environment, or of avoiding government regulation by promoting "market mechanisms" - although both of these are part of the picture. Corporate environmentalism also is seen in business as necessary to succeed in an increasingly competitive international marketplace.
For example, John Bryson, chairman and CEO of Southern California Edison Company, points out that "competitors like Germany and Japan can produce a unit of economic output for roughly half the energy we use."
"Energy efficiency will lead not only to technological development, but to economic growth and environmental improvement," Mr. Bryson told the Arkansas gathering last month. "It will provide the basis for producing the next generation of globally competitive US products and services."
Energy efficiency alone, says Richard Clarke, head of Pacific Gas & Electric (the nation's largest public utility), could create half a million new jobs in the next five or six years and another half million by the year 2010. This conclusion builds on the theory that a dollar saved on utility bills is a dollar that can be spent on economic development, lower costs, or environmental protection.
While many suspect that environmental protection costs jobs - which it does in some local and regional instances - there is increasing evidence that this is not generally the case.
Political scientist Stephen Meyer of the Massachusetts Institute of Technology recently completed a study tracking the relationship between environmental programs and economic performance in all 50 states during the 1970s and '80s.
"The data revealed a clear and consistent positive relationship between the states' environmental effort and their economic performance," Professor Meyer found. "States with higher environmental rankings outperformed states with lower environmental rankings on four of the five economic growth indicators."
While the data do not necessarily prove that environmental protection stimulates economic growth, Meyer observed, "it is absolutely clear that the [negative] environmental impact hypothesis is repudiated by the data."
Many businesses, however, have already concluded that environmental protection can increase profits and a competitive edge.
One of the oldest corporate efforts is Minnesota Mining and Manufacturing Company's "Pollution Prevention Pays" program of voluntary waste reduction. 3M figures that since 1975 it has saved more than $500 million as a result.
Some other examples of business environmentalism:
* Wal-Mart is designing a new retail store in Lawrence, Kan., called Eco-Mart. It will be built with lumber that comes from sustainably-managed forests.
* The giant Mall of America, which opened last August in Bloomington, Minn., has its own self-contained recycling center, which is expected to recycle 700 tons a month, more than half the waste from 340 stores.
* The Mobil Chemical Company has developed a new wood-replacement product called Timbrex, a wood-polymer composite that uses no toxic preservatives. It is made of 100 percent recycled wood and plastic and is itself fully recyclable.
* Under the auspices of the President's Commission on Environmental Quality (named in 1991 by George Bush), 11 major corporations have set up voluntary demonstration projects to test a program called Total Quality Management. It is designed to cut resource waste and pollution emissions throughout the manufacturing process. Among the corporate heavyweights taking part are AT&T, Chevron, DuPont, Proctor & Gamble, Ford, and General Electric.
* The Monsanto Company recently announced that it had reduced toxic air- emissions at its worldwide operations by 30 percent (from a base year of 1987). In the United States, such reductions have reached 66 percent, and the goal here is 90 percent. And in the company's 1992 environmental review, CEO Richard Mahoney declared that "by the end of the decade, we will no longer dispose of toxic or hazardous wastes by underground injection."
* The Chemical Manufacturers Association now requires members to adopt an audited "Responsible Care" program.
* In return for permission to build a planned community on 600 acres of wetlands in Osceola County, Fla., Walt Disney World will buy and turn over to the Nature Conservancy 8,500 acres of wetlands and forest that provide habitat for endangered species.
Such practical trade-offs are seen by many business leaders as one important part of what has come to be known as "sustainable development" - defined by a United Nations commission as economic progress that "meets the needs of the present without compromising the ability of future generations to meet their own needs."
As part of the run-up to last June's Earth Summit in Brazil, 50 corporate chiefs from around the world formed the Business Council for Sustainable Development.
Among the 50 are eight Americans, including Mr. Popoff of Dow. The others are Maurice Greenberg of American International Group Inc.; Charles Harper of ConAgra Inc.; Allen Jacobson of 3M; Samuel Johnson of S.C. Johnson & Son; William Ruckelshaus of Browning-Ferris Industries Inc.; Paul O'Neill of Aluminum Company of America; and Edgar Woolard of Du Pont.
"I believe that sustainable development is a matter of economic survival," Popoff told a gathering of chemical manufacturers in Houston last October.
As he does regulary, he urged the businessmen to "price goods and services to reflect their true environmental costs, including production, use, recycling, and disposal."