Green Pressures on Companies Go Beyond `Comply or Die'
Meeting public expectations is becoming new yardstick of success
INDUSTRIAL companies are facing a new kind of environmental challenge.
If a company does not get a bank loan or insurance policies because it fails to comply with both regulations and public expectations, ``this is powerful language,'' says Jan Stromblad, senior vice president of ABB Brown Boveri Ltd., Baden, Switzerland. This gives new meaning to the cliche ``comply or die.''
Merely obeying regulations and meeting government-set standards is not good enough anymore. Companies increasingly must meet public expectations of environmentally good citizenship. That means using processes, producing products, and delivering services that are as ``clean'' as possible rather than dealing with a mess afterward.
David Marks, who heads the programs in environmental engineering at the Massachusetts Institute of Technology (MIT), adds that there is a carrot as well as a stick nudging companies toward ``greener'' operations. He notes that the definition of environmental technologies in the future may be those that produce less waste and recycle materials rather than deal with waste. ``There may be major markets for clean products and clean technologies,'' he says.
It will not be easy for companies to move in this direction. Prof. Marks recently chaired a workshop at MIT to explore the implications. They involve a substantial - perhaps fundamental - change in corporate thinking.
For example, Marks notes that corporations usually want a persuasive assessment of an environmental risk before taking sometimes costly measures to avert it. Marks warns that corporations which delay action until they get such an assessment will wait in vain. These risks often are too complex and subtle for scientists to analyze fully. ``In environmental concerns, there is no scientific truth,'' he explains.
Marks's MIT colleague John Ehrenfeld adds that corporations also need to change their thinking about adaptability. Long experience in being able to substitute new materials for traditional materials that become scarce has made many industrialists suspicious of the Malthusian dictum that growing human demands breed disaster. Dr. Ehrenheld points out that Malthus was talking about material resources. But now he says: ``We're not talking about resources any more. We're talking about life sustaining systems.''
Responding to this kind of environmental concern challenges company culture. It requires what Ehrenfeld calls a new ``set of belief systems by which a company makes sense of the outside world.'' That is a difficult transition for companies that must cope with uncertain risks while keeping a sharp eye on costs. Yet, Ehrenfeld notes, ``the pain of dealing with what they did in the past'' is forcing companies to surpass what regulations require them to do today.
Marks invited Terry DeWitt, vice president of Honda Automobiles/US, to come from Marysville, Ohio, to explain how this Japanese company is trying to meet the challenge.
Mr. DeWitt explained that this difficult change in thinking can be good for business. ``Although not all environmental improvements are cost-beneficial, we think many of them are,'' he said. For example, putting emission controls on the exhaust end of a car to clean up pollution after the fact is expensive. But designing a car that runs cleanly to begin with can give the manufacturer a competitive edge. In short, he said, he believes it is better to invest in research dollars to avoid environmental problems than to invest in remedial dollars.
The trick is in deciding how best to invest those research dollars. A manufacturer may have to freeze a product design before all the relevant environmental facts - including probable future standards - are fully known. DeWitt admitted that this is risky. A manufacturer may end up with an inappropriate facility. Yet, he said, this kind of forecasting is becoming an essential management skill.