Ecology and Bottom-Line

PRESIDENT BUSH and others argue for going slow on efforts to curb environmental problems to avoid jeopardizing economic growth - reinforcing the tired argument that business and the environment are at odds. In reality, companies making environmental leadership a key element in strategic planning improve their bottom lines, become more competitive in world markets, reduce future liability risks, and can avoid boycotts by ``green'' consumers. The key to this win-win strategy is a new understanding of efficiency, rethinking corporate practices to reduce raw materials and energy consumption and waste production, and, if possible, emulating nature by ``closing the loop'' - recovering scrapped products as raw material.

It also requires astute top managers, who, as Monsanto chief executive officer (CEO) Richard Mahoney says, abandon the ``command and control'' mentality that only considers end-of-the-pipe pollution controls - and instead borrow from nature by an emphasis on systems planning and feedback loops.

European companies think about efficiency: Their designers and managers share the same living conditions as their customers. Living in smaller homes, they design cars and appliances that take less space, cost less to operate, and have less packaging.

These companies' energy and disposal costs are higher, so their managers can't externalize disposal costs as in the US. The feedback from analyzing disposal and energy costs shaped design and manufacturing processes.

Worst of all, in a more global market, American consumers also prefer sleek ``Euro-design'' appliances and Japanese cars. The gap may widen. One Japanese manufacturer is said to be designing efficient new appliances for global markets specifically to capitalize on greenhouse effect concerns. In light of the Chinese goal of a refigerator in every living unit, imagine the profits a company can realize from a small refrigerator that doesn't use CFCs! Pollution-wracked Russia and East Europe will surely opt for less-polluting products as their economies open up.

The good news is that some US firms learned the efficiency lesson, elevating environmental decisions in their planning, and thinking in terms of systems.

Electric utilities are the leaders. For years, their rates and profits were based on the logical approach of meeting growing demand by generating more electricity. Recently, soaring costs and community opposition made building new power plants difficult, and sometimes impossible. Gradually, management realized they could profit without building new plants, meeting demand by a counter-intuitive strategy of wringing more productivity out of the existing system with new high-tech bulbs and other innovations. From Boston Edison to Pacific Gas & Electric, utilities on both coasts are winning both environmentalist friends and profits through efficiency.

How can other companies capitalize on efficiency?

The CEO must make a personal and corporate commitment, elevating the environment from technical compliance by a junior engineer to a policy issue for senior management. PG&E CEO Richard Clarke advises his counterparts to ``make environmental considerations and concerns part of any decisions you make, right from the beginning. Don't think of it as something extra you throw in the pot.''

Signal that management is serious about working with nature. Environmental compliance is a factor in evaluating managers' performance at Polaroid. Why not extend it to all workers? Those on the assembly line who suggest waste reduction ideas should be rewarded. Carrots should be coupled with big sticks, instituting well-defined disciplinary procedures for those violating environmental practices. Penalties should be stiff and consequences well-publicized.

Aim high. Chemical firms with the best environmental records have the highest standards: DuPont's goal is zero pollution. 3M aims at a 90 percent reduction in hazardous materials emissions by 2000. Monsanto's Mahoney says ``A goal of zero emissions is scientifically impossible to achieve in an industrial society. But it is the only goal which will keep us stretching for ever greater improvement.''

Above all, think in terms of systems paralleling natural ones. There are no loose ends in nature. Volvo's new corporate environmental policy covers the car's entire life cycle ``from conception to design, production, use, and final disposal. Ultimately, all the materials which we use will be the safest available in terms of environmental protection.''

Using systems-thinking to bring a company's operations into line with natural systems will reduce inputs to the lowest level possible, recover and recycle as many wastes as possible during production, and reduce packaging. Finally, if at all possible, the company should approximate nature's cycle of birth, maturation, death and rebirth by reclaiming the product at the end of its life cycle as the raw material for new products.

Those who create an artificial dichotomy between environmental protection and economic growth blind themselves to new global markets and operating cost and liability reductions.