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o
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Environmental
Sustainability
Policies and Practices;
A Summary
Benchmark Evaluation
of Corporate
Environmental Reports
Automobile and Automobile
Parts Companies
Oil Refining Companies
Chemical Companies
Forest and Paper Companies
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Environmental
Sustainability
Policies ar
d Practices:
A Sufjimary
Benchmark Evaluation
of Corporate
Environmental Reports
United States
Environmental Protection
Agency
Office
Policy,
of
Economics
and Innovation
(1808f)
EPA-260-R-02-002
July 2002
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Acknowledgements
This report was prepared by Abt Associates under Contract #68-W-99-042, and managed by Richard
Kashmanian, in EPA's Office of Policy, Economics, and Innovation. It is a summary of three previous reports
prepared by Abt Associates and Benchmark Environmental Consulting, under Contracts #68-W4-0029 and #68-
W-99-042, and originally managed by Ken Munis. EPA is grateful for the companies who contributed their time
and information to these previous studies, and the participants from academia, business/trade associations,
governmental agencies, and non-governmental organizations in the stakeholder meetings that helped develop the
indicators of environmental sustainability.
Disclaimer
This report provides information on different ways that companies are using environmentally-sustainable
practices and policies. Information about these companies was collected between February and May 1999 from
their publicly available printed and website corporate literature that were available as of February 1999. The
companies included in this report do not constitute an all-inclusive list of those who have adopted environmental
sustainability principles in their practices and policies. The purpose of this report is to share information about
the sustainability efforts of these companies based on the information that they report, rather than to compare the
relative environmental soundness of their products, services, or practices between them or other companies, or to
judge which are superior. The mention of a particular industry, company, or product does not imply endorsement
of use or verification/testing of the company or product claims, nor the industry's or company's overall practices
or past compliance history, by the U.S. Environmental Protection Agency. In addition, the mention of a
sustainability indicator or its source(s) does not indicate Agency endorsement. Any views expressed represent
preliminary staff assessments and do not necessarily reflect those of the Agency or the Administration.
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TABLE OF* CONTENTS
I. Overview L 1
Other Initiatives for Corporate Environmental Sustainability Reporting 4
II. Background 8
What Are the Indicators of Environmental S istainability? 9
Which Companies Were Evaluated? 12
How Were the Companies Evaluated? 12
What Does the Corporate Environmental Lit srature Really Indicate? 15
III. Activities Meeting the Indicators of Environmental Sustainability 18
Indicator 1: Accept responsibility for enviror mental effects throughout all phases of a
product's life lg
Indicator 2: Practice materials and resource conservation throughout the organization 21
Indicator 3: Establish company sustainable development goals and measure progress
towards those goals on a periodic basis 23
Indicator 4: Implement supplier programs designed to reduce environmental impacts or
add environmental value to the design or redesign of products and services provided to
the company 24
Indicator 5: Pursue investment strategies that support communities, promote equity,
and/or enrich jobs, while reducing risks to human health and harm to the environment 27
Indicator 6: Seek technological innovations that achieve superior environmental
protection at lower unit costs for the firm and the economy 29
i
Indicator 7: Introduce policies and commitments to adopt home country standards, or
equivalent or not less stringent standards of ojperation abroad, where existing
environmental management systems are weak or ineffective 30
Indicator 8: Demonstrate progress towards sustainable production and consumption 32
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Indicator 9: Voluntarily provide environmental information, in excess of governmental
regulations, to help the public assess potential risks to environmental and human health,
including that of workers 34
Indicator 10: Phase out processes and chemicals that pose the greatest environmental
risk, disposing of any such processes and chemicals in an environmentally sound
manner 35
Indicator 11: Modify procedures, including among affiliates and suppliers, in order to
reflect the heightened risks of special populations and sensitive ecological areas 37
Indicator 12: Commit at the highest level to ecosystem management that incorporates an
appraisal of the interrelationship between human and natural systems 38
Indicator 13: Involve workers and non-industrial stakeholders in the firm's sustainable
development decision-making '• 40
Indicator 14: Explain how any beyond compliance recommendations or voluntary
standards developed by other organizations (e.g., EPA, PCSD, ICC, ACC, etc.) have
changed the operations of the business 42
Indicator 15: Collaborate on research and development of environmentally sound
technologies and programs with non-industrial stakeholders such as academics,
community groups, minorities, indigenous people, local authorities, Federal
Government and/or international organizations 44
Indicator 16: Periodically report verified global environmental, health and safety
performance information to the public, providing details for smaller geographic regions ... 47
Indicator 17: Develop proactive sustainable development responses to current human
and/or ecological threats that maybe the result of the firm's, or its sector's, past and/or
present practices 49
Indicator 18: Acknowledge the need for and participate in moving toward a greater
reliance on pricing systems that internalize environmental costs 50
Indicator 19: Participate in industry-wide efforts to recast products and processes for
sustainable production and consumption patterns for future generations 52
Indicator 20: Reconsider business strategy in light of the carrying capacity of human and
natural systems, and the challenge of resource productivity 53
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IV. Study Findings
Automobile and Automobile Parts Companies
Chemical and Oil Refining Companies
Forest and Paper Companies
Comparison of Industry Sectors
V. Bibliography
. 55
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.57
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63
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I. Overview
In recent years, more and more
companies have recognized that there
can be competitive rewards for improving
environmental performance beyond
regulatory requirements. Improved relations
with the public and customers and reduced
costs are only some of the positive effects.
A number of companies have devised
innovative and diverse solutions to address
their environmental impacts holistically.
Other companies can learn from these
industry leaders. There appears to be a
genuine interest in the specific policies and
practices that help companies become more
"environmentally sustainable." This report
aims to advance environmental
sustainability by sharing the activities of
some of the leaders with others.
The varied manifestations of
environmentally-sustainable activities,
however, raise some issues. Despite the
efforts of many organizations and
individuals to define "environmental
sustainability" and "sustainable
development," and specify measurement
methods, no universal guidelines exist.
Several key questions remain unanswered,
such as: What characterizes an
environmentally-sustainable company?
Specifically, what policies, programs, and
activities should a company pursue if it
wants to be environmentally sustainable?
How can these activities best be measured
and evaluated?
This summary report presents an effort
by the U.S. Environmental Protection
Agency (EPA) to address these questions.
The report:
• introduces a set of indicators of
environmental sustainability.
• provides examples of voluntarily-
reported corporate activities that
often meet or exceed these indicators
— these examples are selected from
companies that are among the
environmental leaders in the
automobile and automobile parts
sector, chemical and oil refining
sector, and forest and paper sector.
• presents patterns in environmental
activity and reporting that were
observed in the industries assessed.
The indicators summarized in this report.
comprise one vision of what constitutes
corporate sustainability. This vision
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combines much of the best work on defining
corporate sustainability and is the result of a
development process that included input
from multiple stakeholders. The indicators
challenge companies to adopt and report on
policies and activities to improve their
environmental practices, and set targets for
environmental sustainability for companies
to strive for. Furthermore, they can be used
to measure companies' progress.
This report also summarizes efforts to
assess the policies and practices of
companies from three different industry
sectors against the indicators. This "road
test" of the indicators illustrates their utility
and highlights the challenges in evaluating
corporate polices and practices. In addition,
the descriptions of activities included in the
report illustrate the practical applications of
the 20 indicators. Other companies may use
these as examples of steps that they can take
to reduce their environmental impacts.
Among the companies studied, the following
trends were noted:
• Nearly all of the companies have
taken steps in researching new,
innovative, environmentally-
beneficial technologies that achieve
superior environmental protection at
lower unit costs; voluntarily
informing the public of
environmental and health risks; and
involving suppliers in environmental
sustainability plans.
• Most of the companies have
demonstrated steps toward
sustainability, but the sustainability
indicators where the companies are
less active include internalizing
environmental costs into the price of
their products and collaborating with
non-industrial stakeholders.
Common themes in environmental
sustainability can be drawn across all three
groups of companies. For example, many of
the companies from all three industries
emphasized worker health and safety issues
in conjunction with environmental issues. In
addition, establishing the basis for
continuous environmental improvement by
the companies was a general area where
there may be an opportunity for
improvement.
In part because companies within a given
industry face similar obstacles to
environmental sustainability, there were
trends within each industry of how
companies fared against the indicators.
The automobile and automobile parts
companies, did generally well at indicators
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dealing with reducing risks. For example,
two of the companies have developed lists of
chemicals that are prohibited from their
manufacturing processes. The automobile
and automobile parts companies indicated
strong commitments to developing
environmentally-sound products, processes,
and services, and reducing risks and hazards
to human health and ecosystems. Like the
chemical and oil refining companies, the
automobile and automobile parts companies
also showed a policy commitment to the
application of home country environmental
standards abroad and included worker health
and safety issues in their corporate
environmental literature. These companies
had the greatest potential opportunity for
improvement in those indicators promoting
community and stakeholder involvement in
their decision-making.
The chemical and oil refining companies
did relatively well at indicators involving the
integration of environmental sustainability
into business strategies. The reporting
practices of these companies with regard to
these indicators are influenced by their
membership in the American Chemical
Council (ACC), which requires its members
to follow the requirements of Responsible
Care®, an initiative by the chemical indus try
to improve its companies' environmental,
health, and safety (EH&S) performance
worldwide. A key finding of this study is
that industry-wide programs such as this
have helped companies to attain common
minimum standards and to develop their
own progressive initiatives. The chemical
and oil refining companies had the greatest
potential opportunity for improvement in
those indicators involving the establishment
of a basis for continuing environmental
improvement.
The forest and paper companies, like the
automobile and automobile parts companies,
did generally well at indicators dealing with
reducing risks to humans and the
environment. For example, most of the
companies in this report have reduced or
eliminated the use of elemental chlorine
during pulp bleaching, thereby almost
eliminating dioxin emissions, hi addition,
similar to the chemical industry, the forest
and paper sector's Sustainable Forestry
Initiative (SFI) has been a catalyst for
successful initiatives of individual
companies. SFI sets forth principles of
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sustainable forestry that all member
companies must implement. While it is
difficult to assess the full impact of SFFs
influence on company reporting, some of the
practices and policies that led companies to
meet several of the indicators reflect SFI
principles. The forest and paper companies
had the greatest potential opportunity for
improvement in those indicators involving
the establishment of a basis for continuing
environmental improvement.
Common themes in environmental
sustainability can be drawn across all three
groups of companies. The companies in all
three sectors fully met the indicator for
seeking technological innovations that
achieve superior environmental protection at
lower unit costs. In addition, most of the
companies from all three industries
emphasized worker health and safety issues
in conjunction with environmental issues.
The process of conducting the
benchmark evaluations also highlighted
areas of corporate sustainabiliry reporting
that could be improved to allow a more
thorough and accurate assessment of
company practices and policies. The utility
of the evaluations is, at this point, somewhat
undermined by the inconsistency of the
information provided in the corporate
environmental reports and literature.
Despite the large quantity of information
often presented in corporate environmental
reports, it can be difficult to evaluate
corporate practices and policies when
companies use different formats and types of
information. In addition, the current lack of
independent verification of corporate
environmental information makes it difficult
for users of the information to discern
whether the information presented is
primarily a public relations effort or is fully
representative of corporate practices.
Other Initiatives for Corporate
Sustainability Reporting
This report is intended to increase the
available information about corporate
sustainability and to complement existing
international efforts to standardize and
promote sustainability reporting. One
important existing effort is the Global
Reporting Initiative (GRI). This program,
originally launched by the Coalition for
Environmentally Responsible Economies
(CERES) and now managed by multiple
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organizations including the United Nations,
aims to develop and promote globally
applicable guidelines for reporting the
economic, environmental, and social
dimensions of corporate sustainability. The
idea behind GRI was to create a global set of
guidelines for reporting information about a
company's sustainable practices, on par with
guidelines for financial accounting reports.
GRI produces voluntary guidelines that
provide a reporting framework to promote
comparability between reports and reliability
of corporate sustainability reports. The
guidelines outline principles and concepts,
as well as specific economic, environmental,
and social content that should be included in
corporate sustainability reports. The
environmental aspect of the GRI guidelines
is similar to the World Business Council for
Sustainable Development's work on eco-
efficiency.1 GRI supports the independent
verification of reports and encourages the
development and use of principles for
verification practices. The guidelines are
See World Business Council for Sustainable
Development (WBCSD), Measuring Eco-Efficiency:
A Guide for Companies to Report Performance
2000.
continuously evolving and updated with
stakeholder feedback. The latest set of
guidelines was released in June 2000 and
will likely be updated in 2002. Twenty-one
companies participated in a pilot-test
of the GRI guidelines and others have
produced reports using them. (See GRI's
website, www.globalreporting.org, for more
information.)
The standardization of corporate
environmental reports that may result from
GRI should improve the potential to
benchmark companies' practices and
policies against a vision of sustainability.
The GRI and the benchmark indicators for
environmental sustainability presented in
this report therefore complement each other.
The GRI defines reporting practices and the
benchmark indicators define a version of
sustainability. If the GRI guidelines are
comparable to standards for financial
accounting, then the benchmark indicators
are analogous to defining what it means to
be financially sound.
Many other organizations also produce
guidelines or standards for reporting
sustainable corporate practices as well as for
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defining corporate sustainability. Some
entities focus more on environmental
components, while others focus on social
and economic ones. Some of these
guidelines or standards were used in the
development of the benchmark indicators
and are listed in the "Background" section of
this report. A notable new effort is the
Global Compact, a voluntary initiative that
promotes corporate transparency and
accountability in business operations.
Supported by multiple stakeholders and led
by U.N. Secretary Kofi Annan, the Global
Compact proposes nine principles for
businesses that focus on human,
environmental, and labor rights. Another
recent effort the Organization for Economic
Cooperation and Development's (OECD's)
Guidelines for Multinational Enterprises,
which were substantially revised in June
2000. These guidelines, which include a set
of voluntary principles and voluntary
standards aimed at promoting responsible
corporate conduct, were recently adopted by
the governments of 33 countries. OECD's
guidelines provide voluntary standards for
reporting, as well as principles for
companies to adopt, that focus on labor and
environmental standards, combating
corruption, and safeguarding consumer
rights.2
The effort to define and assess corporate
sustainability that has been described in this
report is part of an ongoing global effort by
many different organizations to promote
industrial development that is more
sustainable for the environment and society.
Voluntary environmental reports are just one
tool that can be used to assess corporate
activities. Mandatory reports and externally
verified information also can be used.
Ideally, the sustainability indicators and
assessments of company practices and
policies will contribute to and build upon
larger efforts to define and assess corporate
sustainability practices.
The remainder of the report's text is
organized into three sections. The next
section, "Background," describes the process
used to develop the indicators, lists the
indicators and the companies evaluated, and
summarizes the methodology used to
evaluate companies' practices and policies
through review of their corporate
2 The guidelines are available at
www.oecd.org/daf investment/guidelines.
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environmental literature. The context and
limitations of corporate environmental
literature also are discussed. The next
section, "Activities Meeting the Indicators
of Environmental Sustainability," describes
the types of corporate activities assessed as
exceeding or fully meeting the 20 indicators
and provides specific examples. The final
section, "Study Findings," summarizes what
the indicators tell about the strengths and
areas for improvement in environmental
sustainability of leading companies in the
three industries.
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II. BACKGROUND
in 1997, EPA set out to develop a
method for assessing whether
companies in different industry sectors were
involved in activities that could be
characterized as "environmentally
sustainable." To do this, an initial set of
indicators of environmental sustainability
was developed. These indicators were
drawn from a number of leading sources on
environmental sustainability, such as the
Coalition for Environmentally Responsible
Economies (CERES) Principles, Interfaith
Center on Corporate Responsibility (ICCR),
President's Council for Sustainable
Development (PCSD, 1993-1999), and
World Business Council on Sustainable
Development (WBCSD). Voluntary
corporate environmental activities for the
electronics manufacturers and photographic
manufacturers were first assessed against
these indicators through review of their
environmental literature, and the results of
these evaluations were summarized in two
reports.3
These indicators were revised using
input from stakeholders provided during two
meetings in December 1999. Stakeholders
included representatives from government
agencies, non-governmental agencies
(NGOs), academia, companies, and industry
associations. Three new industries were
then selected for evaluation against the new
indicators. These industries were:
• automobile and automotive (referred
to here as the automobile and
automobile parts sector)
• chemical and oil refining sector
• forest and paper sector
A cross-section of companies within
these industries was selected for the analysis
with several objectives in mind. They are
among the leading companies in their
industries. They represent a broad range of
products manufactured within the industries.
Finally, they are among the best in
environmental reporting.
3 Sustainable Industrial Development: A Benchmark
Evaluation of Public Environmental Policies and
Reporting in the Electronics Industry, and Sustainable
Industrial Development: A Benchmark Evaluation of
Public Environmental Policies and Reporting in the
Photographic Manufacturing Industry. Prepared for
U.S. EPA, Office of Policy, Planning, and
Evaluation, by Benchmark Environmental
Consulting, November 1997.
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Publicly available materials (as of
February 1999) from companies in each of
these sectors were evaluated against the new
set of 20 benchmark indicators of
environmental sustainability. These
evaluations were documented in three
separate reports.4 The evaluations attempted
to link the best current thinking on
sustainability with what companies said they
were doing to be more sustainable. The aim
was to identify the types of sustainability
principles that were being picked up by
some of the leading environmental reporters,
for use as a standard in making similar
assessments for and by other companies.
4 Indicators of Sustainable Industrial Development: A
Benchmark Evaluation of Corporate Environmental
Reports in the Automobile and Automotive Sector:
Indicators of Sustainable Industrial Development: A
Benchmark Evaluation of Corporate Environmental
Reports in the Chemical and Oil Refining Sector: and
Indicators of Sustainable Industrial Development: A
Benchmark Evaluation of Corporate Environmental
Reports in the Forest and Paper Sector, Prepared for
U.S. EPA, Office of Policy, Economics, and
Innovation, by Abt Associates and Benchmark
Environmental Consulting, draft final reports, July
2001.
What Are the Indicators of
Environmental Sustainability?
The purpose of the five reports was not
to develop a new definition of
environmental sustainability.5 Instead, the
idea was to use some of the best currently
available thinking on the subject to
formulate a set of benchmarks that
determine a sustainable company. The
indicators for environmental sustainability
presented in tibis report were therefore drawn
from and reflect many different sources.
Sources of the indicators included:
• American Chemistry Council's
(ACC's, formerly the Chemical
Manufacturers Association)
Responsible Care® program
• American Society for Testing and
Materials (ASTM) E50.03, "New
Standard Guide for Development and
Implementation of Sustainable
Development Program" (Ballot
Draft, December 19,1997)
• Caux Principles, from the Minnesota
Center for Corporate Responsibility
• CERES Principles
• ICCR, "Principles for Global
Corporate Responsibility:
5 For a detailed description on how the indicators
were developed and the specific sources for each
indicator, see the three reports on the automobile and
automobile parts, forest and paper, and chemical and
oil refining industries.
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Benchmarks for Measuring
Business Performance"
(1998)
• International Institute for Sustainable
Development (HSD), "Bellagio
Principles: Guidelines for the
Practical Assessment of Progress
Towards Sustainable Development"
(1997)
• Pew Center on Global Climate
Change
• PCSD
• Public Environmental Reporting
Initiative (PERT)
• United Nations Conference on
Environment and Development:
Agenda 21
• United Nations Conference on
Human Settlements (UNCHS,
Habitat): Commitments by Partners
to the Implementation of the Habitat
Agenda
• WBCSD, "Corporate Social
Responsibility: A Dialogue on
Dilemmas, Challenges, Risks and
Opportunities." (1998); Discussion
paper to support a meeting in the
Netherlands, (September 6 — 8,
1998). Geneva; "Signals of Change"
(1998). Sustainable Production and
Consumption: A Business
Perspective (1998).
These sources represent a diverse set of
perspectives and expertise. Responsible
Care®, ASTM standards, Caux Principles,
CERES Principles, PERI Guidelines, and
WBCSD reports are all products of
voluntary business organizations. The two
United Nations conferences were global
initiatives administered by member
governments with input from business and
environmental groups. The PCSD was a
U.S.-specific organization consisting of
government, private, and non-profit
representatives. The Pew Center on Global
Climate Change, ICCR, and HSD are
independent non-profit organizations. Each
of these organizations has performed
noteworthy research on environmental
sustainability, and together they contribute
to a broad understanding of the issue.
Some sector-based programs have
developed their own definitions and agendas
for environmental sustainability. For
example, the chemical industry's
commitment to sustainable development has
been shaped by the American Chemistry
Council's Responsible Care® program.
Launched in 1988 in response to public
concern about the manufacture and use of
chemicals, Responsible Care® is an initiative
by the chemical industry to improve its
companies' EH&S performance worldwide.
Responsible Care® commits member
companies to the responsible management of
chemicals. All members of the ACC are
obligated to follow the requirements of the
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program and to report publicly on their
global EH&S performance. The
Responsible Care® program was one of the
sources for the indicators for environmental
sustainability used in the evaluations
described in this report. Consequently, many
of the guiding principles of Responsible
Care® overlap with these indicators.
Within the forest and paper sector, there
have also been multiple efforts to measure
and report sustainable development. The
American Forest and Paper Association's
(AF&PA's) SFI establishes principles of
sustainable forestry, to which all member
companies must adhere. By defining
sustainability for the industry, the SFI
attempts to standardize understanding of the
issue and create a consensus among its
members about how to practice and report
on sustainable forestry. SFI's influence on
and reporting of sustainable industrial
activities and policies by companies in the
forest and paper sector is discussed in Study
Findings section later in this report. Other
attempts to define sustainable forestry
management include the Forest Stewardship
Council's (FSC's) principles for forest
stewardship.
Twenty indicators of environmental
sustainability were identified as described
above. The indicators were grouped into
five themes:
• Environmentally Sound Products,
Processes, and Services
• Integration of Sustainable
Development into Business
Strategies
• Reducing Risks and Hazards to
Human Health and to the Ecosystem
• Community/Stakeholder
Participation in Sustainable
Development
• Establishing the Basis for Continuing
Environmental Improvement
These categories group together
indicators that are related and provide
organization to the report. They also can be
used as an informal outline of the important
components of environmental sustainability.
The indicators were created to be
independent of one another. However,
several of them support or complement one
another and may appear to overlap. The
report attempts to treat each individually and
examples are placed where they appeared
most appropriate. Depending on how the
policy or practice is described, some
examples could be used for multiple
indicators.
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The indicators are presented in the box
on the following page.
Which Companies Were Evaluated?
The voluntary corporate environmental
literature summarizing practices and policies
from a cross-section of some of the leading
companies in the three industry groupings
was reviewed against the indicators. This
information was analyzed and presented in
the three reports described earlier in this
section that became the basis for this report.
Information was obtained from the
following companies:
Automobile and Automobile Parts Sector:
• American Honda Motor Company
• Daimler-Benz
• General Motors Company
• Navistar International
• United Technologies Corporation
• Volvo
Chemical and Oil Refining Sector:
• Amoco
• British Petroleum
• Dow Chemical Company
• DuPont
• Eastman Chemical Company
• Occidental Petroleum Company
« Royal Dutch/Shell Group (Shell)
• Solutia Chemicals
• Sun Group (Sunoco)
• Union Carbide Corporation
Forest and Paper Sector:
• Georgia-Pacific
• International Paper
• Kimberley-Clark
• Mead Corporation
• Westvaco
• Weyerhaeuser
As is common in a quickly changing
marketplace, some of these companies have
since merged with others, sold off part of
their business, changed their name, or
altered the nature of their operations. The
names reported here reflect the information
known at the time of the evaluation.
How Were the Companies
Evaluated?
To determine which companies to
assess, the best environmental literature was
sought within the industries being evaluated.
A cross-section of leading companies that
were voluntarily reporting information on
their environmental practices to the public,
or that had adopted public corporate policies
targeting environmental sustainability or
sustainable development issues was obtained.
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REPRESENTATIVE BENCHMARK INDICATORS
FOR ENVIRONMENTAL SUSTAINABILTTY
Environmentally Sound Products, Processes,
and Services
1. Accept responsibility for environmental effects
throughout all phases of a product's life.
2. Practice materials and resource conservation
throughout the organization.
3. Establish company sustainable development goals
and measure progress towards those goals on a
periodic basis.
4. Implement supplier programs designed to reduce
environmental impacts or add environmental
value to the design or redesign of products and
services provided to the company.
Integration of Environmental Sustainability
•into Business Strategies
5. Pursue investment strategies that support
communities, promote equity, and/or enrich jobs,
while reducing risks to human health and harm to
the environment.
6. Seek technological innovations that achieve
superior environmental protection at lower unit
costs for the firm and the economy.
7. Introduce policies and commitments to adopt
home country standards, or equivalent or not less
stringent standards of operation, abroad, where
existing environmental management systems are
weak or ineffective.
8. Demonstrate progress towards sustainable
production and consumption.
Reducing Risks and Hazards to Human Health
and to the Ecosystem
9. Voluntarily provide environmental information,
in excess of governmental regulations, to help the
public assess potential risks to environmental and
human health, including that of workers.
10. Phase out processes and chemicals that pose the
greatest environmental risk, disposing of any such
processes and chemicals in an environmentally
sound manner.
11. Modify procedures, including among affiliates
and suppliers, in order to reflect the heightened
risks of special populations and sensitive
ecological areas.
12. Commit at the highest level to ecosystem
management that incorporates an appraisal of the
inter-relationship between human and natural
systems.
Community/Stakeholder Participation in
Environmental Sustainability
13. Involve workers and non-industrial stakeholders
in the firm's sustainable development decision-
making.
14. Explain how any beyond compliance
recommendations or voluntary standards
developed by other organizations (EPA, PCSD,
ICC, ACC, etc.) have changed the operations of
the business.
15. Collaborate on research and development of
environmentally sound technologies and
programs with non-industrial stakeholders such as
academics, community groups, minorities,
indigenous people, local authorities, Federal
Government and/or international organizations.
16. Periodically report verified global environmental,
health and safety performance information to the
public, providing details for smaller geographic
regions.
Establishing the Basis for Continuing
Environmental Improvement
17. Develop proactive sustainable development
responses to current human and/or ecological
threats that may be the result of the firm's, or its
sector's, past and/or present practices.
18. Acknowledge the need for and participate in
moving toward a greater reliance on pricing
systems that internalize environmental costs.
19. Participate in industry-wide efforts to recast
products and processes for sustainable production
and consumption patterns for future generations.
20. Reconsider business strategy in light of the
carrying capacity of human and natural systems,
and the challenge of resource productivity.
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The quality and amount of the information
provided in the company's corporate
environmental literature and the company's
relative economic significance were taken into
consideration. Materials evaluated included
corporate EH&S reports, brochures, websites,
and other public corporate literature, available
as of February 1999. Material that became
available after February 1999 (even if it was
a report for 1998) was not considered in the
evaluation. Mandated environmental
reporting, such as EPA's Toxics Release
Inventory, was not included in this
evaluation. Many of these companies have
made further advances since early 1999 that
are not reflected in this report. Examples
include:
• GM announced its suppliers must be
ISO 14000 certified
• BP has become the world's largest
private consumer of solar energy
• Westvaco has partnered with the
Nature Conservancy to survey and
develop management programs for
its U.S. land holdings (1.3 million
acres)
Information collected from the publicly
available corporate materials was evaluated
against the 20 benchmark indicators of
environmental sustainability. There was a
qualitative assessment of how each
company's environmental literature
measured up to each indicator and then a
rating was assigned. Companies were rated
as either exceeding the indicator, fully
meeting the indicator, partially meeting the
indicator, or providing no information
related to the indicator topic. Actions
reported by companies could count for more
than one indicator if appropriate. The
assessments were somewhat subjective and
could yield different results if done by
someone else. It is also important to point
out that the indicators were developed after
the companies had written their corporate
environmental materials. This means that the
corporate environmental literature was
developed without knowledge of the indicators
of environmental sustainability against which
they would be evaluated. Once the
preliminary benchmark evaluation was
complete, the companies were given an
opportunity to comment on the ratings and
to provide more information if they
disagreed with the evaluation.
14
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The evaluations in the three reports only
analyzed activities the companies said they
were doing or would do, in their corporate
environmental literature made publicly
available as of February 1999. The
evaluation did not compare or rate the actual
activities of the companies. Furthermore,
the information in the corporate
environmental literature was not verified
independently by EPA. Consequently,
during the time period covered by the
evaluation, the companies may have been
engaged in more or fewer environmentally-
sustainable activities than mentioned in their
literature.
What Does the Corporate
Environmental Literature Really
Indicate?
What is corporate environmental
literature and what does it indicate?
Corporate environmental literature includes
publicly available corporate environmental
reports, worker health and safety reports,
and other environmental information that
may be presented in reports, brochures, or
on company web sites.
Although some elements of corporate
environmental reporting and disclosure are
mandatory, public corporate environmental
literature is voluntary. For example,
companies may be required by governmental
regulations to report certain information to a
regulatory agency. This information may
include quantitative data on their
environmental impacts (e.g., use of raw
materials and toxic chemicals, air and water
emissions, and the amount of hazardous waste
disposed). Voluntary corporate
environmental reports provide companies with
the opportunity to report, additional
information not covered by currently
mandated environmental reporting. Such
policies and practices range from the
implementation of pollution prevention
programs to how the company addresses
stakeholder's environmental and health
concerns. This reporting medium allows
companies the opportunity to proactively
inform the public about their "beyond
compliance" environmental policies and
activities.
In corporate environmental reports,
companies can present a summary of their
activities across their facilities, potentially
15
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facilitating evaluations of their sustainability.
Information that companies are required by
regulation to report varies by country and is
often facility-specific, making it difficult for
researchers to compile and evaluate it for a
multinational company that has multiple
facilities in many countries. Corporate
environmental literature therefore serves as a
useful supplement to required environmental
reporting, summarizing existing
environmental data and providing additional
information.
A number of limitations must be kept in
mind when reviewing or analyzing corporate
environmental literature. In most cases, the
data reported have not been verified
independently. In addition, while these
reports attempt to capture the breadth of the
company's activities, for brevity sake they
may only present a representative sample of
these activities, or the companies may only
report information that they perceive to be
important to their audience(s). As a result,
companies may have been involved in more
or fewer activities than were reported.
Furthermore, the content and format
used to convey the information differs
among companies. For example, data may
be qualitative or quantitative. With
qualitative data, such as descriptions of the
company's sustainable environmental
activities, it may be difficult to assess
whether the information illustrates all
activities throughout company operations or
an isolated activity (e.g., at a particular point
in time or at one facility). Quantitative data
may or may not be normalized to a variable
that assists the reader in determining what
the numbers actually mean (e.g., by
production volume or by revenue). For
example, if a company reports that
emissions of a substance declined, without
providing sufficient accompanying
information, the reader may not know
whether the emissions declined due to ;
pollution prevention efforts or to a decrease
in production. Consequently, there is much
variation among different companies'
environmental documents.
The variety of formats currently used in
corporate environmental reports makes it
difficult to compare multiple companies.
While attempts have been made to provide
guidance on the type of information that
should be presented (e.g., Public
16
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Environmental Reporting Initiative, the
Global Reporting Initiative, the Responsible
Care® Principles, etc.), currently there is no
universally-accepted standard for writing
corporate environmental reports in the U.S.6
6 In Europe, the Eco-Management and Audit Scheme
(EMAS) addresses this issue.
17
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III. ACTIVITIES
MEETING THE INDICATORS
OF ENVIRONMENTAL
SUSTAINABILITY
This section presents an overview of
the types of activities that met or
exceeded each of the 20 indicators for
environmental sustainability. It is primarily
meant to help companies better understand
the types of sustainable industrial policies
and activities with which they can be
involved and on which they could report.
Companies may also use this section to
benchmark their current environmental
sustainability performance. For each
indicator, the types of activities that address
the issue are briefly described. In addition, a
few specific examples are presented of
companies' reported activities that were
assessed as meeting or exceeding the
indicator. The activities and examples have
been compiled from the assessments of
corporate environmental literature of
companies in the chemical and oil refining
sector, the forest and paper sector, and the
automobile and automobile parts sector.7
ENVIRONMENTALLY SOUND
PRODUCTS, PROCESSES, AND
SERVICES
Indicator 1: Accept responsibility
for environmental effects
throughout all phases of a product's
life.
The environmental impacts of most
products occur not only during
manufacturing, but also during use and
disposal. Several organizations note that an
important step in moving toward
sustainability is for companies to address
impacts at all of these product stages. ICCR
states, "the company has a responsibility for
the environmental impact of its products and
services throughout the life cycle of these
products and services." Agenda 21 asserted
that companies should "play a major role in
reducing impacts on resource use and the
environment through more efficient
production processes, preventive strategies,
cleaner production technologies and
7 See the Table in the previous section for a list of
indicators.
18
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procedures throughout the product life
cycle."
The following are the types of activities
included in the corporate environmental
literature of companies that were assessed as
accepting responsibility for environmental
effects throughout all phases of a product's
life. The companies that exceeded or fully
met this indicator did one or a combination
of the following:
• included a strong statement on
accepting responsibility for a
product's environmental effects
throughout its life-cycle, including
the extraction of raw materials,
product manufacturing and
packaging process, product use,
product recycling, and disposal
• prioritized reducing environmental
impacts over a product's life-cycle
through source reduction,
innovations in processes and
products, reuse, recovery, and
recycling
• documented the use and performance
of life-cycle assessment and/or
product life-cycle impact analysis |
and design, to minimize or prevent
waste generation and discharge of
contaminants into the environment
and maximize product recycling and
recovery
• implemented a program in which a
recycling operations group assisted
customers in recycling and
recovering their product and
documented the number of
customers and tons of recyclable
material recovered
Some specific examples of companies'
activities assessed as meeting the indicator
follow.
The automobile manufacturer, Volvo,
documented in its corporate environmental
material the use of life-cycle assessment.
Volvo reported that life-cycle assessments
are used "increasingly in new car projects
and component projects to ensure that a
holistic view is taken of the environmental
implications." The company's corporate
environmental report provided an example
of a life-cycle assessment performed on a
whole car, including all of its subsystems
(engine, gearbox, fuel system, etc.). The
purpose of the life-cycle assessment was to
identify the environmental impact of the
sub-systems for use as a reference when
designing new cars. Volvo was assessed as
exceeding the indicator due to its additional
commitments to resource efficiency. For
example, the company's Swedish dealers
took back used auto parts (e.g., used car
components, engine oils, filters, and
packaging materials) from Volvo owners
who performed their own repairs.
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British Petroleum (BP), an integrated
energy company, has used life-cycle
assessment as a tool for achieving more
environmental sustainability, not just for
environmental assessment. For example, BP
considered environmental safety,
community, and social performance as part
of the "impact" of its operations. Its report
expressed a commitment to take
responsibility for its social, as well as
environmental, impact. The company
reported that it had a responsibility to ensure
its "overall impact is beneficial to the
communities affected by (its) presence." BP
also expressed a commitment to performing
environmental impact assessments prior to
undertaking investments in developing
countries.
Weyerhaeuser, an integrated forest
products company, has made an explicit
commitment to "taking responsibility for
products throughout their life-cycles,
reducing environmental burden, minimizing
waste, and maintaining product quality."
Weyerhaeuser described a program called
Minimum Impact Manufacturing (MIM) that
addressed different environmental areas,
such as air and water quality and solid and
hazardous waste minimization, through
pollution prevention. Using MIM, the
company hoped to operate efficient,
increasingly closed-cycle forest product
manufacturing (i.e., more reuse of waste or
by-products), "without negatively impacting
the environment." Specifically,
Weyerhaeuser reported focusing on:
• collecting and recycling used or
scrap paper
• generating less waste
• limiting the toxic chemicals used in
manufacturing
• optimizing more efficient raw
material use in mills
• reducing emissions and eliminating
spills
• reducing and recycling materials and
residuals from Weyerhaeuser mills
that previously were disposed of in
landfills
Another example is provided by United
Technologies Corporation (UTC). At the
time of the evaluation, UTC manufactured
automotive parts, among many other
products. As of December 2000, the
company manufactured a broad range of
high-technology products and support
services to the building systems and
aerospace industries. UTC included life-
cycle analysis in company policy objectives
and demonstrated this commitment through
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the establishment of a center focusing on
life-cycle analysis. Specifically, the
company policy committed to "conserve
natural resources in the design, manufacture,
use and disposal of products and delivery of
services" and to "drive pollutants in
manufacturing processes to the lowest
achievable levels." The company
established a "Center of Excellence in
Product Life Cycle Design" in Aachen,
Germany, whose mission is to "develop
supporting environmental, health and safety
technologies and help deliver improved
methods and tools to design teams."
In the chemical industry, Solutia
provides an example of taking responsibility
throughout the product life cycle. At the
time of this report, Solutia was an offshoot
of the Monsanto Company and an
independent chemical company committed
to Responsible Care® principles. Its report
included examples of the company's
commitment, in policy and in practice, to
accepting responsibility for environmental
effects throughout the phases of a product's
life. Solutia's New Product and Process
Development (NPPD) process included an
EH&S review which links EH&S criteria to
earlier stages of project management. The
NPPD process consists of a multi-level
EH&S assessment for already existing
products, as well as an EH&S assessment
for new products or ideas, which included a
qualitative survey used to help understand
the potential environmental effects of the
proposed product. Solutia also used the
screening and information data sets from the
Organization for Economic Cooperation and
Development (OECD) as a baseline for
toxicology testing on existing products.
Indicator 2: Practice materials and
resource conservation throughout
the organization.
One of the most concrete and direct steps
that companies can take toward
environmental sustainability is to reduce
material use in all parts of the organization.
PCSD noted, "just as the manufacturing
sector has adopted a goal of zero defects, the
nation can aspire to the ideal of being a zero-
waste society through more efficient use and
recycling of natural resources in the
economy."
The companies that were assessed as
fully meeting the indicator provided detailed
examples of conservation of energy,
materials, and resources, such as:
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• reducing materials and resources
used in the manufacturing process
• reducing the resources needed to use
the products (e.g., better fuel
efficiency)
• increasing the ability to recycle the
product
• reducing the environmental impact
of non-process related activities (e.g.,
employee car pools, office recycling,
etc.)
A few examples of companies assessed as
fully meeting the indicator follow.
Honda, an automobile company,
provided examples of resource conservation
efforts. Honda reported the amount of
packaging waste eliminated by using
returnable supply containers, the amount of
metal casting dust and mold sand diverted
from the waste stream due to recycling, and
the steel and bumpers recycled per year.
Honda also described manufacturing process
changes that conserved resources and
product design changes (such as
improvements in a car's efficiency through
engine improvements or unproved
aerodynamics) that avoided pollution from
product use. In addition, Honda included a
description of its efforts to create alternative
fuel vehicles.
A chemical/oil refining company
example is Sunoco Inc., an independent U.S.
petroleum refiner-marketer. Sunoco's
principles of environment, worker health,
and safety expressed commitment to the
sustainable use of natural resources, the
reduction and elimination of wastes, and
energy conservation. The company had a
policy in place requiring facilities "to reduce
emissions and waste, facilitate the use of
recycling techniques, eliminate the use of
certain chemicals, and promote the
purchasing of products made with recycled
materials." Sunoco also provided examples
illustrating its implementation of pollution
prevention technology and descriptions of its
recycling programs.
Weyerhaeuser, a forest and paper
company, acknowledged the need for
conserving forests and biological diversity.
Its corporate environmental policy statement
strongly stressed a commitment to the
conservation of natural resources throughout
its operations, through recycling and waste
reduction. More specifically,
Weyerhaeuser's environmental report
described its recycling programs, such as
We-cycle-Office-Wastepaper (WOW), a
program over 20 years old, with more than 3
22
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million individual participants. The
company's environmental policy also
stressed a balance between a combination of
intensively managed tree plantations with
unmanaged forestlands. When planned in
unison, Weyerhaeuser stated, these types of
timber management practices could yield
both high economic and ecological value.
Indicator 3: Establish company
sustainable development goals and
measure progress towards those
goals on a periodic basis.
Sustainable development programs are
most successful when companies commit
themselves to explicit targets and regularly
evaluate their effectiveness in meeting those I
objectives. The ASTM Standard on
Sustainable Development notes, "the
inclusion of a policy statement on
sustainable development in an
organization's overall business policy is
necessary to convey commitment to all
employees, customers, suppliers,
shareholders and the public."
The companies that exceeded or fully
met the criteria for this indicator:
• described specific company-wide
environmental sustainability goals
• demonstrated that they measured
performance towards these goals
* addressed a range of environmental
sustainability topics that included
social and economic issues
One example is the Royal Dutch/Shell
group (Shell). At the time of the evaluation,
the group of Shell companies included
petroleum exploration and production,
chemicals, gas and power generation, oil
products, and renewables. Shell's
environmental literature described how the
Shell companies recognized the importance
of and set strong goals for sustainable
development. Importantly, these goals
recognized the social components of
sustainable development. For example,
Shell's business principles included the
following as one of its responsibilities to
society: "...to express support for
fundamental human rights in line with the
legitimate role of business and to give
proper regard to health, safety and the
environment consistent with [Shell
companies'] commitment to contribute to
sustainable development." In addition to
setting sustainable development goals, Shell
implemented a sustainable development
management system and other supporting
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systems to realize these goals. Furthermore,
the Shell companies attempted to measure
progress toward some of these targets. For
example, in 1997, they began measuring and
reporting indicators of occupational illness
for their oil products activities to establish a
baseline value against which future targets
could be set. Shell's environmental
literature also reported upon the progress
towards certain company goals, such as the
percentage of companies with EH&S
management systems in place. Shell even
listed the percentage of companies that had
adopted performance measures and targets.
As described in their corporate
environmental and social literature, the Shell
companies set many sustainable
development goals, implemented
management systems to realize these goals,
and started measuring progress towards
them.
DuPont expressed goals across all
elements of sustainable development,
including social, economic, and
environmental components. A producer of
high-performance materials, chemicals,
Pharmaceuticals, and agricultural products,
DuPont defined sustainable development to
include local sustainability in addition to
more traditional sustainable development
goals. For example, the company's
environmental literature stated that "DuPont
believes sustainable development can best
be achieved at the local or neighborhood
level." It also referred to DuPont's "willing
acceptance of social responsibility."
Weyerhaeuser set sustainable
development goals and reported
performance on some of these goals. Like
DuPont, these goals also included social
facets of sustainable development, such as
international efforts of encouraging the
participation of indigenous people and other
stakeholders.
Indicator 4: Implement supplier
programs designed to reduce
environmental impacts or add
environmental value to the design or
redesign of products and services
provided to the company.
Nearly all manufacturers rely on other
companies for supplies such as raw
materials or components to be included in an
assembled product. For a company to
reduce its environmental impacts effectively,
24
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it should include suppliers within its plan.
According to the PERI Guidelines,
corporations' environmental reports would
"describe supplier programmes and
cooperative or partnership activities
designed to reduce environmental impacts or
add environmental value to the design or
redesign of products and services - include
information regarding selection criteria for
environmentally responsible suppliers and
standards to which they must adhere, [and]
identify the scope of the supplier
certification process (e.g., all suppliers, most
suppliers, or those in specific sectors)."
Responsible Care® principles state that
member companies must, "use Health,
Safety and Environment (HSE)
considerations in selecting, retaining, and
reviewing contractors, distributors, and other
customers; work with contractors and
distributors to improve their HSE
performance and procure from suppliers
who adhere to sound HSE principles."
Companies assessed as exceeding or
fully meeting the indicator expressed their
commitment in several ways:
• responsible selection of suppliers to
achieve environmental sustainability
25
• establishment of environmental
guidelines or standards, programs,
management systems, or strategies
for selecting and managing suppliers
• verification of supplier compliance
with environmental standards
• willingness to cancel contracts if
environmental standards are not met
A few examples of companies assessed as
fully meeting or exceeding the indicator
follow.
Volvo explained its commitment to
ensuring suppliers' compliance with a set of
environmental standards. These standards
were set to minimize the overall
environmental impact of Volvo's products.
For example, suppliers were required to
certify that they did not use chemicals
prohibited by Volvo, in the components they
supplied to the auto manufacturer. Papers
and plastics used by suppliers were also
required to contain recycled material.
Volvo's definition of suppliers included
other "working partners," such as
automobile dealers. In Sweden, all car
dealers are required to prepare a brief
description of their environmental activities
to present to customers. Furthermore, in
addition to requiring suppliers to meet
certain environmental standards, Volvo
-------
explained that it conducted audits to assess
supplier compliance with these standards.
Kimberly-Clark, manufacturer of tissue
and other household paper products, stated
that it purchases wood pulp from
commercial growers that had adopted
environmental practices as stringent as its
own. Furthermore, the company noted that
its products do not contain wood fiber from
tropical rain forests. The company had a
policy statement requiring that suppliers
meet certain environmental standards.
Specifically, Kimberly-Clark's corporate
environmental policy on sustainable use of
natural resources instructed its facilities to
consider the environmental practices of
companies that supplied its raw materials,
fuels, and utility services. The company's
facilities were urged to "avoid doing
business with fuel suppliers or utilities
which fail[ed] to comply with environmental
legal responsibilities or which are perceived
by the general public to not follow
environmentally responsible operating
practices."
Sunoco established supplier standards
and described supplier selection programs
that took into account environmental
sustainabiliry issues. For example, the
company's supplier relations policy set
standards for selecting cargo vessels,
product carriers, waste-handling and
disposal facilities, contractors for major
maintenance work, management contractors,
remediation contractors, and engineering
contractors performing emission reduction
control projects. This selection process
covered a number of areas that addressed
environmental sustainability, such as:
• working with suppliers to seek out
environmentally-preferable materials
and processes
• reviewing the hazardous waste
disposal procedures of firms
contracted to perform waste disposal
• conducting monitoring programs to
review supplier performance against
chemical use requirements
• conducting environmental
assessments at third-party transport,
treatment, and disposal facilities
Within the automobile and automobile
parts sector, General Motors (GM)
explained that the company required its
suppliers to meet certain environmental
standards. For example, GM's suppliers
were expected to have their own
environmental policy statement and adopt
resource conservation and pollution
prevention goals. GM's supplier
26
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specifications mandated that suppliers also
meet an engineering standard for restricted
and reportable chemicals in vehicle
components, and that they adhere to
packaging and identification requirements.
The literature also described how GM was
working with a supplier environmental
advisory team to improve its suppliers'
understanding of environmental programs.
For example, GM conducts on-site
workshops for its suppliers to help their
engineers eliminate waste from their
processes.
International Paper, a forest and paper
company, required contractors to submit a
written safety and health plan describing
how specific elements of their programs
would be implemented at the work site. The
company's environmental literature also
included examples of how good supplier
relationships resulted in improved
environmental performance. At a plant in
Oshkosh, WI, for example, International
Paper worked with a resin supplier to reduce
the content of solvent in the resin used in its
paper-saturating process. As a result,
methanol emissions at the site were reduced
by 85 percent.
INTEGRATION OF SUSTAINABLE
DEVELOPMENT INTO BUSINESS
STRATEGIES
Indicator 5: Pursue investment
strategies that support communities,
promote equity, and/or enrich jobs,
while reducing risks to human health
and harm to the environment.
Companies face frequent investment
decisions, such as the site of a new facility
or the implementation of a new technology.
Consideration of environmental and social
impacts when making these decisions is an
important step in enhancing companies'
positive role in society and in minimizing
negative impacts. ASTM states that
companies should "address the
consequences of social and ecosystem
alteration that an economically derived
substitution decision may cause." The Caux
Round Table notes that, "businesses
established in foreign countries to develop,
produce or sell [goods or services] should
also contribute to the social advancement of
those countries by creating productive
employment and helping to raise the
purchasing power of their citizens.
27
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Businesses also should contribute to human
rights, education, welfare, and vitalization
of the countries in which they operate."
Activities undertaken by companies that
address the indicator include the following:
• outlining a corporate investment
strategy that considers social and
equity issues
• assessing the social impact of
proposed projects
• making contributions (e.g., financial
and volunteer participation) in
communities affected by business
operations, such as supporting
education, environmental programs,
and health initiatives
• integrating sustainable development
initiatives into business practices
The activities of a few companies assessed
as fully meeting the indicator are presented
below.
Weyerhaeuser reported integrating
indigenous people into the decision-making
process for investment in privately-owned
land. More specifically, this forest products
company pointed out its participation in a
joint cultural property protection agreement
in 1997 with federal and state agencies and
indigenous people. This agreement helped
protect culturally- or archaeologically-
significant sites in Arkansas and Oklahoma
forests, which included forest land acquired
by Weyerhaeuser. The company also
described strategies that encouraged the
participation of indigenous people in
Weyerhaeuser Canada's plans and
operations.
DuPont reported investing in medical
and social programs to assist local
communities. In Africa, for example,
DuPont donated water filters to assist
communities in the fight against guinea
worms, which were found in the drinking
water. The company also reported making
contributions to support education,
environmental programs, the arts, health and
human service organizations, and
community and civic activities.
Navistar, a truck, bus and engine
manufacturer, is actively involved in the
redevelopment of brownfields (abandoned
industrial sites that are possibly polluted). It
communicates with residents, business
owners, citizens groups, and elected officials
in the communities where the brownfields
are located as it cleans up and redevelops
these properties. The company perceives
benefits to the community due to reduced
pollution and a new source of jobs, and
28
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benefits to the company due to reduced
financial risk.
Indicator 6: Seek technological
innovations that achieve superior
environmental protection at lower
unit costs for the firm and the
economy.
In nearly all industries, companies are
continually assessing new technologies and
processes. If chosen correctly, many
technological changes can reduce
environmental impacts and financial costs
simultaneously. The sustainability of both
companies and the environment are
enhanced when such changes are
implemented. The CERES Principles
address this issue by stating that members
"will update [their] practices constantly in
light of advances in technology and new
understandings in health and environmental
science."
Technological innovations that
I
exemplify this indicator were aimed at: !
• reducing environmentally hazardous j
materials j
• reducing emissions of pollutants |
» shifting to a more sustainable energy
supply
» increasing worker safety
« increasing fuel efficiency
Dow emphasized achieving
environmental goals through use of
technology. The company set a goal to "use
the best available technology.. .to build the
most environmentally sound and safe
facilities." Dow included an example of a
new technology developed by employees at
a bio-oxidation unit in Stade, Germany, to
reduce problems associated with liquid and
solid waste separation in the waste treatment
system. As a result, $20 million was saved,
and waste flow into a river was reduced by
30 percent. The company also linked
performance of EH&S goals to corporate
financial goals to measure the return on
investment generated. Dow predicted that
an upcoming investment in energy use
reduction technology and programs would
save money, due to reduced energy costs,
while at the same time reduce carbon
dioxide and other greenhouse gases.
From the forest and paper sector,
Georgia-Pacific expressed support for
investments in new technology that had both
environmental and financial benefits. The
29
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corporation's environmental literature
described an energy and pollution-control
system at the Mt. Hope, WV, and
Brookneal, VA facilities, which are fueled
by wood residuals and recirculate pollutant-
containing dryer exhaust back to the furnace
as combustion air. The company also
explained that it was seeking methods to
produce more fiber-efficient building
products using smaller, faster-growing trees
or wood by-products as raw materials, to
conserve resources and reduce disposal in
landfills.
Navistar realized cost savings by
implementing technologies and programs
that addressed environmental issues.
Navistar reported that pollution prevention
initiatives instituted since 1992 had reduced
raw material and waste disposal costs by
more than $40 million. In addition to
focusing on pollution prevention and waste
reduction, Navistar explained that its
"energy conservation efforts [also] seek to
eliminate waste and reduce costs where
possible."
Indicator 7: Introduce policies and
commitments to adopt home country
standards, or equivalent or not less
stringent standards of operation
abroad, where existing
environmental management systems
are weak or ineffective.
The stringency of regulations varies
considerably across the world, leaving open
the possibility that multinational
corporations might reduce their
environmental performance in countries
with lower standards. In order to minimize
environmental impacts, companies should
be encouraged to use the practices and
policies that best protect the environment at
all facilities. The Caux Round Table notes
that businesses, "should recognize that some
behavior, although legal, may still have
adverse consequences." PCSD stated that,
"the private sector should continue to move
toward voluntarily adopting consistent goals
that are protective of human health and the
environment in its operations around the
world." :
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Reported corporate activities that
illustrate the indicator include the following:
• applying a company's environmental
policy and standards uniformly to
facilities and business operations in j
all countries where the company
conducts business
• committing to protect the
environment in all countries of
operation
• expressing a corporate emphasis on
global reporting and/or
environmental management systems j
(EMSs)
• establishing global environmental
guidelines
Three examples of companies assessed as
fully meeting this indicator follow.
Occidental Petroleum Corporation
implemented an EH&S management system
throughout its worldwide operations. The j
j
international code for OxyChem, the
corporation's chemical operation, explained
that Responsible Care® principles were
applied to international operations in a
manner equivalent to its domestic plants. As
a result of implementing these standards
internationally, between 1993 and 1994
recordable safety incidents declined by 46
percent, lost time incidents declined by 57
percent, and environmental incidents
declined by 82 percent. The corporation
also reported that OxyChem's distribution
and product stewardship codes were applied
to overseas shipments.
Kimberly-Clark reported a policy of
establishing uniform environmental
standards that apply to all of its facilities
worldwide. The company notes, "These
standards meet - and in most cases - exceed
applicable government and regulatory
requirements throughout the world. We
adhere to all legal requirements in the
countries where we operate, but we consider
these regulations to be minimum standards."
Daimler-Benz expressed a commitment
to environmental protection at its facilities
around the world. At the time of the
evaluation, the company manufactured
transportation products, systems, and
services. In 1998, Daimler-Benz merged
with Chrysler to become Daimler-Chrysler.
Daimler-Benz's environmental literature
reported that the company "endeavors to
behave in an exemplary manner in terms of
environmental protection at all of its plants
and service outlets around the world." The
company also provided evidence of adopting
international standards over less stringent
local ones. For example, when founding
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Yaxing-Benz Ltd. with a.Chinese partner,
technical experts from both companies
performed an ecological evaluation that was
benchmarked against international and
national standards. The company explained
that where there was a discrepancy between
the standards, the more stringent standard
was used.
Indicator 8: Demonstrate progress
towards sustainable production and
consumption.
In order for environmental sustainability
policies and initiatives to be effective, they
should be supported by concrete examples of
achievement. This indicator measures
whether a company demonstrates progress
towards sustainable production and
consumption, which can be defined as
"strategies that promote environmental
quality, while satisfying customer demand,
societal need, and business objectives."8
Definitions of sustainable production and
consumption may differ by industry, varying
according to the products that each industry
produces and consumes. Companies can
play many roles in sustainable production
and consumption. To demonstrate progress
in sustainable production and consumption,
companies could engage in one or more of
the following activities:
• establish internal goals for
sustainable production and
consumption and measure progress
towards meeting those goals
• evaluate existing and future policy
initiatives for their potential to guide
business and society towards
sustainable patterns of production
and consumption9
• provide examples of initiatives that
demonstrate progress towards
sustainable production and
consumption
• publish actual results of sustainable
production and consumption
activities
For the automobile and automobile parts
sector, sustainable production and
consumption included improving fuel
efficiency, marketing reconditioned
automotive parts, and developing alternative
fuel vehicles. Volvo recognized and
addressed a range of environmental issues
facing the transportation industry. These
issues included climate change, atmospheric
pollution, traffic congestion and noise as a
function of urbanization, the threat to the
8 World Business Council for Sustainable
Development (WBCSD), "Signals of Change," 1998.
32
9 World Business Council for Sustainable
Development (WBCSD), "Signals of Change," 1998.
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ozone layer, and natural resource population
limits. Volvo's environmental literature
described how the company addressed each
of these issues.
For example, Volvo reported investing
in efficient public transport. The company
noted that it was involved in the
development of a transportation system
based on high-capacity buses in Curitiba,
Brazil. Volvo explained it had installed
similar transportation systems in Bangalore
and other Indian cities in the past. Volvo
reported on many other efforts towards
sustainable production and consumption of
its products, such as:
• working to lower the average fuel
consumption of new cars sold by the
company in the European Union,
through methods such as innovations
in engine technology and improved
vehicle aerodynamics
• marketing reconditioned automotive
parts "with the emphasis on reduced
environmental loading and efficient
utilization of resources"
• developing commercial vehicles that
run on alternative fuels
• including tips in its owner's manuals
about fuel economy and ways to
reduce tailpipe emissions through
small adjustments in driving habits
For oil refining companies, sustainable !
production and consumption included a
commitment to alternative energy sources.
Shell reported on its efforts to supply
alternative energy sources. Svenska Shell in
Sweden, for example, launched a new
biogas composed of compressed purified
methane extracted from the emissions of a
sewer treatment plant near Stockholm. Shell
also described business areas that focused on
renewable energy technology, such as solar
energy systems, biomass power, and
offshore wind farms.
For forest and paper companies,
sustainable production and consumption
might include processes of harvesting wood
and making wood products that are
sustainable. A vision for a sustainable
process could include the following issues
noted by the FSC: improving forest
management, incorporating the full costs of
management and production into the price of
forest products, promoting the highest and
best use of forest resources, reducing
damage and waste, and avoiding over-
consumption and over-harvesting.
Companies should not only address these
issues directly, but also educate consumers
to enlist their cooperation. No examples are
presented here, since none of the forest or
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paper companies evaluated was assessed as
folly meeting or exceeding this indicator.
REDUCING RISKS AND HAZARDS
TO HUMAN HEALTH AND TO THE
ECOSYSTEM
Indicator 9: Voluntarily provide
environmental information, in excess
of governmental regulations, to help
the public assess potential risks to
environmental and human health,
including that of workers.
One important way of reducing risks to
workers, the general population, and the
environment is to provide information to the
public so that contingency plans can be
made in case of an accident. Agenda 21
stated that companies should "provide data
for substances produced that are needed
specifically for the assessment of potential
risks to human health and the
environment.... [They should also] be
transparent in their operations and provide
relevant information to the community that
might be affected by the generation and
management of hazardous waste."
Activities reported by companies that
were assessed as fully meeting the indicator
include the following:
• instituting a company policy on
providing environmental and human
health information to the public
• providing a variety of environmental
information and statistics through
Material Safety Data Sheets (MSDS)
and other formats
• providing information on worker
health, safety statistics, and safety
programs to employees and the
public
• reporting environmental and human
health data for both national and
international operations and in
multiple languages to address
different audiences
• developing worker health and safety
and community outreach programs to
provide EH&S information to
workers and the public
Amoco, in the chemical and oil refining
sector, addressed EH&S concerns.
Regarding disclosure of environmental
information, Amoco reported that it provides
Material Safety Data Sheets for all products,
even those not required by law. These
sheets are available to company employees
and customers upon request, in multiple
languages. Amoco also produced fact sheets
containing the same information in a less
technical format. Amoco also described the
installation of new warning labels on service
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station gasoline pumps to alert customers to
potential fire hazards associated with filling
some types of containers.
Volvo demonstrated a commitment to
making environmental information public.
The company's environmental policy stated
that "Volvo's environmental programs and
their results shall be communicated in an
open and factual manner. Each company
head is responsible for implementing action
programs based on this Policy." The
company addressed human and
environmental health implications of
automobile production. It explained the
health hazards linked to pollutants
associated with the transportation industry.
A supplement to Volvo's 1997
environmental report presented information
on the annual consumption of energy and
water, and emissions of carbon dioxide,
solvents, nitrogen oxides, and sulfur dioxide
for all of Volvo's 42 majority-owned plants
world-wide. The company also published
environmental information on the internet
for both the public and its employees.
In the forest and paper sector, Georgia-
Pacific recognized the importance of
communicating with the public, stating that
"an important aspect of environmental
protection is keeping our communities
informed about Georgia-Pacific's facilities
and what the company does every day to
ensure that they operate safely." The
company's environmental and safety report
provided data on a variety of environmental
and safety statistics. These statistics
included water use per ton of product,
recovered paper consumption per year,
safety performance, safety incidence rates,
reductions in discharges of total suspended
solids, and biochemical oxygen demand per
ton of product, ha some cases, the statistics
were compared to industry averages.
Georgia-Pacific also described company-
wide worker health and safety goals, as well
as the programs implemented to accomplish
them.
Indicator 10: Phase out processes
and chemicals that pose the
greatest environmental risk,
disposing of any such processes and
chemicals in an environmentally
sound manner.
Companies should make it a high
priority to replace elements of its operations
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that are the most problematic. The text of
this indicator is derived from Agenda 21; the
CERES Principles add that members must,
"reduce and make continual progress toward
eliminating the release of any substance that
may cause environmental damage to the air,
water, or the earth or its inhabitants."
Specific activities that address this
indicator include:
• voluntarily eradicating potentially
harmful chemicals or processes
• voluntarily removing equipment
containing chemicals at potentially
harmful levels
• disposing of leftover chemicals or
contaminated equipment in an
environmentally-sound manner
Phasing out processes or chemicals in
compliance with legal obligations was not
considered sufficient to be evaluated as
meeting this indicator. Neither were reports
of pollution prevention commitments,
unless these commitments were linked
directly to the phasing out of a harmful
substance.
Within the forest and paper sector,
International Paper has eliminated the use of
elemental chlorine in pulp bleaching
processes. In addition, the company has
reduced dioxin emissions to "non-detect"
levels in its releases. The company
calculates that in its pulp, wastewater
discharges and waste treatment sludges at its
U.S. mills, discharges of dioxin are less than
a third of an ounce per year.
Shell explicitly committed to phasing
out certain chemicals. The company's
global environmental guidelines, for
example, called for eliminating "hard"
chlorofluorocarbons (CFCs), halons, and
their stocks, that were used in Shell refinery
and distribution operations, by the end of
2000. The guidelines also prohibited the
future purchase of CFCs for existing
equipment, as well as equipment that used
hard CFCs. Furthermore, Shell set a target
for eliminating the use of trichloroethylene
(TCE), a solvent that contributes to
stratospheric ozone depletion.
Shell also noted an example of producer
responsibility in disposing of hazardous
chemicals, explaining how it handled the
removal and disposal of an obsolete
pesticide produced by the company. In the
1960s and 1970s, international aid agencies
purchased the insecticide dieldrin for locust
control in Mauritania, which is located in
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northwest Africa. The pesticide was later
declared obsolete, and the license to use it
was withdrawn. Dieldrin was also
subsequently declared one of the 12
Persistent Organic Pollutants listed for
international action by the International
Program on Chemical Safety, hi 1997,
Shell, together with the non-profit German
Agency for Technical Co-operation, worked
to remove and safely dispose of 186,000
liters of the pesticide and 1,500
contaminated storage drums from sites
around Mauritania.
Daimler-Benz described prohibiting
certain so-called "black-listed" chemicals
from plant operations. Daimler also
provided examples of chemicals being
discontinued at specific plants.
Indicator 11: Modify procedures,
including among affiliates and
suppliers, in order to reflect the
heightened risks of special
populations and sensitive ecological
areas.
Whether it be natural ecosystems or
human cultures, there are certain entities that
are particularly susceptible to the effects of
pollution. Agenda 21 addressed
environmental concerns by, "encouragfing]
affiliates to modify procedures in order to
reflect local ecological conditions." ICCR
notes that companies should respect, "the
cultural, religious and social customs and
traditional knowledge of members of
indigenous communities," and that "the
development of joint working agreements
between indigenous communities and
companies is a prerequisite to building
business relationships and commitments."
Companies assessed as meeting this
indicator described how they altered their
operations to reflect these concerns. Some
of their activities that address this indicator
include:
® conducting environmental impact
assessments prior to investing in
operations in developing countries
• recognizing location-specific
environmental issues and adjusting
procedures accordingly (i.e.,
reducing water use in drought-prone
areas)
• making a policy commitment to
natural resource conservation that
influences business procedures
• for forest and paper companies,
identifying and protecting
biologically, historically, or
physically unique parcels of
company land
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The activities of a few companies that were
assessed as fully meeting the indicator
follow.
Navistar stated that it has a commitment
to "minimizing the' health and safety risks to
employees and the residents of communities
in which Navistar operates, as well as
ensuring the ecological balance of those
communities." The company also provided
an example in which it altered its operations
due to environmental conditions.
Specifically, at an assembly plant located in
a semi-desert area, Navistar implemented a
zero-water-discharge system, enabling it to
recycle and reuse 95 percent of its treated
wastewater for production or irrigation
purposes.
The Mead Corporation is a North
American supplier of paper products, school
and office supplies, and packaging material.
Mead reported setting aside parcels of land
with environmental value. The company
explained that some of the land set aside
contained unique or rare ecosystems. The
company also reported that it had donated
and sold land to a non-profit organization for
conservation purposes.
BP reported that it conducted
environmental and environmental impact
assessments prior to investing in operations
in developing countries.
Indicator 12: Commit at the highest
level to ecosystem management that
incorporates an appraisal of the
interrelationship between human and
natural systems.
A company's commitment to
environmental sustainabiliry is most likely to
succeed when it has the support of the
company's senior management. Agenda 21
recommended that, "environmental
management [be recognized] as among the
highest corporate priorities and as a key
determinant to sustainable development."
WBCSD comments, "Managers must
understand that the earth is finite, its
capacity for recovery from excessive
resource use is limited, and pressures to
modify business behavior will increase."
Activities reported by companies include
expressing commitment to ecosystem
management that addresses these issues
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(through company policy and education of
management, and managerial
accountability), conducting research on the
issue, and executing ecosystem management
that takes these issues into account. Specific
examples include:
• instituting a policy that holds
operating managers accountable for
environmental and safety
performance of company
• staffing company positions that
support company's environmental
management plan
• fully describing the structure and
principles of an ecosystem
management system
• conducting research on social,
physical, and biological diversity and
issues associated with specific
natural resources to help company
decision-makers understand
sustainability issues
• expressing involvement in ecosystem
management that takes into account
the long-term effects of human
industrial activity on natural and
human systems
• in forest management, paying
attention to biological distinctions in
types of forests (e.g., setting aside
forest land of ecological, historical,
or social importance)
A few examples of companies that were
assessed as fully meeting the indicator
follow.
GM addressed ecosystem management
in company policy and practices. The car
manufacturer noted how the company's
corporate policy evolved from "internal
policy letters" to a global "environmental
management system" and a "sustainability
management framework approach." GM's
management structure included a Chief
Environmental Officer who reported to the
Vice-Chairman. Furthermore, the company
endorsed the CERES principles, a corporate
code that encourages more sustainable
environmental conduct. For a description of
CERES, refer to the following text box.
DuPont expressed commitment to
informing its staff throughout the company
and the Board of Directors about pertinent
EH&S issues. It also described efforts in
which the company donated land or money
for conservation. In addition, DuPont
expressed commitment to managing its land
to enhance habitats for wildlife.
Georgia-Pacific reported employee
training and awareness programs and an
environmental audit program to ensure that
environmental performance met company
standards. The company recognized forests
as total ecosystems, expressing commitment
to conserve "the broad range of value
associated with forests — soil, air, water,
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Coalition for Environmentally Responsible
Economies (CERES)
The Coalition for Environmentally
Responsible Economies (CERES) is a non-profit
coalition of many investor, environmental,
religious, labor, and social justice groups. Founded
in 1989, CERES seeks to promote socially and
environmentally-sound corporate behavior and
standardized corporate environmental reporting.
The coalition promotes the CERES Principles, a
10-point corporate code of environmental conduct
to help guide corporate behavior toward
sustainable policies and practices. The principles
have been endorsed by over 50 companies,
including a number of Fortune 500 firms. CERES
also produces the CERES Report, a standardized
report of corporate environmental management
and performance. In 1997, CERES launched the
Global Reporting Initiative (GRI) to establish a
standardized format for global corporate
sustainable development reporting. GRI activity is
overseen by an international steering committee
that includes representatives from NGOs,
corporations, professional accounting
organizations, and the United Nations.
flora, wildlife, and fish habitat." Regarding
conservation, Georgia-Pacific reported
developing a program "to protect unique
sites on company lands." Furthermore, the
company described contributing to
conservation projects that included federal
agencies as well as conservation,
community, and environmental groups. For
example, Georgia-Pacific agreed to work
with "the U.S. Fish and Wildlife Service to
conserve the habitat of the endangered red-
cockaded woodpecker, wherever it was
found on the more than 4 million acres of
Southern timberland" owned and managed
by the company.
COMMUNITY/STAKEHOLDER
PARTICIPATION IN
SUSTAINABLE DEVELOPMENT
Indicator 13: Involve workers and
non-industrial stakeholders in the
firm's sustainable development
decision-making.
Because corporate decisions have
impacts well beyond company facilities, it is
important to include outside stakeholders in
sustainable development planning. Public
inclusion can both improve the company's
reputation for openness and provide new
perspectives that can generate innovative
ideas. The WBCSD notes that a key priority
for corporate social responsibility is that
business recognizes and strengthens the
"relationships, partnerships and
communications that it has with all
stakeholders." The ICCR highlights the
moral obligation associated with this
indicator: "Indigenous peoples, by virtue of
their inherent rights, are entitled to full
participation in the business decisions which
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pertain to their ancestral lands and their way
of life."
Activities that companies can undertake
to address this indicator include the
following:
• committing, through corporate
policies and goals, to include
workers and external stakeholders in
corporate decision-making
• demonstrating involvement of
employees and non-industrial
stakeholders in the corporate
decision making process (or, for
chemical and oil refining companies,
demonstrating involvement in more
activities than community advisory
panels, which are required by
Responsible Care®)
• viewing workers and non-industrial
stakeholders as a source for
environmental management ideas
• widely defining non-industrial
stakeholders to include federal, state,
and local governments, interest
groups, environmental and
community groups, community
members, and local indigenous
peoples (and, for forest and paper
companies, including non-
landowners in addition to land-
owners)
Specific examples of activities from
companies that were assessed as fully
meeting Indicator 13 follow.
The Dow Chemical Company pledged
commitment to and reported evidence of
external stakeholder involvement in the
company's practices. Dow pledged "to be a
responsible corporate citizen, to be open and
responsive to ideas and concerns" of
external stakeholders. Dow described how it
honored this pledge through the creation of a
corporate environmental advisory council.
Comprised of independent international
environmental experts, such as
environmental activists, journalists,
academics, former government officials, and
regulators, the council advised Dow's Board
of Directors. As of the writing of this report,
the council met a few times each year to
review the company's practices,
performance, and policies. According to
Dow's Chairman, "this outside input has
reinforced our decision-making process."
Dow also referenced a specific company site
in Japan, where employees are encouraged
to be involved in EH&S decisions. Since
1982, over 1,600 employee suggestions have
been received.
Dow summarized its attempt to
communicate with external interests, stating
that "when our stakeholders told us that we
were out of sync with the times, and that our
-------
position was costing us business, we decided
to open up a dialogue with our adversaries,
as well as our supporters."
Weyerhaeuser reported on corporate
policies and goals that supported stakeholder
input into company decision making. For
example, one of Weyerhaeuser's forestry
goals committed "to actively listen to and
act upon public expectations." Furthermore,
a strategy of Weyerhaeuser's Canadian
subsidiary was to "provide the public access
for input into [the company's] management
process and to involve stakeholders in [the]
management process." In addition, a
company fact sheet addressing community
outreach stated that "Weyerhaeuser actively
communicates with community members to
understand public priorities; to factor those
viewpoints into business decisions; and to
improve cooperation with neighbors, other
landowners, regulatory authorities and
customers worldwide."
Weyerhaeuser also described involving
stakeholders, including indigenous people,
in extensive community participation
programs at specific sites in the U.S. and
Canada. For example, in Saskatchewan, the
company included indigenous people to help
plan forest operations. Another example of
the involvement of non-industrial
stakeholders in the company's sustainable
decision-making process, Weyerhaeuser
reported that it included two years of public
consultation when preparing its 20-year
forest management plan.
Navistar International reported involving
workers in environmental management
decisions. For example, Navistar noted a
program that trained employees to identify
and eliminate sources of waste within the
truck manufacturing process.
Indicator 14: Explain how any
beyond compliance recommendations
or voluntary standards developed by
other organizations (e.g., EPA,
PCSD, ICC, ACC, etc.) have
changed the operations of the
business.
Several governmental and non-
governmental organizations have developed
voluntary programs to help companies
modify their practices or to work toward
higher environmental standards. A
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successful corporate sustainable
development program includes active
participation in these initiatives and
demonstrates resulting changes. Companies
using the PERI Guidelines, "Identify the
extent to which the organization uses
recommended practices or voluntary
standards developed by other organizations
such as the International Chamber of
Commerce, the International Standards
Organizations (sic), Environment Canada,
MITI Guidelines, etc."
Examples of voluntary programs and
sustainability guidelines or standards
include:
• involvement with federal or state
environmental agency reform
initiatives, such as WasteWi$e,
Project XL, Green Lights, and
Energy Star
• adoption of guidelines for public
reporting or environmental
responsibility, such as the CERES
Principles, Public Environmental
Reporting Initiative (PERT)
Guidelines, ISO 14001 EMS
Standard, or the ICC Business
Charter on Sustainable Development
Companies assessed as meeting the
indicator showed how their
involvement/commitment with such
organizations or principles affected their
business operations. Manifestations of such
impacts could be seen in:
• changes to corporate environmental
goals
• changes to company operations
GM, for example, reported adjusting
company goals as a result of its participation
in voluntary governmental programs. As
part of the company's participation in EPA's
WasteWi$e program for reducing solid
waste, GM set three-year base-line goals
addressing resource management. GM also
reported involvement in the EPA's Green
Lights and Energy Star Buildings programs,
which promote use of energy-efficient
technologies to prevent pollution. In
addition, GM endorsed the CERES
Principles.
Another company that reported
operational changes due to participation in
voluntary programs is the Union Carbide
Corporation (UCC). The company
explained how a voluntary Superfund
Amendments and Reauthorization Act
(SARA) data management audit, undertaken
for all major locations in 1996, "enhanced
data collection and analytical methods, and
corrected deficiencies in data management
practices." UCC also described
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participation in other voluntary
environmental programs, such as EPA's
Project XL, as well as the application of the
ISO 14001 environmental management
standard.
Within the forest and paper sector,
International Paper was one of the
companies that reported changes in its
operations as a result of participation in a
number of voluntary environmental
programs. The company pointed out that
participation in EPA Region 1 's
Environmental Leadership Program resulted
in changes to company operations in Jay,
ME, including using mineral filler to replace
a portion of the wood pulp in papermaking.
International Paper also reported using the
ISO 14001 standard to improve its EMS. In
addition, the company reportedly followed
guidelines on environmental reporting from
the Public Environmental Reporting
Initiative, which is described below.
The Public Environmental Reporting
Initiative (PERI)
The PERI Guidelines were developed during
1992 and 1993 by a number of companies from
different industry sectors, with input from various
stakeholders. PERI is committed to increasing
good corporate citizenship via environmental
reporting. The guidelines are used by various
organizations in different sectors to help create a
comprehensive environmental reporting strategy
that is balanced and inclusive.
Indicator 15: Collaborate on
research and development of
environmentally sound technologies
and programs with non- industrial
stakeholders such as academics,
community groups, minorities,
indigenous people, local authorities.
Federal Government and/or
international organizations.
Research and development (R&D) is an
essential component of a company's
operations, and is one of the most important
areas in determining its future direction.
External stakeholders can help a company
develop more sustainable products and
processes by participating in R&D planning
and by conducting research in academic or
governmental laboratories. Pew Center on
Global Climate Change states, "Our
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companies recognize that the risks and
complexities of climate change are so
important that we must work together to
meet this challenge. We support efforts to
bring together the ingenuity and experience
of all sectors of our society — private,
public, and non-governmental organizations
— to address this issue in a constructive
way."
Open collaboration also is important for
governmental decision-makers. For
example, PCSD stated that, "The federal
government, assisted by non-governmental
organizations and private industry, should
maintain scientific research and data
collection related to global environmental
challenges. Credible, complete, and peer-
reviewed research and data are central to
guiding U.S. policy and international
deliberations."
Companies that met the indicator
requirements tended to present some
common themes, such as:
• committing, in company goals and
policies, to working with non-
industrial stakeholders to develop
environmentally-sound technologies
and programs
• providing examples of collaborating
with stakeholders to develop
environmentally-sound technologies
and programs
The automobile and chemical and oil
refining companies did not fully meet the
indicator. While they demonstrated
collaboration with stakeholders on
ecological and wildlife conservation issues,
they did not show how these projects
addressed the development of
environmentally-sound technologies. The
activities of a few companies that were
assessed as fully meeting the indicator
follow.
In the chemical and oil refining sector,
British Petroleum (BP) described an
example of stakeholder collaboration in the
development of an environmental
improvement and management program for
small- to medium-size businesses in Poland.
The program was developed to assist BP's
supply chain and address Poland's needs. BP
noted that it held discussions with NGOs,
government, international agencies,
academics, and Polish citizens to get
feedback for the program. The resulting
program, the Business Environmental
Advisory Services, was a partnership
between the company, the Polish
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Environmental Partnership Foundation, and
Groundwork Blackburn, an environmental
NGO based in the UK. BP expressed
commitment to soliciting stakeholder
dialogue, stating that BP has a
"responsibility to.. .engage positively with
governments, community leaders and others
to manage [its] impact on the basis of
dialogue and partnership." It also referred to
cooperating with stakeholders on the issue
of climate change, stating that "industry,
particularly the oil and gas industry, should
co-operate with governments and others in
seeking economically sound and
internationally agreed solutions."
Navistar addressed collaboration with
stakeholders in its corporate goals and
provided some examples of these efforts.
Navistar's environmental policy included a
commitment to "work with all levels of
government toward the development and
implementation of equitable and effective
environmental laws, rules, regulations and
policies." Navistar explained that it had
been involved in sharing information with
other manufacturers and regulatory agencies
"to foster dialogue and to find new solutions
to tough issues." For example, Navistar's
environmental team at an engine plant in
Melrose Park, EL provided best practices
information on the company's pollution
prevention initiatives to EPA.
Weyerhaeuser also expressed
commitment to stakeholder collaboration.
The company stated that its Canadian branch
was "presently working with various
stakeholder groups to achieve business
improvement opportunities." Weyerhaeuser
noted extensive collaboration with various
stakeholders on multiple projects. These
projects included planning location-specific
forest operations, preparing the company's
20-year forest management plan, identifying
approaches for the sustainable management
of boreal forests, developing habitat
management processes, and developing
solutions to declining salmon populations.
Stakeholders that were part of these
collaboration projects included numerous
governmental, environmental, tribal,
community, academic, and landowner
groups.
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Indicator 16: Periodically report
verified global environmental, health
and safety performance information
to the public, providing details for
smaller geographic regions.
The public can best adapt to a
company's external impacts when there is
accurate information about local releases.
The CERES Principles state, "We will
conduct an annual self-evaluation of our
progress ... [and will] inform in a timely
manner everyone who may be affected by
conditions caused by our company that
might endanger health, safety, or the
environment." PERI provided much of the
language for this indicator, noting,
"Environmental releases are one indicator of
an organization's impact on the
environment. [Companies should] provide
information that quantifies the amount of
emissions, effluents, or wastes released to
the environment... Information should be
based on the global activity of the
organization, with detail provided for
smaller geographic regions, if desired."
47
To meet this indicator, companies should
report EH&S performance data that is:
• verified - through internal audits
and/or external performance
verification that are reported to the
public
• global
• addressing smaller geographic
regions, such as communities
A few examples of companies that meet or
exceed the indicator are discussed below.
Volvo reported comprehensive global
environmental performance data across
multiple key environmental themes, as well
as data on environmental management,
supply chain management, and employee
training. The environmental data were
normalized against net group sales. Detailed
environmental performance data also were
presented for each plant and aggregated for
the group. Volvo reported an active internal
auditing program. In addition, eight of
Volvo's plants were reported to be Eco-
Management and Audit Scheme certified,
meaning that their environmental
performance data were verified.
Weyerhaeuser verifies its reported global
and local EH&S data. The company
included EH&S data for the U.S. and
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Canada.10 Weyerhaeuser also reported
performing internal audits of manufacturing
facilities and forest operations to identify
areas for improvement. The company's
Alberta operations received FOKESTCARE
certification, which required independent
audits by a team including local community
members.
Union Carbide provided global EH&S
data, and it reported details for specific
regions and sites. Internal audits were
conducted by the company's EH&S audit
program. Union Carbide explained that
trained employees conducted compliance
checks using best-practice auditing
procedures. External consultants
participated in around 15 percent of the
company's audits and provided follow-up
analysis and an annual performance
assessment. Furthermore, the company's
EH&S data management system was
verified by external auditors.
BP provided global EH&S information.
The information was independently verified
using the guidelines of the European
Federation of Accountants. BP also
provided site-based EH&S information. In
addition, BP produced a Social Report,
which included a discussion on guidelines
for reporting and the merits of global,
regional, and local reporting.
Eco-Management and Audit Scheme
(EAAAS)
The Eco-Management and Audit Scheme
(EMAS) is a voluntary environmental management
scheme adopted by the European Council in June
1993. EMAS has been open to participation by
companies since April 1995. The objective of
EMAS is to promote continuous environmental
performance improvements of industrial activities.
Companies voluntarily commit to evaluate and
improve their environmental performance and
provide relevant information to the public. EMAS
regulation takes the form of 21 Articles and 5
Annexes. Compliance with EMAS must be
independently verified according to certain
guidelines.
10 The company's operations were located only in the
U.S. and Canada until mid-1997. After this time, the
company began to actively manage timberlands in
New Zealand and acquired land in Uruguay.
Consequently, these new areas of operation were not
covered in Weyerhaeuser's 1997 Annual
Environmental Performance Report, which was used
for the evaluation.
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ESTABLISHING THE BASIS FOR
SUSTAINABLE DEVELOPMENT FOR
FUTURE GENERATIONS
Indicator 17: Develop proactive
sustainable development responses
to current human and/or ecological
threats that may be the result of
the firm's, or its sector's, past
and/or present practices.
According to this indicator, companies
should seek to reduce the impact of their
practices as part of their sustainability
efforts. Some actions that address this
indicator and that were reported by
companies assessed as fully meeting the
indicator are:
• recognizing the industry's potential
impact on human health and the
environment and changing
operations as a result (e.g., for
climate change, reducing greenhouse
gas emissions)
• evaluating and responding to health
risks associated with emissions from
product manufacturing or use
A company's potential environmental
and human health impacts depend on the
type of operations it performs. Different
industries addressed different human and
ecological threats, although climate change
was one issue addressed by all industries. A
few examples of companies assessed as fully
meeting the indicator are discussed below.
Human and ecological threats addressed
by the automobile and automobile parts
sector included climate change, human and
environmental effects due to atmospheric
pollution, traffic congestion, depletion of the
ozone layer, and natural resource and
population limits. The literature of UTC
addressed the issue of climate change. UTC
explained, "We.. ..recognize the substantial
ambiguities and open questions in research
on global climate change. But we believe
also that the prudent course is to work to
reduce greenhouse gas emissions." The
company also reported that it had joined the
Business Environmental Leadership Council
of the Pew Center on Global Climate
Change "to evaluate and to work to mitigate
global warming."
Human and ecological threats potentially
caused by the past or present activities of the
paper and forest industry may include loss of
biodiversity, endangered species,
environmental effects of clearcutting, soil
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erosion, and social and economic impacts on
local communities. For example,
International Paper reported on ecological
restoration programs, attempts to address
biodiversity and land use issues, and
reduction of greenhouse gas emissions.
The Pew Center on Global Climate Change
The Pew Center is a non-profit, independent
organization that aims to bring a cooperative
approach and critical scientific, economic and
technological expertise to the global debate on
climate change. Established in 1998 by the Pew
Charitable Trusts, the Center is working with
major companies and other organizations to
educate the public on the risks, challenges, and
solutions to climate change and to encourage the
reduction of greenhouse gas emissions.
Chemical and oil refining companies that
were assessed as meeting this indicator
reported on activities focused on climate
change. Shell's corporate environmental
and social material, for example, noted that
the company "is committed to taking action
on climate change." The corporation
explained that it aimed to exceed the Kyoto
target for reduction of greenhouse gas
emissions. Shell also expressed a
commitment to limit greenhouse gas
emissions through improvements to energy
efficiency in its operations, and said it would
help customers reduce greenhouse gas
emissions by increasing the availability of
fuels with a lower carbon content.
Indicator 18: Acknowledge the need
for and participate in moving toward
a greater reliance on pricing
systems that internalize
environmental costs.
Organizations that study environmental
sustainability widely recognize that those
consuming common natural resources often
do not pay the true value that these resources
represent to society. Many groups,
including ASTM, the Pew Center, and
PCSD, recommend that those companies
that consume large quantities of resources,
such as minerals, forests, clean air, and clean
water, should have internal accounting
systems that reflect the total impacts of their
products on resource depletion and
environmental degradation. ASTM notes in
its standard on sustainable development,
"The goals of [a company's sustainable
development] program should reflect at least
an accounting for natural and human capital
consumption and/or generation in an
organization's operation; just as financial
capital is currently accounted for."
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In addition, PCSD recommended that
companies make greater use of market
forces through use of incentives, such as
emissions trading, deposit/refund systems,
and tax and subsidy reform.
Companies evaluated as exceeding or
fully meeting this indicator:
• acknowledged the need for internal
pricing systems that internalize
environmental costs
• indicated participation in moving
toward this type of pricing system
Shell addressed the need for
intemalization of environmental and social
costs, and the company reported pursuing
sustainable development accounting. Shell
acknowledged that "to measure total net
value added, economic value added and
market value added, values will need to be
adjusted for the linked impacts — both
positive and negative - on natural, human
and social capital." Shell reported
assembling a multi-stakeholder team to work
on metrics for environmental accounting.
Shell also described the need to adjust
values for impacts (positive and negative) on
natural, human, and social capital.
Volvo has internalized environmental
costs by developing a measuring system to
"quantify the environmental impact of each
item used in the manufacture of a car and in
the car itself." The Environmental Loading
Unit takes into account environmental,
safety, and cost issues. Volvo also discussed
how costs associated with environment-
related investment and development are
estimated. To estimate these costs, the
company used a formula specified by the EU
Accounting Advisory Forum. Volvo
explained that some of its environmentally-
targeted products may be more expensive to
purchase but more cost-effective in the long
run. For example, cars that operate with
methane gas may cost more to buy than
equivalent petroleum-fueled cars, but may
save money over time due to lower fuel
prices and tax breaks. (In Sweden, there are
tax breaks for these types of cars.) In
addition, Volvo discussed the difficulty of
assessing the economic benefits of its
environmental programs, stating that "the
more environmental activities are integrated
in a company's overall operations, the more
difficult it is to separate environment-related
economic effects from others."
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Dow's chairman acknowledged the
importance of full-cost accounting, stating
that "knowing the true cost/benefit-ratio -
through an address to full cost accounting —
guides objective decisions and investments
inEH&S".
Indicator 19: Participate in
industry-wide efforts to recast
products and processes for
sustainable production and
consumption patterns for future
generations.
The environmental impacts of a product
often are larger than necessary because the
product does not exactly meet the needs of
its consumers. As a result, excess materials
might be used to manufacture the product, or
the product might be disposed of
prematurely. The WBCSD notes,
"Companies have a continuing responsibility
to assess their customers' needs and to sell
'solutions/ not just products, that meet those
needs while at the same time minimizing
their environmental impact." Companies
can meet this indicator by undertaking
independent initiatives or by coordinating
with other industry participants to
reformulate the types of products offered by
the industry.
Companies that exceeded or met this
indicator did one or more of the following:
• participated in pollution-prevention
initiatives sponsored by government or
trade associations
• shared knowledge or infrastructure for
disassembling obsolete products
• coordinated with other companies to
collect environmental information on the
sensitivity of shared ecosystems
GM described its participation in many
different sustainable development initiatives.
For example, GM reported involvement with
PCSD, the World Business Council for
Sustainable Development, CERES, and the
Greening of Industry Network. GM also
noted participation in numerous federal,
state, and local voluntary pollution
prevention and energy conservation projects.
In addition, GM described its progress
towards increasing the sustainability of its
products (e.g., developing alternative energy
vehicles). Furthermore, GM noted its work
with the American Automobile
Manufacturers Association to educate
automobile manufacturers about materials
recovery, recycling, and disposal of "end-of-
life" vehicles and the creation of industry
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partnerships to increase the environmental
sustainability of automobile production and
use.
DuPont addressed re-casting products
for sustainable production and consumption,
stating: "We intend to stay on the leading
edge of providing products, know-how and
services to meet the needs of a growing
global population in a way that improves the
quality of life while protecting the
environment for future generations. This is
not simply a need - but a must!"
The President's Council on Sustainable
Development (PCSD)
The PCSD was created in June 1993 at
President Clinton's request and continued through
June 1999. Its mission was to find ways of
integrating sustainable development concepts into
national environmental, social, and economic
goals without jeopardizing the future. The group
was comprised 'of business representatives, senior
government officials, environmental, civil rights,
labor, and Native American organizations.
World Business Council for Sustainable
Development (WBCSD)
As of 2000, the WBCSD was a coalition of
some 150 companies committed to economic
growth and sustainable development. Its members
are drawn from 30 countries and more than 20
major industrial sectors. The WBCSD aims to
encourage and foster cooperation among
businesses, governments, and other organizations
concerned with the environment and sustainable
development. The coalition also aims to promote
high standards of environmental management in
business.
Indicator 20: Reconsider business
strategy in light of the carrying
capacity of human and natural
systems, and the challenge of
resource productivity.
Some aspects of the environment have a
particularly limited ability to recover
burdens on it. Although companies should
seek to minimize all of their impacts, they
should adjust their strategy first to address
the most pressing resource limitations. The
WBCSD states, "Managers must understand
that the earth is finite, its capacity for
recovery from excessive resource use is
limited, and pressures to modify business
behavior will increase. These constraints
will remain a fact of life, and therefore
business has to anticipate these challenges
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by applying environmental criteria 'from the
laboratory to the market.'" In addition, the
PCSD noted that companies should,
"develop methods to measure the quantity
and quality of renewable and non-renewable
resources, such as forests, lakes, minerals,
and fish populations. These measurements
should include the economic value of
degrading or restoring air, water, and soil
quality."
Companies that met this indicator
undertook one or more of the following
activities:
• acknowledged natural resource limits
and the environmental load of their
products
• discussed planned or actual steps in
their corporate strategy to become
sustainable
• conducted large-scale research of
potentially sustainable technologies
BP, assessed as fully meeting the
indicator, reported on efforts to address
climate change issues and invest in solar
energy business. The company pledged to
seek solutions concerning climate change in
several areas: reducing greenhouse gases,
energy conservation, new energy
technologies, flexible market instruments,
and participating in policy processes.
Expressing commitment to the development
of alternative energy sources, BP noted its
aim to increase solar energy sales to $1
billion by 2007.
Volvo demonstrated its awareness of
global environmental issues and described
how the company addressed these issues.
For example, Volvo's material included a
statement recognizing global resource limits.
Volvo noted its work to reduce the fuel
consumption of new vehicles, to build
vehicles that run on renewable fuels, to
recover materials from its operations, and to
work toward developing systems for reusing
and recycling scrap vehicles and
components.
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IV. STUDY FINDINGS
"IT his report highlights the considerable
efforts made by companies in the three
sectors studied in addressing the
environmental sustainability indicators.
Looking at each sector individually, each
had strengths and opportunities for
improvement in different areas of
environmental sustainability. Each of the
three sectors has a different set of impacts
on the environment, and therefore has
different challenges when working toward a
solution. This section discusses
environmental sustainability trends within
each of the three sectors. Although it is
possible to draw conclusions from the
findings of this report, there are two
important caveats to note. The findings
were based on:
• a small number of companies
• data reported in 1999
The patterns that are mentioned here are
based on literature from a relatively small
number of companies that are considered to
be a cross-section of leaders in
environmental reporting. These patterns,
therefore, may not be representative of the
industries overall. In order to be included in
the evaluations, each company had to have
produced an environmental report
comprehensive enough to be assessed
against the majority of the 20 indicators of
environmental sustainability. These patterns
therefore illustrate the activities of a cross-
section of companies at the forefront of
voluntary environmental reporting.
It is also important to reiterate that the
patterns were drawn from the evaluations of
literature published before February 1999.
Companies may currently be involved in
activities in which they were not active a
few years ago. It is also possible that
companies were involved at the time of
assessment in environmentally-sustainable
activities that they did not mention in their
environmental literature.
The information presented in this section
is intended for a variety of audiences. By
indicating something about which areas of
environmental sustainability companies in
these three sectors are already involved in,
the report may allow regulators,
environmental organizations, and industry
groups to focus their programs and resources
more efficiently and effectively. In addition,
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companies (especially companies in the
three sectors assessed) may be able to use
this information to benchmark their own
activities against leading companies and
gauge their progress.
Automobile and Automobile Parts
Companies
The automobile and automobile parts
companies reported activity in a variety of
areas of environmental sustainability. All or
almost all of the selected automobile and
automobile parts companies were assessed
as fully meeting the following indicators:
Indicator 1
Indicator 2
Indicator 4
Indicator 6
Accepting responsibility for
environmental effects throughout
all phases of a products life.
Practicing materials and resource
conservation throughout the
organization.
Implementing supplier programs
designed to reduce environmental
impacts or add environmental
value to the design or redesign of
products and services provided to
the company.
Seeking technological innovations
that achieve superior
environmental protection at lower
unit costs for the firm and the
economy.
Indicator 7
Indicator 9
Indicator 11
Indicator 12
Introducing policies and
commitments to adopt home
country standards, or equivalent or
not less stringent standards of
operation, abroad, where existing
environmental management
systems are weak or ineffective.
Voluntarily provide environmental
information, in excess of
governmental regulations, to help
the public assess potential risks to
environmental and human health,
including that of workers.
Modifying procedures, including
among affiliates and suppliers, in
order to reflect the heightened
risks of special populations and
sensitive ecological areas.
Committing at the highest level to
ecosystem management that
incorporates an appraisal of the
'inter-relationship between human
and natural systems.
While many environmental sustainability
issues were addressed, the companies
included from this sector did not address
many of the social and equity components of
sustainable development. In particular,
these companies generally did not meet the
community and stakeholder participation
indicators. The companies had the greatest
potential opportunity for improvement in the
following indicators because they partially
met them, or provided limited or no
information:
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Indicator 8
Indicator 13
Indicator 15
Indicator 16
Indicator 18
Demonstrate progress towards
sustainable production and
consumption.
Involve workers and non-industrial
stakeholders in the firm's
sustainable development decision-
making.
Collaborate on research and
development of environmentally
sound technologies and programs
with non-industrial stakeholders
such as academics, community
groups, minorities, indigenous
people, local authorities, Federal
Government and/or international
organizations.
Periodically report verified global
environmental, health, and safety
performance information to the
public, providing details for
smaller geographic regions.
Acknowledge Hie need for and
participate in moving toward a
greater reliance on pricing systems
that internalize environmental
costs.
The automobile and automobile parts
companies indicated a strong commitment to
environmentally-sound products, processes,
and services. Like the chemical and oil
refining companies, the automobile and
automobile parts companies also showed a
policy commitment to the application of
home country environmental standards
abroad and included worker health and
safety issues in their corporate
environmental literature.
Chemical and Oil Refining Companies
The chemical and oil refining companies
actively report involvement in a variety of
environmentally-sustainable industrial
commitments. This is in stark contrast to
the widely reported environmental disasters
associated with the industry in the past. It is
likely that in response to these past events,
the industry has sought to revise its practices
and become more involved with
environmentally-sustainable corporate
commitments.
All or almost all of the assessed
companies met or exceeded the following
indicators:
Indicator 1
Indicator 2
Indicator 6
Accepting responsibility for
environmental effects throughout
all phases of a product's life.
Practicing materials and resource
conservation throughout the
organization.
Seeking technological innovations
that achieve superior
environmental protection at lower
unit costs for the firm and the
economy.
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Indicator 7
Indicator 9
Indicator 14
Introducing policies and
commitments to adopt home
country standards, or equivalent or
not less stringent standards of
operation, abroad, where existing
environmental management
systems are weak or ineffective.
Voluntarily provide environmental
information, in excess of
governmental regulations, to help
the public assess potential risks to
environmental and human health,
including that of workers.
Explaining how any beyond
compliance recommendations or
voluntary standards developed by
other organizations have changed
the operations of the business.
The reporting practices of the chemical
and oil refining companies with regard to
these indicators are influenced by their
membership in the ACC, which requires its
members to follow the requirements of
Responsible Care®. A key finding of this
study is that industry-wide programs such as
this have helped companies to attain
common minimum standards and to develop
their own progressive initiatives.
Responsible Care® requires companies to
submit annual progress reports on efforts to
implement the program's principles and
codes of management. Two of these codes
of management address product stewardship
and pollution prevention. Companies'
commitment to these codes is reflected in
the evaluations, in which almost all
companies were assessed as meeting
Indicators 1 and 2 (accepting environmental
responsibility throughout all stages of
products' lives and practicing conservation
throughout the organization). Responsible
Care® also requires that companies "provide
information on health or environmental risks
and pursue protective measures for
employees, the public, and other key
stakeholders." This emphasis is very similar
to Indicator 9, which almost all companies
were assessed as fully meeting.
Companies also reported a commitment
to employee health and safety issues,
reflecting the Responsible Care® employee
health and safety code and its requirement
that companies work to continually improve
their EH&S performance.
The companies had the greatest potential
opportunity for improvement in the
following indicators because they provided
limited or no information about them, or
partially met them:
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Indicator 8
Indicator 11
Indicator 18
Indicator 20
Demonstrating progress towards
sustainable production and
consumption.
Modifying procedures, including
among affiliates and suppliers, in
order to reflect the heightened
risks of special populations and
sensitive ecological areas.
Acknowledging the need for and
participate in moving toward a
greater reliance on pricing systems
that internalize environmental
costs.
Reconsidering business strategy in
light of the carrying capacity of
human and natural systems, and
the challenge of resource
productivity.
It is interesting to note that many of
these indicators address issues that are not
specifically covered by Responsible Care®.
For example, Responsible Care® does not
address internalization of environmental
costs or consideration of natural systems and
sensitive ecological areas.
Forest and Paper Companies
The forest and paper companies were
most active in several areas of
environmental sustainability. All of the
companies were assessed as meeting or
exceeding each of the following indicators:
Indicator 4
Indicator 6
Indicator 11
Indicator 12
Implementing supplier programs
designed to reduce environmental
impacts or add environmental
value to the design or redesign of
products and services provided to
the company.
Seeking technological innovations
that achieve superior
environmental protection at lower
unit costs for the firm and the
economy.
Modifying procedures, including
among affiliates and suppliers, in
order to reflect the heightened
risks of special populations and
sensitive ecological areas.
Committing at the highest level to
ecosystem management that
incorporates an appraisal of the
inter-relationship between human
and natural systems.
As with the chemical industry, the forest
and paper sector's SFI has been a catalyst for
successful initiatives of individual
companies. SFI sets forth principles of
sustainable forestry that all member
companies must implement. SFI includes
guidelines on public reporting and attempts
to create a standardized sector approach to
sustainable forest management. While it is
difficult to assess the full impact of SFI's
influence on company reporting, some of the
practices and policies that led companies to
meet several of the indicators reflect SFI
principles. For example, SFI includes
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guidelines that address environmental
sustainability issues for the procurement of
wood and fiber from suppliers. Possibly
reflecting these guidelines, all companies
were assessed as meeting Indicator 4 on
implementing supplier programs designed to
reduce environmental impacts.
Many of the forest and paper companies
did not report the participation of certain
stakeholders in the environmental
sustainability decision-making process.
Although companies reported working with
federal and state regulators and programs,
and certain environmental groups, they did
not indicate participation and involvement
by tribal peoples, with one exception. They
also did not indicate that the companies were
actively addressing the indicators under the
general theme of establishing the basis of
environmental sustainability for future
generations. The companies had the greatest
potential opportunity for improvement in the
following indicators because they provided
limited or no information about them, or
partially met them:
Indicator 17
Indicator 18
Indicator 19
Indicator 20
Developing proactive sustainable
development responses to current
human and/or ecological threats
that may be the result of the firm's,
or its sector's, past and/or present
practices.
Acknowledging the need for and
participating in moving toward a
greater reliance on pricing systems
that internalize environmental
costs.
Participating in industry-wide
efforts to recast products and
processes for sustainable
production and consumption
patterns for future generations.
Reconsidering business strategy in
light of the carrying capacity of
human and natural systems, and
the challenge of resource
productivity.
In general, the forest and paper
companies reported activities to promote
environmentally-sound products, processes
and services, as well as technological
innovations to achieve environmental
protection, to consider the risks of sensitive
ecological areas, and to commit to a
heightened level of ecosystem management.
Comparison of Industry Sectors
Common themes in environmental
sustainability can be drawn across all three
groups of companies. For example, the
companies in all three sectors fully met the
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indicator for seeking technological
innovations that achieve superior
environmental protection at lower unit costs
(Indicator 6). In addition, most of the
companies from all three industries
emphasized worker health and safety issues
in conjunction with environmental issues.
The following indicators were met or
exceeded by most of the assessed
companies:
Indicator 4
Indicator 6
Indicator 7
Indicator 9
Implementing supplier programs
designed to reduce environmental
impacts or add environmental
value to the design or redesign of
products and services provided to
the company.
Seeking technological innovations
that achieve superior
environmental protection at lower
unit costs for the firm and the
economy.
Introducing policies and
commitments to adopt home
country standards, or equivalent or
not less stringent standards of
operation, abroad, where existing
environmental management
systems are weak or ineffective.
Voluntarily provide environmental
information, in excess of
governmental regulations, to help
the public assess potential risks to
environmental and human health,
including that of workers.
Areas of environmental sustainability
that companies did not address are harder to
group into patterns across the groups of
companies, as they differed within an
industry. These variations across groups are
to be expected, given that their companies
use different processes. Across all groups,
relatively little activity was reported on the
following indicators:
Indicator 3
Indicator 5
Indicator 8
Indicator 16
Indicator 18
Establish company sustainable
development goals and measure
progress towards those goals on a
periodic basis.
Pursue investment strategies that
support communities, promote
equity, and/or enrich jobs, while
reducing risks to human health and
harm to the environment.
Demonstrating progress towards
sustainable production and
consumption.
Periodically report verified global
environmental, health and safety
performance information to the
public, providing details for
smaller geographic regions.
Acknowledging the need for and
participating in moving toward a
greater reliance on pricing systems
that internalize environmental
costs.
The literature of companies from the
forest and paper and automobile and
automobile parts companies shared some
common practices. Both of these groups of
companies were active in implementing
supplier programs designed to reduce
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environmental impacts (Indicator 4), seeking
technological innovations that achieve
environmental protection cost-effectively
(Indicator 6), modifying procedures to
reflect the heightened risks of special
populations and ecologically sensitive areas
(Indicator 11), and committing to ecosystem
management that takes into account the
interrelationship between human and natural
systems (Indicator 12).
The chemical and oil refining, and the
automobile and automobile parts companies,
also shared emphases. Almost all of these
companies were assessed as meeting
Indicator 7 - introducing policies and
commitments to adopt home country
standards abroad. The companies from
these industries also emphasized product
stewardship and materials resource
conservation (Indicators 1 and 2).
Furthermore, both of these industries were
assessed as seeking technological
innovations that achieve environmental
protection cost-effectively (Indicator 6) and
actively providing environmental
information in excess of governmental
regulations to help the public assess
potential environmental and health risks
(Indicator 9).
Across all companies, this study found
that corporate environmental practices and
policies, and the public reporting of them,
are evolving. Companies like those
discussed in this report are taking significant
steps to reduce their environmental impacts.
However, only one company — Shell — met
all of the indicators, suggesting that even
some of the most environmentally-proactive
companies have gaps in their sustainability
strategies.
Also significant is the variation in
reporting formats used by the companies.
Some focused on quantitative results; others
were oriented toward policies and qualitative
initiatives. The disparity highlights the
importance of adopting systematic
sustainability reporting guidelines, like those
being developed by GRI. Only when
companies produce standardized
environmental reports, like those created for
financial purposes, will the public be able to
assess the sustainability of corporations in a
reliable and comparative way.
62
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V. BIBLIOGRAPHY
-y his report was based on the following
' three reports by Abt Associates and
Benchmark Environmental Consulting,
which were prepared for EPA's Office of
Policy, Economics, and Innovation.
• Indicators of Sustainable Industrial
Development: A Benchmark
Evaluation of Corporate
Environmental Reports in the
Automobile and Automotive Sector,
draft final, July 2001.
• Indicators of Sustainable Industrial
Development: A Benchmark
Evaluation of Corporate
Environmental Reports in the
Chemical and Oil Refining Sector,
draft final, July 2001.
• Indicators of Sustainable Industrial
Development: A Benchmark
Evaluation of Corporate
Environmental Reports in the Forest
and Paper Sector, draft final, July
2001.
Quotes in this report were taken from these
three reports, not from the original sources.
The sources that were used for these three
reports are listed below.
Automobile and Automobile Parts
Sector
American Honda Motor Company,
The Environmental Challenge, 1997.
One Team Building Our Future, 1996.
Website: www.honda.com
Daimler-Benz,
Daimler-Benz Environmental Report
1998.
Daimler-Benz Environmental Report
1998, Facts and Figures.
Daimler-Benz, Consolidated Interim
Report, January 1 through September 30
1998.
Daimler-Benz Environmental Magazine,
published every other month.
Website: www.daimlerchrysler.com
General Motors,
1997 General Motors Environmental,
Health, and Safety Report.
PRISM report.
Website: www.gm.com
Navistar International,
Environmental, Health and Safety
Report, 1997.
Navistar Annual Report for 1997.
Website: www.navistar.com
United Technologies Corporation,
Environmental Health and Safety
Progress Report 1997.
Website: www.uta.com
Volvo,
Volvo Environmental Report 1997.
Supplement to the Volvo Environmental
Report: Environmental data for Volvo
production plants, 1997.
Website www.volvo.com
Chemical and Oil Refining Sector
Amoco,
Amoco's Environment, Health, and
Safety Report, 1997.
Website: www.bpamoco.com
British Petroleum,
BPHSE Facts 1997.
BP Social Report 1997.
BP Chemicals Site Reports 1997.
Website: www.bpamoco.com
63
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Dow Chemical Company,
1998 Progress Report on Environment,
Health & Safety; Goals for 2005.
Website www.dow.com
DuPont,
DuPont Safety, Health and the
Environment: 1997 Progress Report.
Website: www.dupont.com
Eastman Chemical Company,
Protecting People and the Environment,
the 1998 Responsible Care Report (Also
available at www.eastman.com/corp/9
8_respcare.html).
Our Journey Together, the 1997
Corporate Social Responsibility Report.
Websites: Environmental information:
www.eastman.com/env/index.shtml
Verification information:
www.eastman.com/corp/rc_toc.html
Occidental Petroleum Corporation,
Occidental Petroleum Corporation 1997
Annual Report on Health, Environment
and Safety.
Websites: www.oxychem.com
www.oxy.com
Shell Group,
Globe—The International Business
Magazine of Shell Oil Products, Issue 3,
1998.
Statement of Business Principles
(pamphlet — no page numbers
indicated).
Profits and Principles, Does There Have
to be a Choice?
Oil Products Heath, Safety, and
Environmental Report 1998.
Royal Dutch/Shell Group of Companies
Heath, Safely, and Environmental
Report 1998.
Websites:
Royal Dutch/Shell Group website:
www.shell.com
Shell Nigeria website:
www.shelhiigeria.com
Brent Spar website:
www.brentspar.com
Shell Chemicals website:
www.shellchem.com
Solutia,
1997 ES&H Annual Report.
Website: www.solutia.com
Sunoco,
' Sun Company 1997 Health,
Environment & Safety Review and
CERES Report.
Website: www.sunocoinc.com
Union Carbide,
Carbide Corporation Responsible Care
1997 Progress Report.
Website: www.unioncarbide.com
Forest and Paper Sector
Georgia-Pacific,
A Way of Life, Environmental and
Safety Report 1998.
Georgia-Pacific Corporation,
Community Investment Report 1997.
Websites: www.gp.com/enviro/
www.thetimbercompany.com
International Paper,
Sustaining the Environment for Future
Generations, 1997-1998 Environment,
Health and Safety Annual Report.
Website: www.internationalpaper.com
Kimberly-Clark,
Kimberly-Clark's Vision for a Better
Environment and a Better World.
Website: www.Kimberly-Clark.com
64
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Mead,
Mead Public Policy Report, 1997, 1996,
1995, 1994.
Sustainable Forestry InitiativeSM
Brochure.
Mead's Third Party Verification
Announcement.
Mead's Safety, Health and Environment
Commitment.
Mead's Financial Fact Book 1998.
Mead Publishing Paper Division 1997
Environmental Matters Annual Report.
Mead Publishing Paper Brochure -
Rumford.
Mead Forest Management Assistance
Brochures - Chillicothe and Rumford.
Community Advisory Panel Minutes, for
Rumford, March 1999 and January 1999.
Mead Sanctuary brochures —
McCullpugh Creek, Quinne George,
Goldenstar Lily, White Pine, Vinton
Furnace.
Mead and Chillicothe Generations of
Papermakers brochure.
The World of Mead Packaging brochure.
Best Management Practices Booklet,
Rumford.
Mead Announces Sale of Non-Strategic
Assets, January 1999.
Mead announcement of abandoning
plans to locate a paper mill in Southeast
Tennessee.
Westvaco,
1997 Environmental, Safety & Health
Report.
Website:
www.westvaco.com/environment/
eshreport97
Select Sources on Sustainable
Development
American Chemistry Council's (formerly
named the Chemical Manufacturer's
Association),
Responsible Care® Practitioners Site:
www.cmahq.com/
American Society for Testing and Materials
(ASTM),
New Standard Guide for Development
and Implementation of Sustainable
Development Program, January 27,
1998.
New Standard Guide for Development
and Implementation of Sustainable
Development Program, Ballot Draft,
December 19,1997.
Coalition of Environmentally Responsible
Economies and Societies,
The CERES Principles
Website: www.ceres.org
Interfaith Center on Corporate
Responsibility (ICCR),
Principles for Global Corporate
Responsibility: Bench Marks for
Measuring Business Performance, 1998.
Website: www.iccr.org
International Institute for Sustainable
Development (USD),
Bellagio Principles: Guidelines for the
Practical Assessment of Progress
Towards Sustainable Development,
1997.
Website: www.iisd.org/measure/l.htm
Minnesota Center for Corporate
Responsibility,
The Caux Principles
Website: www.cauxroundtable.org
65
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Pew Center on Global Climate Change
Website: www.pewclimate.org
President's Council on Sustainable
Development (PCSD),
Sustainable America: A New Consensus
for Prosperity, Opportunity and a
Healthy Environment for the Future,
1996.
Website:
clinton2.nara.gov/PCSD/Publications/
TF_Reports/amer-top.html
Public Environmental Reporting Initiative
(PERI).
Website:
www.ibm.com/ibm/environment/
initiatives/peri.phtml
United Nations,
Agenda 21, Report of the Secretary-
General to the Commission on
Transnational Corporations, April 1993,
E/C.10/1993/14.
Report of the United Nations Conference
on Human Settlements (Habitat II),
A/CONF.165/14, pp.1138-170.
United Nations Conference on Human
Settlements Annual Report 1996.
World Business Council on Sustainable
Development (WBCSD),
Corporate Social Responsibility: A
Dialogue on dilemmas, challenges, risks
and opportunities, 1998.
Discussion paper to support a meeting in
the Netherlands, September 6-8, 1998.
Signals of Change, 1998.
Sustainable Production and
Consumption: A Business Perspective,
1998.
66
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