Pollution Prevention: The Environmental Side of Total Quality ------- &ollution Prevention: The Environmental Side 01 Total Quality IE \5'£ IJ Remarks by EPA F. Henry Habicht II 1,1~ ' Deputy Administrator, ~~, ~ U.S. Environmental Protection Agency 0 J~ , [As Delivered] ~O'I ;,: :r::'c' :'~. ' " Communications, Education, And Public Affairs !~r1,Q:~+ yr:'i'(." ;\.i, l' P:/" '. ' EPA's commitment to pollution prevention is so well- h (2°l)lpe:J"::;<: / established in mid-1992 that it is difficult to believe that . We, ave success u y put the word out that industry works better when it stays ahead of the environmental just two years ago the Agency was still in the first stages curve instead of behind it. It is far cheaper to plan of introducing the concept into its culture. ahead than to react to problems and merely comply At that time, some critics complained that EP A was no with the minimum requirements. longer satisfied with control of the "end of the pipe"-;-it . And, we have provided carrots as well as now wanted to use "pollution prevention" to go up the sticks-real incentives for pro-environment action. pipe, into the boardroom decision-making process. One Total quality and pollution prevention provide their syndicated writer even called pollution prevention own monetary rewards-but government can offer "industrial abortion." ' even more than that, from markets for tradable emissions allowances, to EP A's soon-to-be-initiated "Environmental Excellence" program. But let's take a step back in time for a moment. Around the time that it celebrated its 20th birthday in 1990, EPA began to see clearly what had and had not worked over those two decades of environmental protection. The most fundamental lesson was that our traditional method of environmental protection- traditional command and control, end-of-the-pipe regulation-could not solve current problems, for all of its impressive successes. The costs of compliance with strict regulations were high and getting higher. Pollution control efforts in one medium, such as water or air, sometimes pushed pollution into other media. And as we reiJ.ched higher numbers in pollution reduction, we were getting diminishing environmental returns. We also saw that this purely regulatory regime reflected a basic shortcoming in our management structure. We had a fragmented, balkanized culture- really a series of cultures-that serviced each of the medium-specific statutes for which EP A is responsible. We had fallen into the habit of writing regulations one at a time, without thinking about who our customers were. Many issues which cut across some or all of the media-such as lead, groundwater, nitrogen, anrl impact on small communities-were being addressed in a series of vacuums. ' Bill Reilly and I came to view these two pro~ms-an over-reliance on regulation, and a fragmented management culture-as opportunities for change. We believed there were comprehensive ways in which the problems could be addressed. We viewed pollution prevention as the favored method of environmental ~ "- 'G ~ \~ -0 1 ~, August 10, 1992 U.S.EPA G~ . I',j ~. " Now we can see that this kind of criticism entirely missed the point of what EP A was doing. Our goal in this new era has been to make environ- atal progress by harnessing powerful marketplace tools approaches like total quality to encourage break- ughs in the technology of prevention-oriented production. Past misunderstandings between government and industry over pro-environmental action have clouded the real issues. Government and business both face serious challenges in their work. Business has the bottom-line goal of monetary viability-profits, growth, economic ~ health. And an agency like EP A faces the challenge of '0 finding the best way to work with business-with ~c.business, not against it or in spite of it-in protecting the E:) environment. J We now believe that the way to work together is to speak a common language. As I'll explain today, we have &1 strived over the last couple of years to develop the ability Q2 on all levels of our agency to do just that: (J) . We have provided goals for businesses to achieve through our voluntary programs. ED . We have established performance measures, such as U? the Toxics Release Inventory, which go beyond bureaucratic doublespeak and show how industry truly effects the environment. . We have melted down the iron flowcharts which tUSed to enslave us and are speaking to industries as dustries, individually, in a series of dialogues in :{hich we achieve consensus through the civilized process of negotiation. 1992 Summer National Meeting Of The American Institute Of Chemical Engineers Session: "A Total Quality Management Approach , _I~ ,J~e Environment" Minneapolis, MN EPA 175-K.92-012 @ Printed on Recycled Paper ------- protection. And we moved quickly to address th~ fragmentary condition of management by preparmg a ~l.at' inr plantingLlfe principles of total quality managem,ent deep within EP A. Our efforts at that time were backed up by the Pollution Prevention Act of 1990, in which Congress established a national policy that pollution should be prevented or reduced at the source whenever feasible. Our problems were systemic-rooted in deeply held cultural beliefs. We had to have a comprehensive plan, but change wasn't going to come easy: . Pollution prevention required a cultural change because letting businesses come up with their own voluntary standards is quite different from cracking the whip of prescriptive regulations. . And total quality management required a cultural change because, up until two or three years ago, EP A was not overly concerned with cross-program staff ' teamwork, relationships with citizens and regulated communities, or long-term efficiency and cont~uous improvement. Therefore; EP A designed a strategic planning process, linked to our budgetary apparatus and other central' systems. Crucial to this process is combining science and policy to set long-range priorities, based on the assessment of where society can achieve the greatest return of reducing environmental risk. Over $120 billion will be spent this year by American businesses and citizens in the name of environmental protection-and given the massive weight of this expenditure, we can not afford to treat all environmental problems as equally serious. Once we have identified a priority problem and budgeted for it, prevention is the preferred approach, and total quality principles provide the management tools to achieve our goals. Pollution prevention and total quality management are flip sides of the coin. Total quality is to management what pollution prevention is to the environment. In an industrial company with environmental impacts, there is a natural tendency for pollution prevention to emerge as the policy of choice when total quality principles are applied to environmental management. Pollution is basically a proxy for waste in the production process. Changing the process with a commitment to quality can prevent the "defect" of pollution. Pollution prevention and total quality management share the belief that if an institution breaks down its inner walls and gives its employees authority and accountability, they will bring back the best possible ideas. On the other hand, setting prescriptive command and control quotas is a sure-fire way to stifle creativity and produce a short-term, low-horizon, small-picture respoj to challenges. It is like flipping a light switch off. "" We did not invent the idea that total quality and pollution prevention are linked-long before we embraced these ideas, Philip Crosby named as one of his "Absolutes of Quality Management" the principle that "the system for quality is prevention, not appraisa1." I've even seen an article in the journal Total Quality Environmental Management that speaks of the "Zen vision" of environmental quality. The chant goes like this: "ma quest to eliminate every ounce of toxic chemical, waste, pollution, and threat to public health and nature...Creating new technology to make it so... Pollution prevention... Becoming more profitable...Smart business." Our desire to inspire a corporate and grass-roots movement toward pollution prevention on a nationwide basis made our efforts to effect a cultural change within our own agency even more important. And any change, cultural or otherwise, ultimately boils down to concrete actions. These were some of ours: . We restructured the institutional organization of our pollution prevention efforts-we designated prevention as a primary responsibility of our Assistant Administrator for Prevention, Pesticides, and Toxic Substances, whose office administers the 33/S0 e voluntary toxic reduction program and the operati1 the Toxics Release Inventory. . We erected the framework of multi-media action within the agency. Pollution prevention is by its nature multi-media-it cuts across the activities of all program offices. This is more efficient, because multiple media impacts can be addressed with one effort rather than several, and dispersed sources of pollution such as farm and street runoff and vehicles can be at least, partially addressed. . By November of 1991, nearly all EP A senior managers-SOO of. them-had completed a three-day course on understanding and implementing total quality management. We've provided TQM training to almost all of our management corps and a significant portion of our other employees more than 6000 people. Hundreds of Quality Action Teams have been formed - in our headquarters, Regions, and labs, many to develop plans for pollution prevention. . We created a Pollution Prevention Policy Staff that reports directly to Bill Reilly and me on strategic matters. The Policy Staff is currently working with me on the development of our Environmental Excellence Program, which I'll discuss in a moment. Only by bringing all of our employees into the loop-educating them on prevention, encouraging the!ll apply its principles and constantly improve their wor.K;O- listening to their ideas-did we truly make total quahty 2 ------- ~ pollution prevention fundamental elements of EP A's '-to-day activity. Armed with these internal resources, we are now well- positioned to work with the industrial community-which in the past expected only regulation from us-to help them find ways to adapt total quality to the cause of pollution prevention. We view it as our responsibility, as America's environmental agency, to give these linked concepts the widest exposure possible. Of course, there have been several dramatic corporate examples of pollution prevention activities over the last 20 years- certainly, the efforts of 3M in Minnesota come to mind, with its well-known "Pollution Prevention Pays" program. Many companies out there may not have 20 years of pollution prevention experience, but still don't need much help from EP A or anyone else in moving toward a prevention-oriented system of production. All they may need is encouragement-something, to make it easier to see the benefits. And we strongly believe that the benefits are many. A study released in June by the nonprofit environmental research group INFORM (developed with EPA help), examined pollution prevention activities at 29 organic chemical plants from 1978 through 1990. Eighty prevention activities reduced 128.7 million lbs. of waste a I~ , and 1/4 of the activities achieved total elimination of e, while more than half achieved 90 percent uctions. Some plants saved over $1 million annually, while only one activity resulted in a net cost increase. Total quality activities-such as employee training and cross-plant involvement-were documented as crucial in each case. . As U.S. News and World Report noted last year, companies are "discovering that they can save money by preventing pollution early rather than trying to cope with it later." There are many real-world examples: . Monsanto saved itself $75 million dollars in raw materials and untold potential costs in waste treatment facilities and Superfund liability just by finding a way to reduce the waste left over from making its herbicide "Roundup." . Northern Telecom eliminated all use of ozone- depleting CFC-113 solvent in its worldwide operations by developing other means for cleaning electronic circuitry. It spent $1 million to develop these means, but by the end of 1991 it had saved about $4 million by not buying the solvent, not paying the CFC taxes, and avoiding waste. . At a California plant of Dow Chemical, a project Eam developed a method of recycling and improving e control of a reactant used to make agriculture . roducts. It had been incinerated after one use; now, consumption was cut by 80 percent through reuse, which eliminated 2.5 million pounds of waste a year and saved Dow $8 million in raw materials and other costs. (This and previous example are from Schmidheiney book, Changing Course.) Our voluntary pollution prevention programs have shown many companies the tangible benefits of choosing prevention. The Green Lights p~ogram encourages the use of energy-efficient lighting by both companies and governments. Use of this kind of lighting will save participants billions of dollars a year in electric bills while cutting down on power-plant emissions. At present, well over 500 corporations, states, city and county governments, and non-profit organizations have signed up, giving commitments of space greater than the total office space in New York, Los Angeles, Chicago, Houston, Dallas, and Detroit. This represents about $1 billion in annual savings and pollution prevention equivalent to taking 1.6 million cars off the road! We recently announced a similar program involving personal computers, called the "Energy Star Computers Program," and are continuing to look at other applications for voluntary "green" initiatives. And as of today over 750 companies have committed to meet the challenge of our 33/50 project, which is the reduction of the release and transfer of 17 highly toxic chemicals-such as cadmium, mercury, lead, benzene, and others-50 percent by the end of 1995 (measured against the baseline of the 1988 TRI). But the 50 percent/700 million lb. goal is just that-a goal. The underlying goal is continuous improvement, the continual effort to both save money and reduce environmental waste by better and better business practices. When the Chemical Manufacturers Association instituted its Responsible Care Program, requiring its members to exceed EP A requirements, it embraced compe~itiveness just as much as it acted to improve the environment. EPAregulations and enforcement actions do lurk in the minds of all companies involved in the use of materials which have an environmental impact, rod it is proper for EP A to police the edges of what is allowable. But there are rewards for achieving more than what is merely legal. It may be that rigorous environmental standards have a pro-competitive effect-an effect of pure economic benefit. Harvard's Michael Porter wrote in the New York Times last year that "Nations with the most rigorous (environmental standards) often lead in exports of affected products"-he said that the economic performance of nations with the strictest laws is "strong proof" that environmental protection does not hamper competitiveness. One of the industries he cites as support for this position is the chemical industry. How do companies get these rewards? Total ql -tlity principles provide companies with a roadmap to successful pollution prevention. Since prevention can involve a culture change-what one writer has called a "sea change"-in corporate thinking, total quality 3 ------- management demands that the effort to find methods of prevention involve everyone, from top management to the line worker. Over and over I hear stories where the blue collar employee figured out the solution that cut waste dramatically at its source. As one consultant has said, "All the people up and down the line have to believe in the environmental program. Freeing up minds is the lowest- cost way to do it." As I'm sure most of you have heard, a basic tenet of total quality management is that empowered employees are usually right. Eighty-five percent of the problems in an organization arise from systems-the way management sets up the way work is done. Only about 15 percent comes from employee mistakes. This doesn't leave managers like us with much room to hide, but it's the truth! The way breakthroughs are made, it seems to me, is when employees of a company "think outside of the box"-when they set their minds free from the restrictions of the status quo and just "go with it." Employees need to be empowered by their managers to think this way. There was an article in the Total Quality Newsletter which commented on how the American worker, unlike the Japanese or anyone else, likes the tough challenge!; and the impossible dreams. As Frank Pipp, a former executive with Xerox, has said, "You have to set seemingly ridiculous goals to force people to think outside of the box." And sometimes, creative thinking comes without the incentive of specific goals. Recently, dry cleaners studied their consumers' life-cycle use of their products and services and came to realize that they could provide the same level of service without having to use the chemical known as PERC (Percholoroethylene)-the use of which they had, because of "inside the box" thinking, taken as a given. This is a time of fast change in environmental protection. Twenty years ago, who would have thought that industry would be buying and selling sulfur dioxide credits at the Chicago Board of Trade? Or that a utility would be trading acid rain "allowances" with an indu~trial manufacturer in order to find cheaper ways to reduce pollution? And who would have thought that this would occur with the approval of both industry and environmentalists? We have learned that environmental protection must turn to the market for solutions-a healthy environment and an healthy economy are symbiotic, one unable to exist without the other. Pollution prevention is as market-friendly as it is environmentally attractive. It is within the power of every company to lower its environmental costs. So, EP A is changing the way it operates-even when we regulate, we will set only goals or performance standards and leave industry maximum flexibility to innovate, as long as we get back from industry the kind of reliable data that can assure the public that progress is being made. And total quality principles are essential in developing accurate data. EPA's new role-I'll call it "enlightened flexibility"-is embodied in a voluntary program that we plan to introduce soon. The "Environmental Excellence Program" will be our most ambitious voluntary program, building directly upon Green Lights, 33/50, and other initiatives to allow manufacturers, utility companies, and other businesses to achieve certain benefits by using pollution prevention technology to far exceed applicable environmental requirements and attain the most environmentally sound processes possible in terms of pollution prevention, energy efficiency, and product life- cycle analysis. Benefits of successful participation will range from limitations on penalties for violations to speedier pesticide registration to corporate advertising and public recognition. The ultimate goal of participants will be to earn the status of "Environmental Excellence," a prestigious achievement that would qualify the company for further significant benefits. These benefits and levels of status will be tangible and significant-but the greatest reward for companies in this all-encompassing program will flow naturally from successfully internalizing the principles of total quality and the processes of pollution prevention. National and international environmental policies al~ show us that the time has come for government to step back and let industry use the best tools it has to provide environmental breakthroughs: . The Clean Air Act of 1990 has spawned technological research and innovation in alternate sources of energy and in ways of delivering the energy services we need. I have a list of technological innovations inspired by the Act; it fills up 29 single-spaced pages. . President Bush's National Energy Strategy would stimulate technological innovation in coal-burning technology, natural gas, and such alternate-sources of energy as solar power. . EP A is now researching ways to translate the Rio summit's policy against climate change into new voluntary programs, such as Green Computers, to limit the emissions of greenhouse gases and other pollutants. . The Intermodal Surface Transportation Efficiency Act of 1991, with its flexible and nonprescriptive approach to rebuild.ing the nation's infrastructure, will spur voluntary technological innovation. A recent article in the Wall Street Journal mentioned one small North Carolina company whose manufacturing process resulted in many dirty rags, soiled with materi. that is categorized as hazardous waste. This triggered regulatory attention-and a good number of governmeil! forms. So many forms, in fact, that an employee posed for 4 ------- .hotograph standing next to the stack of forms his ~pany was required to file. The employee was six feet two inches-and the pile was slightly taller than he was! Believe it or not, EP A dislikes that image even more than the company does! Pollution prevention and total quality management allowed EP A to transform itself and its mission in the direction of flexibility. They can have a similar effect within manufacturing companies. Empowered employees-free to think and be creative, free to help develop preventive methods and continually improve on them-can lead us all in taking a joyous leap off the treadmill of prescriptive regulations. And maybe those stacks of forms will shrink away, leaving American business free to focus on the sorts of innovative breakthroughs that can make us cleaner and more competitive at the same time. (0;-~; .;'.. F)Q.f':,_(.-;C-/ /., ,~vt:"1 (~\"''''I ,.""jJ , 5 ------- |