INCREASE YOUR PROFITS BY REDUCING YOUR
HIDDEN COSTS
By Stacy Richards
When a company pollutes within the currently existing legal framework, it’s using its "corporate pollution credit card." Since environmental laws have caused the interest on that card to skyrocket, it behooves companies to consider changing their mindset to go "beyond compliance." "At compliance" in environmental terminology means the company is setting itself up to lose profits and control over its destiny. It’s the equivalent of maxing out the credit card and making only minimum monthly payments into perpetuity.
Progressive companies recognize that by going "beyond compliance" or being responsible for the environmental aspects of their business, they (and their employees) will actively seek ways to eradicate their pollution credit card balance and, by doing so, save enormous amounts of money and provide a healthier work environment for employees. An increase in company productivity is the usual end result - with improvements in the quality of life in their communities and economic development because of fewer demands on local landfills and water supply and treatment facilities.
What are these "environmental aspects and their costs?" They range from cooling water that is paid for twice (to supply and to treat), the costs of tracking, monitoring, inspecting, reporting, treating and disposing of hazardous materials and the associated liability costs which consume increasing human and financial resources. Permit processes have become more complex, adding costs through delays or uncertainty in bringing new products or projects to market.
A good example in Pennsylvania is General Electric Transportation Systems (GETS), located in Grove City. GETS substituted water-based cleansers for the chemical solvent traditionally used to clean locomotive engine products. The water-based cleansers were cheaper than chemical solvents - as effective - and GETS avoided a $5 million capital cost to install pollution control equipment on its air emissions stacks. The chemical solvents also released voltaic organic compounds (VOCs) into the air during application, causing GETS to potentially exceed air quality standards. The substitution of water-based cleansers eradicated the problem. Currently, the GETS facility in Erie tightly controls the environmental aspect costs of its hazardous materials in the workplace and successfully avoided millions of dollars in associated waste management costs.
Companies such as General Electric employ cost accounting systems connecting environmental costs to units of production. These environmental accounting practices easily assess the return on investment linked to improved management of their environmental aspects-whether these aspects are regulated or not. Their focus becomes "up-the-pipe" as opposed to the traditional "end of pipe" solution, where pollution is avoided altogether rather than controlling or managing it after it has occurred. This is a significantly different way of thinking. This movement - to go beyond compliance for market reasons - provided DEP with an extraordinary opportunity to partner with companies in their waste minimization efforts.
Gov. Tom Ridge created the Office of Energy and Technology Development (OETD) at DEP with a focus on educating businesses and business assistance organizations across the state on ways to achieve these savings, by introducing concepts like environmental accounting and energy saving assessment software to the marketplace.
OETD instituted a voluntary "P2E2 (Pollution Prevention and Energy Efficiency) Site Visit" program - as opposed to our usual compliance audits - to assist companies that realize the value of the P2E2 approach. In the past two years, OETD’s six regional offices conducted more than 120 voluntary P2E2 site visits geared towards preventing pollution and identifying energy efficiency measures. The collective cost savings have been staggering.
Don’t misconstrue the message; DEP continues to exercise existing regulatory and legal enforcement mechanisms to ensure compliance with environmental laws when necessary. We believe both a regulatory and an incentive approach are necessary to protect and preserve Pennsylvania’s environment.
In the 21st Century, our mission is going to require the introduction of a more holistic approach towards developing solutions to pollution than have been commonly practiced by businesses, society and regulators. The concept may seem industry-oriented, but the benefits extend to all Pennsylvanians and their environment. Pollution prevention, or source reduction, is the bridge in a partnership among the environment, the economy and the community.