Environmental programs prove tough to measure
By Industrial Distribution Staff -- Industrial Distribution, 10/1/1999
Exton, PA.--Many distributors and manufacturers claim to be environmentally friendly these days. However, just how do you measure if any of that friendliness is going to your bottom line? Unlike production, cost, profit and quality, most companies still have no good measure for the effectiveness of their environmental programs, or their allocation of resources to environmental programs. That's according to a study released by ECS Risk Control, a loss control consulting firm."Most companies measure their environmental regulatory compliance costs, but nothing else, which leaves a huge data gap regarding the company's overall environmental performance," said ECS Risk Control's Jim Green. "If companies develop valid and useful environmental performance indicators, this data can assist them in matters such as reducing material purchasing costs, designing more effective packaging and analyzing fuel purchasing decisions. This not only improves a company's environmental performance, but also its business and financial performance."
Quality Mill Supply, a general line distributor based in Columbus, Ind., is committed to environmental programs and last year won an American Eagle Award from the American Supply & Machinery Manufacturer's Assn. Although the firm won the award for addressing an environmental concern within its community, the company is also heavily involved with setting up environmental programs for its customers. Even there, it can be difficult for customers to see savings.
"There are a lot of intangible benefits," said Mike Baker, president at Quality Mill, "and there are specific benefits like if you recycle you don't have to pay somebody to haul it off. But again, it's hard to quantify it. If somebody's using a solvent cleaner and they switch to water based, you can show it costs less to use the product and the cost avoidance because you no longer have to pay somebody to haul off hazardous waste -- you can specifically show hard savings there.
"What's hard to get to though is all those intangible savings, like not having to wear personal protection equipment, and not knowing how much you'd pay waste haulers. The cost of acquiring the product may go up, but the internal costs of reporting to the EPA go away and it's hard to put a cost on that."
According to ECS Risk Control, environmental performance indicators that companies should review include: environmental compliance; water releases; land releases; hazardous waste; global environment; pollution prevention; resource consumption; recycling; energy; and environmental enhancements. ECS says performance indicators should be quantitative, specific, and applicable to the site and industry, easily trackable and relevant. They should also reflect the goals and concerns of the company's overall environmental policy.
"Some indices make perfect sense for a chemical company to track, such as releases of chemicals into water bodies, but make little sense in monitoring the environmental progress of a light bulb manufacturing company with no such activities," Green said.
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