The Challenges And Opportunities Of Climate Change And Sustainability - Part II

Thursday, May 1, 2008 - 00:00

Part I of this article, appearing in the April issue of The Metropolitan Corporate Counsel, dealt with the business reasons for companies to be ever cognizant of their GHG emissions. In that part, it was proposed that corporations should address GHG emission issues for a number of reasons, including: (1) more efficiencies are brought to bear on business operations and (2) investors are better disposed to favor companies that are environmentally friendly. In Part II, the authors discuss methodologies that can be implemented to advance Sustainability principles and address GHG emissions.

How To Do IT? - What Are The Mitigating Tools And Methodologies Available?

As noted, there is no comprehensive federal program addressing Climate Change. However, the state and regional initiatives are advancing. For example, in California major emitters of GHG must comply with CA's Global Warming Solution's Act (AB 32). AB 32 mandates a reduction of GHG emissions by major emitters of 20% below 1990 baselines by 2020. (Other states have passed or are contemplating similar GHG/Climate Change legislation.) This requirement translates to reductions in GHG emissions of 60-80%. What tools exist to accomplish such significant reductions?

I. Good Business Practices

Much can be accomplished with the implementation of sound and organized business practices. One of the tried-and-true methods of attacking such new challenges is industry coordination and collaboration. Whether through USCAP or the Pew Center on Climate Change Business Leadership Council (a 42-member coalition committed to better defining the impacts of global warming and the options to mitigate them, See, www.pewclimate.org), U.S. companies have already recognized the need for well-conceived, comprehensive government action on global warming and a coordinated industry response, and are taking steps to make it happen. Such collaborative efforts of forward-thinking corporations has successfully navigated environmental issues in the recent past (e.g., under the auspices of the United Nations Environment Programme such a coalition led to the rapid phase-out of stratospheric ozone depleting chemicals. This often cited and instructive example of teamwork between competitors and across industries benefited all who participated. See , Champions of the World - Stratospheric Ozone Protection Awards, EPA430-R-97-023, August 1997).

II. Sustainability

In order to address any new issue, a structured approach consistent with the core business practices is needed. Many in the business world equate their response to Climate Change and the associated GHG-emissions legislation as a simple matter of reducing their GHG emissions. Although direct GHG emissions from businesses (e.g., stacks, vehicles, boilers and other emission sources) are an important aspect of an appropriate response to Climate Change legislation/ regulation, the more complete response, and likely the more competitive response, by business would involve more. A comprehensive approach to changing business is needed. Businesses have the opportunity to consider movement toward cleaner "detoxified" systems, substantial reductions in carbon emissions, and greater overall process efficiency. Thus, the more pro-active and comprehensive approach involves a system-wide examination of the "sustainability" baseline of an operation.

At its base, "sustainability" or "sustainable development" is not a new concept. It is the term used to denote a very simple concept - a proactive, as opposed to reactive, response to the Climate Change challenge. Its basic principle is that corporations can maintain and achieve long-term success by integrating economics, environmental policies and social values in their business plansreferred to as the "triple bottom line." It is now the accepted moniker for sustainability which also provides the basis for businesses to create a pathway or roadmap to sustainability. Its underlying message holds great potential for enhanced environmental performance and improved social standing, while improving the bottom line. It is also an increasingly important metric for Wall Street and financial markets reflecting indicators of successful future performance. Sustainability is a future-focused business endeavor.

Sustainable development is a logical progression in the process improvement movement started decades ago. In the 1980s and 1990s these business initiatives were called "environmental risk management programs;" their goal was implementation of corporate programs to assure long-term compliance with laws and regulations. Some businesses also simultaneously adopted total quality management (TQM) programs which environmental leaders used to help transform their environmental programs into "pollution prevention programs."

Aerospace companies such as General Dynamics and Lockheed Martin were early adopters ( See , General Dynamics Eliminates 40 Million Pounds of Hazardous Waste in 4 Years , Pollution Engineering Magazine, Frank Basile and John Grosskopf, May 1989; A Case History of Aerospace Pollution Prevention: A Decade of Progress at Air Force Plant No. 4 (1984-1993), KR McKee and SP Evanoff, 94-TA-38.05, 87th Annual Meeting of the Air and Waste Management Association, June 20-24 1994 ; Facilities of the Year - Environmental Excellence Flies High, Environmental Protection, December 2000).

In the latter half of the '90s and as the century turned, these programs evolved into more comprehensive management tools known as "environmental management systems" (EMS) which simultaneously addressed both compliance and the identification and implementation of ongoing improvements in the environmental performance of the company. The most widely recognized EMS is the ISO 14001 management system model which is a broadly embraced methodology for environmental management that many businesses have in place.

Sustainability takes this progression one step furtherthe focus goes beyond compliance with law, and beyond the identification and reduction of potential liabilities, to include return on investment and value-add strategies and the identification of opportunities to simultaneously reduce the impact on the environment with cost-effective return on investment methods for such reduction. For example, the ISO 14001 management system model can be leveraged to continuously enhance the Triple Bottom Line and, with regard to GHG emissions, reduce the organizations carbon footprint. The ISO 14001 model of continuous improvement can create synergy between the interrelated environmental, health, safety and energy management programs.

Sustainability is a journey - not a destination - upon which an increasing number of businesses will embark. There are no silver bullets to help businesses instantaneously complete this journey, but some leading businesses have discovered however, there can be silver buckshot from the effort. Uniform, easy, and easily understood metrics can be developed to discern what truly leads to sustainable businesses. Careful engineering analysis and valuable new tools like integrated management systems, Life-Cycle Analysis, supply chain management, and total environmental cost-accounting provide significant opportunity. The use of these new analytical tools is fast becoming commonplace.

It is noted that a company should not approach Sustainability in a vacuum. There are a number of tools and best practices available that can easily be identified through professional associations and a review of trade literature. For example, the US Green Building Council's Leadership in Energy and Environmental Design ("LEED") standards set the benchmark for high performance buildings.

Finally, it is important to recall lessons recent history has taught. The successes in pollution prevention, stratospheric ozone protection and environmental management systems all had one common denominator - a drive from the top. Senior management support and involvement are essential for success. This key ingredient will be needed to tackle Climate Change and Sustainability.

The Future

Businesses benefit by embracing the constant change inherent in the global market. "Climate Change," "GHG emissions reductions," "Sustainability principles," all are terms that will be added to the lexicon of corporate America in the next decade. Embracing the model of EMS, innovation, embedded best practices, while collaborating and partnering with stakeholders, industry trade groups and environmental coalitions appear to be a program for success to address this new environmental challenge. The changes driven by global warming, like the most dire predicted environmental consequences themselves, will not be linear and incremental; instead they will be rapid and exponential. Those who begin to plan now and incorporate these issues into their strategic business planning process will prosper.

John Grosskopf PE, BCEE is Vice President, Strategic Initiatives and Sustainability, TRC Companies, Inc., and Cynthia Retallick Esq . is Senior Vice President, TRC Companies, Inc. Stephen Evanoff PE, BCEE, CSP was a co-author, and an advisor to TRC for this article.

Please email the authors at jgrosskopf@trcsolutions.com, cretallick@trcsolutions.com or stephenevanoff@msn.com with questions about this article.