Environmental Protection

Moving From P2 to P4

New solutions for companies looking to better manage their MSDS inventories

This year marks the 15th anniversary of the Pollution Prevention Act of 1990, established by the U.S. Environmental Protection Agency (EPA) to reduce or prevent pollution at its source, before it's generated. Most environmental professionals know about pollution prevention (P2), and have either benefited directly from pollution-prevention measures at their own company or know of someone who has. Obviously, tons of pollutants and millions of dollars have been saved by industrial changes in production, operation, and raw-material use under P2 policies. Those who follow EPA may even be familiar with the agency's 2004 program called P3 -- "People, Prosperity, and Planet" -- addressing the needs of developed and developing nations in moving toward sustainability.

In honor of EPA's letter "P" nomenclature, I'd like to introduce you to a couple of techniques to usher in what I refer to as P4.

What is P4?
In my 2003 book The Nontoxic CEO, I talk about a form of corporate responsibility (which includes pollution prevention) that is directly tied to increased bottom-line savings for companies who "do the right thing." The subtitle of my book is simply, Protecting your people, planet and profits through better chemical management. It's that "protecting people, planet and profits ?" phraseology from which I extract the four P's.

Inherent in the book's philosophy -- based on real case-studies of visionary U.S. companies -- is a desire to reduce the number and volume of hazardous chemicals bought, stored, used, and disposed of (a familiar P2 concept). The "protecting" piece of P4 is simple. Reducing your company's hazardous chemicals means your people and the environment come into contact with less "bad stuff." A bottom-line savings element develops because -- when implemented correctly -- you can sweep your shelves of hazardous chemicals you don't need, do less compliance administration, consolidate chemical vendors, save storage space, and reduce potential liabilities and fines.

Using the techniques outlined in this article, more U.S. companies are going from P2 to P4 without reinventing any wheels.

It Starts In Your Inventory
As environmental, health, and safety (EHS) professionals know, U.S.
companies are required by law to have a Material Safety Data Sheet (MSDS) available for every regulated chemical product they have on their shelves. If you have regulated chemicals for which you don't have MSDSs, you are subject to potential fines. In fiscal 2004, EPA conducted 21,000 inspections and mounted 425 criminal and 455 civil investigations. These actions led to total jail sentences of 77 years and $47 million in total fines, according to the agency. What you don't know about your shelved chemical inventory can definitely hurt you.

In my "day job" as the CEO of a software company helping U.S. businesses comply with regulations, I see the workings of hundreds of companies across a broad range of industries. These companies vary from "small" ones that report on only a couple of hundred chemicals annually, to multi-national giants who use more than 50,000 different chemical products.

While my clients and I have done a good job of chemical compliance and management in the past 14 years my company's been in the business, recent revelations have shown us that there's always room for improvement. By using new, accurate electronic inventory techniques -- including a portable, bar-code-scanning computer that gathers data to tie directly into a company's automated MSDS database -- we are just beginning to see some huge gaps between shelved chemical products and MSDS holdings.

These new inventory and reconciliation methods reveal that most companies are, on average, as much as 64 percent out-of-sync where MSDS-to-product reconciliation is concerned. The reasons for such large gaps are simpler than you might imagine.

The Math is Simple
Let's say you are a manufacturing company whose EHS department is managing and reporting on 1,000 products at one of your facilities. According to our 64-percent-out-of-sync figure, you may have 640 different products that are in question. For the sake of illustration, let us assume that half your out-of-sync products (320) have no corresponding MSDSs -- neither at the facility where the products are stored, nor at the home office. Let's also say the other 320 products in question are "phantoms" -- chemicals you believe you have on hand because you are managing the MSDSs in the EHS department. In fact, there are no such corresponding products sitting on your shelves. (Don't laugh; it happens all the time in virtually every facility).

Obviously, from an environmental standpoint, it's the first group of products that are the most dangerous. If you've got products for which you have no MSDSs, there is no easy way of knowing or retrieving critical information in an emergency or any other time. When you store products for which you don't have easy access to chemical constituent information, you may be stockpiling environmentally watch-listed, or "do not use here" chemicals. That kind of scenario puts you, your company, your employees, and the environment at risk. In the instance of maintaining MSDSs for products you no longer have or use, you are not endangering the environment and your employees so much as you are simply increasing your costs needlessly. The U.S. Occupational Safety and Health Administration says that it costs $15 per year, per MSDS to maintain hard copies for your chemical products.

In the case of our example company that manages 320 MSDSs for products they no longer use, the EHS department is wasting nearly $5,000 a year off the top.

Small P-Cards Create Big Problems
Let's look at some other significant costs you may be needlessly incurring. For instance, whenever you go out to get chemicals, you've got acquisition costs. If the home office is buying the chemicals through the procurement department, every effort is made to "get the best price," and vendor consolidation efforts may even be in place. And that's all well and good.

If, however, chemicals are not purchased through central stores, you've got local acquisition going on. A large number of U.S. companies allow employees at wide-ranging facilities to purchase "small volume" chemicals with Purchase Cards (or P-cards, essentially company credit cards). This can add up to a very expensive endeavor. Who bought the products? How long did it take? How much did they buy? This becomes the real transaction cost.

I have seen firsthand how rampant P-card purchasing can be. For instance, one East Coast utility client with some 70 different facilities had allowed so many employees to purchase their own "small volume" chemicals that 80 percent of their chemical products were not coordinated or used across sites. The procurement department was not able, in those instances, to leverage their "buying power" and save money by purchasing from a select group of vendors. From an environmental standpoint, the situation at the power company was worse. When an employee is out buying chemicals from local suppliers, in the absence of a good, controlled material request and approval system and EHS review, it's too easy for toxic substances to be stockpiled unwittingly. And that's the second recommendation in striving for P4: Once you've done an accurate electronic inventory that ties into your MSDS-information database, implement a computer-based request and approval program and keep environmental "bad actor" chemicals off your shelves.

Follow the Savings
In the final analysis, your company's most direct reason to reduce the number of its hazardous chemicals may be a financial one -- protecting profits. Your CEO, CFO, and shareholders will have every reason to applaud loudly because your EHS department is cleaning the shelves of redundant and overly toxic chemicals. This opens the door for savings through better procurement and less risk exposure. The watchwords for sound chemical compliance and management in the 21st century are simple: First, clean your shelves of wasteful and too-toxic materials, and second, implement sound computer-driven material request and approval protocols. This one-two punch is the most direct way to make your P2 add up to P4.

This article originally appeared in the 09/01/2005 issue of Environmental Protection.

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