Product Stewarship - Part 2
Adding governance to your stewardship strategy
- By Richard MacLean
- Jan 01, 2006
The following is the second in a two-part series that examines governance issues associated with product stewardship. In this part we examine the current stewardship model used by BHP Billiton and two historical case studies at General Electric and Arizona Public Service that illustrate the complexities in the decision process. These concerns are taking on a whole new significance in light of emerging global regulations based on the precautionary principle and management's push to develop new products in expanded markets. What are the dynamics in play and what strategies are appropriate for a global marketplace?
The bottom line for companies is that now may be the right time to take a systematic look at their products and services. A number of large companies are already well along the way. BHP Billiton, the world's largest diversified resource company, uses the model illustrated in Figure 1. The key concept in this model is their acknowledged responsibility for the areas that they have direct control over and their concern over how their products may ultimately be used (or abused) in the supply chain.
For example, how do they ensure that their lead does not end up in metal-core candle wicks (lead-core wicks were banned in 2003 in the United States)? Under what circumstances should they allow their lead to be used to make leaded gasoline? In some countries both market opportunities are perfectly legal.
Product stewardship is not about doing what the law allows, especially in the United States where the regulatory process has been stalled by lawsuits and the endless search for conclusive results through "sound science." Indeed, that is the main point of this two-part article: product stewardship is about doing what is prudent and right with the data at hand, as imperfect as it may be. It's about examining all the ramifications objectively and not attempting to rationalize away responsibility. It is most certainly not about the analysis paralysis that the current U.S. regulatory system seems to be in.
I can think of two examples from my past that illustrate these concepts. Up until the early 1990s, service representatives routinely vented chlorofluorocarbons (CFCs) when working on home refrigerators. While at General Electric, I raised the issue in a key meeting with a vice president from the Washington, D.C. office, and I recommended that the company consider promoting capture and recycling. The feedback from GE's major appliance business was that it was not required by law and was too expensive. They weren't interested.
Not long thereafter, a housewife observed a service representative vent the entire CFC charge into her home in advance of a major system repair to her refrigerator. She started writing letters to her congressmen. Soon after, Section 608 of the Clean Air Act was added to make recycling mandatory, and the rest is history, as they say. GE lost an opportunity to take a leadership role and instead ended up with some embarrassing public relations moments.
The second example was a campaign at Arizona Public Service (APS) for a "green image" public relations program in the early 1990s to swap gasoline powered lawnmowers for new electric units, ostensibly to improve the air quality in Phoenix. I rejected the proposal, because if the company really wanted to do the right thing it would creatively promote xeriscaping instead of tools that continue an environmentally wasteful practice -- watering grass in the desert.
Technically, the gas-for-electric swap would have been a step in the right direction, but encouraging small steps (and selling more electricity under the green banner) is disingenuous when the public really should be encouraged to use far superior and less costly options. The ultimate outcome was the award-winning "Environmental Showcase Home" built by APS that demonstrated all of these energy and water saving principles.1
Companies are starting to think long term and strategically about product stewardship. The stakes are just too great. While the U.S. government ponders global warming, utilities such as Duke Energy and American Electric Power consider major shifts in reducing carbon dioxide emissions through carbon taxes and technology, respectively. The drug industry focuses on pharmaceuticals in the environment (PiE). Coca Cola, GE, and Proctor & Gamble spotlight global water stewardship. Weyerhaeuser and Chiquita Brands concentrate on sustainable forestry and agriculture. And the list grows.
Product stewardship is a concern that affects all companies -- not just the majors. Most environmental health and safety departments have limited resources and are struggling to maintain regulatory compliance. How can they take on these additional responsibilities? My response is: How can they not? Now may be the time to formulate a strategy and seek the resources to carry it out.
This article originally appeared in the 01/01/2006 issue of Environmental Protection.
Richard MacLean is president of Competitive Environment Inc., a management consulting firm established in 1995 in Scottsdale, Ariz., and the executive director of the Center for Environmental Innovation (CEI), a university-based nonprofit research organization. For Adobe Acrobat® electronic files of this and his other writings, visit his website at http//:www.Competitive-E.com.