Bottom Line Benefits
The birth of environmental regulations in the 1970s resulted in costs that prompted businesses to view environmental controls as a necessary expenditure that lowered the bottom line. But the corporate world began to change its perspective as they have embraced and adopted the ISO 14001 international standard for environmental management systems (EMS).
Environmental management is really only about two things -- risk and money. As the objective evidence gathered since the first EMS registration shows, when organizations look at both in conducting their environmental affairs, the benefits can be tremendous.
Risk Management
Benefits in risk management measure up to the predictions made in 1994, when the standard was first published.
Environmental management is really only about two things -- risk and money. |
Gray Taylor, a partner with the prestigious Canadian law firm of Davies, Ward, Phillips & Vineberg, LLP, represents BSI client Celestica, headquartered in Toronto, Ontario. Taylor shows his understanding of risk and money in his ranking of the top three business benefits of ISO 14001:
- Avoidance of noncompliance and limitation of the cost of noncompliance;
- A management tool for limiting and reducing the cost of compliance; and
- Seizing the opportunity to understand the company in terms of the risks it creates; thereby, finding ways to eliminate or reduce them.
"You identify opportunities to do things in a better way, not simply in a way that cuts your compliance costs ? but in a way that really gives you a better understanding of the processes of your operations themselves," says Taylor.
In Canada, the act of implementing and maintaining an EMS provides a due-diligence defense. If a company does everything it possibly can to avoid an offense, it can be found not guilty or at least it can be a mitigating factor in what penalty the company receives. Those who practice due diligence are rewarded.
Scott J. Brundage, Quality Manager and EMS Coordinator at Electrolux Home Products (formerly Frigidaire) in Greenville, Mich., also provides an example. The site began its ISO 14001 efforts in 1999. Their first big savings under the new system came because Electrolux followed their documented procedures, avoiding a $70,000 fine for a spill by a contractor on its site.
As part of its EMS procedures, Electrolux stipulates that all contractors have to be licensed for whatever activity they are conducting on Electrolux's site. The contractor was licensed, but did not properly handle raw sewage it was pumping out of an underground tank. Electrolux reported the incident to the Michigan Department of Environmental Quality (DEQ), which is the state regulatory agency. In their investigation, DEQ determined Electrolux had taken the necessary precautions against a spill, so it did not fine the company. Evidence presented to the state included Electolux's review and approval of the contractor, documented procedures for operational control by Electrolux employees and the contractor and a request to the contractor for corrective action, including evidence retraining of their employees.
A letter sent by state officials stated that Electrolux would have been fined if it had not demonstrated it had procedures in place to prevent such an occurrence, so that was a big benefit to us," Brundage said.
Cost Reductions
Brundage says quantifiable results also come from cost reductions achieved through objectives and targets set within the EMS. The site identified solid waste management as a significant issue in 1999. By changing the way it handled materials, Electrolux has recorded substantial gains in this area.
"To make any improvements you really have to be able to measure what your are doing before you can improve it and make an analysis of where your problems are." |
Prior to implementing ISO 14001, Electrolux employees hauled scrap materials on a semi-trailer for disposal 45 miles from the plant. This trip was made three times a week, involving labor and fuel costs. After rethinking the business processes, the facility brought in a compactor and began crushing the scrap material, cutting the bulk that had to be transported. The trips were cut from three down to one per week. This resulted in savings of fuel and labor costs and reduced wear and tear on the equipment, Brundage says.
Facilities engineer Mark Wittbrodt, at Delphi Saginaw in Michigan, says,
"To make any improvements you really have to be able to measure what you are doing before you can improve it and make an analysis of where your problems are."
At the Delphi Saginaw site, there are five plants, a wastewater treatment facility and a powerhouse. More than a year ago, Delphi initiated "energy walks" during periods of shutdowns, such as weekends or extended vacations like Memorial Day. The Delphi energy team would look for air leaks or other ways to reduce energy consumption. The energy team would then produce an energy audit report, assisting Delphi to identify corrective actions that would improve future control.
Those energy walks were so effective, Delphi has stepped up its efforts through a computerized system. The new energy monitoring computer system, which is almost fully in place, will allow Delphi Saginaw to narrow the focus from plant-wide usage to department usage.
A specialist from its corporate offices concluded the Saginaw facility can improve its energy-reduction efforts by 20 percent and save an estimated $2.5 million in its annual $20 million energy bill.
Wittbrodt says that potential savings do not involve a capital investment but can be earned simply by shutting down big processes. With some capital investment to fix steam trap leaks, additional site savings of up to about $14 million annually are expected, he says.
Another problem discovered on an "energy walk" was water usage. The site has cost-coating systems with 3-inch mains; water pours through them nonstop. Employees did not shut down the water mains, because they didn't think the cost of water was high enough to have an impact. But that water, whether it got mixed with coolant or was clean, would end up in a batch tank for treatment. The site treats about 1.2 million gallons of water every day. Failure to shut off the water mains cost Delphi an additional 40 percent in water treatment costs.
ISO 14001 provided a systematic framework for identifying significant aspects, setting objectives to improve, putting operational controls into place and monitoring progress to ensure awareness and accountability.
General Motors' Flint Metal Center in Michigan has taken aggressive steps to monitor and reduce its energy usage. GM Flint Metal Center, a plant of more than two million square feet, is a three-shift 2,800-employee operation. With ISO 14001 implementation, it discovered tremendous energy savings and increased revenue streams through better waste management.
Michael Lekse, Director of Manufacturing Engineering at GM Flint Metal Center, says because the facility is such a big consumer of electricity the local utility supplier has an engineer who works full-time at the site to help measure GM Flint Metal Center's energy usage. On Jan. 1, 2001, the facility began tracking energy usage on weekends, shutting down processes when possible. Because the facility is so enormous, a group at GM Flint Metal Center developed a how-to manual for plant equipment shutdown during periods of non-production. The focus was appropriate controls. Every Monday, GM Flint Metal Center would measure how successful it was conserving energy over the weekends.
A review of energy usage over holiday weekends during the past three years tells the story. For example, the facility used 448,918-kilowatt hours on the four-day Thanksgiving holiday in 1999. During that same holiday two years later, it used 174,299 kilowatt-hours, representing a 61 percent reduction. Shut down efforts for 2001 translated into a quarter of a million dollars in savings. Lekse says those savings alone covered the cost of developing and implementing the EMS.
Potential savings do not involve a capital investment but can be earned simply by shutting down big processes. |
Because the shutdown manual produced such results, GM Corp. honored the facility with an energy award -- only one of three such awards. The manual has since been adopted as a model throughout the corporation. The savings GM Flint Metal Center realized can now be driven across every metal stamping plant within the corporation.
GM Flint Metal Center is also rethinking management of its waste streams, such as copper and wood. Prior to ISO 14001, the facility shipped wood as trash to a landfill. It found a client that burns wood as a heat source. Now, instead of paying to landfill wood, the facility sells it.
Copper recycling is a new project, and as yet results are not quantifiable. Welding operations' copper tips must be replaced after so many cycles of use. Those tips were being lumped in with other metallic pieces and sold as scrap metal. The cross-functional team, formed as part of its ISO efforts, began targeted collections within departments that use the copper welding tips. The tips are now sold as copper, which has a much higher value than scrap metal.
As Lekse says, "ISO 14001 and doing what's right for the environment does not drag GM Flint Metal Center down, but complements its business goals."
It's all about risk and money. And whether made through product sales or energy savings -- it's all the same to the bottom line.
e-sources
This article originally appeared in the May 2002 issue of Environmental Protection, Vol. 13, No. 5, p. 37.
This article originally appeared in the 05/01/2002 issue of Environmental Protection.
About the Author
Darin St. Germain, PE, is vice president of sales and marketing for conventional products at USFilter Memcor Products in Ames, Iowa.