Fostering Industry-Initiated Environmental Protection Efforts (1997)

In recent decades, environmental protection by regulation has been the predominant means for seeking to protect public health and the environment from industrial pollutants in the United States. Some regulations have been highly successful in improving environmental quality, but as the number of regulations has increased, the efficacy and cost of regulations applied to waste streams exiting industrial facilities (i.e., "end-of-pipe" regulations) increasingly have been questioned. Some regulations have been questioned as being redundant, inflexible, overly complex, unscientific, or very costly relative to the estimated environmental benefit. Regulatory approaches often have been blamed for isolating segments of society into adversarial "pro-industry" and ''pro-environment" groups. Gains for one side often are assumed to represent losses for the other.

But clearly, environmental protection must not be an issue of choosing between regulatory control and industrial success. Increasingly, corporations are recognizing the benefits to the public and to their long-term profitability that result from reducing environmental impacts (Epstein 1996). Also, government is recognizing that environmental protection approaches initiated by industry can sometimes be more effective than those prescribed in environmental regulations. Such efforts are part of a change in the nation's environmental outlook—and evolution from sole reliance on regulatory controls to a multifaceted outlook that combines the goals of environmental protection with long-term business success.

In the late 1980s and early 1990s, the number of environmental programs initiated by industry increased sharply, although it is important to note that environmental initiatives had been undertaken by some corporations in earlier years. Programs initiated by industry have included efforts to design processes and products for pollution prevention, waste minimization, and energy efficiency, among others. In general, such programs were not directly related to technical compliance with regulations. As discussed later in this report, these industrial environmental programs are diverse, and reliable methods to determine their effectiveness have not been established or generally accepted.

A variety of nonregulatory programs have been initiated to foster industrial environmental initiatives. They include partnerships between industry and government, national environmental organizations, local community groups, industry consortia with environmental goals, environmental management standards, labeling and certification programs, and state and federal programs for encouraging improved industrial environmental performance. Many industry-initiated environmental programs have been encouraged and aided by government programs, including the Department of Energy's Energy Efficiency and Industrial Technologies programs, the Environmental Protection Agency's 33/50 Program, the Presidential Green Chemistry Challenge Awards, and other federal and state programs. Recent presidential administrations have advocated cooperative efforts between regulators and regulated parties and have promoted flexibility and innovative approaches in combatting pollution (PCSD 1996). Such supporting activities have provided manufacturers with forums to share experiences, as well as relevant information on technologies and management techniques. They also have provided recognition for exemplary

environmental programs, benchmarks, and standards by which to assess progress.

In addition to nonregulatory efforts, some regulatory efforts have promoted environmental initiatives by various industries. For example, the Resource Conservation and Recovery Act of 1976, combined with the high cost of hazardous waste disposal, created incentives for industry to reduce the amount of hazardous waste produced. Also, the 1986 passage of the Emergency Planning and Community Right-to-Know Act (EPCRA)¹ contributed to the growth of industry-initiated environmental protection programs. EPCRA requires manufacturing facilities to report annually on releases and transfers of more than 600 chemicals (if the chemicals are used or produced above a certain threshold amount). That reporting resulted in the creation of a national database called the Toxics Release Inventory (TRI). Publication of TRI data apparently has increased industry's motivation to reduce emissions of included chemicals by providing a highly visible overview of the use and release of toxic chemicals (EPA 1995). Previously, facilities did not normally aggregate and report comprehensive data on their own emissions and those of similar facilities; therefore, quantitative comparisons among facilities and industries were difficult to make.

Regulations obviously will remain an important part of the national environmental-protection strategy. However, effective strategy is not simply a matter of always selecting a traditional regulatory approach (also known as command-and-control regulation). Regulatory requirements can have unintended and unnecessary adverse effects upon business performance, especially if they apply to companies with limited resources or product lines (OTA 1994). Another type of regulation, known as performance-based

regulation, requires that a specific outcome be achieved without mandating the means of compliance. Such regulation can help provide flexibility and reduce compliance costs. Flexible regulatory programs can enable companies to find ways to comply with standards in a less burdensome manner.

As an example of potential cost savings provided by regulatory flexibility on an entire-facility basis, the Amoco-U.S. EPA Pollution Prevention Project, Yorktown, Virginia (Amoco 1992), concluded that more cost-effective environmental protection programs could be designed by allowing a facility the flexibility to accommodate site-specific factors in its efforts to meet environmental objectives. The study reported that, by assessing various methods to reduce pollutant releases from the Yorktown facility, about 95% of the release reductions required by regulations and statutes can be achieved for 20–25% of the costs for these programs. The study revealed large unregulated emission sources due to loading operations that could be controlled more cost effectively than the emission reductions achieved by existing regulations.

Regulatory efforts might be used in concert with programs that rely on industry-initiated efforts. Compared with regulations, industry-initiated programs can appeal to government and industry in many ways:

• Traditional regulatory approaches promulgated at federal, state, and local levels are not always coordinated with each other, even within a given governmental level. Some redundancy or inconsistency among regulatory requirements is inevitable, as is considerable paperwork.
• Industry experts know their manufacturing processes best. Often the public officials writing and enforcing regulations do not have much background in the industry sector to which the regulations apply. Industry-initiated programs can enable those who are

• most familiar with products and processes to develop appropriate and cost-effective solutions.
• Regulations sometimes require industry to use methods that might not be the most efficient way for a particular facility to meet environmental standards. Industry-initiated programs can enable industry to use a more efficient approach in achieving a desired environmental benefit.

Although self-initiated programs might be appealing to industry, efforts to promote such programs may be threatened as industry and government facility managers assess whether to take further self-initiated action after the most easily achieved environment goals are met. Companies generally must make decisions based on the realities of the marketplace. A material substitution that is beneficial to the environment might cause the price of a product to increase or might change the quality of the product. In such cases, a company might be reluctant to undertake a material substitution, especially if it might cause a reduction in sales. In addition, new self-initiated efforts might lose their attraction if a business fears that new regulations might be put in place regardless of the amount of resources spent on recent self-initiated efforts.

According to a survey of environmental managers at 185 corporations in the United States and Canada, many companies have not integrated environmental improvement into business decision making and have not recognized it as an important business issue. The respondents indicated that two common problems often impede a company's ability to improve its environmental practices: (1) lack of integration between environmental and business issues in the company, and (2) failure of top management to recognize that the environment is an important business issue (ADL 1995).

Based on interviews with 25 current or former industry executives responsible for environmental, health, and safety, Yosie and

Herbst found that many companies have made progress in integrating environmental activities with other business functions and reducing costs, but the ability of environmental programs to contribute to revenue was unclear (Yosie and Herbst, 1996).

Current environmental activities can be divided into three broad types of efforts: mandatory efforts (regulated by government), nonmandatory industry efforts at standardization, and industry-initiated efforts (not covered by the first two categories). The focus of this report is on industry-initiated efforts, and to a lesser extent, nonmandatory industry standardization efforts.

The National Research Council's Committee on Industrial Competitiveness and Environmental Protection prepared this report on nonregulatory efforts undertaken in recent years by manufacturing industries, DOE, EPA, and others to enhance and sustain environmental efforts initiated by industry and government facility managers. The committee included members with expertise in industrial economics, environmental regulation, manufacturing, toxic chemical releases, engineering, and management. It included experts with perspectives of industry, academe, national environmental organizations, and citizens organizations.

The committee was not charged to evaluate, nor did it have the resources to examine rigorously, the costs and benefits of the industry-initiated efforts or to assess technological, regulatory, and economic policy barriers to increased use of innovative techniques for objectives such as pollution prevention or increased energy efficiency. Specifically, the committee was charged to:

Assess (a) ways to enhance and sustain recent 'voluntary'

efforts by industry and government facility managers in pollution prevention and energy efficiency, and (b) recent efforts by EPA, DOE, and other agencies to stimulate, facilitate, and reward such efforts.

This report illustrates the kinds of industry-initiated efforts that can lead to environmentally beneficial results that are endorsed by interested third parties, and advantageous to corporations (economically or in other ways). The report discusses steps that government agencies might take to promote industry-initiated efforts and to broaden the range of effective environmental-protection approaches.