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Business and the Environment

The relationship between corporations and the environment is a tumultuous one. Corporations have abused and violated the environment for generations. These actions have now become unacceptable in our present society. There is growing concern for our natural resources; the world’s forests, waterways, and air are noticeably tainted. In the last twenty years, the U. S. has become more vigilant in recognizing and passing acts to attempt to regulate and purify our environment. Between 1938 and 1986, twelve acts regarding business and the environment have been passed. The Food and Drug Administration established the first act in 1938.

The Federal Food, Drug and Cosmetic Act was passed to regulate food and drug additives. The Delaney Clause in 1958 added the prohibition of the sale of foods containing human or animal carcinogens to the original act. The Wilderness Act of 1964 outlawed the development of wilderness areas and gave new procedures for the appointment of new protected areas. In 1969, the National Environment Policy Act created a nation wide environmental policy and the Council on Environmental Quality. A year later, the first legislation passed for the Clean Air Act. It was relegislated in 1977 and again in 1990.

This act established the Environmental Protection Agency (EPA) to control the enforcement of air quality standards. In 1972, both the Federal Insecticide and Rodenticide Act and the Clean Water Act were passed. They were relegislated in 1988; and 1977, 1981, and 1987 respectively. FIFRA requires the registration of every pesticide, certification and preconsumer testing. The Clean Water Act established standards for wastewater treatment, sludge management, and set discharge limitation and water quality standards. The Endangered Species Act of 1973 protects animals that are threatened or endangered.

Relegislated in 1984, the Resource Conservation and Recovery Act of 1976 standardized the manufacturing, transportation, storage, treatment and dumping of solid and hazardous waste. Also passed in 1976 was the Toxic Substances Control Act, which delegates the EPA control over the assessment of risks involved in chemicals and recordkeeping. 1980 saw the passing of the Comprehensive Environmental Response, Compensation, and Recovery Act, which brought liability upon the owners, transporters and sources of hazardous waste, and established the Superfund to help with cleanup costs.

The Superfund Amendment and Reauthorization Act requires companies to publicly disclose all chemical and toxic hazards in their operations. 1 These acts have often left companies feeling as though their hands were tied. The Clean Air Act by 1989 managed to reduce air pollution to two thirds of the 1970’s level. The Act achieves this through the use of permits to regulate the construction and production of major sources of pollution. The act specifies that a major source is one that emits 100 tons or more per year. This means that a factory can be built that emits 90 tons of pollution per year with out a permit.

A permit is also necessary if you want to increase an existing factory that emits 100 tons by 25 tons. This act has its shortcomings. For example, a university wants to expand its heating plant. The administration has two options either modify the existing plant or build a new plant. The university’s heating plant emits 100 tons of pollution, this means that they will need a permit. The modification would normally be more cost effective because it is a smaller job and would not take as much time to accomplish. The practicality of the situation would force the building of a new heating plant that is to be smaller than 100 tons of pollution.

The reason for this is the delay, cost and uncertainty of the permitting process, which would drive the over all cost up. It is probable that the modification of the single plant would ultimately produce less pollution that the two separate plants. 2 The SARA, or Superfund Amendment and Reauthorization Act passed by the government as an addendum to the Comprehensive Environmental Response, Compensation and Recovery Act specifies that companies make public details of their storage and handling techniques. All firms manufacturing 300 specific chemicals must abide by this.

Firms with ten or more full time workers must painstakingly report must report all chemicals released routinely. The quantity of the specific chemicals released into water, soil, and air, along with a listing of waste treatment efficiency must be made available to the surrounding community. It is difficult for companies to cite specific waste treatment facilities, for not many true ones exist. The public demands total removal of hazardous wastes and at the same time that the goods be produced with the same efficiency and quality. 3

The Clean Water Act is a system of minimum national standards for the discharge of toxins and hazardous waste into the environment. The rules given call for complicated technical decisions to be made by businesses. The fact that a company must comply with all new standards within a year causes for much loss and payment of fines. These acts do have negative effects upon businesses. However, corporations are finding advantages to environmentally sound procedures. Not only are environmentally friendly policies popular with consumers, but they can also save businesses a great deal of money.

As the acts and their socially conscious agenda become more assimilated into the business world, business is working to gain advantage and minimize disadvantages. Many case studies support this idea. Corporations have discovered that they can often use environmental friendly programs and products to produce more profits. An excellent example of this is Ben and Jerry’s ice cream company. The company began by making all natural ice cream on a very small scale in Burlington, Vermont in 1978.

Natural food held great appeal in Vermont, even before it held nation-wide popularity. Soon, their product became extremely popular. Ben and Jerry’s all natural products provided the first benefits of environmental-friendly policies for the company. Later, when two large manufacturing facilities were built in Waterbury and St. Albans Vermont, they decided to treat the waste created form their processing with a prototype solar aquatic treatment system. Like a wetland, the system combines solar energy with plants, algae and microbes to break down wastewater.

Three “green teams” strive to ensure compliance with their priorities of managing their waste, conserving energy, practicing sustainability, finding renewable energy sources and forming environmentally positive community programs. Besides these positive actions, which attract many customers, other environmentally correct actions save Ben and Jerry’s money. Instead of sending massive amounts of waste to the landfill, the company implemented procedures that minimize waste and reduce cost simultaneously. Cardboard waste is baled and sold or recycled, which saves the company $17,400 annually.

Office employees must follow a recycling program to save energy, cost and trees. $235,000 a year is saved in recycling or reusing plastic buckets. As much as $250,000 a year will be saved from new energy saving devices incorporated by the company. There are environmentally positive aspects in every part of the company which prove Ben and Jerry’s to be unhypocritical, for the environmentally friendly image they sell their products. Since their total sales were $97 million in 1991, it seems that this philosophy works and brings about a large customer base. 4

Other companies have found profit through environmentally safe Merck & Co. , a worldwide health product corporation for animals and humans, and specialty chemicals balances profit and responsibility even in the face of SARA. To maintain an inner accordance, Merck runs its operations with the same regard for health and well being that its products have. Merck has declared, “… our commitment is to conduct our business worldwide in a manner that will protect the environment as well as the health and safety of our employees and the public. “5 Merck made formal its environmental commitment in 1990.

In 1990, the company published a statement giving its environmental policies and goals. The progress toward these objectives was charted through periodic reports in a set five-year period. The objectives set by Merck were specific. The minimization of chemicals released into the atmosphere, in turn harming people, animals, the ozone layer, and causing acid rain and the greenhouse effect was one goal. Research to find new ways to minimize waste and conserve resources was a priority. Reduction of waste generation and self-sufficient waste treatment and disposal were another goal.

Energy and resource conservation practices were to be utilized in its research, manufacturing and office facilities. Lastly, resource conservation was to be promoted through innovative product design and recyclable materials. 6 Merck, like all chemical producers, was directly confronted with SARA. Though the company is not forced to reduce emissions, its operation procedures go far above SARA suggestions and Clean Air Act regulations. Voluntarily, the company made a commitment to the EPA to follow these higher standards. Merck specifically vowed to reduce carcinogen air emissions by 90% at the end of 1991.

Also, these air emissions were to be eradicated by 1993. Finally, Merck would reduce releases of corporate chemicals by around 90% of all direct releases and material transfers for off site disposal by the end of 1995. Merck had reduced all its worldwide releases of toxic chemicals by 50% from 1987 figures by the end of 1992. 7 The goals focusing on toxic waste processing and reductions were to be achieved through a strategic plan at division and plant levels. Divisions, plants and salaried employees directly or indirectly involved with manufacturing were to implement personal goals to help Merck achieve their overall goals.

The eight plants under Merck’s manufacturing division, along with the two manufacturing vice-presidents, were each accountable for the reduction and better management of waste in the plants. A central environmental resource staff coordinated and supported the effort. SOurce reduction was the biggest priority, followed by recovery/recycling/reuse, and waste management. Most of Merck’s waste is non toxic. The toxic minority consists of primarily ethyl alcohol, acetone and methyl alcohol, used in manufacturing processes.

The waste stream is boiled, the purified vapors condensed, and the liquid recollected. 90% is recovered for reuse. The remaining 10% is toxic waste. 8 Packaging components have experienced reduction in the interest of landfill space and resource conservation. Cotton wadding in drug bottles has been eliminated in the US. In Europe, there has been a 10% reduction in aluminum and foil waste. A conversion in Europe to standard blister packaging and high volume carton printing reduces waste and saves money. 9 New and more efficient equipment helps to reduce Merck’s waste management problems.

By standardizing and improving production, Merck is less likely to encounter problems with the FDA for making drug production changes. Approval for production changes is extremely time and cost consuming. Yield and product quality standards are on the same level as environmental standards. Merck, “takes responsibility for the total life cycle of materials we use and products we manufacture. “10 Merck keeps lines of communication open with the public concerning its environmental policies. By working with the Chemical Manufacturers Association’s Responsible Care Program, Merck provides information to the public through a 1-800 number.

The number is linked directly to Merck, where questions regarding Merck plants are answered. Emergency response systems are in place at factories, and for Merck transports. Literature regarding operations and safety procedures are distributed by Merck to keep the public informed. 11 Merck’s environmental commitment extends to its corporate headquarters. Environmental preservation of woodland and wetlands upon the site was the priority. The 900,000 square foot hexagon-shaped building and the 700,000 square foot underground parking garage made a minimal effect upon the land.

Awards and recognition were in order for this achievement. Kevin Roche, an architect known for designs that blend into the environment, was chosen for the project. The hexagon building surrounds five acres of forest, roads go over the land, and trees were moved rather than destroyed. They were nurtured in a nursery for as long as three years and then returned to the landscape. Energy saving features were utilized in the main building. All paper waste, the principal waste product, is recycled. 2. 8 tons of waste are produced per day, of which 8 tons are recyclable. 12

Merck has made an agreement with the Costa Rican Instituto Nacional de Biodivarsidad (INBio) to grant a million dollars to catalog the immensely diverse life found in Costa Rico. In exchange, Merck is granted the rights to any new medicines found. If a new medicine is found, the royalties will surpass the cost of the failure of the project. The diversity of Costa Rico is thought by scientists to contain more biodiversity then any other planet on earth. Many unknown animals and plants exist in Costa Rico and have yet to be discovered. Merck is training local people to take samples and perform extractions.

INBio will analyze the samples. Merck will evaluate samples for agricultural and pharmaceutical applications. This mutual beneficent relationship will aid both the environment and Merck. 13 By improving their product, cutting their costs, and improving their public image, Merck has made a profit from environmental friendliness. The envirometal centered policy has opened up new markets and gained a competitive advantage. This compliance is expensive, but seems well worth the expenditure for the return. The EPA also has developed incentives in recent years for environmental policy compliance.

The Green Lights program gives companies EPA support to drive down lighting usage, which accounts for over 20% of overall electrical costs. Software, financing information, lighting product consumer reporting is provided free of charge. Public recognition is given through public service ads, news articles, marketing materials, broadcast specials and videotapes. Computer manufacturers who install automatic “power down” on their computers join the Energy Star program endorsed by the EPA. Consumers and businesses look specifically for this symbol in many cases, causing a gain for the computer manufacturer.

Variable Speed Drives for heating, ventilation and air conditioning systems save 40% or more efficiency. The EPA has formed a special group buy to make them more affordable. Payback is within three years. Plans are on the board to endorse other “green” technologies this way. Refrigerators that are produced and function 30-50% more energy efficient then 1993 standards will receive a rebate. These are just a few incentives the EPA is providing. 14 Government and business have often debated over policies and laws. In the case of laws governing business practices and their effects on the environment, this holds true.

The balance between being environmentally safe and still producing the quality and quantities needed is delicate. However, today’s market makes environmental friendliness sellable, and the procedures involved often save businesses a considerable amount of money. Ben and Jerry’s have utilized the market for environmentally aware products and combined it with their company philosophy. Merck has utilized the same business strategy and found ways to surpass SARA and other environmental acts. These businesses prove that being environmentally responsible is not only morally correct, but also profitable.

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