Environmental Strategies. Chapter 4

Transcription

1 Environmental Chapter 4

2 Overview Business Relevance of Environment Types of Environmental Issues Facing Service Companies Role of the Service Company in Environmental Issue Mitigation Environmental Impacts of a Service Company 2

3 Services and the environment are two separate issues Environmental impacts of Service Companies Companies that offer environmental services Waste disposal, cleaning services, environmental lawyers and consultants 3

4 Environmental Management Many companies measure against the triple bottom line as developed by John Elkington Financial, environmental and social performance Financial Performance ROI, ROE, ROA, EPS, etc. The Triple Bottom Line Minority % of workforce, family-friendly policies, living wage for international labor Hazardous chemical emissions, energy use, solid waste recycled Social Performance Environmental Performance 4

5 Environmental Management Research has demonstrated the link between financial success and the ability to manage the environment Financial implications of poor environmental management State and Federal fines Cost of litigation Cost of environmental clean-up Damage to the company brand 5

6 Environmental Management Financial implications of high-performance environmental management Cost Reductions Improved quality and yield Improved relationships with regulators Reduced insurance costs Enhanced company brands Examples include Home Depot and UPS 6

7 Environmental Management There is a positive correlation between environmental events and stock market performance Positive environmental events = higher share price Examples include Alcan Aluminum whose share price increased 80% faster than the DJIA after receiving a prestigious environmental award Negative environmental events = lower share price Examples include Tyson Foods who lost 8% of market capitalization when a subsidiary was fined for illegal dumping 7

8 Service Process Matrix: Environmental Services Service Factory Service Shop Traditional: Airlines and hotels Traditional: Hospitals and auto repair Degree of Labor Intensity High Low Environmental: Solid waste management and facilities management Mass Service Traditional: Retailing and schools Environmental: Environmental standards organizations like Southface or ISO Environmental: Hospital environmental services and hazardous waste management Professional Service Traditional: Lawyers and doctors Environmental: Environmental consultants, architects, and auditors Low High Degree of Interaction and Customization 8

9 Service Process Matrix: Environmental Issues for Service Companies Service Factory Service Shop Degree of Labor Intensity High Low Airlines: Solid waste from cabin service, blue water, fuel use, engine emissions, hazardous chemicals from aircraft maintenance Hotels: Solid waste from restaurant and room operations, energy use from lighting and climate control, water use from laundry Mass Service Retailing Operations: Fuel and emissions from product distribution, urban sprawl from location decisions, solid waste from packaging Schools: Energy use from lighting and climate control, food waste, hazardous cleaning products, paper use from copies and printing Hospitals: Solid waste from rooms, biohazards, energy use from lighting and climate control, water use from laundry, cleaning chemicals Auto Repair Shops: Hazardous chemicals to clean parts, waste oil, solid waste of replaced parts, hazardous chemical-soaked rags Professional Service Consultants: Fuel and emissions from travel, paper use, carbon dioxide emitted during client meetings Dentists: Biohazard waste, toner cartridges, paper, and other office waste Low High Degree of Interaction and Customization 9

10 Services and Their Environmental Impacts Professional services - doctors, lawyers, consultants, etc. Medical waste, paper, toner Service shops - hospitals, hotels, auto repair, etc. Infectious waste, laundry soap, used motor oil Service factories - UPS, Royal Caribbean, Delta, etc. Fleet maintenance, fuel, waste water 10

11 Environmental for Service Process Opportunities Process Improvement Operations Total Quality Environmental Management (TQEM), Six Sigma Process Certification ISO 14000, CERES Principles, Codes of Conduct E-commerce Migrate paper based processes, process automation, reverse logistics 11

12 The CERES Principles 12

13 Environmental for Service Operations Product Opportunities Product redesign Design for the Environment (DFE), lifecycle analysis Value added services Include value added services along environmental dimensions Dematerialize Vertical or horizontal integration effectively eliminates the supplier s incentive to sell additional hazardous material 13

14 Chapter Summary Advanced economies have migrated from a manufacturing to a service environment Understanding environmental issues is critical Services impact the environment directly, hence, mitigation of environmental risk can result in significant gains Service companies can mitigate risk by improving both the process and the product 14

15 Chemical Management at Delta Air Lines Prior to 1994, Delta utilized centralized purchasing for the decentralized use of hazardous chemicals In 1994, Delta was fined $1 million by the Georgia EPA alleging that Delta s chemical management system was inadequate Delta began to develop an integrated chemical management system based on three main goals 1) Manage the chemical process more effectively, 2) Capture all required data concerning use and disposal and 3) Perform these functions at an overall lower cost to the company. 15

16 Chemical Management at Delta Air Lines A Delta employee along with a former Delta supplier form Interface LLC 1995 agreement with Delta stated that Interface LLC would act as the gatekeeper between chemical suppliers and Delta Would honor all purchaser orders, freed up 30,000 feet of warehouse space at Delta, minimized Delta s supplier base Agreed to deliver routine orders in three hours and expedited orders in two hours (Opened a facility 1.5 miles from Delta) Agreed to a 95% fill rate 16