Businesses and Sustainable Development

Environment is everything outside the business itself. This excludes the financial or commercial ‘environment’ within which the business operates. It encompasses the commons (i.e. air, water & land); humans and other living things, and crises that arise from the interaction of the business with these living and non-living components.

The World Conservation Strategy (WCS) published by the United Nations in 1980 emphasised that environmental conservation is not the opposite of development. Stressing the interdependence of conservation and development, the WCS was the first to give currency to the term ‘Sustainable Development’.

The World Commission on Environment and Development (WCED), in its milestone 1987 Brundtland Report (also called Our Common Future), endorsed the concept of Sustainable Development. The WCED defined Sustainable Development as “Development which meets the needs of the present without compromising the ability of future generations to achieve their needs and aspirations”.

Following the 1987 Brundtland Report, the international business community has been intensifying its efforts to put an end to the adversarial relationship between industry and the environment. The smart, innovative and farsighted businesses have since been turning environmental considerations into a competitive edge. Many of these companies have been reducing their environmental impact on a continual basis while also improving their bottom line.

Environmental awareness has increased over the past two decades, with an increasing number and variety of organizations realizing the tangible benefits to be gained from adoption of good environmental management practices.

The stirrings of good environmental practices include:

– The fact that environment management is a logical extension or an integral part of quality management, which many companies have adopted for reasons of business efficiency and advantages;
– The savings on raw materials and energy;
– The savings possible from waste minimization, and reduced costs of waste disposal;
– Improvement in corporate image;
– Contribution to competitive advantages;
– Reduction of risk and liability costs;
– The fact that environmental pressures could reduce the market share or even destroy the market for certain products overnight.

The Business Charter For Sustainable Development
Business must take the ethic for living sutainably as an integral part of corporate goal. They can do this by:
– Adopting practices that build concern for the environment into the whole apparatus of business, industry and commerce, and also require consultation with local communities and the public at large on their operations;
– Introducing processes that minimize the use of raw materials and energy, reduce waste and prevent pollution;
– Increasing the useful life of products while making them environmentally friendly with minimum impact on people and the environment.

The International Chamber of Commerce (ICC), in its furtherance of promoting sustainable development among businesses all over the world, formally launched the Business Charter for Sustainable Development in April, 1991 at the second World Industry Conference on Environmental Management (WICEM) held in Rotterdam. The Charter’s sixteen (16) principles are designed to aid industries and their associations in developing their own environmental policies and guidelines for green business.

The sixteen (16) principles of environmental management in the 1991 Business Charter are set out below:
1) Corporate priority
To recognize environmental considerations as among the highest corporate priorities of the organization; and to establish policies, programmes and practices for conducting operations in an environmentally sound manner.
2) Integrated management
To integrate environmental policies, programmes and practices fully into the organisation’s business as an essential element of management at all levels in the organisation.
3) Process of improvement
To continue to improve corporate policies, programmes and environmental performance,
taking into account local and international regulations, technological developments, scientific understandings, consumer needs and community expectations.
4) Employee education
To educate, train and motivate employees to conduct the organisation’s operations and
activities in an environmentally responsible manner.
5) Prior assessment
To carry out environmental impact assessment before starting a new activity or project and
before decommissioning a facility or leaving a site.
6) Products and services
To develop and provide products or services that have no undue impact on the environment and are safe in their intended use, that are efficient in raw materials and energy usages, and that can be recycled, reused, or disposed of safely.
7) Customer advice
To advise, and where relevant, educate customers, distributors and the public on the safe use, transportation, storage and disposal of the organisation’s products; and to apply similar considerations to its services.
8) Facilities and Operations
To develop, design and operate facilities and conduct activities taking into consideration the
efficient use of raw materials and energy, the sustainable use of renewable resources, the minimisation of adverse environmental impact and waste, and the disposal of residual wastes in a safe and environmentally responsible manner.
9) Research
To conduct or support research on the environmental impacts of raw materials, products, processes, emissions and wastes associated with the organisation’s operations and activities and on the means of minimising such adverse impacts.
10) Precautionary approach
To modify the organisation’s operations and activities such as manufacture, marketing or use of products or services in the light of new scientific and technical understandings; to prevent serious or irreversible environmental degradation.
11) Contractors and suppliers
To promote the adoption of these principles by contractors and suppliers acting on behalf of the organisation, encouraging and, where appropriate, requiring improvements in their practices to make them consistent with those of the organisation.
12) Emergency preparedness
To develop and maintain emergency preparedness plans for all significant hazards associated with the organisation’s operations and activities. The emergency plans should be implemented in conjunction with the emergency services, relevant authorities and the local community, recognizing potential transboundary impacts.
13) Transfer of technology
To contribute to the transfer of environmentally friendly technology and management
methods throughout the industrial and public sectors.
14) Contributing to the common effort
To contribute to the development of the public policy, business decisions, governmental and intergovernmental programmes and educational initiatives that will enhance environmental awareness and protection.
15) Openness to concerns
To foster openness and dialogue with employees and the public, anticipating and responding to their concerns about the potential environmental impacts and hazards of the organisation’s operations , products, wastes or services, including those of tranboundary or global significance.
16) Compliance and reporting
To measure environmental performance; to conduct regular environmental audits and assessments of the organisation’s compliance with its requirements, legal requirements and these principles; and periodically communicate its environmental performance to the board of directors, shareholders, employees, the authorities and the public.

Government Legislations and Regulations
Nigeria has legislations that mirror the sixteen (16) principles of environmental management in the 1991 business charter. These include Factories Act Cap 126 LFN 1990, Standards Organisation Act Cap 412 LFN 1990 and Environmental Impact Assessment (EIA) Act No. 86 of 1992, among others.
The EIA Act makes the EIA mandatory for development projects likely to have significant adverse impact on the environment prior to implementation. The Act contains provisions which:
– prohibit the government from issuing a permit or license, or grant an approval under the provisions of any other law or enactment for the purpose of enabling the project to be carried out in whole or in part prior to the project approval in accordance with the EIA Act. No. 86 of 1992.
– prohibit individuals, government and corporate bodies from making or authorising payment or providing a guarantee for a loan or any other form of financial assistance for the purpose of enabling the project to be carried out wholy or in part prior to the project approval under the EIA Act.
The Standards Organisation Act contains provisions which are geared toward promoting delivery of quality products and services, with a view to promoting efficiency and reducing waste. The Factories Act principally focus on safety and occupational hygiene in workplaces.

Beyond Regulatory Compliance: Using Environment as a Competitive Edge.

The new ‘green’ corporate thinking provides managers with a three-stage environmental management process – going from regulatory compliance to cost reduction (competitive costing) to finally using pollution management as a revenue generator. Today, environmental management is not something that we should do. It is not just the ethical thing to do. It is a strategic issue for businesses to maintain a competitive advantage.

Total Quality Management (TQM) & Environmental Management (EM)
EM can be taken as either the logical extension, or an integral part, of TQM. This is from the viewpoint that a process laden with pollution translates to squandering of raw materials and energy; resulting in over-priced and poor quality products, undervalued services, and untold operational inefficiencies. In essence, pollution prevention enhances marketable quality products, while also reducing waste and other environmental impacts.

TQM is a system which involves every department and every employee in improving the organization’s effectiveness, flexibility and competitiveness in the search for ever – increasing quality. It is symbolised by the cliché: ‘Right first time every time’. While environmental excellence entails producing better quality products and services with less environmental impacts. It is symbolised by the notion: ‘We haven’t got it right by the environment, but we’re trying and we’re getting better’.

Towards Products that Deliver Real Environmental Improvements
Business decisions can be made using a value: impact assessment. The approach, through not yet fully developed, can help industry to make successful products which deliver real environmental improvements. The approach is similar in concept to the cost: benefit assessment used in many public policy decision – making processes.

Value: Impact Assessment
A value: Impact assessment is a management tool for assessing the value of a product (fitness for use) relative to its environmental impact.

Value Assessment
The value assessment determines how well a product works relative to what the user wants and is willing to pay. A product that is bought a second time by the same person is considered ‘fit for use’ (at least by that person). A product is not considered ‘fit for use’ if it does not meet the user’s expectations.

However, the ultimate measure of general fitness for use is the market share for a product. The market share is expressed as a percentage of the product usage in relation to competing products. To maintain or improve on the market share, it is crucial for a company to find out what people’s new needs and expectations are and to develop ways of meeting or even exceeding them.

Impact Assessment
Environmental impact of a product has to be considered across the lifecycle of the product. Lifecycle assessment, as a state of mind, requires manufactures to take the responsibility for environmental impact of their product in the entire lifecycle; which includes the winning of raw materials, their manufacturing, distribution, use, possible re-use or recycling and eventual disposal.

The manufacturers need to share this responsibility at appropriate stages in the lifecycle with the raw materials suppliers, users of products (for recommended and actual usages), and waste management industry. The lifecycle assessment is currently being used to determine the overall environmental profile of products or services over the whole lifecycle from cradle to grave.

The environmental impacts associated with the entire lifecycle of a product should include, but not limited to the following:

– Impacts associated with all aspects of extracting and processing the raw materials
– Impacts created in conjunction with manufacturing processes
– Raw materials and energy consumption
– Air emissions
– Discharges to water bodies
– Solid and other wastes
– Land contamination & impact on scenic beauty
– Noise, odour, dust, vibration, heat and visual impact
– Impacts associated with product distribution, use (both recommend and actual usages), re- use, recycling and final disposal.

A lifecycle assessment consists of four stages: Goal definition, Inventory, Impact analysis, and Valuation. The first stage, Goal definition, defines the functional unit for the comparison (normally per equivalent use), as well as the purpose, boundaries and scope of the assessment. The Inventory stage is the process of accounting for all the inputs (raw materials and energy usage) and of individual waste emissions to land, water and air and as solid waste. This second stage in the lifecycle assessment uses the data gathered to draw up an inventory of these inputs and waste discharges for a product.

The last two stages of a lifecycle assessment, Impact analysis and Valuation, attempt to quantify the overall environmental impact of the inventory list of inputs and emissions. In the Impact analysis stage, inputs and emissions are converted into the actual environmental effects such as deforestation, degradation of environmental media and scenic beauty, contribution to ozone depletion, greenhouse effects, etc. It can be misleading to aggregate emissions without considering the different effects that they cause. Conversely, aggregation of hazards according to environmental effects helps to communicate lifecycle impact data.

Valuation, which is the final lifecycle assessment stage, attempts to combine all the environmental effects of a product into an overall environmental impact. This requires accurate and comprehensive data concerning environment effects. Arriving at an overall environmental impact for a product involves value judgment of experts, taking into consideration societal viewpoints on these environmental effects. Therefore, it is important for a company to be abreast of the dynamics of the societal viewpoints, so that it can continually fine tune its product development programme to deliver products which offer better performance and value while reducing environmental impact.

Classification of Products / Services based on Value: Impact Assessment

Four types of products can be identified based on the product’s value and the environmental impact associated with its lifecycle of winning raw materials, manufacture, distribution, use, re-use and disposal. They are as follows:

i) ‘Less from more’ product: This is unacceptable in the market for its dismal performance compared to competing products (i.e less value). It is also not environmentally friendly (i.e more environmental impact)

ii) ‘More from more’ product: The product is successful in the marketplace (i.e more value), but it wreaks havoc on the environment (i.e more impact). In essence, the product development focuses exclusively on performance without any regard for environmental quality. Increasing environmental temperament of consumers and the environmental regulator’s stick will push the product out of market place in the long – term.

iii) ‘Less from less’ product: It is usually regarded as a ‘green’ product. It is unable to meet the societal expectations and needs on performance (i.e less value). Its unique selling point is its environmental friendless (i.e less environmental impact).

iv) ‘More from less’ product: It is the product which offers better performance (i.e more value) and reduced environmental impact (less impact). This is the product that meets the people’s needs, and as well deliver real environmental benefits.

Marketing and Claims of Product Quality
The traditional marketing techniques remain the only method for companies to present claims concerning performance and environmental benefits of their products and services to the public. These claims which may be included in labeling, advertising, promotional materials and all other forms of marketing, whether asserted expressly or by implication, through words, symbols, emblems, logos, depictions, brand names, or through any other means, should avoid consumer deception.

A good marketing practice should appropriately disclose the quality, feature and environmental
attribute of a product and substantiate same with competent and reliable scientific evidence. However, some unscrupulous businesses don’t worry about a little dishonesty, fraud and other unethical marketing claims to make a fast buck.

For instance, the increase in weight or volume of laundry detergent in a pack may not necessarily give better value or cleaning performance per pack. It leads to more environmental burdens if a given weight/volume from the enlarged pack gives less cleaning performance than less amount from the concentrated product in small pack. Reduction in weight by using more active ingredients to achieve better results in performance is possible. Concentrating a product while making it more weight efficient can reduce the amount of packaging and yet give better results from environmental and economic consideration. The concentrated product would involve less raw materials usage; less energy used in manufacturing, transportation, distribution and use; and less waste to be disposed of after use.

In the spirit of sustainable development, businesses should place more emphasis on profit rather than the physical weight / volume of goods they make and sell. Businesses would impact more positively on the bottom line if they increase their profit while making and selling less tonnage/volume of quality products. Afterall, the focus of sustainable development is achieving more profit from less resources.

Sustainable development is not a destination. It is a journey which individual businesses must
undertake to conserve the earth’s resources. A business can continually contribute to this as it
environmentally improves its product and operation, by maximising profit while producing less tonnage/volume of quality products. The business can play its part in sustainable development by producing ‘more from less’ goods and services – i.e. more value and performance in products which use less resources and produces less environmental impact. This is essential for any business that has focus on long term profit growth.

Written by
Tayo Akeem Yusuf
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