Documente Academic
Documente Profesional
Documente Cultură
Environment
Management
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Eco-Environment (ecological)
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two things made very clear: our natural resources are finite, and if we consume those
limited resources there is (2)no replacement for them anywhere nearby. The environment we
depend on for our lives and survival is limited, and in crisis. This crisis is further worsened
by the (3)huge growths on the populations and economies of India and China booming and it
is urgent to take measures to make life on Earth sustainable. The figure below is a popular
model to understand sustainability as a process involving the interaction of the economy,
society, and environment.
Source: Kane, G. (2010).The three secrets of green business: unlocking competitive advantage in a low carbon
economy. UK, London: Earthscan. P.5
In order to produce development and successfully deal with the crisis, we have to apply the
principles of Sustainable, which is best defined as a development that meets the needs of
the present generation without compromising the ability of future generations to meet their
own needs. This is achieved if social and economic development are regarded as a
sustainable process, as explained below:
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1. Inter-generational equity: the development process aims to minimize any negative
impacts on future generations resulting from the development activity or process.
Sustainable development can be best achieved through the concept of total quality
management (TQM). Kaikaku and Kaizen suggest two different views on how to achieve
economical sustainability.
Kaikaku proposes the introduction of big radical changes that align a whole system
to deliver quality products, doing the right thing while
Kaizen proposes the concept of continual, incremental improvements within a
system to squeeze the best performance out of it. doing things right
for example, big radical changes such as sustainable product development, adopting cleaner
manufacturing processes or shifting from a product to a service, should be complemented
with basic waste minimization and energy efficiency techniques). Applying such measures
would be the first step of a long way down the road to sustainability.
(3) As a result of the fast growth of human population and industry, the whole world is
currently facing many challenges to the environment, among which the one causing most
concern is the phenomenon of Global Warming .
Since the 1990s, many government, industry, and nonprofit entities have tried to set and
create comprehensive, voluntary environmental and social standards conducive to the
creation of green, eco-friendly business environment. Those standards targeted products,
facilities, and company operations and covered a wide range of policies, practices, and
performances, including issues such as energy efficiency, controlling climate change,
business ethics, community investment.
The increasing interest in the environment and economics and their mutual relation led to the
birth of a new discipline namely, ecological economics, field of study that addresses the
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relationships between eco-systems and economic systems in the broadest sense. or
Environmental economics is a discipline which addresses the mutual relation between the
economy and environment and how they impact each other, as well as the correct methods of
regulating economic activity in order to balance competing environmental, economic, and
social goals. Environmental economics employs the discipline of economic analysis to guide
the creation of policies that promote economic sustainability and tackle environmental
problems such as pollution. Corporations and industrial entities should adapt to the present
systems and integrate environmental responsibility within their overall management process
of their businesses. This should lead to increased environmental performance and long-term
profitability.
Economy is classified into two sectors: production and consumption. The production sector
extracts from the environment the raw materials, such as energy resources (coal, gas, etc.).
Therefore, the environment has two roles; it is a supplier of resources and a sink or receptor for
waste products. These wastes may result directly from production or from consumption.
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Coefficient of
Environment Degradation
Per capita GNP
Source: Jhingan, M. & Sharma, C. (2007). Environmental economics: theory, management and
policy. Vrinda publications LTD. p. 150
- Since climate change is, partially, the result of burning fossil fuel, a strategy should be
developed for controlling climate change (i.e., shifting away from carbon based economy
to solar-hydrogen economy).
- Humans must attempt to control the birth rate and control their population in order to
reduce pollution.
- Humans must modify their life styles and the global economy accordingly in such a way
as to promote sustainability and preserve the environment.
Topic 3 Eco-Advantage
What is eco-advantage?
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The movement toward environmental sustainability in business has grown rapidly since
1990 in response to the changing local and global regulations, the emergence of new
compliance standards, the opportunities for positive publicity, and the increasing
expectations of customers. Eco-advantage, is a joint and equal effort to both, making
money and doing the right thing. It calls for the implementation of a pragmatic economical
approach that promotes growth without harming the environment. A similar but more
fashionable term for eco-advantage is green innovation in which the focus is the
development of environment-friendly products.. For example, reduction of waste
production and energy consumption has developed into a more system-based approach. The
problem is that implementing initiatives to reduce environmental impact is voluntary and
limited with only small penalties for not complying. Now, demand is increasing for the
adoption of a corporate social responsibility (CSR) approach which emphasizes
incorporating social aspects into business strategy and practice. Top companies achieve
success by taking into consideration requirements of both the customer and the
environmental, building product loyalty based on their concern for the environment, adding
new values and innovations and developing the reputation of a trusted eco-brand, such
companies can meet market needs and make profit. Eco-advantage is the missing link
between sustainability and being competitive.
Achieving eco-advantage
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1. identify and reduce environmental risks, thereby reducing liabilities, avoiding costs, and
increasing speed to market,
2. cut operational costs and improve efficiency by reducing environmental expenses
(waste, disposal fees and energy spending),
3. grow revenues by designing and marketing environmentally products that meet
customers' needs (energy efficiency, and reduced pollution).
4. create intangible value for productions (enhancing their brands, connecting with
customers on an emotional level through environmental stewardship).
Changing the environmental behavior of small companies requires weakening the resistant
forces (i.e. poor eco-literacy), strengthening the driving forces (i.e. effective research), and
preferably a combination of both (a strategic response is produced). A UK survey revealed
that Small and medium enterprises impacted the environment mainly in the areas of waste
and transport, and that their response focused on managing hazardous waste, reducing waste
and packaging, and increasing recycling; as well as aiming to reduce fuel and energy
consumption, optimize distribution networks, and minimize pollution.
Companies that successfully manage environmental risks lower operating costs, reduce the
cost of capital, and keep their insurance premiums under control. On the revenue side, the
benets brought about by an environmental approach are sometimes tangible (like a higher
product price or increased sales) but are largely intangible: strengthened relationships with
customers, employees, and other stakeholders. These intangibles, can have a concrete
impact on investment returns. (Loyalty of customers, employee commitment).When
evaluating risks and benefits, we can oversimplify matters and take certain to be roughly
equivalent to the short-term and less certain to the long-term. If we consider waste
reduction as an example of cost control versus risk management, it is clear here this will
lead to savings.
Figure 3. Strategy Framework for Environmental sustainability and corporate social responsibility.
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Source:Esty, D. & Winston, A. (2006). Green to Gold: How Smart Companies Use Environmental Strategy to
Innovate, Create Value, and Build Competitive Advantage. Yale University Press, p102
2. Environment management system (EMS) and ISO
In 1991, the ISO concluded that meeting high environmental standards in the present and
future requires companies to create environmental management systems (EMS), whose
main function would be to support activities intended to protect the surrounded environment
and prevent its contamination. The process of EMS provides an understanding on how
the EMS should function in the context of system analysis, identify errors and weak spots,
formulate proposals for improving processes, and achieve the target parameters related to
the environment. An effective EMS is part of sustainable development and is defined by
SAGE as "operating activities that meet the needs of present stockholders without impairing
the ability of future generations to meet their needs. An EMS protocol uses a company's
own environmental policies and principles as a base to help companies achieve
environmental performance goals. Different ISO systems exist for different industries and
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businesses can adopt the system that better suites their practice. A common practice for
companies is to acquire one or two of the most popular ISO certificates namely, ISO 9000
series and ISO 14000 series. ISO 9000 series is related to quality management systems
which addresses customer requirements/satisfaction, adherence to regulations and strive for
continuous improvement whereas, ISO 14000 series address the impact of the companys
activities on the environment and the companies attempts to improve its performance in this
respect. Together, Jayathirtha list a number of concepts, which all these quality standards
systems, organizations must adopt as stated by):doing business as usual is unacceptable. ;
doing business without a systematic management approach is economic; providing quality
and protecting the environment are the key; doing it right the first time is crucial; listening
to customers and other stakeholders is necessary; respecting society (Jayathirtha,2001: 246).
An EMS helps organizations identify, manage, monitor, and control their environmental
issues in a holistic manner. In addition to what was mentioned earlier, there are many
reasons why an organization should take a strategic approach to improving its
environmental performance including:
improve company reputation and the confidence of stakeholders through strategic communication;
achieve strategic business aims by incorporating environmental issues into business management;
provide a competitive advantage through improved efficiencies and reduced costs; and
encourage better environmental performance of suppliers by integrating them into the organizations
business systems(ISO, 2015: 3).
The ISO 9000 and ISO 14000 standards are both concerned with the process of product
production rather than the product itself and that's why both are similar in nature. ISO
14000 uses a system which includes a set of controls such as documentation control,
management system auditing, and operational control, control of records, management
policies, audits, training, statistical techniques, and corrective/preventive actions. In
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addition to these controls, ISO 14000 includes quantified targets, established objectives,
emergency and disaster preparedness, and disclosure of environmental policy. Such a
system may provide the basis for developing a comprehensive EMS. ISO 14001 Standard
system is voluntary and it is not an EMS; rather, it provides an outline for companies and
assist them in the development of their own EMS. ISO 14001 assists companies in meeting
their environmental and economic goals and can be incorporated with other management
functions, and its aim is to assist companies by providing a guidelines in continuous
improvement of their environmental performance and at the same time complying with
applicable legislation. ISO14001 standard is generic management system meant to be
applicable to any size and type of organization, product or service, in any sector of activity.
OR according to Hillary;
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Lastly, Gavronski et al. list several groups of benefits of the 14001 standard including:
Taken together, the ISO 14001 can be integrated easily into any existing ISO management
system. Like all ISO management system standards, ISO 14001 includes the need for
continual improvement of an organizations systems and approach to environmental
concerns. The standard has recently been revised, with key improvements such as the
increased prominence of environmental management within the organizations strategic
planning processes, greater input from leadership, and a stronger commitment to proactive
initiatives that boost environmental performance (ISO,2015:2). Baxter International, a
medical products company, saved $21.7 million in 1994 because of its efforts to prevent
pollution and to minimize wastes. Thus, continuous improvement of the EMS can enhance
business success.
Companies who truly care about the environment change not only their processes and
products, but also their organization. The qualities of management and the effectiveness of
systems determine the ability of the company to do this in an effective, profitable, and
environment-friendly manner. Total quality management (TQM) ultimately aims for zero
defects. For many forward-looking organizations, they have incorporated environmental
responsibility as an aspect in their pursuit of TQM and as such, zero defects also means zero
negative impact on the environment. Competitiveness is often measured by three things:
quality, price and delivery. TQM is a system of dealing with quality at every stage of the
production process. The main elements of the TQM system in any EMS are: teamwork,
commitment, communications, organization, control and monitoring, planning and
inventory control system. A failure in any part of the TQM or EMS can lead to gaps where
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waste of resources occur and quality decline. Errors can multiply, such that problems in one
part of the organization can result from the failure to meet the requirements of another.
TQM is an approach that aims to improve the effectiveness and flexibility of business, so
that results are achieved in less time and cost, through reducing wasted effort and physical
waste by involving everyone in the improvement.
TQEM is defined as an economically driven, system-wide and integrated approach for the
reduction and elimination of all waste streams associated with the design, manufacture, use
and/or disposal of products and materials. The TQEM concept, based on the theories of
Deming, Juran, and Crosby, combines the principals of Total Quality Management (TQM)
with the goals of environmental management. TQEM has emerged from integrating
environmental management system (EMS) into the total quality management (TQM).It
combines the management approaches to support the companys business and helps create a
more effective interaction between TQM and EMS such that they do not compete for
resources or priority attention.TQM and TQEM share features including: improve final
output; leadership; emphasize long-term planning over short-term; changing relationships
between companies and their stakeholders; cultural change; improved information,
communication, training, accountability; and promote continual measurement, self-asses,
and improvement. This mean that many of the tools of TQM can be adapted for TQEM.
TQEM systems are viewed as TQM systems modified to deal with environmental issues.
The no waste aim of TQEM systems is similar to the TQM goal of zero defects. TQM
focuses on waste as it applies to process inefficiencies, whereas TQEM focus on outputs
such as solid and hazardous waste. The concepts share a similar focus, and so many of the
tools, methods, and practices of TQM can be used in TQEM systems. Developing a cost
framework for TQEM begins with TQM.
TQEM consists of: Total (involves the entire organization, supply chain, and/or product life
cycle), Quality (designed to improve quality through zero defect definitions),
Environmental(strategic environmental management approach), Management (the system
managing through steps such as plan, organize and control). TQEM works both vertically,
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involving all employees at all levels from top to bottom, and horizontally, across departments,
and extends both backwards and forwards to include the support chain and the customer chain.
Among operations managers for the sustainability management movement, environmental
management has achieved a high status in their mindsets and practice.
Managers do not invest sufficiently in TQEM programs because they cannot easily assess
the impact of such programs as a result of their lack of appropriate performance measures.
Most of the cost savings produced by TQEM related investments are largely hidden or
misallocated and have a payback period of several years. Furthermore, at present, the
literature contains several proposals of conceptual frameworks for identifying the different
costs associated with waste and pollution (table 1). For operations managers responsible for
environmental performance, as well as daily production, conventional aggregated financial
information is of minimal use. Operations managers often lack the skills required to use the
tools associated with financial analysis and, therefore, find accounting systems very difficult
to use. While the direct costs easily measured, it is not easy to measure the other costs, and
since managers choose not carry out such measurements. When costs are not directly related
to the activities that generate them, operations managers in this case are dealing with
incomplete or inaccurate information for the decision-making process.
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Table1. The TQEM cost framework
The TQEM cost framework
External failure: Internal failure:
costs associated with the occurrence of costs directly related to the occurrence of
environmental issues (e.g. waste) outside environmental issues within the
the manufacturing facility manufacturing facility
Contingent liability costs: future liability Waste management: hauling, storage,
costs handling, waste fees, hauling insurance
Treatment or storage in tanks, Reporting costs: hazardous pollutant
transportation land disposal, emissions reporting,
soil & waste removal & treatment, Industrial users continued compliance
groundwater removal & treatment, reports,
natural resource damage, Toxic standards annual compliance report,
corrective action, Injury and illness annual summary,
worker illness, Fatality or hospitalization report,
economic loss, Occupational injuries and illness survey
Less tangible costs: Medical surveillance costs: hazardous
waste. Medical surveillance program
Lower product acceptance by consumer, Less tangible costs: strained employee/union
Negative corporate image, relations, Strained Supplier customer
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The TQEM cost framework
Appraisal costs: involved in the direct Prevention costs: associated with the
appraisal of environment issues design and planning of TQEM program
Inspection and Laboratory acceptance Administration and system program
Planning (engineering work) incoming- in
Maintenance and calibration process-final inspection, Special process
planning data analysis, Procurement
planning Vendor survey,Reliability studies
Outside endorsement Measurement and control equipment
Strained distributer relations Qualification of materials
Field testing
Product engineering review
Monitoring and testing costs:
hazardous waste chemical and
physical analysis, Ground water
monitor, Hazardous pollutant testing
and monitoring pretreatment standards
monitoring, daily Toxic
Source: Curkovic,S., Sroufe, R. &Landeros, R.(2005).Measuring TQEM Returns from the Application of
Quality Frameworks. Business Strategy and the Environment Bus. Strat. Env. 17, 93106 Wiley, p.100-101
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commit to environmental management
Source: Jayathirtha, R. (2001). combating environmental repercussions through TQEM and ISO 14000.
Business Strategy and the Environment Bus. Strat. Env. 10, 245250 DOI: 10.1002/, p.248
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