Environmental Management---Spreads Green
& Profits
The solution to the problem regarding the
lack of environmental management by small companies may
require a change in the way big companies think about environmental
management. The big companies, instead of concentrating
their investments in programs within their corporate borders,
must devote a significant portion of their spending to numerous
small companies that serve as their suppliers.
Big corporations such as Dupont, IBM and
Xerox have shifted the focus of their environmental programs
from cleaning up damage to preventing it. In effect,
they’ve moved their environmental investments up the
supply chain to the point at which the processes and products
are initially designed. Not only is this approach environmentally
sound; it also makes good commercial sense.
To see whether investments by large companies
can lead to a real change in the attitude and performance
of the smaller ones, the World Bank and a major industrial
group set up a 2-year pilot project in Mexico. The project
brought together two large companies and 22 of their small
suppliers. The large companies recruited the suppliers,
underwrote the costs of the project, and made some of their
employees available to give advice on creating environmental
systems. Two local universities provided staff to support
small companies and a major industrial group provided training
and project reviews.
To make the program as practical as possible,
training was conducted in a just-in-time fashion. The suppliers
were taught only as much as they could implement in a two-month
to four-month period. In this way, they were able to immediately
apply the lessons they were learning. Halfway through the
project, the small companies were showing considerable progress.
Suppliers had established an environmental planning process
and policies and almost all had achieved reductions in hazardous
emissions. They had also improved their workplace conditions,
waste-handling procedures, and materials and energy handling
efficiency. These improvements have lead to productivity
gains, showing that environmental management can benefit
the bottom line as well as reduce pollution.
In follow-up surveys, the small companies
voiced strong support for this initiative. Almost 70% said
that more active mentoring by the big companies would have
significantly improved the results of the project. Therefore,
big companies have to make a genuine commitment to their
small suppliers-a commitment of both time and money.
In return for such a commitment, a large company
can expect important gains. First, it will benefit from
the improved quality, reliability and efficiency of its
supplier’s operations. Second, and perhaps more important,
it will ensure that a supplier’s bad environmental
reputation does not contaminate its own.
Big companies can help themselves by helping
their small suppliers with environment management. The
above trial has proved that, large companies and their suppliers
had better profits besides helping to improve the environment.
Further Reading: Harvard Business Review,
Vol 76 No 6, By David Champion.
