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News from the National Academies
Date: Aug. 24, 1999
Contacts: Bob Ludwig, Media Relations Associate
David Schneier, Media Relations Assistant
(202) 334-2138; e-mail <news@nas.edu>

[FOR IMMEDIATE RELEASE]

Publication Announcement

Industry Can Gain Competitive Advantage By Improving Environmental Performance

U.S. manufacturers have significantly lessened the harmful effects of industry on the environment in the last several decades, in large part because of government regulations that limit pollution. Consequently, most of the measurements that industries use to evaluate their environmental performance have been developed solely to comply with government-imposed reporting requirements.

As firms seek to move beyond compliance, they are finding it difficult to measure environmental performance in ways that are meaningful to the firm itself or to the public, including shareholders, customers, and the communities in which they operate. Manufacturing today involves complex networks of suppliers. In addition, the environmental impact of producing goods is often overshadowed by the effects that products will have on the environment after they are sold.

Manufacturers now are being challenged to expand coverage of environmental performance beyond the factory gate -- "upstream" in a product's life cycle to include the suppliers of raw materials, and "downstream" to produce more environmentally friendly products. Sustainable development further challenges corporations to account for broader ecological and social objectives in their performance.

Companies also are discovering that measuring their stewardship of natural resources can benefit their public reputations and marketing efforts, while improving product development and increasing competitiveness. A new report from a committee of the National Academy of Engineering examines U.S. industry's experience in setting and meeting these expanded goals, and identifies factors needed to improve the measuring and reporting of corporate environmental performance.

The report highlights current and potential uses of a wide range of environmental performance measurements in four major U.S. industries -- automotive, chemical, electronics, and pulp and paper. Firms in these sectors cite increased manufacturing efficiency, greater market access, and better relations with shareholders as areas where a competitive advantage can be gained from improved environmental performance.

The report also offers a set of environmental measures that any company could implement to improve its environmental performance. These measures, which assess environmental impact during both product manufacturing and product use, represent a minimum number of measures that an environmentally responsible firm should track, the committee said.

Tracking and reporting industrial environmental performance is a relatively new phenomenon, the committee pointed out, but this expanded assessment has the potential to be as influential as corporate financial reporting. Sophisticated financial measures, which now primarily help stakeholders such as customers, investors, and regulators determine whether a corporation is competing fairly and successfully, do not reflect environmental performance.

While the committee noted that the impetus for more advanced environmental measures is coming from industry, it also acknowledged the need for stronger federal coordination to improve the tracking and reporting of environmental performance by corporations. In addition, the federal government should work with industry, state and local governments, and other organizations to develop better methods of ranking the relative health risks of individual chemicals, or classes of them. The report also calls for coordinated efforts to help define appropriate measures that can gauge a corporation's contribution to sustainable development. Such coordination should enhance the reporting of environmental performance.

As more definitive environmental goals are established, industry sectors as well as individual companies should more aggressively set, track, and report on their progress in meeting targets, the report recommends. Companies that set goals and commit to tracking and reporting progress often realize rapid improvements in environmental performance.

The best methods and tools to assess environmental impact must be disseminated throughout and across industries, the committee said. This would be most helpful to small and medium-size companies, which do not have extensive supply chains for materials or the financial means that large firms have to research and test effective measures. The government is in a good position to monitor and distribute these recent advances.

Read the full text of Industrial Environmental Performance Metrics: Challenges and Opportunitiesfor free on the Web, as well as more than 1,800 other publications from the National Academies. Printed copies are available for purchase from the National Academy Press Web site or at the mailing address in the letterhead; tel. (202) 334-3313 or 1-800-624-6242. Reporters may obtain a pre-publication copy from the Office of News and Public Information at the letterhead address (contacts listed above).


NATIONAL ACADEMY OF ENGINEERING

Committee on Industrial Environmental Performance Metrics

Robert A. Frosch * (chair)
Senior Research Fellow
Center for Science and International Affairs
John F. Kennedy School of Government
Harvard University
Cambridge, Mass.

David C. Bonner
Senior Vice President of Technology and Engineering
Westlake Group
Houston

John B. Carberry
Director of Environmental Technology
E.I. du Pont de Nemours & Co.
Wilmington, Del.

Leslie Carothers
Vice President of Environment, Health, and Safety
United Technologies Corp.
Hartford, Conn.

Daryl Ditz
Director
Environmental Management Program
Environmental Law Institute
Washington, D.C.

Thomas N. Gladwin
Max McGraw Professor of Sustainable Enterprise, and
Director, Corporate Environmental Management Program
Business School and School of Natural Resources and Environment
University of Michigan
Ann Arbor

Thomas E. Graedel
Professor of Industrial Ecology, of Chemical Engineering, and of Geology
Yale School of Forestry and Environmental Studies
New Haven, Conn.

Christopher Green
Executive Director
Materials Research and Technology Business Development Directorate, and
Chief Technical Officer, China
General Motors Corp.
Warren, Mich.

Richard R. Gustafson
Denman Professor of Paper Science and Engineering, and Chair, Management and Engineering Division
College of Forest Resources
University of Washington
Seattle

Michael J. Leake
Director
Environment, Health, and Safety
Raytheon/Texas Instruments Systems
Dallas

David W. Mayer
Director
Pollution Prevention and Environmental Performance
Georgia Pacific Corp.
Atlanta

Richard D. Morgenstern
Senior Economic Counselor
U.S. Department of State
Washington, D.C.

William F. Powers *
Vice President, Research
Ford Motor Co.
Dearborn, Mich.

Darryl K. Williams
Senior Vice President, Technology and Environment
Eastman Chemical Co.
Kingsport, Tenn.

STAFF

Deanna J. Richards
Study Director

* Member, National Academy of Engineering