Climate Change ProgramsBenefit EH&S Groups

by Marc KarellHistorically, EHS managers function to prevent violations, fines, and bad pub-licity. EHS is not perceived as a money-making activity for the firm, just onethat prevents losses that would not happen if good systems are in place. As a result, EHS departments geared toavoiding problems are often not placedhigh in a typical firm’s hierarchy, particu-larly compared with professionals inmanufacturing and sales.

The explosive growth of climatechange as an environmental issue ischanging this. Climate change offersopportunities for special environmentalprograms that embody core businessvalues for any company or governmentagency.

This article presents eight nonregula-tory reasons a robust climate changeprogram led by environmental profes-sionals will benefit the bottom line ofany firm.

Making the Monetary CaseClimate change can become a catalystfor reducing significant expenses.Moreover, a well-constructed climatechange program can make money for companies. This has been showntime and again. Reducing GHG emissions most commonly occurs by reducing fossil fuel combustion and electric usage.

Given the high price of fuel and elec-tricity these days, such projects willalso result in significant cost savings.A comprehensive energy audit canidentify “low hanging fruit” and determine potential projects to reduce GHG emissions and their likely sav-ings and payback time.

In addition, reducing GHG emissions canresult in credits that your firm can sell onthe market for revenue. In Europe, underthe Kyoto Protocol, a number of firms realized significant revenues from sellingtheir credits (i.e., excess emissions reductions). In the United States, whilethe value of carbon credits in the volun-tary or regulatory market (RegionalGreenhouse Gas Initiative or Califor-nia’s Global Warming Solutions Act) isnot expected to be as high as in Europe,it can become a reasonable source ofrevenue if played correctly. EHS canassume a major role in making this happen and then managing the benefits.

Create New Products And Sell MoreAs with any new business opportunity, climate change offers possibilities tofirms that are open to new ideas. Toyota with its Prius and GE with itsEcoimagination program are examplesof firms using the recognition anddemand of climate change to produceand market products. EHS can be in theforefront of such activities, working

with product development and market-ing to introduce new products or re-tool existing products to take advan-tage of the growing interest in climatechange. Again, climate change allowsEHS to contribute as more than a sup-port group to a firm’s bottom line.

Impress Customers and SuppliersThere is a growing movement amongthe firms you deal with (mainly retail-ers) to understand the “carbon lifecycle” of your products. Call this the“Wal-Mart effect,” as Wal-Mart has been prominent in requiring some of its suppliers to develop information onGHG emissions upstream and down-stream of their products’ appearance in the retail store.

While Wal-Mart is just gatheringinformation, some companies are nowrequiring their suppliers to implementminimum energy or other GHG minimizing practices as a condition to purchasing their products. Imple-menting a climate change programwill show your customers and suppliers that you are aware of the situation and are already minimizingGHG emissions and putting yourproduct in a better position compared

© 2008 Business & Legal Reports, Inc.

COMPLIANCE DVISOR The Environmental Manager's A

CONTENTS

The environmental manager’s smart choice for news and compliance solutions

February 4, 2008 www.blr.com Issue 704

The Business Case for Reducing GHGs

5

The Business Case for Reducing GHGs

We Would Like to Hear from You

Do the arguments in this article makesense at your firm? Have you attemptedto move forward in any of these areas?Have you been successful? What barriersto further success in implementing a climate change program and gainingrecognition for EHS have you observed?

Please share your experiences athttp://community.blr.com/safety/forums.New users must create a free profile bycompleting a simple registration form.

to your competitors. EHS can workwith marketing and sales to make this happen.

Raise Employee MoraleCompanies are being challenged moreand more these days to keep good employees from leaving and to raisecompany morale. It has been docu-mented that the cost of replacing a valued employee is very large.

In addition, how does a company moti-vate its employees to work hard and beloyal to the firm? Climate change canbe one answer.

Many firms have developed programsthat involve employees and share suc-cesses through internal newsletters.Firms have reported that their employ-ees, in some cases, have a new zealand devotion to the workplace oncethey have invested in climate changeand sustainability programs andbelieve that the firm is dedicated to agreater good. As one person put it, itgives him something to talk about atthe dinner table that the family can relate to. Thus, climate change canhave an impact beyond the workplace.

In addition, a firm implementing build-ing upgrades to meet Leadership inEnergy and Environmental Design(LEED) standards will likely see anincrease in productivity and reductionin sick days, which is good for boththe company bottom line andemployee satisfaction. EHS can workwith human resources and communi-cations to involve and inform employ-ees about climate change goals andsuccesses.

Fast-tracking Future ProjectsCompany success is often associatedwith growth—in sales, product develop-ment, and manufacturing volume.

However, environmental concerns areoften used as reasons to block expan-sions and growth, forcing firms to lookto grow overseas, sometimes causingdisaggregation of product development.Environmental and other citizengroups have become sophisticated intheir ability to block growth.

Conversely, company environmentalprograms can help defuse conflictswith advocacy groups. As was seenlast year in the proposed buyout ofTXU power plants, a climate changeprogram was a major factor in a proposed expansion, including theconstruction of new coal-fired powerplants. A number of environmentalgroups signed on to this expansion because of the assurance (and metrics)that a robust climate change programwould be in place with distinct, meas-urable goals.

The climate change program enabledtrust to build between the parties, help-ing to reduce the time necessary to approve the expansion, saving the firmmuch money and time in permitting theproposed facilities, and enabling themto build and operate sooner than other-wise. EHS can work with strategicservices to develop a climate changeprogram to allow such fast-tracking.

Improving EfficiencyThe hallmark of reducing fuel andelectricity use while maintaining andincreasing the manufacturing rate is to improve efficiency.

A climate change program with GHG emissions reduction targets can improve operational efficiencythroughout a firm’s general business,spanning the handling of raw materialsto transportation of raw materials tothe plant to delivery of the product tothe customers, as well as the actualmanufacturing process.

Improving efficiency improves profitmargins and decreases emissions ofother compounds, allowing growthwithout tripping major air permittingrequirements and related onerous environmental regulations. EHS canwork with engineering to make thishappen.

Evaluating Climate RisksIn recent years we have begun to seethe physical effects of climate changeon the earth, such as the melting ofpolar ice caps and greater temperatureextremes. Scientists have forecastmany potential grave dangers, such asrising sea levels, more intense storms,the spread of tropical diseases, watershortages due to greater salt waterinfiltration into freshwater stocks, andchanges in agricultural patterns.

Historically, companies have usedEHS to determine what impacts theiroperations have on the environment,such as air emissions and wastewater.With climate change, for the first time,we are concerned with the reverse—how the environment will impact business should some of these effectsmanifest themselves.

A whole science has developed concerning modeling effects on a business. For example, if your firm operates a critical manufacturing planton an island in the Caribbean, howwould your bottom line be impactedby the greater risk of another Katrinaknocking it out? What if you don’teven own that plant, but depend on araw material it produces? What if acritical crop needed to make your prod-uct will need to be shifted to other partsof the world because the soil in theexisting locations can no longer growit? What would be the long-term effectsof hotter weather, more tropical dis-eases, and long-term water shortage on

© 2008 Business & Legal Reports, Inc. (#704)

Robert L. Brady, J.D., Publisher; Margaret A. Carter-Ward, Editor in Chief; Ana Ellington, Senior Editor; William C. Schillaci, Content Editor; Sherry Newcomb, EditorialAssistant; Corinne Weber, Proofreader; Darlene Francis, Product Manager; Rebecca MacLachlan, Graphic Designer; Alice Rand, Customer Service, Reprints Ext. 2267.Environmental Manager’s Compliance Advisor is issued by BUSINESS & LEGAL REPORTS, INC. Editorial and business offices are located at 141 Mill Rock RoadEast, P.O. Box 6001, Old Saybrook, CT 06475-6001. © 2008 Business & Legal Reports, Inc.Subscription price: $349.95 annually for complete service. Periodicals postage paid at Old Saybrook, CT 06475-9998, Standard Mail enclosed. POSTMASTER: Sendaddress changes to Environmental Manager’s Compliance Advisor, 141 Mill Rock Road East, P.O. Box 6001, Old Saybrook, CT 06475-6001.Authorization to photocopy items for internal or personal use, or the internal or personal use of specific clients, is granted by Business & Legal Reports, Inc., pro-vided that the base fee of U.S. $0.50 per copy plus U.S. $0.50 per page is paid directly to Copyright Clearance Center, Customer Service, 978-750-8400, or check CCCOnline at: http://www.copyright.com. For those organizations that have been granted a photocopy license by CCC, a separate system of payment has been arranged.ISSN #0887-9753.

© 2008 Business & Legal Reports, Inc. 3

people’s standards of living and con-sumer confidence in your products?

A climate change risk program candelve deeper into questions like theseand allow your firm to be preparedearly and make the proper investmentsto minimize risk and even turn riskinto opportunities. EHS can work withrisk groups to develop a viable climatechange risk program.

Improving Your ImageClimate change is recognized by thepublic and governments worldwide asa potentially catastrophic problem. Inthe United States, a small but growingnumber of people use environmentalimage to promote consumer confi-dence in the products they buy. Yourcompany can use this approach todemonstrate that it is forward thinking.And unlike other social programs, climate change has a recognized met-ric—the reduction in GHG emissions.

There are several voluntary registriesto demonstrate that your company has achieved certifiable GHG emis-

sions reductions both for the publicrecord and to apply in advance to any future rules.

Such a program can be a positive partof your annual or other stakeholder reports and be a headline entry on your website. A number of proactivecompanies have already received positive recognition for verifiable reductions in GHG emissions. EHScan work with public relations andcommunications to show stakeholdersthe environmental commitment andsuccess of your firm.

Preparing for RegulationAnd then comes the traditional role ofEHS—regulatory preparation. Withthe likelihood of federal legislationduring the next presidential term, having a climate change program willput your firm in a better position toprepare for any new rule that mayaffect you. This will save your firmcosts to prepare to comply and can beused as an opportunity to prosper overyour competitors.

In addition, with your own climatechange program, your firm will be in a better position to advocate forrules that reward your prior efforts in a greater way.

Be prepared, those of you in EHS, for abold new world, as your efforts leadinga climate change program will put yourgroup beyond the traditional role of aback-office support group that preventsthe loss of money, and into a morecommanding position influencing increases in revenues and positive busi-ness outcomes and customer relations.

� Marc Karell, P.E., Principal at ClimateChange & Environmental Services, LLC,based in New York. Website: www.CCESworld.com. Contact: 914-584-6720 orkarell@CCESworld.com

This article was originally published in BLR’sEnvironmental Manager’s Compliance Advisor.Visit BLR at www.blr.com.

This article is reprinted with permission from Business & Legal Reports, Inc. Please visit BLR’s website at http://www.blr.com.