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This article was downloaded by: [University of Wisconsin Oshkosh] On: 04 October 2014, At: 02:00 Publisher: Taylor & Francis Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK Impact Assessment and Project Appraisal Publication details, including instructions for authors and subscription information: http://www.tandfonline.com/loi/tiap20 Integrating environmental consequences and impact assessment into design processes and corporate strategy Thomas W. Mason a , A. Thomas Roper a & Alan Porter b a Rose-Hulman Institute of Technology , Tcrrc Hautc, IN 47803 , USA E-mail: b Industrial and Systems Engineering , Georgia Institute of Technology , Atlanta , GA 30332 , USA E-mail: Published online: 20 Feb 2012. To cite this article: Thomas W. Mason , A. Thomas Roper & Alan Porter (1999) Integrating environmental consequences and impact assessment into design processes and corporate strategy, Impact Assessment and Project Appraisal, 17:2, 141-145, DOI: 10.3152/147154699781767918 To link to this article: http://dx.doi.org/10.3152/147154699781767918 PLEASE SCROLL DOWN FOR ARTICLE Taylor & Francis makes every effort to ensure the accuracy of all the information (the “Content”) contained in the publications on our platform. However, Taylor & Francis, our agents, and our licensors make no representations or warranties whatsoever as to the accuracy, completeness, or suitability for any purpose of the Content. Any opinions and views expressed in this publication are the opinions and views of the authors, and are not the views of or endorsed by Taylor & Francis. The accuracy of the Content should not be relied upon and should be independently verified with primary sources of information. Taylor and Francis shall not be liable for any losses, actions, claims, proceedings, demands, costs, expenses, damages, and other liabilities whatsoever or howsoever caused arising directly or indirectly in connection with, in relation to or arising out of the use of the Content. This article may be used for research, teaching, and private study purposes. Any substantial or systematic reproduction, redistribution, reselling, loan, sub-licensing, systematic supply, or distribution in any form to anyone is expressly forbidden. Terms & Conditions of access and use can be found at http:// www.tandfonline.com/page/terms-and-conditions

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Page 1: Integrating environmental consequences and impact assessment into design processes and corporate strategy

This article was downloaded by: [University of Wisconsin Oshkosh]On: 04 October 2014, At: 02:00Publisher: Taylor & FrancisInforma Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House,37-41 Mortimer Street, London W1T 3JH, UK

Impact Assessment and Project AppraisalPublication details, including instructions for authors and subscription information:http://www.tandfonline.com/loi/tiap20

Integrating environmental consequences and impactassessment into design processes and corporatestrategyThomas W. Mason a , A. Thomas Roper a & Alan Porter ba Rose-Hulman Institute of Technology , Tcrrc Hautc, IN 47803 , USA E-mail:b Industrial and Systems Engineering , Georgia Institute of Technology , Atlanta , GA 30332 ,USA E-mail:Published online: 20 Feb 2012.

To cite this article: Thomas W. Mason , A. Thomas Roper & Alan Porter (1999) Integrating environmental consequences andimpact assessment into design processes and corporate strategy, Impact Assessment and Project Appraisal, 17:2, 141-145,DOI: 10.3152/147154699781767918

To link to this article: http://dx.doi.org/10.3152/147154699781767918

PLEASE SCROLL DOWN FOR ARTICLE

Taylor & Francis makes every effort to ensure the accuracy of all the information (the “Content”) containedin the publications on our platform. However, Taylor & Francis, our agents, and our licensors make norepresentations or warranties whatsoever as to the accuracy, completeness, or suitability for any purpose of theContent. Any opinions and views expressed in this publication are the opinions and views of the authors, andare not the views of or endorsed by Taylor & Francis. The accuracy of the Content should not be relied upon andshould be independently verified with primary sources of information. Taylor and Francis shall not be liable forany losses, actions, claims, proceedings, demands, costs, expenses, damages, and other liabilities whatsoeveror howsoever caused arising directly or indirectly in connection with, in relation to or arising out of the use ofthe Content.

This article may be used for research, teaching, and private study purposes. Any substantial or systematicreproduction, redistribution, reselling, loan, sub-licensing, systematic supply, or distribution in anyform to anyone is expressly forbidden. Terms & Conditions of access and use can be found at http://www.tandfonline.com/page/terms-and-conditions

Page 2: Integrating environmental consequences and impact assessment into design processes and corporate strategy

Impact Assessmenr and Prolccr Appmisnl, volume 17, number 2, June 1999. papzs 141 145. Beech .Tree Publishing, IO Watford (‘lose, Guildford, Surrey GUI ZEP, UK.

Corporate strategy

Integrating environmental consequences andimpact assessment into design processes andcorporate strategy

Thomas W Mason, A Thomas Roper and Alan Porter

As we enter the 21st century, it is clear thatproducts and processes must be designed tocontribute to sustainable development. Thispaper shows that there are forces that makeintegration of environmental consequences indesign processes a profitable part of corporatestrategy. Businesses should be consideringimpacts not only because it is bestfor our world,but also because there is increasing evidencethat it may be the most profitable approach aswell.

Keywords: impact asscssmcnt; cnvn-onmental assessment;corporate strategy

Thomas W Mason and A Thomas Roper arc at the Rose-HulmanInstitute of Technology, Tcrrc Hautc, IN 47803, USA; E-mall:[email protected] a n d Alan.Ropcr@Rosc-Hulmanxdu. Alan f’ortcr IS in Industrial and Systems Engmecr-ing, Georgia Institute of Technology, Atlanta, GA 30332, USA;E-mail: Alan.Portcr(cclSYE.GATECH.edu.

APID CHANGES IN TECHNOLOGY haveRoften been blamed for the unanticipated im-acts that affect the environment and society

in which they are implemented. Measures to amelio-rate the negative effects have been implemented overthe years, but traditionally it has been after the newtechnologies and their benefits have been embraced.

In addition, the historical approach to restrainingthe effects of technology has been to look at the badeffects one at a time to try to figure out constraintsthat might eliminate or at least reduce them. Thisusually only happens after political struggles overregulations, and the enforcement of the resulting poli-cies is often difficult because the businesses based onthe technologies are the only parties with long-termsustainable interest.

During the 70s the technology assessment (TA)movement attempted to establish mechanisms forlooking at impacts well before negative consequenceswere encountered. While the seeds of environmentalmanagement and control that were sown in that erahave brought forth changes in levels of harmfulemissions, the broader issues associated with techno-logical development were not pursued with the samesuccess.

Increasing awareness of the need for ecologicalsystem concern, rather than just modifying specificsources of emissions, seems to present an opportunityto once again take an holistic view of production andconsumption and their effects. Alan Porter (1997) haspointed out that there are lessons from technologyassessment for advocates of strategic environmental

Impact Assessment and Project Appraisal JUM 1999 1461-5517/99/020141-5 US$08.00OlAlA1999 141

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Page 3: Integrating environmental consequences and impact assessment into design processes and corporate strategy

‘K, ol~puhlubm authored ,n Inducm

Figure 1. Number of articles in seven related research areasagainst percentage authorised by industry

Note: Popp = percentage of companies’ papers in all papers ofa domain

assessment (SEA). Moreover, the tools of impactassessment (IA), which evolved from TA are essentialto the achievement of sustainable development.

It may be that businesses, especially those basedon technology, are now more receptive to systemicthinking about strategy. Historically, technologicalchanges were viewed by business as perhaps fortui-tous, but probably unpredictable, phenomena thatmight be increased by expenditure on R&D. Theconnection between discovery of new knowledge andproduct or process change was not well understoodand was assumed to be a very long-term matter. At atime when business focus was clearly short-term,long-term consequences seemed safe to ignore.

- The realities of the 1990’s globally competitiveworld have changed these perceptions. Research on“sustainable technology” is increasing (Porter, 1998).Furthermore, industry is an active participant. Figure1 shows the number of articles on each of sevenrelated research areas (tallied from EI Cornpendexover the past decade) plotted against the percentageauthored by industry.

Now, businesses view technological change as anintegrated component in their overall competitivestrategy. Hence, the direction of technology improve-ment must be influenced by cross-functional pro-cesses aimed at overall corporate success. The oldphase-dominant practices of throwing research outputover the transom to development people, who workedon it and threw it over the transom to manufacturing,who worked on it and threw it over the transom tomarketing, who then tried to figure out who might bepersuaded to buy the product, are replaced by concur-rent engineering and total quality management(TQM) practices that design in the characteristicsneeded for success in the market place.

Will the various forces on design and productionof products include effective direction toward thegoals of sustainable development? There is increasingevidence that the potential exists now to get busi-nesses to incorporate requirements for the environ-ment and society into their internal processes.

The motivations are coming from the realizationsthat:

resource-prudent processes can reduce costs;significant portions of the market respond to so-called ‘green marketing;’long-term liability exposure exists for products andby-products of production; andpractices bringing favorable results yield sustain-able competitive advantages.

Reducing costs by ‘green’ behavior

Engineering for sustainability can reduce costs in anumber of ways. Repetto (1997) has argued that pol-lution laws have boosted productivity, which willlower costs. A University of Michigan study revealedthat companies saw operating performance improve-ments and higher returns after pollution preventionprograms were implemented (Wasik, 1996, page 3).

The TQM approach is geared to doing things rightthe first time and minimizing waste and rejects. Thismeans less demand for materials and less waste to beeither processed or absorbed by the environment. Thecontinuous improvement management approach as-sociated with the quality movement and the needs toincrease competitiveness together can compel con-tinuing efforts to cut costs, which can, in turn, meanless demand for resource extraction.

In the steel, paper, aluminum and other industriesthere have been technological advances that haveincreased the amount of recycled materials that canbe used as inputs. For example, paper mills operatewith almost 100% recycling of key chemicals andwater, thereby easing siting, community relatrons andwater problems.

This recycling is not done because of the socialconscience of the firms in these industries; it is donebecause it is good business. Ray Anderson (1998) hasembarked Interface, a carpet company, on a missionto become a fully sustainable corporation, demon-strating increasing revenues and profits in the process.Such demonstrations will lead other firms to strive forsustainability as well.

‘Green marketing’ as a source of profit fromenvironmentally responsible behavior is even moreapparent. Menon and Menon (1997) concluded thatthere is an “emerging consensus” that goals such as

Paper mills operate with almost100O/~ recycling of key chemicals andwater, thereby easing siting,community relations and waterproblems: this is done not because ofsocial conscience, but because it isgood business

142 Impact Assessment and Project Appraisal Jrtrrc 1999

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Page 4: Integrating environmental consequences and impact assessment into design processes and corporate strategy

Impact assessment in corporate strategy

who do not care and none of the consumers who areconcerned about sustainability. Firm G will get halfthe conslrmers who do not care and all tho’se who aresocially conscious of the effects of their consumptionon the earth. Note that Firm G will have a costadvantage in this market because of its higher level ofoutput, even though the cost curve is higher. In fact,its cost curve may not be higher.

The point here is that the benefits of higher salescan include lower cost per unit of production, and‘green’ operations can have higher sales. This advan-tage may lead to price advantages and/or higher levelsof profitability.

The preceding discussion does not capture all thedimensions of Firm G’s advantages from ‘green’behavior. Business strategists emphasize that com-petitive advantages can be short-lived. Firm A couldrealize that its market opportunities were limited andadopt similar ‘green’ product approaches. However,it is unlikely to be that easy. Processes which result inproducts, projects and services that are consistentwith sustainable development often benefit from sys-tematic design for sustainability (for instance, inter-linked choices of materials based on life-cycleconsiderations). They may also have secret or am-biguous underlying technologies that can provide aproprietary edge to some firms over others. Patentsand trade secrets protection provides legal barriers tocopying successful approaches.

While it may seem that sharing these innovationswould have benefits to society, the competitiveadvantages they provide are powerful incentives todevelop and refine sustainable approaches.Chynoweth and Kirschner (1993) have pointed outthat environmental standards are a source of competi-tive advantage in the chemical business. Other inves-tigations have found that companies may even try toget environmental standards strengthened to enhancetheir position. For example, Whirlpool Corporationreportedly tried to raise environmental requirementson washing machines in the United States to counterthe entry of a new product from its competitor GE(Menon and Menon, 1997, page 59).

The transformation from prescribed ‘end of pipe’environmental constraints to sustainable productiontechniques as a competitive asset also implies oppor-tunities for the continuous monitoring that has alwaysbeen stressed in theory, though not always practiced.Public pressure is often successful in getting regula-tions imposed on business in eras of high public,,interest.

Then the public moves on to other issues, andmonitoring to assure goals are attained is not vigor-ously pursued because nobody seems to have a directinterest. When environmental preservation and sus-tainable production methods are part of the competi-tive market, firms have incentives both to supportpublic authorities in their efforts and to monitor oneanother.

The possibility of long-term monitoring is particu-larly important in a society in which class action suits’

A _ _____ ___ .___ __ _ _. __ __

G’s unit cost curveA’s untt cost curve

A G Outputs

Figure 2. Output scale cost advantage

sustainable development and business success areinterwoven. Honda is spending million of dollars ofits United States advertising budget to make sure thatconsumers there know that one of the engine optionsfor its Accord significantly exceeds governmentemission requirements. Ben and Jerry’s ice cream haspromoted its earth-friendly image since it began as acompany.

Such examples show that there are significant mar-ket niches in goods, which at least claim to respect thelong-term needs of the planet. There are enough en-vironmentally conscious consumers to make somefirms specialize in using corporate resources to caterto their values. Other firms in the same business maybe forced also to accommodate the environmental andsustained development wishes of customers or losesubstantial portions of the market. If the industry isone with scale economies, this sacrifice of a part ofthe market can also lead to higher costs per unit ofproduction.

Figure 2 shows the per unit costs of production fortwo firms in an industry. Firm A is minimally com-mitted to sustainable production and protection of theenvironment, while Firm G is making ‘green’ produc-tion and marketing an important part of its strategy.Suppose that two-thirds of the market does not careabout the ‘green’ aspects of products. There is noreason to expect that they will not buy a product thathas less impact unless its price is higher. The otherthird of the consumers prefer more socially desirableproducts.

If there are only two firms, we can assume that atequal prices the firm selling the less ‘green’ product(Firm A) will get half the two-thirds of consumers

When environmental preservationand sustainable production methodsare part of the competitive market,firms have incentives both to supportpublic authorities in their efforts andto monitor one another

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II Technological organ,zaf~onCapital Psrsonnal Natural

Research - rRsO”lCRI

KNOWLEDGE

Figure 3. Core competencies in the technology deliverysystem

can threaten the existence of even very large corpora-tions. Product and environmental liability can resultin multi-billion dollar lawsuits decades after deci-sions are made - yet another motivation to considerthe long-term effects of actions.

Wishful thinking?

All this discussion could be interpreted as wishfulthinking, except that there is evidence to support thehypothesis that business is concerned about theseissues. For example, a McKinsey and Company sur-vey of chief executives and board members had a 92%response indicating that the environment is one of thetop three management priorities for the decade of the90s (Walley and Whitehead, 1994).

Perhaps even more convincing is the evidence thatenvironmentally responsible tirrns have superiorstock market performance (Klassen and McLaughlin,1996). This suggests that investors are calculating thepresent value of the future superior profits or avoid-ance of losses that environmentally sound productioncan help to bring about.

The realities of the changes in business strategyand shifts toward sustainable development suggestthat there are opportunities to use business motiva-tions to accomplish social objectives in sustainabledevelopment. The basic argument for using the mar-ket mechanism rather than government planning isthat it is more effective. There is a need for a concep-tual model that can support practical approachesto making businesses’ technological decisions con-sistent with the earth’s long-term needs. Impactassessment offers the outer shell of that model, andmodem strategy for managing technology within thefirm will provide the core.

Figure 3 shows a modified version of the Technol-ogy Delivery System originally suggested by Wenkand Kuehn ( 1977, reproduced in Porter et al, 199 1).The technology delivery enterprise (organization)mediates between the technology coming forth fromR&D and the delivered product, process, service and

other outcomes. Those outcomes (intended and unin-tended) affect the technology users and indirectlyaffect many others. This technology delivery systeminteracts with its socioeconomic and naturalenvironments.

Developing a technology delivery system modelfor a specific technology helps map the importantplayers and their effects. One addition in this versionof the model is a line showing that norms and valueshave a direct effect on management choices, as wellas indirect effects through political demands and gov-ernment action. The success of ‘green marketing’shows that the technological organization must con-sider consequences because its customers will includethem in their decisions to buy. This is independent ofgovernment policy.

Another modification is to replace the techno-Hlogical organization block with a variation based onPrahalad and Hamel’s (1990) vrew of core competen-ties as the roots of a business. This explicit focus oncompetencies is consistent with the shift towardknowledge as the basis of wealth in the 2 1 st century.Natural resources, capital and labor are still importantinputs to production, but it is the generation and useof knowledge that will determine financial success.The core competencies in this use of the diagram areresponsible for all the end products of the business,including negative ones. These determine the directand indirect outcomes that bring both benefits andproblems to the world of today and the future.

Historically, impact assessment methods wereviewed as being most useful in the policy realm. Thisfigure shows that impact assessment can shape thecore competencies to make sustainable methods aneffective part of the business’s competitive strategy.Such an approach can assist the technological busi-ness leaders in efforts to “manage from the future”(see Porter et al, 1991).

Responsible stewardship

All over the world, businesses are changing theirprocesses to optimize design and production to meetor exceed customer expectations (see, for example,Kolarrk, 1995). Methods of quality function deploy-ment (QFD) are offered as ways to ensure that therequirements of the marketplace are translated intoproduct specifications and improvements in the com-petencies that are at their roots.

Sustainable development implies that the processof functionally integrating requirements should in-clude responsible stewardship in the use of resourcesand the management of by-products over the prod-ucts’ entire life cycle. This will require applicationsof the tools of impact assessment as part of the designprocess. In fact, assessing and interpreting well canbe critically important core competencies of the firm.

The United States Office of Technology Assess-ment produced a report entitled Grcer~ Products b-yDesigfr (US Congress, 1992). More recently, Graedel

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Documents, guidelines anddiscussions will fall short as long asthey are viewed as primaarilyinteresting to environmentalprofessionals: the object ofsustainable development must beviewed as an integral part of theentire business

and Allenby (1995) have published a textbook onIndustrial L:c,ology that discusses engineering designin the context of materials and energy use and envi-ronmental impacts. Emphases on processes arc also astrength of the IS014000 guidelines, which are theinternational certification standards for environ-mental quality.

However, to a large degree, all these documents,guidelines and discussions will fall short as long asthey are viewed as primarily interesting to environ-mental engineers and other environmental profes-sionals. The object of sustainable development mustbe viewed within the organization as an integral partof the entire business, just as customer requirementshave become.

Opportunities for IA professionals

What are the implications for this evolving businessmodel for impact assessment professionals? There arcopportunrtics h&c. Informing consumers about thedirect and indirect consequences of business activitycan help them be better consumers, as well as voters.We can also push for educators to incorporate impactassessment methods in the preparation of a wide rangeof professionals, not just those destmcd for traditionalimpact assessment careers.

However, there are more proactive possibilities.Clearly, the methods of impact assessment can beviewed as valuable tools in the corporate collection ofcore competencies. Businesses may very well be re-ceptive to strategic relationships with organizationssuch as IAIA. McDonalds, for example, has for manyyears had a joint program with The EnvironmentalDefense Fund (Achrol et al, 1983).

To some extent, such alliances may just be ‘imagepolishing’ or efforts to get a ‘seal of approval.’ Nev-ertheless, this paper has shown that there are very realbusiness advantages to being better than competrtorsat protecting and sustaining the world. Therefore,there may be a growing market for the tools of impact

assessment in large parts of the global businesscommunity.

Years ago, Melvyn Kranzberg stated Kranzberg’sLaw. “Technology 1s neither good nor bad, nor is itneutral.” There is a wide array of opportunities fortechnology to contribute to a better and more sustain-able world. The tools of impact assessment should beused to assist business in exploiting them. The chal-lcnge to us is to find more ways to facilitate theintegration of impact assessment into regular businessprocesses.

Note1. Class action IS a legal action undertaken by one or more

plaintiffs on behalf of themselves and all other persons havingan identical interest in the alleged wrong

References

R S Achrol, T Reve and L W Stern (1983), “The environment ofmarketing channel Dyads: a framework of comparative analy-sis”, Journal of Marketing, 47, October, pages 5567.

Ray Anderson (1998) “A spear in the chest and subsequentevents”, paper presented at the 42nd Annual Conference of theInternational Society for Systems Sciences, Atllanta, GA, USA,23 July 23.

E Chynoweth and E Kirschner (1993) “Environmental standardsprovide a competitive advantage”, Chemical Week, 152(16),pages 46-52.

T Graedel and B Allenby (1995) industrial Ecology (Prentice-Hall,Englewood Cliffs, NJ).

R Klassen and C McLaughlin (1996). “The impact of environmentalmanagement on firm performance”, Management Science. 42,pages 11991214.

W Kolarik (1995). Creating Quality: Concepts, Systems. Strategiesand Tools (McGraw-Hill, New York).

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US Congress, Office of Technology Assessment (1992). GreenProducts by Design: Choices for a Cleaner Environment OTA-E-541 (US Government Printing Office, Washington DC, Octo-ber).

N Walley and B Whitehead (1994). “It’s not easy being green”,Harvard Business Review. 72, May/June. pages 4652.

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