1996 Electronics Industry Environmental Roadmap - Civil and ...

Strategic Business Opportunities
– Incorporation of environmental concerns in product design,
– Environmental considerations in manufacturing processes and facilities,
– Compliance with existing mandates,
– Community awareness,
– Environmental considerations in marketing and distribution, and
– Strategies for addressing disposition or take-back.
Self-audits provide corporate management with an ongoing evaluation mechanism, and,
to the extent management is willing to share some portion of the results, present a source
for industry benchmarking. In order to provide appropriate incentives, regulators may
want to assure businesses of a “safe harbor” for problems identified during self audits,
allowing adequate time for any appropriate response.
Improved Understanding of Environmental Costs: Analysis at many large businesses has
revealed that many cost-accounting systems do not trace environmental costs to the production
processes that generate these costs. This was acceptable historically because the
costs were usually small and the expense of tracing was relatively large. However, the
growing magnitude of these costs and the non-linear form of some environmental cost
drivers can cause traditional allocation methods to produce suboptimal financing and investment
decisions [1, 2].
There is no single accepted definition of “environmental cost.” Here, we use this term to
describe costs that arise from satisfying corporate environmental objectives, including
compliance with current and anticipated local, state, and federal environmental
regulations. For example, the Occupational Health and Safety Act regulates employee
exposure to hazardous chemicals and requires worker right-to-know training on handling
them. The Superfund Amendments and Reauthorization Act (SARA) of 1986 and the
Emergency Planning and Community Right-to-Know Act of 1986 also regulate the use
and storage of hazardous substances. Federal legislation regulating the monitoring,
handling, and treatment of hazardous wastes includes the Resource Conservation and
Recovery Act (RCRA) of 1976, the Hazardous and Solid Waste Amendments of 1984,
and the Comprehensive Environmental Response, Compensation and Liability Act
(CERCLA) of 1980. The Clean Air Act, the Clean Water Act, and SARA are the basis
for most federal regulation of air and water emissions. In addition to costs imposed by
these regulations, businesses pay for insurance to protect against liabilities arising from
hazardous materials use or pollution.
Measuring and reporting the full life-cycle costs of products and their components will be
an increasingly important component of strategic planning (see Figure 2-1). Strategic
planning will need to incorporate information on both existing costs and likely future
costs [7, 8]. Several recent reports indicate that many firms tend to underestimate the
existing environmental costs associated with specific products and product lines [1, 2, 9].
A comprehensive, activity-based costing approach is commonly recommended for
understanding existing environmental costs.
19