by Marc Karell

Historically, EHS managers function to prevent violations, fines, and bad publicity. EHS is not perceived as a money-making activity for the firm, just one that prevents losses that would not happen if good systems are in place. As a result, EHS departments geared to avoiding problems are often not placed high in a typical firm's hierarchy, particularly compared to professionals in manufacturing and sales.

The explosive growth of climate change as an environmental issue is changing this. Climate change offers opportunities for special environmental programs that embody core business values for any company or government agency.

This article presents eight nonregulatory reasons a robust climate change program led by environmental professionals will benefit the bottom line of any firm.

Making the Monetary Case

Climate change can become a catalyst for reducing significant expenses. Moreover, a well-constructed climate change program can make money for companies. This has been shown time and again. Reducing greenhouse gas (GHG) emissions most commonly occurs by reducing fossil fuel combustion and electric usage. Given the high price of fuel and electricity these days, such projects will also result in significant cost savings. A comprehensive energy audit can identify "low hanging fruit" and determine potential projects to reduce GHG emissions and their likely savings and payback time.

In addition, reducing GHG emissions can result in credits that your firm can sell on the market for revenue. In Europe, under the Kyoto Protocol, a number of firms realized significant revenues from selling their credits (i.e., excess emissions reductions). In the United States, while the value of carbon credits in the voluntary or regulatory market (Regional Greenhouse Gas Initiative or California's Global Warming Solutions Act) is not expected to be as high as in Europe, it can become a reasonable source of revenue if played correctly. EHS can assume a major role in making this happen and then managing the benefits.

Create New Products and Sell More

Like any new business opportunity, climate change offers possibilities to firms that are open to new ideas. Toyota with its Prius and GE with its Ecoimagination program are examples of firms using the recognition and demand of climate change to produce and market products. EHS can be in the forefront of such activities, working with product development and marketing to introduce new products or re-tool existing products to take advantage of the growing interest in climate change. Again, climate change allows EHS to contribute as more than a support group to a firm's bottom line.

Impress Customers and Suppliers

There is a growing movement among the firms you deal with (mainly retailers) to understand the "carbon life cycle" of your products. Call this the "Wal-Mart effect," as Wal-Mart as been prominent in requiring some of its suppliers to develop information on GHG emissions upstream and downstream of their products' appearance in the retail store.

While Wal-Mart is just gathering information, some companies are now requiring their suppliers to implement minimum energy or other GHG minimizing practices as a condition to purchasing their products. Implementing a climate change program will show your customers and suppliers that you are aware of the situation and are already minimizing GHG emissions and putting your product in a better position compared to your competitors. EHS can work with marketing and sales to make this happen.

Raise Employee Morale

Companies are being challenged more and more these days to keep good employees from leaving and to raise company morale. It has been documented that the cost of replacing a valued employee is very large. In addition, how does a company motivate its employees to work hard and be loyal to the firm? Climate change can be one answer.

Many firms have developed programs that involve employees and share successes through internal newsletters. Firms have reported that their employees, in some cases, have a new zeal and devotion to the workplace once they have invested in climate change and sustainability programs and believe that the firm is dedicated to a greater good. As one person put it, it gives him something to talk about at the dinner table that the family can relate to. Thus, climate change can have an impact beyond the workplace.

In addition, a firm implementing building upgrades to meet Leadership in Energy and Environmental Design (LEED) standards will likely see an increase in productivity and reduction in sick days, which is good for both the company bottom line and employee satisfaction. EHS can work with human resources and communications to involve and inform employees about climate change goals and successes.

Fast-tracking Future Projects

Company success is often associated with growth--in sales, product development, and manufacturing volume. However, environmental concerns are often used as reasons to block expansions and growth, forcing firms to look to grow overseas, sometimes causing disaggregation of product development. Environmental and other citizen groups have become sophisticated in their ability to block growth. Conversely, company environmental programs can help defuse conflicts with advocacy groups. As was seen last year in the proposed buyout of TXU power plants, a climate change program was a major factor in a proposed expansion, including the construction of new coal-fired power plants. A number of environmental groups signed on to this expansion because of the assurance (and metrics) that a robust climate change program would be in place with distinct, measurable goals.

The climate change program enabled trust to build between the parties, helping to reduce the time necessary to approve the expansion, saving the firm much money and time in permitting the proposed facilities and enabling them to build and operate sooner than otherwise. EHS can work with strategic services to develop a climate change program to allow such fast-tracking.

Improving Efficiency

The hallmark of reducing fuel and electricity use while maintaining and increasing the manufacturing rate is to improve efficiency. A climate change program with GHG emissions reduction targets can improve operational efficiency throughout a firm's general business, spanning the handling of raw materials to transportation of raw materials to the plant to delivery of the product to the customers, as well as the actual manufacturing process. Improving efficiency improves profit margins and decreases emissions of other compounds, allowing growth without tripping major air permitting requirements and related onerous environmental regulations. EHS can work with engineering to make this happen.

Evaluating Climate Risks

In recent years we have begun to see the physical effects of climate change on the earth, such as the melting of polar ice caps and greater temperature extremes. Scientists have forecast many potential grave dangers, such as rising sea levels, more intense storms, the spread of tropical diseases, water shortages due to greater salt water infiltration into freshwater stocks, and changes in agricultural patterns. Historically, companies have used EHS to determine what impacts their operations 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 effects manifest themselves.

A whole science has developed concerning modeling effects on a business. For example, if your firm operates a critical manufacturing plant on an island in the Caribbean, how would your bottom line be impacted by the greater risk of another Katrina knocking it out? What if you don't even own that plant, but depend on a raw material it produces? What if a critical crop needed to make your product will need to be shifted to other parts of the world because the soil in the existing locations can no longer grow it? What would be the long-term effects of hotter weather, more tropical diseases, and long-term water shortage on people's standards of living and consumer confidence in your products?

A climate change risk program can delve deeper into questions like these and allow your firm to be prepared early and make the proper investments to minimize risk and even turn risk into opportunities. EHS can work with risk groups to develop a viable climate change risk program.

Improving Your Image

Climate change is recognized by the public and governments worldwide as a potentially catastrophic problem. In the United States, a small but growing number of people use environmental image to promote consumer confidence in the products they buy. Your company can use this approach to demonstrate that it is forward thinking. And unlike other social programs, climate change has a recognized metric--the reduction in GHG emissions.

There are several voluntary registries to demonstrate that your company has achieved certifiable GHG emissions reductions both for the public record and to apply in advance to any future rules. Such a program can be a positive part of your annual or other stakeholder reports and be a headline entry on your website. A number of proactive companies have already received positive recognition for verifiable reductions in GHG emissions. EHS can work with public relations and communications to show stakeholders the environmental commitment and success of your firm.

Preparing for Regulation

And then comes the traditional role of EHS--regulatory preparation. With the likelihood of federal legislation during the next presidential term, having a climate change program will put your firm in a better position to prepare for any new rule that may affect you. This will save your firm costs to prepare to comply and can be used as an opportunity to prosper over your competitors. In addition, with your own climate change program, your firm will be in a better position to advocate for rules that reward your prior efforts in a greater way.

Be prepared, those of you in EHS, for a bold new world, as your efforts leading a climate change program will put your group beyond the traditional role of a back-office support group that prevents the loss of money, and into a more commanding position influencing increases in revenues and positive business outcomes and customer relations.

[Source: Environmental Manager's Compliance Advisor. Subscribe today!]