Abstract

Key words

Introduction

Over the past 50 years business in the US has had the opportunity to manage their impacts upon the environment using a variety of tools. Prior to that time it could be said that the predominant existing view was that human impact upon the environment was a necessary and inevitable cost of progress. This perception kept the concept of mutual benefit for environment and business from being considered as a business management style.

Because of a large number of clearly connected and increasingly public environmental disasters in the USA and a growing disgust at the lack of accountability by businesses a series of federal and state regulations were passed between 1970 and 1986. These regulations evolved into patchwork system of prescriptive requirements to manage the most serious water, air, and hazardous waste problems. In 1986 additional reporting requirements were added for storage and ultimate disposition of a large number of chemicals considered hazardous materials. By the early 1990’s the growing web of regulations were beginning to reach their capacity for creating environmental improvement. Further, this maze of regulations resulted in a situation where many of those who regulate dealt only with a single perspective of a regulated media. Often they did not understand how the regulations overlap or cause environmental damage because of the one-size-fits-all approach that transfers waste from one media to another or one country to another.

The dilemma where we find ourselves in 2007 is that we have rules about purchasing, storing, using, selling (products from) and managing waste from hundreds of thousands of chemicals and compounds. Because the commerce of these materials has grown and the ability to see who uses them has also grown, the web of regulations impact every type of business, some households, and sometimes individuals.

To a large degree the proliferation of rules and regulations has benefited the environment. Rivers are not burning (1), waste management has improved, and the air is cleaner of the regulated materials. Since 2000 regulators in Wisconsin have discovered that we do not have enough resources to enforce all of the regulations we are capable of passing. Businesses have found that each new regulation limits their ability to manage operations, be innovative, and bring new products to market. We all learned that as individuals we were tending not to manage but to use the regulation as the point of achievement rather than the base line for improvement.

The EMS approach respects the diversity of activities under which the individuals and their businesses will perform. EMS methodology does not focus upon controlling the down stream damage or apply one solution to impacts that have many root causes. People promoting the EMS approach recognize that root causes to problems are the result of decision making processes of individuals based upon their ability to understand each situation. This level of behavior cannot be governed externally but it can be managed individually and culturally.

The next part of this paper will look at the structure of the 2004 Green Tier Law (Act 276) including some insights into the expectations the legislation establishes.

Following that will be four case studies of EMS implementations done to prepare potential participants for Green Tier participation. Each case study will provide participant background, outline observations about the experience and discuss the potential for producing an EMS.

Green Tier Law

Road to Act 276

By the mid 1980’s it was becoming clear that legislative mandates that worked well to manage pollution from point sources in a media specific approach did not work well to solve the root causes of pollution. The root causes were associated with decision making processes interrelated with social and financial activities of a business. They were often broad in scope and outside of the environmental agency’s control. As the realization of these underlying issues set in, so did an era of unfunded mandates and shrinking local government budgets.

Also, through the late 1980’s environmental auditing was seen as an activity prone to litigation even though it was recognized as a business improvement tool. Many companies did not perform audits because our legal community strongly advocated against it. By the mid-1990’s the property transaction process forced the due diligence auditing protocols to become a standard requirement of financial institutions and they were standardized by ASTM. Three triggering factors changed the view of auditing. They were environmental due diligence for property transfer, Brownfield redevelopment, and the posting of environmental compliance information on the internet.

The birth of the Green Tier effort within Wisconsin Department of Natural Resources (WDNR) started in 1995 (2). From 1995 to 2004 several programs and legislative attempts occurred leading up to Green Tier. Green Tier passed as law in April 2004. Even today the program continuously changes as it gains definition and momentum. As of April 30, 2007 there are 18 Tier I participants/applicants. There are two (2) contract level Tier II participants and three Charters Agreements.

The Green Tier statute describing the Environmental Performance Program and the Environmental Improvement Program is found as Wisconsin State Statute 299.85. The law describes three program facets (Tier I, Tier II and Charters), and then carves off environmental auditing protocols and protections as a fourth component in a separate section (3).

Green Tier I agreements require an applicant to describe their current performance relative to the regulations and note anything they have done to demonstrate that they are willing to commit to performance beyond compliance. The applicants must have had a period of continuous compliance and not be under current notices or orders concerning environmental regulations. A level I applicant agrees to implement an ISO 14001 equivalent EMS within the first twelve months after their accepted application and have the EMS audited to a standard of “Functional Equivalency”. A level I applicant is required to submit a performance report by February 1 each year after entry into the program.

The term “Functional Equivalency” denotes a condition where the EMS consists of a structured program that is in all respects equivalent to the ISO14001 structure and is functioning to provide superior environmental performance. The Tier I participant must be organizing a stakeholder group and beginning to show a more transparent operating style.

All Tier I agreements provide the same incentives from the WDNR, specifically:

• Green Tier Logo permission
• Single point of contact
• Reduced inspection frequency
• Recognition on the WDNR web page

Green Tier II participant’s must have implemented an ISO14001 certified program or operated the functionally equivalent program with demonstrated superior environmental performance. The entry qualifications are higher with regard to long term compliance, auditing competency, and demonstrated and measured performance.

GTII application and negotiation results in a legally binding environmental performance contract with the WDNR. GTII is based upon the concept that businesses with a demonstrated track record of superior environmental performance should be able to use that “environmental capital” to negotiate terms and conditions by which they will operate. The contract must achieve measurable or demonstrated benefit to the environment and benefit both parties. The agreement must continue to perpetuate increasing environment performance in a direct or off-set manner.

Negotiable environmental performance for these participants may consist of anything from superior regulated performance to voluntary conservancy or educational outreach efforts. The significant change at the Tier II level is recognition and value for superior performance demonstrated in voluntary or regulated environmental areas. Tier II benefits are custom to the individual business. A Tier II participant is expected to have a functioning external stakeholder group and do transparent reporting such as the Global Reporting Initiative (GRI) requires.

Charter Agreements are a unique concept in Green Tier modeled after Dutch and Bavarian pacts. Charters provide opportunities for unrelated parties to create superior environmental performance. These parties may be in different business sectors, trade associations, Non-governmental organizations (NGO’s), local governments or community individuals.

The framers of this provision were clearly after an “inclusive” process that could allow nearly any combination of entities to form to focus upon one or more environmental improvements. By doing so a Charter can leverage community and individual volunteerism as an efficient and important force in environmental management and societal improvement. Harnessing individual and community volunteerism and expertise and then combining it with business individuals and government members was envisioned as one of the most powerful provisions in the legislation. The Charter envisioned the ability to tap into both organizational and personal energy that can collaborate to achieve environmental goals on a voluntary basis. This is a unique mechanism of leveraging and collaboration that can be used to make environmental and social changes needed to address our current and future problems whether they are regulated or unregulated in nature.

Currently, only three Charters have been conceived and brought to operational status. Two concern land development and construction activities and one concerns an association of scrap metal businesses. All Charters focus upon pollution prevention of storm water although some have broader scopes involving such things as environmental education, protection of native species, and wider scope preservation goals.

Summary

The Green Tier Program has had a relatively slow start although each year has shown increasing participation. There has been more acceptance of an EMS by potential Green Tier participants even though the benefits of joining the program at the Tier I level have resulted in few marketing benefits and small demonstrated product differentiation potential thus far.

The primary benefits have been at the business operations level. They include increased efficiency, resource utilization, cost of correction, and better public perception. All participants in the agriculture industry that were lightly regulated felt the ISO 14001 model was too burdensome for its benefit but as they begin operating their programs they are seeing the connections to efficiency and external support. Even so, the agricultural movement is seeking a way to make an EMS hybrid with other management styles to lower the initial administrative burden.

Automotive industry suppliers went through a flurry of ISO 14001 implementations in the 1990’s. Because there were no links to governmental benefits and the implementations focused on format not business function, their implementation commonly did not result in demonstrated business performance improvement. Green Tier has catalyzed a renewed interest in EMS implementation. About 0.5% of Wisconsin businesses have joined. No (environmentally) unregulated businesses have joined although there is interest in a “footprint” based EMS.

The primary incentive Green Tier provides is to be a “triggering” reason to implement an EMS within business segments that would otherwise be high environmental performers on a project versus process basis. Those businesses want to organize their performance to leverage greater present and future benefit to the environment and their business Triple Bottom Line. They see Green Tier as the one additional benefit they needed to make the EMS work worthwhile.

In Wisconsin, Green Tier has clearly been a trigger for non-manufacturing businesses to sign up for implementing an EMS and then plan to join the Green Tier program. Predominately these participants have been from the land development/construction sector and the agriculture sector (Dairy Farms). These sectors have historically been less regulated but recently fell under new regulation and are facing more on the horizon. These business owners quickly understood that their ability to sustain their sector of business financially and geographically is dependant upon managing their environmental footprint and maintaining the land as their raw material resource.

So while traditional manufacturing has been slow to realize EMS and GT benefits spokespersons within agriculture and residential construction have seized what one individual called “an opportunity of a life-time” for businesses in their sectors.

References

Mason, William and Folkert, George 1973, Environmental Problems-Principles, Readings, and Comments. pp. 119.

Thomas Eggert, Environmental Quality Magazine, Environmental Charters: Wisconsin Recaptures Its Progressive Environmental Traditions, August 2004. pp.1-15, Wiley Periodicals. www.interscience.wiley.com

Wisconsin Department of Natural Resources web Page address, http://nxt.legis.state.wi.us/nxt/gateway.dll?f=templates&fn=default.htm&vid=WI:Default&d=stats&jd=299.85

Case studies in EMS implementation

Case Study #1 Cabinet manufacturing

A small wood cabinet, door, and trim manufacturing and coating operation in Wisconsin sought help in obtaining the air permit required to allow an expansion. The location is near an ozone “non-attainment” area stretching from Chicago Illinois to an area just south of Green Bay Wisconsin. The coating operation was small but due to the way the Governmental agency calculates “potential” emissions it was classified as a “major” source of air pollution.

This firm was not well suited to begin an EMS because their overall environmental knowledge was low. The facility generally got information from unreliable sources like haulers about waste management requirements. Air information came from people whose expertise was filing regulatory reports. There was no organized approach or responsible individual.

The one advantage this facility had was top down leadership from a new dynamic leader who insisted upon environmental improvement and planning. As the immediate permit process was built the firm was encouraged to learn more about their equipment and actual manufacturing and pollution capabilities. These exercises gave rise to renewed interest in more efficient manufacturing layouts and processes and sparked interest in technological advances. The facility began to commit to a philosophy of “no new emissions”. The new permit reclassified them as a restricted major source, one level down from their starting point.

A few months later the facility decided to change the layout and install new coating booths. Although the primary reason for this expansion was to experiment with water-based coatings for emission reductions, the addition of new coating booths triggered a new and costly permit exercise. Unfortunately the WDNR only views new equipment as additional emission potential.

A new facility strategy was implemented within this permit where they committed to implementing a multi-media EMS within the 5 years and to undergo three successive 50% voluntary emission reductions, each 18 months apart. The goal was to move the facility from 34 to 6 tons per-year actual emissions. At that level they no longer need a traditional permit.

The permit achieved with this strategy was the first of its kind in Wisconsin. It pioneered a new tool for regulators, leveraged creation of a new line of environmentally responsible products, reduced hazardous waste creation, and provided worker and facility safety improvements.

Based upon these demonstrated financial, safety, and environmental benefits the facility has started to implement a formal EMS whose scope includes all aspects of the facility operation. The facility is also seeking renewable and sustainable wood products and engineered products without formaldehyde glue additives.

The key to EMS acceptance and implementation at this facility was the enlightened leadership and demonstrated benefit. Shortly after the air issues were resolved the facility was the subject of a surprise inspection by regulators. During that inspection the only area not cited for a deficiency was the air program. This pointed out to the full management that the EMS was an essential tool in managing their operations for compliance assurance, flexibility and profitability.

Case Study #2 Wisconsin Builders Association

Wisconsin Builders Association (WBA) represents approximately 200 residential and light commercial land developers. They established a Charter under Green Tier for their members. Several WBA members envisioned that the implementation of an environmental management system would be easy and that a single checklist style EMS (generic) could be fashioned and used. They envisioned significant regulatory flexibility and anticipated that a Tier II status transformation could happen in about one year.

The plan was that the trade organization would become the entity to which its members would apply for Green Tier through the Charter Agreement. Within the plan the Charter Group would be governed by a board comprised of agency, environmental, local government, and business members. Members would apply for Green Tier through this organization and report performance to it.

Three land developers volunteered for a pilot scale implementation training. The developers varied by their number of employees, use of outside or internal engineers, and use of outside contractors. All of the firms developed residential neighborhoods.

The pilot was set up to accomplish all training in a single day in a group setting. A second training day would occur at the individual business location.

It is fair to say the training scenario was a failure by most measures with the exception that a lot of what didn’t work was learned.

For a variety of reasons only one pilot firm has successfully moved ahead to implement a functional EMS. The participant attitude coming into the project clearly underestimated commitment needed to implement the EMS. The training provider mistakenly agreed to provide training in the compressed format members required.

Key to the set-up was the trade organization message to members that developers essentially already did the activities that constituted an EMS. The developers assumed that a little bit of documentation in a generic fashion would complete the system. The escalating perception of simplicity overtook common sense and became a recipe for disaster before the first implementation session began. The aftermath was that only the one pilot became dedicated to the concept of EMS and then joined Green Tier.

A more recent EMS for a development firm that sells multiple acre lakeshore and river frontage properties started with their vision that they sell a personal dream, not a chunk of geography. They believed that in order for that dream to remain intact, the property and its natural capital on it needed to remain intact and thrive over time. They have implemented their EMS structure in roughly three months, or about 10% of the time of the original pilot participants. Attitude when beginning the EMS process is a very important factor.

Case Study #3 Veridian Homes

Veridian Homes, LLC, a residential home development and construction firm, already was ISO 9001 qualified and began an ISO18001 approach to safety. The firm specializes in “traditional development neighborhoods” (TND) producing 400-600 homes per year. The firm wanted to capitalize upon the ISO approach to make a quality, environmental, health and safety (QEHS) system. Veridian wanted to become a Green Tier II company.

The firm has about 220 associates along with more than 100 trade partners. Trade partners provide many of the construction services while Veridian manages the process of land buying all the way to finished home closing. Veridian considers their EMS to extend to trade partners. They demonstrate respect by training and interacting with all partners on a daily basis. Many trade partners attended EMS sessions at Veridian’s request.

With the ISO infrastructure already in place, records and document control, communications, training, and internal auditing we established. Continuous improvement was firmly instilled but environmental aspect and impact analysis was a soft spot.

Before the EMS began environmental processes were driven by inspections and fines. With the EMS they implemented root cause and preventive aspects of the EMS that fit into their highly skilled business and production planning process. Erosion fines have been eliminated. The cost of erosion management has been reduced cut over 50% by non-disturbance practices, use of reusable erosion devices, good housekeeping during construction, and careful delivery of people and materials to each worksite. The EMS has brought Veridian higher quality homes in terms of energy and materials of construction. It has supported better margins, steady business in a down-turned market, and their reputation as one of the most forward thinking builders in the region.

Veridian was concerned that a firm unfamiliar with the construction process could not help them implement an EMS. What the company learned was that they needed to be the experts in building and the consultant had to be the experts in EMS implementation. The synergy approach to implementing an EMS was a powerful tool in time and resource efficiency while the facilitation relationship helped them more fully understand the EMS’s connection to their financial and social business processes.

Veridian has brought together NGO’s and several local governments to help establish the most successful Charter Agreement thus far. They have also piloted the use of recyclable erosion materials from waste building materials. They developed a virtual inspection process where regulators see every active site weekly via photographic reviews. A third-party provides rainfall event inspection and continuous improvement feedback that is implemented. Veridian is the best EMS construction company in Wisconsin. They show how the EMS provides success to their business, the government, and the environment.

Case Study #4 Wisconsin Agricultural Stewardship Initiative

Through May 5, 2007 we have worked with the Wisconsin Agricultural Stewardship Initiative to help 9 dairy operations and one cheese plant to implement an EMS.

The first three farms varied in size from 700-3500 milking cows. The farms were 30-75 miles apart. A grant of $24,000 was used to implement the three EMS programs.

The 3500 cow operation produced no crops but did manage a large group of feed producers from various regional farms. In essence they set up a regional economy that paid enough for crops that local farms could survive without selling off land to developers. The farm utilized a methane digester to produce electricity for operations with excess to sell on the energy grid.

The second farm had about 1800 milking cows. They had a more traditional operation with manure lagoons and batch milking operations. Their feed was produced by a division of the farm roughly 3600 acres of owned or rented agricultural land. Some of this land was located by wetlands and streams. Farm #2 was often participated in new farming techniques and studies.

The third farm was a 700 cow operation that was vertically integrated with feed production and dairy operations. It was a large farm but by most measures was operated similar to farming operations in the 1970’s with the exception of modern machinery.

The three farms all exhibited a close connection to the land and a belief that if they did not care for it their livelihood would be in jeopardy. Operations 2 and 3 were openly engaged in succession planning transitions as well. The factor of succession planning often brought the concept of sustainability to the forefront in the EMS sessions. All three expressed an interest in joining but the burden of additional paperwork and reporting still looms as a perceived obstacle for them. The single farm in the program, Holsum Dairy in Chilton Wisconsin, is making progress but continues to search for tangible (direct financial) benefits from the program.

Though continuous improvement, farms 4-9 benefited from the learning at the first three pilot farms. The first group of three was selected based upon differences in management styles, product variations, and residential development pressures. The second group of three farms selected based upon size of operations and differences in management styles.

The EMS implementation program was conducted at two agricultural office meeting locations about 75 miles apart. The meeting locations were donated by local agricultural services in return for their ability to participate in the EMS process. The goal was to build mass and drive the EMS process to increasingly smaller farms. A $22,500 grant provided a core to develop an EMS structures for the 6 farms. The small funding challenge made us see if smaller operations could afford to participate in group EMS implementation.

One group included a grazing operation that was starting up a cheese making plant to specialize in producing grass fed/grazing operation specialty cheeses. The two other dairies were roughly the same size in many respects however their management styles were quite different and one has significant residential development pressure.

The six farms completed EMS sessions in March 2007. A lifeline service was established to continue to assist the farms as they implemented the EMS into their daily operations. That feature is still operating and will be the subject of future discussions as to its value. Another feature of this project was the use of an intermediate audit. These audits were conducted at each of the six participating farms on May 3-4 2007.

The goals of the on-site audits were to:

• Continue to implement learning specific to the farm within their EMS effort.
• Provide a follow up to assure activities at the farm were taking place and being applied to their specific farm business activities.
• Respect each farm operation as unique and custom while uniting the common aspects of their operations.
• Achieve a cooperation and unity that could lay the ground work continuous improvement in cooperative practice exchanges and group auditing.

To a significant extent these six farms remain a work-in-progress. Four of the six farms operations could move into the Green Tier program and reasonably expect success without making initial significant operational changes. Two of the farms will need additional business changes in their infrastructure to allow them to achieve a functional EMS. All nine farms will need a stable and continued connection to understand the current environmental regulations framework. The aspect of business and governmental cooperation in regulated and voluntary activities will be critical to meeting public expectations. They now realize that the public looks for results and does not necessarily care if a perceived problem is regulated or not regulated.

In each of the case studies above there were attitudes, behavior and business factors that affected the EMS process. Like the aspect analysis conducted within an EMS each participants behavior is capable of creating a positive influence or negative influence.

These are the + and – comments heard from the participants. The EMS was:

• Too difficult/time consuming/regulatory
• Not of value compared to the work involved
• Easy
• Costly in time and materials
• Necessary for business
• An integral part of the business operation-inseparable
• Important for international businesses-competition.

A one-on-one discussion of what was learned and observed is welcome.