1. The Business of the
Environment –
factors motivating industry to
take up environmental
initiatives
A Report for ‘Business And The
Environment’
by
Maria Simonelli
June 1999
Business and the Environment -an organisation of business people
committed to sustainable development
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This project was made possible due to the support of the
following organisations. Special thanks to the host and all the
organisations participating in the Advisory Group and the
interviews.
Advisory Group:
BP Amoco (Host)
City of Melbourne
EcoRecycle Victoria
Environs Australia
University of Melbourne
Participating Organisations:
Banksia Environmental Foundation
Box Hill Hospital
BP Amoco Australia
Business Victoria
Corporate Environmental Management Pty Ltd
Geoff Donnelly, ex Norwich Financial Services
EcoRecycle Victoria
Energy Efficiency Victoria
Epworth Hospital
Greenworld Office Products
Interface Australia Pty Ltd
Kodak Australasia Pty Ltd
Melbourne Patagonia Store
Moreland City Council
Sheraton Towers at Southgate
About
BATE:
Business
And
The
Environment
(BATE)
was
founded
in
1993
by
a
group
of
business
managers
and
environmental
professionals
to
promote
sound
environmental
business
practices.
Its
members
have
successfully
pioneered
new
and
better
practices
within
their
own
organisations
and
have
joined
forces
to
share
ideas
and
progress
continuous
improvement.
See
Appendix
5
for
further
information
about
becoming
involved.
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CONTENTS
Preface 4
Acknowledgements 5
Executive Summary 6
Scope of Paper 8
Methodology 9
Creating Change 10
A Snapshot of Each Organisation 13
Interviewed
The Key Motivational Factors Emerging 15
from the Interviews
The Interviews In-depth
Cost Savings 16
Continuous Improvement 18
Staff Alignment 20
CEO and Upper Management 22
Leadership and Support
Reputational Gains 24
Compliance with Regulation 25
Barriers to Implementation Identified in 26
the Interviews
Lessons Learnt Checklist 29
Building Sustainable Business Practices 30
Conclusion 31
Appendices 33
References 46
Footnotes 50
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“Business is on the verge of a transformation, a change brought on by social
and biological forces that can no longer be ignored or put aside, a change so
thorough and sweeping that in the decades to come business will be
unrecognisable when compared to the commercial institutions of today.
We have the capacity and the ability to create a remarkably different economy,
one that can restore ecosystems and protect the environment while bringing
forth innovation, prosperity, meaningful work and true security. The
restorative economy unites ecology and commerce into one sustainable act of
production and distribution that mimics and enhances natural processes.
It proposes a newborn literacy of enterprise that acknowledges that we are all
here together, at once, at the service and mercy of nature and each other.”
Paul Hawken The Ecology of Commerce
Preface
From mid 1998 to mid 1999 I was in the unique position of being a participant in a
Commonwealth program which provides outstanding professional development
opportunities. The program known as “Senior Women in Management” (SWIM)
provides participants with challenging experiences to learn and add depth by working
with various sectors, including government, industry, business and non government
sectors. This wide ranging learning experience is further broadened with coursework
aligned to core competencies and an overall environment of feedback and coaching.
This time has personally been one of professional growth and exploration.
During the SWIM year I had chosen to work specifically with industry and business
sectors to explore to what extent they were achieving sustainable development and
gain a further understanding of the role organisational culture plays in the take up of
environmental best practice.
So why this paper? The opportunity to work with members of Business And The
Environment (BATE) and other industries, has allowed me to investigate further a
number of areas of interest. The basis for this study was that of exploring the
motivational factors driving industry to take up environmental programs. Linked
closely to this is an examination of the extent environmental issues are being seen as
an external threat to company operations or part of mainstream business practices. In
other words, what particular features are found in organisations that have incorporated
environmentalism into their organisational culture, and how can an understanding of
organisational culture assist in achieving environmentally conscious practices in
organisations.
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In developing this paper, I struggled to find an appropriate title that would reflect both
the views of the participants and the need for a catchy phase that would grab the
reader’s attention. Examples of those rejected include “How I found God…….and
maximised business profits” and “How I achieved environmental best practice on the
road to…. (insert destination depending on religious persuasion eg. Damascus,
Mecca, Melbourne Cricket Ground…..)’.
While the links between religion and business were unintentional, I found many
examples of how the environmental epiphany of top CEOs, is transforming business
practices worldwide. While in the end the only title which appeared to capture the
intent of the paper was “The Business of the Environment”, it is hoped that this paper
may provide some further insight into the business logic behind the take up of the
environmental programs and act as catalyst for debate on how business managers can
overcome barriers in establishing and maintaining such programs.
It should also be remembered that this study was conducted over a four month period
and is the result of my interpretations of views of managers collected during
interviews and in general observations of the organisations and thus does run the risk
of being a superficial analysis. While this paper is not intended as a comprehensive or
qualitative thesis on each company, its management nor its industry performance, it
does provide some current opinions of those at the coal face attempting to balance the
even increasing demands placed on them as managers.
Acknowledgements
This study was made possible due to the joint efforts of BATE, Environment
Australia and BP Australia. My services as project manager were provided by the
Federal Department of the Environment through “Senior Women In Management”
(SWIM), a Commonwealth program, and I thank Environment Australia for
supporting me in investing in my own education.
I also gratefully acknowledge the assistance of an advisory group, whose different
backgrounds and views helped guide the paper. Thanks to Steve Malcolm from
EcoRecycle, Ian Mitchell from Melbourne University, Susan St Lawrence from BP
Australia, Anne Spurritt from the City of Melbourne and Wayne Wescott from
Environs Australia.
Special thanks also to BP Australia, Office Facilities Management Team, who
provided invaluable project support and inspiration. BP Australia has been a long
term member of BATE and has a commitment to the BATE objectives of sustainable
development and continuous environmental improvement.
Credit for much of the content of this paper belongs to the individuals in the many
organisations interviewed over this four month project and I express my appreciation
for contributing their time and opinions to this study. They should also be
acknowledged for their ongoing work in turning sustainable development from vision
into reality.
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Sustainable
Development
is
development
that
meets
the
needs
of
the
present
without
compromising
future
generations
abilities
to
meet
their
own
needs.
Our Common Future 1987
Executive Summary
As we move towards the new millennium, the concept of sustainability is progressing
from being associated with purely economic growth towards one which includes
environmental protection and social justice. This so called ‘triple bottom line’ is
increasingly observed in many companies world-wide as they attempt to integrate
sustainable development into their business strategies. As more companies discover
that environmental programs make good economic sense, they are recognising that
environment performance can be compatible with their business objectives.
Similarly business leader have recognised that opportunities exist for companies
through progressing sustainable development. Ecological sustainability, the so called
‘next green surge’, will be a key strategic driver for business over the next two
decades. (I) A recent Business Leaders Forum on Sustainable Development
acknowledged that significant environmental pressures on the world can create
business opportunities and will require leadership, and partnerships among
government, business and the community. (2)
The greenhouse debate, particularly highlights the shifts that have occurred over the
decade of the 90s in regard to industry acceptance of its impact on the environment
and the business opportunities this market transformation can create. In 1999, it’s fair
to say that very few companies would publicly say that we need more science as proof
that global climate change is occurring, in fact many have become advocates of the
precautionary principle. Hundreds of organisations have joined up to government
programs like the Greenhouse Challenge or the Victorian Energy Smart program (3)
and actively promote better environmental practices in their organisations. The
debates have matured and industry is acknowledging that their own practices must
improve and in many cases, that environment programs provide economic and other
business benefits.
While there has been a significant shift from a state of denial regarding the impact of
business on the environment, to a gradual acceptance of their responsibility to do no
harm, it must also be acknowledged that there still lies an enormous challenge in
developing a ‘sustainable global economy’.
Whether it be the lure of the green dollar or growing environmental business
consciousness, it is difficult to provide a definitive answer as to what is driving this
transition. This study set out to examine the motivational factors at work for those
organisations that have made the shift to integrating environmental principles into
their business objectives. It did not set out to provide a quantitative comparison of
each sector’s performance or success based on environmental criteria, but to look for
Environment
programs that
make good ‘cents’
- how companies
have maximised
business benefits
and achieved
environment best
practice
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trends across sectors in acknowledging the importance of environment in their
decision making processes.
A total of 27 interviews were conducted across 16 organisations (industry, business,
government and now government), with a number of managers and staff within the
organisations interviewed to gain a company wide view. The type and scale of
programs in place ranged from small scale projects focusing on energy or waste
minimization, to larger scale redesign of whole operations.
Of those interviewed the motivational factors emerging as the most prominent were:
• Cost savings;
• Continuous improvement;
• Staff alignment and staff concerns;
• Chief executive officer leadership;
• Reputational gains;
• Compliance with regulation; and
• Environmental ethics.
While the degree of importance of these factors varies across the organisations
interviewed, it was clear that cost savings and continuous improvement, as part of
good business practice, were both a major influence. The strategic importance of staff
concerns and reputational gains were also significant factors for the majority of
organisations. The leadership role played by the Chief Executive Officer (CEO) in the
organisation was a driver for the multinational organisations and the Local
Government sector. In regard to the role regulation plays in driving organisations, its
importance varied across the organisations interviewed, and was more evident in the
multinationals and hospital sector.
Environmental ethics were the most difficult motivating factor to quantify. While
there was clearly an awareness with managers of the magnitude of environmental
problems and a scientific understanding of environmental threats facing the planet, its
priority could not be clearly distinguished from amongst the other factors.
This study was also particularly interested in the methods approached by
organisations to ensure program success and the barriers encountered along the way.
The internal organisation organisational barriers identified were largely related to
human resistance and the various attempts to sign people onto behavioral and
attitudinal change programs. Another consistent barrier identified across all
organisations, particularly small to medium size, is that of the challenge to achieve
environmental improvement in times of economic downsizing, continued increasing
demands on staff resources and tightening budgets. External barriers also identified
continuing negative market perceptions in the use of remanufactured products and the
non ease of use of recycled materials. There was also clearly a mismatch with the
vision some organisations have for the future and their ability to reach this via current
technology.
Are the current debates and programs, highlighted in this paper, a signal that
environmentalism and sustainability are being incorporated into organisational and
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business thinking? This small study can not answer this definitively, although it does
provide a number of consistent indicators across organisations that appear to be
making genuine efforts to integrate environmental policies into aspects of their
business practices.
The critical role that the business and industry sectors play in creating wealth and
employment, generating new markets, products, services and technologies,
encouraging competition and initiating change and innovation, provide powerful and
far reaching impacts. If the recent Business Leaders Forum on Sustainable
Development (4) is an indicator, then there is also a growing recognition by industry
of the responsibility they have as major users of natural resources and heavy
producers of waste. What is also being recognised is that future belongs to
industries that can find new ways of optimising their positive impacts and
minimising those that are negative.
Scope of this paper
In designing the methodology for this study it became clear that due to the limited
time and resources available an in-depth analysis of Australian and transnational
organisations would not be possible. While it began with a simple question about
motivational factors, the more the study progressed, the more it became clear that
there were many more questions this paper should focus on. In the end it was decided
that a qualitative and descriptive work, conducted through an interview format, across
various organisations and focusing on specific motivational questions, would provide
a valuable snapshot of the business sector.
It was not within the scope of the study to provide qualitative data on the
organisations, their environmental programs nor comparisons within each of the
sectors of their individual performance. Because the study relied heavily on existing
company case study profiles, it has an in built bias towards those organisations that
have demonstrated a record of achievement in their environmental programs. Once
organisations had been shortlisted the study was not overly concerned with the
programs themselves, but rather with why the programs had been established. In some
cases companies were chosen because the programs established early in this decade
had reached a plateau and it was here that barriers and lessons could be highlighted,
thus even the definition of the criteria ‘record of achievement’ was very broadly used.
It will also become evident that some organisations are used to highlight particular
views more frequently than others. Again this is due to the depth of comments and
material made available during the interviews and study period. In the case of BP, my
placement within the organisation provided access to senior managers on a regular
basis. I had also recently completed a study on organisational culture change where
BP had been used as a case study. (5) Any bias in commenting on BP is unintentional
and due more to a greater understanding of the organisation.
It should also be remembered that in some organisations only limited access was
possible, again primarily due to time constraints, and it would be presumptive to
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assume that the views expressed by some individuals in an organisation are the views
of the whole organisation.
The choice of BATE as a vehicle to explore this relationship between business and the
environment was because its members know first hand the balancing act required to
be successful business managers and promote environmentally sound practices. While
the project utilized the first hand experience of past and current members of BATE, it
also interviewed other managers where case study material had highlighted new or
better practices in their organisations.
This paper does not provide details on each company environment program, as this
material is easily available through numerous case study profiles. See Appendix 4 for
more information on obtaining these.
Methodology
The scope of the study was to interview a range of middle to senior level mangers
from different sectors, varying in size and function. It includes examples from the
following sectors: hotel, manufacturing, retail, extractive industry, hospital,
university, finance and Local, State and non-government.
Due to limitations in project funds and travelling time, these companies were located
in and around the Melbourne area. A range of selection criteria was devised to assist
in shortlisting, but companies were not strictly chosen according to this criteria and in
some cases, a determining factor was their availability to participate in the study
within the very tight timeframe.
In shortlisting phase, the advisory group was particularly interested in what appeared
to initiate the environmental programs and what various approaches had been used in
establishing them. In a number of cases, companies were chosen which had an
established program from the early to mid 1990s, to examine the lessons learnt.
Companies were also chosen that had only recently commenced a program to
highlight the driving factors of the late 1990s, as well as finding companies where
comprehensive case study material had not yet been written.
The study relied heavily on previous company case study profiles to provide
background reference material to assist in listing the companies for potential follow
up. This included case studies written by EcoRecycle Victoria highlighting waste
minimization programs, the Australian Conservation Foundation (ACF) and
Australian Council of Trade Unions (ACTU) Green Jobs Unit featuring waste and
energy programs and further material from the Victorian Environmental Education
Council and BATE. The Australian Greenhouse Office website highlighting
companies who have signed onto the Greenhouse Challenge Agreements also
provided valuable information.
Overall the advisory group was particularly interested in examples which included
demonstrated environmental improvement, approaches to problem solving, degree of
maturity of the program and the extent to which the program highlighted multiple
benefits including cost saving, reputation, alignment of company staff and culture,
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involvement of staff, improvement in management process and overall industry
leadership. See Appendix 2 for a full list of shortlisting criteria.
A series of interview questions were devised to explore these themes. A number of
key questions were asked of all participants with further supplementary questions
included to help guide interviewees in their responses. The key questions focus on
why the program was established, how the program was approached, what were the
actual and perceived benefits of the program, what barriers needed to be overcome to
establish programs, what were the lessons learnt and what was the relationship
between the program and the organisational culture. A full list of the sample questions
is found in Appendix 3.
The interviews attempted to highlight the organisation itself and the climate in place
for the program to be established and maintained, rather than focusing on the
programs themselves. Where possible to obtain a company-wide view, a number of
key players in the organisation were interviewed and included the main officer driving
the program, their supervisor, a senior manager or general manager and staff involved
in the implementation of the program.
In total twenty seven interviews were conducted, twenty with business and industry,
two with Local Government, three with State Government, one with a non
government organisation and one with a consultant. A list of interviews is provided in
Appendix 1a.
All interviews were approximately 45 – 60 minutes duration and were taped.
Transcripts were provided back to interviewees for minor editing. The participants all
approved the interview material used and the final draft of this paper. To ensure the
finished product is of greatest value, participants were also asked about what form the
presentation of the material should take. Most agreed that a short paper and access to
the paper on various websites was sufficient. Many agreed that the use of the paper to
stimulate debate and discussion within BATE and other forums would be most
valuable.
It should be noted that over 40 companies were examined for short listing in this
study and all demonstrated, in some form, an advanced environmental program. Their
omission from this study should not be interpreted in any way as a criticism of their
programs.
Even
if
all
the
companies
in
the
developed
world
were
to
achieve
zero
emissions
by
the
year
2000,
the
earth
would
still
be
stressed
beyond
its
carrying
capacity.
(6)
Creating Change
“The world we have created today as a result of our thinking thus far has problems which cannot be solved
by thinking the way we thought when we created them.’ Albert Einstein (7)
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In researching this topic there were two clearly prevailing views which emerged
from the business lobby sector, business leaders and green entrepreneurs about the
relationship between business and the environment. The traditional view is as one
of environmental protection and profitability being as natural opposites. Improving
the environment is associated with reduced profitability for business and increased
costs for consumers, while profitability is thought to require environmental
degradation. (8)
The assumption is that we can either have a healthy environment or a healthy
business sector and trade offs are required to keep these opposites in a proper
balance. In this context responses to environmental issues by business are reactive
and involuntary. ‘In general, during the last 20 years business has tended to be
overcautious and conservative in its approach to these challenges, underestimating
the possibilities for positive change.’ (9)
This view is clearly being challenged and there is a growing recognition that
environment and economy are intertwined. Many writers acknowledge that the
environment contributes to economic output so degrading the environment, at the very
least, can reduce and undermine its economic growth and thus productivity. (10)
Further the assumption that economic forces can only exploit and destroy may have
been true up until now and will continue for some time into the future, but that this
behavior is not the inherent nature of business, nor the inevitable outcome of a free
market system. It is the result of the present commercial system’s design and use and
thus can be redesigned and mature into something more. (11)
To what degree business has progressed towards sustainable development is difficult
to quantify and not within the scope of this paper to answer. Even the CEO and Co-
founder of Interface Carpets, Ray Anderson, one of the world’s largest interior
furnishings companies with a well progressed sustainable development model in
place, believes that his company has moved only 25 percent towards becoming a
sustainable enterprise. (12)
Other authors like Paul Hawkens, while they acknowledge the shift is occurring, add a
cautionary note and still believe there is a ‘yawning gulf between the kind of friendly
‘green’ environmentalism that business wants to promote – one that justifies growth
and expansionary use of resources – and the kind that actually deals with the core
issues of carrying capacity, drawdown biotic impoverishment and the extinction of
species. Business, despite its newly found good intentions with respect to the
environment, has hardly changed at all. ‘ (13)
A recent paper by the World Business Council for Sustainable Development
(WBCSD) also notes that it is impossible to answer to what degree progress has been
made towards sustainable development by the business sector, due to the vast
spectrum of business size and type, as well as the difficulty in deciding on a time
frame over which to judge progress. It also notes that there has been very little
progress made in developing sustainable indicators for business. (14)
At the same time they do acknowledge there are some signals of change, most notably
in the direction of environmental improvement. This is stronger in some areas than
Business is a large
vessel. It will
require great
common effort and
planning to
overcome the
inertia of the
present destructive
course, and to
create a new
momentum towards
sustainable
development.’
(16)
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others, with the big strides being made in waste reduction. The signals also reflect
progress by the big industrial, service and retail companies rather than small to
medium sized enterprises. (15) While this reflects the membership of WBCSD, the
difficulties experienced by small to medium sized business in taking up
environmental practices in Australia were reinforced during the interviews.
While in many cases the environmental initiatives undertaken may be largely a
piecemeal of projects aimed at controlling pollution, there a recognition that focusing
on sustainability requires that environmental considerations become part of the
decision making process. The WBCSD believes that this does add up to a change in
course and signals a paradigm shift in the way in which business does business. ‘It is
a shift from fractured view of environment and development issues, to a holistic view
of business and sustainable development.’ (17) It also reinforces that these shifts are
occurring at different speeds and in different places worldwide.
More specifically this involves shifts from:
• Seeing only costs and difficulties in the concept of sustainable development to
seeing savings and opportunities;
• End of pipe approaches to pollution to the use of cleaner, more efficient
technology throughout entire production systems;
• Linear, ‘through – put’ thinking and approaches to systems and recycling
approaches;
• Seeing environment and social issues as responsibilities only for technical
departments to seeing these issues as company-wide responsibilities;
• A starting premise of confidentiality to one of openness and transparency;
• Narrow lobbying to more open discussion with stakeholders; and
• Seeing sustainable development as integral to business development.
(18)
Do these shifts identified by the WBCSD equate to a change in business culture or
rather signal that improved business practices will acknowledge environmental
impacts and possible benefits, only when cost reductions are to be gained? While the
shifts in physical and technological processes are beginning to be measured, there is
also a need to look for indicators which refer more to cultural and organisational
change, as means of demonstrating how far an organisation has moved along the path
to sustainability.
Again the limited scope of this paper can not provide a quantitative response to this
aspect with each organisation interviewed. While cost reduction is a major factor
influencing business thinking, the interviews do indicate that other factors are strongly
at work. What did become clearer as the study progressed was that the organisations
which were reflecting on the following the questions, were the ones that are
demonstrating major shifts in their approach to environmental management.
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Measuring Culture Change
How does one decide if the changes underway point to genuine organisational culture
change process?
Policy: look for
• Policy statements which lead to implementation plans which are regularly
reviewed, are part of a corporate strategy and have commitment from the senior
managers.
Organisation: look for
• Environmental management systems which are integrated into all aspects of the
management and corporate structure;
• Clear line management responsibly for environmental issues;
• The messages given to suppliers and evidence of environmental purchasing
policies; and
• Environmental performance criteria included in performance contracts and staff
appraisals.
Motivation: look for
• Formal and informal channels of communication regularly utilised by staff.
Information Systems: Look for
• A comprehensive system of key result areas and monitoring which quantities
results and tracks progress.
Promotion and education: look for
• The messages sent within an organisation to staff and the value given to
environmental performance.
Investment: look for
• Positive discrimination in favour of environment programs which provide budgets
and reasonable pay back periods. (20)
It may well be the combination of social necessity and business opportunity driven by
community concern for the health of themselves and the environment, and urged on
by proactive governments, that rework the market so that no company can be immune
from the changes taking place. (21) The current literature suggest that competitive
pressures and commercial opportunities will become so powerful that companies that
remain inactive and disengaged are likely to experience this ‘revolution as a
continuing nightmare… In large measure the choice is in the hands of every business’.
(22)
World
Business
Council
for
Sustainable
Development
(WBCSD)
The
WBCSD
is
a
coalition
of
120
international
companies
united
by
a
shared
commitment
to
the
environment
and
to
the
principles
of
economic
growth
and
sustainable
development.
Its
members
are
drawn
form
35
countries
and
more
than
20
major
industrial
sectors.
It
provides
a
powerful
business
voice
on
sustainable
development
issues
and
plays
an
important
role
in
developing
closer
cooperation
between
business,
governments
and
others,
and
in
encouraging
high
standards
of
environmental
management
in
business
itself.
For
further
information
visit
the
WBCSD
website
at
http://www.wbcsd.ch
(23)
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A Snapshot of Each Organisation Interviewed
An initial criteria for inclusion in this study was a company’s demonstrated record of
achievement based on environmental management programs. What was found was a
spectrum of company practices ranging from environment projects focusing on waste
or energy minimization, to more sophisticated and integrated sustainable management
goals and programs.
Box Hill Hospital is a 312 bed hospital located in Melbourne’s eastern suburbs. The
hospital increased its focus on waste management in 1995 in an effort to improve its
performance in terms of costs savings and environmental impact. They are currently
reviewing the program in the light of changes in the recycling area and more efficient
methods of waste disposal.
BP Amoco, a multinational hydrocarbon and energy company has taken up the challenge
of putting the precautionary principle into action. The company, very strongly focused on
performance, is demonstrating that this means more than just financial performance, but
is linked to environmental and social impacts of the company’s operations, the so called
triple bottom line.
Eastman Kodak, is the world’s largest manufacturer and processor of photographic film
and paper. The company’s Australasian headquarters and manufacturing centre are
located in Coburg, Melbourne. The interview process focused on the environmental
activities in place via the health, safety and environment policy and management systems.
Epworth Hospital is a private, not for profit hospital operating under the auspices of the
Uniting Church located in Richmond, Melbourne. In a short time they have put in place a
successful energy management program and demonstrated substantial cost savings. They
are committed to reducing their energy consumption and greenhouse gas emissions by 10
percent by Year 2001.
Greenworld Office Products is a distributor of environmentally beneficial office products
and began operations in Victoria in 1993. The office products are designed to assist
business to cut costs and reduce waste. The interview focused particularly on the
challenges of providing high technology remanufactured office products in a market
where perceptions still equate recycled with inferior quality.
Interface Carpets operates in 100 countries, makes 40 percent of all carpet tiles
worldwide and is the largest producer of commercial carpets. Since the mid 1990s, the
company has redesigned its operations and is seeking to become the first sustainable and
restorative corporation. In the process the company has saved millions, is creating a new
company culture and, as the CEO describes, has ‘lead the company into another industrial
revolution’.
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Moreland City Council, located in Melbourne and including inner and middle suburbs, is
an amalgamation of the former Brunswick and Coburg Councils and part of the former
Broadmeadows Council. With a strong background in local conservations strategies and
environmental programs, the council is currently revising how it can build on this and
create a sustainable urban environment. The interview focused on how Local Agenda 21
is assisting in this process.
Norwich Union Financial Services embarked on a wide ranging environmental
improvement program in the early 1990s. A past general describes how environmental
programs fit comfortably into the concept of continuous improvement. The interview also
demonstrated the advances made in office improvement programs and how the use of
external consultants can assist in staff education programs.
Patagonia is an international outdoor clothing company with two stores located in
Melbourne and Sydney. The company’s very strong environmental stance is built into all
facets of the company’s production, retail and marketing operations. Their core charter
states their purpose as ‘…… To use business to inspire and implement solutions to the
environmental crisis.’
Sheraton Towers Southgate, located in central Melbourne, has successfully demonstrated
that environmental practices can work in conjunction with the principles of a five star
hotel. Its program to reduce waste and energy consumption have reduced costs and
contributed to staff alignment, without impacting on the quality of service. The interview
highlighted the importance of recognizing organisational culture in achieving
environmental goals.
University of Melbourne, Hawthorn Campus demonstrated leadership in environmental
office improvement in the early 1990s as a way reducing operating costs and providing an
environmental role model for its student. The interview focused particularly on the need
for adequate infrastructure to be in place for higher order behavioral changes to succeed.
State Government departments interviewed
Business Victoria operates the Cleaner Production Planning Program as one of a number
of enterprise improvement services it offers to assist companies in becoming
internationally competitive.
Energy Efficiency Victoria offers a range of services to business to reduce energy costs,
operating expenses and environmental effects associated with excess energy
consumption.
EcoRecycle Victoria aims to eliminate waste, promote sustainable use of resources and
to manage better the disposal of residuals. It works with industry to encourage viable long
term solutions to waste management.
Other organisations interviewed
The Banksia Environmental Foundation is a not profit foundation with a charter to
recognize and encourage environmental achievement by applauding excellence via an
awards program. For further information contact the foundation on ph 03 9428 7567.
For further
information on
assistance and
funding opportunities
offered by these and
other State
Government
departments, see the
contact details in
Appendix 4
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Corporate Environmental Management is a consultancy service that advises companies
on environmental best practice. Its objective is to assist companies operate in an
environmentally sound manner, with reduced operating costs and with the support of its
staff. For further information contact CEM on ph 03 9525 1900.
The Key Motivational Factors Emerging from the Interviews
While the organisations interviewed varied in many different ways, there were still many
similarities in what were motivating factors for take up of environmental policies,
programs and practices. The first and probably most important similarity which was
evident was the positive approach all companies interviewed had in relation to
environmental improvement. According to some authors, this mirrors the global trend in
corporate attitudes to environmental issues which has changed significantly from the
aggressive high profile environmental debates of the 1980s, where environmentalists
were regarded as enemies and regulation something to be fought. (24)
The following responses were the major reasons given in the interviews for this
motivational turn around.
• Cost savings – there is clearly significant cost reductions in environmental
improvement, including savings from the reduced use of raw materials and
energy, to decreases in the cost of waste disposal;
• Continuous improvement – while this varied depending on the size of the
company, there was a significant view that environmental management is
considered part of improved management and business practices and can provide
a competitive advantage.
• Staff alignment – in many companies the pressure to adopt environmentally sound
business practices is coming from workplace staff.
• Chief Executive Officer leadership - this was more evident in the multinational
companies where the CEOs have instigated environmental programs and cultural
change processes.
• Reputational gains- while the extent to which publicity for the programs was
sought varied, in most cases respondents claimed that reputational gains relating
to good environmental and corporate citizenship, were important for the
program’s success.
• Compliance with regulation – all companies believed that compliance with
government regulations and legislation was important, while many viewed that
moving beyond these was equally as important. Related responses also noted the
significant cost of environmental damage from both clean up costs to loss of
company reputation.
• Environmental ethics – although a difficult response to measure since most
responses intertwined environmental ethics with other factors above, there were
some exceptions apparent from the interviews.
A number of factors also provided mixed responses from the companies interviewed
and the following appeared to be seen as non-motivational factors. Some companies
spoke about the reluctance to use their environmental programs as a promotional or
marketing advantage. They have become conscious of the need to maintain credibility
in the market place which has become cynical about ‘greenwash’ promotion.
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Another significant factor was the related to customer tastes. While on one side, the
market for environmental goods and services is growing, there was also a view by the
larger companies like BP and Interface, that customers are still unwilling to pay more
for so called environmentally sound products and processes.
The interviews In Depth
Cost Savings
‘I believe that profit is not only a positive goal, but one of the most powerful long term incentives to ensure
our resources and a regenerating ecosystem. Self interest is a very strong motivator…, it is human desire
that has brought the world to where it is today. That same desire and self interest will determine the future. ‘
Richard Pratt, Chairman, Pratt Industries (25)
Cost saving was undoubtedly a very significant factor and identified by all companies
interviewed as a major incentive to continuing with their environmental programs.
Companies such as Kodak and the Sheraton Towers Hotel mentioned the current
economic conditions and the Asian downturn as impacting on their profit margins,
thus any financial gains from Health, Safety and Environment (HSE), waste or energy
minimisation programs go straight into profit.
Ian Porter, Energy Efficiency Victoria believes that cost savings, in particular, from
energy reduction activities can be dramatic and are intelligent and easy ways to save
costs with often good pay back periods. Often these financial benefits need to be
pointed out to business. Helen Lewis from EcoRecycle Victoria says that many
businesses aren’t looking for cost savings, but once a serious audit points out the cost
benefits, they will adopt changes quite enthusiastically.
Interface Carpets’ CEO Australia and Pacific, Rob Coombs, cites an example of the
real business impact of their waste minimisation program. In the 4.5 years leading up
to March 1999, a worldwide waste reduction program has saved the company $88
million US. This is a seen a significant saving where global sales are in the order of
$1.3 billion US. Major savings were achieved in the Sydney factory where it was
found that $5.20 of product cost was related to wasteful processes. Today this figure
has been reduced to 0.70 cents and has turned the business in Australia from break
even to becoming a profitable part of the international business. Coombs believes ‘our
gross margins and sales levels are almost the same, the major difference has been
though our lowered costs by this war on waste. Furthermore, the real champion of
these savings is our financial director who is the leading voice in environmental issues
and can see the real and pure business benefits to this approach.’
Hospitals too are under pressure to control costs and at Epworth an innovative energy
management program is being driven by the cost reduction benefits. Steve Scott,
Engineering Services Manager explains that the paybacks from their energy efficiency
and environment program were immediate and enabled them to employ a full time
energy manager to ensure continued implementation to the program.
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Cost reduction in business and the associated maximum use of scarce resources, are
definitely major factors in providing the impetus to take up environmental programs.
While not explored in the interviews, emerging environment industries are growing.
Clearly profit motives will drive markets to be created, business to be more
competitive to increase its market share and generally turning environmental
problems into business opportunities. The Environmental Management Industry
Association of Australia says the environment industry is currently worth $500 billion
globally and $8 billion in the Australian domestic market. (26)
Continuous Improvement
Environmental improvement is all part of continuous improvement- like anything, if you don’t measure it,
it’s very hard to change or improve it. The first step we took was to measure and understand the impact of
our activities on the environment. From this point we set targets which are published monthly to allow the
29 plants worldwide to see where they sit in relation to the targets. These measures are as important as any
financial measures we use to gauge our business success’.
Rob Coombs, CEO Australia and Pacific, Interface Carpets
Environmental management as the key to good business was a major thrust of
responses and many noted that a focus on one aspect of companies environmental
activities, could act as catalyst, highlighting other areas for improvement.
The Eastman Kodak Company provides an example of how health, safety and
environment management practices have been incorporated into the concept of
continuous improvement. Claus Dyck, Manager Health, Safety and Environment
(HSE) at the Coburg plant, believes it is fundamentally driven by 3 key elements.
Epworth’s Energy System
The centerpiece of Epworth Hospital’s approach is a Building Automation System (BAS) which is used to improve
the facility’s overall efficiency. The BAS enables Nigel Wolstencroft, Energy Manager, to examine in real time,
how the main heating and cooling systems are performing. A total reprogram of the main chiller and plant’s
control sequence and adjustments to the buildings air handling units has resulted in a 13.25 percent reduction in
electricity used for air conditioning. Epworth’s program also includes major electricity, water and natural gas
saving as well as an education program for staff and suppliers. It’s all part of a continuous improvement
management model known as the “Quality Circle’. Energy Smart News (27)
EcoRecycle Victoria Case Study Series
There are numerous case studies highlighting cost savings in various sectors produced by EcoRecycle Victoria.
Each shows real and significant savings achieved by the introduction of waste management strategies. These are
demonstrated by reduced costs in collection and disposal charges, hidden costs found in time and effort expended
in manufacturing, double handling through transport charges or loss of raw materials. For further information
about these and other publications available contact EcoRecycle Victoria on ph 03 9639 3322.
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‘Kodak has a clear position and direction from its head office in the United States
regarding its commitment to carrying out all business activities in a way that is
sensitive to the environment, it also resources the plants worldwide to implement
these policies and it has fundamentally formal approach to environmental planning
and improvement. In manufacturing at the Australian level, the Key Thrust Program is
an important driver and describes a structured improvement planning process with
measured key result areas.’
It is expected that all levels of the company integrate HSE management practices into
the key business processes which include strategic planning, product development,
service delivery, material purchasing, and the design and operation of manufacturing
processes. Likewise, Kodak suppliers, site tenants and partners are encouraged to
adopt similar principles and practices. To provide leadership and direction, the HSE
Management Council sets policy and reviews progress against goals for Kodak’s
worldwide health, safety and environmental program. A team of Kodak specialists
visit each plant on a 3 yearly basis, to assess operations and ensure these match
worldwide HSE expectations. (28)
Multinational companies like BP, Kodak, Interface and Sheraton Towers relate
continuous improvement to economic efficiency. While again it is not in the paper’s
scope to outline how each organisation puts continuous improvement into practice, it
is clear that all organisations saw their importance as a management tool and their
environmental programs sitting comfortably within this framework.
Interface Carpets
Within Interface Carpets, a program has been laid out designed to achieve sustainability on seven ambitious fronts:
1.Eliminate Waste – The first step to sustainability, QUEST is Interface’s campaign to eliminate the concept of waste, not just
incrementally reducing it. QUEST stands for ‘Quality Utilising Employee Suggestions and Teamwork’.
2.Benign Emissions – Prioritized focus on the elimination of molecular waste emitted to natural systems that have negative or
toxic effects.
3.Renewable Energy – Reducing the energy demands of Interface processes while substituting non-renewable sources with
sustainable ones.
4.Closing the Loop – Redesigning Interface processes and products into cyclical material flows.
5.Resource Efficient Transportation – Exploring methods to reduce the transportation of molecules (products and people) in
favour of moving information. This includes plant location, logistics, information technology, video conferencing, e-mail, and
telecommuting.
6.Sensitivity Hookup – Creating a community within and around Interface that understands the functioning of natural systems
and our impact on them.
7.Redesign Commerce – Redefine commerce to focus on the delivery of service and value instead of the delivery of material.
Engage external organisations to create policies and market incentives encouraging sustainable practices.
(Sustainablility Report) (29)
Pollution – Inefficiency
Pollution should be seen as another form of economic waste. ‘When scrap, harmful substances or energy are discharged into
the environment as pollution, it is a sign that resources have been used incompletely, inefficiently or ineffectively. Moreover
companies then have to perform additional activities that add cost but create no value.. eg handling, storage and disposal…
There are also other hidden costs buried in the life cycle of a product… Environmental improvement efforts have traditionally
overlooked these system costs… they have focused on pollution control through better identification, processing and disposal
– costly approaches. In recent years, more advanced companies and regulators have embraced the concepts of pollution
prevention or source reduction.. to limit pollution before it occurs. While this is an important step, ultimately companies must
learn to frame improvement in terms of resource productivity… and focus on the actual costs of eliminating or treating
pollution. They must their attention to include the opportunity costs of pollution – wasted resources, wasted effort and
diminished product value to customer.’ (30)
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Note: in some organisations the concept of eco-efficiency was mentioned and while
the study could not ascertain to what extent this was being practiced in the
organisations, it was acknowledged as a tool for business to contribute to sustainable
development. As a management philosophy, it is a logical extension of the total
quality management process, which companies already practice to reduce and
eliminate process and product failures and achieve higher quality at lower costs. The
key is its significant change from a business as usual philosophy to one which calls
for business to adapt current practices and systems to achieve higher levels of
economic and environmental performance through continuous improvement.
Producing more from less
Eco-efficiency embraces concepts such as pollution prevention, source reduction, waste reduction, waste minimization
and cleaner production. It captures the idea of pollution through process change, as opposed to end of pipe
approaches, to tackling the problem of pollution. Globally companies already acting and adopting eco-efficiency
principles and practices are:
• building environmental stewardship and excellence into corporate philosophy;
• setting targets for improved performance and introducing systems to track, measure enforce those targets;
• taking responsibility for their product throughout their life cycles;
• being innovative in developing new processes and products; and
• putting the priority on preventing pollution, rather than paying for clean up.
(31)
The concept makes seven main demands on companies
• reduce material intensity of goods and services;
• reduce energy intensity of goods and services;
• reduce toxic dispersion;
• enhance material recyclability;
• maximise sustainable use of renewable resources;
• extend product durability; and
• increase the service intensity of goods and services.
(32)
Staff Alignment
A key motivator expressed by most interviewees was that of the importance of
aligning staff values with those of the company, to encourage ownership and a more
participatory approach in the workplace. It was also broadly recognised that
stakeholders include not only employees, but customers, shareholders, suppliers,
government and neighbours and including them, with all their differing views and
concerns, usually leads to better decisions and more universal support for their
implementation. Successful staff involvement in environment programs was shown to
have many benefits including employee support, personal responsibility and overall
improved morale.
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BP Amoco’s Environmental Improvement Program (EIP) began for very personal
reasons for a member of staff in the Office Facilities Management Team, who saw an
opportunity to adapt her role in security and customer service into one which
incorporated environmental building improvements. Kathleen Esdaile, Environment
Program Coordinator, acknowledges the support of her line managers in
implementing a program which involves its Melbourne Central office in a resource
reduction program. By setting reduction targets of waste to landfill and reduced
consumption, the program builds on the global HSE commitment to take ‘constructive
action to reduce the impact of our office on the environment’. The program had 8
months of development and trialing before its launch in May 1998. ‘Over 40 percent
of staff were consulted in the early phase of development and this effort has paid off.
It reflects people’s genuine interest in reducing our impacts and the need to have an
infrastructure to support them to do so.’
EIP’s success depends upon staff taking personal responsibility for reducing the
environmental impacts of their day-to-day work practices. The program is designed to
raise awareness of environmental issues and educate them about specific skill needed
to reach the EIP targets.
EIP facilitator, Susan St Lawrence, says feedback from staff indicates they are excited
about being able to do something concrete instead of just talking about environmental
issues. An eco-committee member told her that … it has been personally satisfying
and has made me more aware that we can all make a difference’. Susan echoes this by
saying that the EIP provides an avenue for her to put her personal values into action
within her working environment. ‘BP management needs to be congratulated on their
brave stance over EIP. They allowed time for the dream to become reality – to build
trust and relationships, trial and explore, grow each step as we went. That’s really
money where your mouth is, ‘Susan St Lawrence.
Globally, timing was right too. The push out of London head office was for BP
Amoco to meet the greenhouse challenge. EIP provided managers with another
vehicle with which to reach their environmental objectives and contribute towards the
company’s drive for sustainable development.
BP’s Chief Financial Officer and General Manager of Shared Services, Ian Palliser,
says that an important aspect of the EIP is that it makes BP’s stance on environment
relevant for the office based staff, who may otherwise think these programs are only
relevant ‘ out there’ in the refineries. ‘It’s not hard to be a sponsor of this program as
it provides positive win – win’s on all aspects… we can feel good as individuals, help
the environment and reduce the costs of the business. Its about good personal logic
being in alignment with commercial logic and, in fact EIP, helps with the business
direction.’
Many of the companies interviewed also noted the importance of staff participation in
the success of their environment programs. This was a key factor identified in the
environment program introduced at the Sheraton Towers which generates the ideas
via an Environment, Safety and Security Committee and the ‘Act on it Scheme’. Ray
Galea, Safety, Security and Environmental Services Manager, believes that while cost
savings have clearly been a driver for the program, staff participate because of the
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degree of consultation, regular briefings and training programs that are carried out.
‘Ideas for improvement are trialed and appraised using many criteria, not the least
being its impact on our guests… But it’s a very fine balancing act between customer
perceptions, quality service and environmental improvement.’
Fred Matti, General Manager, believes staff participation is high because of the
Sheraton’s culture, degree of staff delegation and the program results, which have
helped to motivate staff further. This is all tied up with a continuous improvement
process which has spin offs in regard to culture, costs savings and staff alignment.’
Both the Sheraton and BP also mentioned the impact young employees are having in
their organisations. In Sheraton’s case with hospitality staff of an average age of 22,
they are more environmentally aware and encouraged to speak their mind. In BP, it
was the young graduates asking questions about the company’s environmental stance
and its compatibility with personal values, that managers claim has helped shift the
company culture.
‘The triple bottom line of sustainable development simultaneously captures progress in
terms of economic prosperity, environmental quality and social justice.’ (34)
CEO and Upper Management Leadership and Support
‘Our program is being driven by Ray Anderson, who was inspired in the 1990s after being in business for 35
years to change the course of the company – he calls it his ‘mid course correction’. After having built the
company in a way that plunders the earth, he wanted to devote the rest of his working life to putting back
more than we take out. You can’t create this type of innovation unless you have that type of commitment.
Rob Coombs talking about Ray Anderson, the CEO of Interface Carpets.
There are a growing number of examples where exceptional leadership has been
displayed in promulgating environmental changes within companies. Most recently
the CEOs from the multinational Interface Carpets and BP Amoco, have been
recognised internationally as leading the debate on policy issues on sustainable
Sheraton Towers Southgate Environmental Policy
Sheraton Towers Southgate is committed to minimizing the environmental impact of its operations and observes
the following principles:
1. To conduct its operations in a manner which complies with regulations and in their absence, to operate in an
environmentally responsible manner.
2. The efficient use of energy throughout its premises.
3. To reduce and recycle wastes generated by the hotel’s activities.
4. A commitment to continual improvement and pollution prevention.
5. To implement a quality purchasing program by working with suppliers to minimise environmental impact of
operations and products.
6. To provide training for all staff to facilitate successful implementation of best environmental practice.
7. To support environmental accountability by introducing on going monitoring of environmental targets.
8. To regularly review environmental objectives.
9. To encourage guest participation in the hotel’s environmental program.
(Sheraton Towers Southgate Environmental Policy) (33)
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development as well as driving their corporations into a new era. Both were recently
awarded 1999 Earth Day Environmental Leadership Awards from the United Nations
Environment Program. (35)
Two further interesting and contrasting examples were highlighted during the
interviews.
Patagonia’s company philosophy began when it’s founder Yvon Chouinard, decided
in the 1960s that his outdoor clothing would be known for its durability and quality,
and his company for its respect of the environment. Scott Edwards, Melbourne Store
Manager, says that the company’s motivating factor is still driven by the CEOs
environmental directive and, while its continuingly reviewing itself, this philosophy is
embedded into the company culture and structure. ‘It links aspects of the company
from what we choose to sell, to where we obtain the raw materials from, to how the
energy to manufacture the product is generated, to marketing the product. While Yvon
still owns the company, he has surrounded himself with a Board and managers who
have the same ethics.’
It is this same philosophy that drives Patagonia to sell cotton clothing made without
synthetic chemicals and polyester fleece clothing made entirely from recycled plastic
bottles. These production decisions are not taken lightly and for the company,
demonstrate its preparedness to invest in efficient operations that provide products
that move them a step closer to a more sustainable system.
Leadership demonstrates itself in various forms and in Moreland City Council it was
the efforts of proactive councilors both before and after council amalgamation,
followed by a like minded Commissioner during amalgamation, that have set the
scene for this Council’s approach to environmental issues. Council has used a process
known as Local Agenda 21 (LA21) to provide a holistic approach to achieving
sustainable solutions. Since 1996, managers have developed internal departmental
action plans and an external community action plan. These have been bought together
into a corporate plan of action under LA21 covering social, economic and
environmental principles and goals. (36)
Peter Mollison, Manager Urban Strategy, says that it was the support and leadership
of the key decision makers in Council, in combination with analysis, information and
workable programs that has allowed this to come together as a well organised and
consistent approach to local governance. ‘The primary motivator is the ‘think global,
act local’ imperative. At the political leadership level, their commitment to the long
term issues that have to be tackled, has provided the strength to develop the strategic
direction required.’
These CEOs, general managers and councilors have defined sustainability to include
financial, social and environmental responsibilities. Individuals, like Ray Anderson
from Interface, have become advocates for sustainable enterprises and the triple
bottom line message is being promoted to other corporate executives via business
leaders forums worldwide* to help accelerate understanding about business
opportunities and the role business leaders have in addressing the challenge of
sustainable development.
If we are able to
take responsibility
for the future of our
planet, then it falls
to us to begin to take
the precautionary
action now ‘John
Browne, BP Amoco
Chief Executive,
Stanford
May 1997
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* Business Leaders Forums on Sustainable Development exist in the US, Canada, UK
and a recent forum has been established in Australia. For more details contact the
Australian Forum Convener Molly Harriss Olson ph 02 6236 8437 (38)
Reputational Gains
‘Until a number of the more dominate players ‘break away from the pack to pursue ecological sustainability
as a serious source of competitive advantage, the bulk of firms will not see sustainability as having more
than a public relations significance. A small but influential band of large multinationals are now moving
tentatively in the direction of such transformation…’ (41)
Most of the companies interviewed saw that maintaining credibility with stakeholders
was necessary to sustain business operations. While many also saw the close link to
marketing, they were conscious about the risk of using their environmental policy to
improve their image. The sentiments are summarized by ‘let the merit of what we do
Patagonia
There is a small, family owned dye factory in Portugal. Its sits on a river downstream from a number of other dye
factories. Most of the factories in the area use the traditional methods – chemically based tints, loads of copper to
fix the colours, and so on – with the effect that the river is heavily polluted. The last factory in line, with the most
polluted river water, produces shirts for Patagonia. The buyers at Patagonia chose this factory at the end of the
river for a very serious reason. The water leaving the dye factory is treated so well that it is cleaner when it
rejoins the river than when it entered the factory. Scott Edwards believes this is a simple and yet powerful
illustration of the way Patagonia does its business. Its integral to the business philosophy that is proactive in
reducing energy use, wastage and its overall environmental impacts. (Energy Smart News) (39)
Moreland City Council
Tools and Techniques – Environmental Auditing – Moreland Local Agenda 21 (LA21)
An environmental audit is a valuable tool in developing an action plan under LA21. An audit was undertaken of
the organisation as a key component of the internal stream of the Council’s LA21 and has resulted in
recommendations on how Council can reduce waste, save energy, save water and improve its purchasing policies.
It also covers resource and environmental management issues such as improving office practices, contract
development and customer services. The Council also took a lead in awareness raising and education amongst its
own staff and continual staff education sessions were integral to the audit process. This collaborative approach
has resulted in positive responses by Council staff to changes in Council practices. (40)
For further information on LA21 see Appendix 4.
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speak for itself and if it’s newsworthy we will look for benefits, but we don’t want
publicity to drive our actions.’ (42)
Many responses mirrored those obtained from a 1998 case study of BP Amoco. These
responses mentioned the close connection between environmental issues and
reputation and recognised to have the right to operate the business; BP must have the
support of the community. ‘It’s about where people want to be and where the
company needs to be. Our licence to operate is driven by our reputation and public
perception. We need to feel, and the world needs to feel, comfortable with what we
are doing. The most dangerous thing you can do is make claims and then not back
them up with action’. (43)
Companies like Kodak and the Box Hill and Epworth Hospitals, all located within
residential zones, reiterated this comment. Claus Dyck, HSE Manager Kodak
summarised it with ‘one important aspect of our HSE program is driven by our
location. With a residential area and school close by, we need to continually earn the
right to operate here. We strive to ensure that the impact of our operations on our
neighbours in minimal.
Companies must align themselves with changing and more sophisticated
environmental stakeholder views. In BP’s case, its customers include some corporates
who may be inclined to be more open in their environmental behaviour. ‘It’s good for
BP’s business to be able to attract corporates who know that environmental
performance is now part of how they will be judged. The good spin off is that if they
are buying fuel from us, they can say to their customers what BP is doing in regard to
the environment like low emission fuels and energy management programs.’ (44)
Compliance with Regulation
‘Industry leaders will always be driving new products in response to new regulations. Regulation creates the market and
leading companies then jump into that opportunity to create new products and systems to respond. They need the
regulations to mop up afterwards because they’ve taken the risk of going out in front and they need to be rewarded for that
by having the whole marketplace in that situation… I would hope we’ll get to the situation where companies are actually
arguing for regulation, in self interest, to drive the standard across the marketplace. ‘ Paul Gilding, Ecos Corporation, ex
Greenpeace Director (46)
Many of the interviewees from larger companies saw regulation as important but
often misguided. The strongest responses came from BP Amoco and Interface
Carpets, whose senior managers, while stressing the need for sensible regulation, also
place much of the responsibility and opportunity arising from change, back onto
industry.
BP
Amoco’s
Triple
Bottom
Line
Approach
‘What
is
sustainable
development?
To
many
economist
it’s
about
having
economic
stability
and
growth…
A
more
balance
view
comes
from
getting
economic
development,
environmental
protection
and
social
responsibility..
We
would
be
wrong
to
see
society’s
growing
environmental
and
societal
concerns
as
impediments
which
slow
progress
down.
On
the
contrary,
they
are
the
beginning
of
a
new
path
for
all
of
us….
While
I
acknowledge
it’s
difficult
to
generalise,
I
believe
Australian
corporations
are
a
little
way
off
the
pace
in
terms
of
fully
embracing
the
concept
of
triple
bottom
line…
all
businesses
are
increasingly
going
to
be
faced
with
issues
other
than
the
economic
dimensions
of
their
operations
and
the
way
they
react
to
those
issues,
will
determine
their
longevity.
Certainly
BP
Amoco,
within
the
oil
industry,
has
come
to
the
realisation
that
we
can
provide
energy
needs
of
our
societies
and
contribute
to
environmental
and
social
development.
Not
only
this
shift
in
attitude
contribute
to
sustainable
development
within
society
it
will
reinforce
the
sustainability
of
our
own
businesses.
(Greg
Bourne
BP
Amoco)
(45)
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‘In business we make investments and think strategically 20-30 years ahead. In this
context, we have realized that we have to do more on the environmental and social
fronts…. BP has done the technical part of environmental control and safety, by and
large, very well for a long time… We now need to think more holistically about
sustainable development… Eventually, all come to the realisation that what society
says today, the politicians will say tomorrow, laws and regulation will then follow.
We have to abide by those laws and regulations. Typically companies of all sorts have
lobbied against changes in regulation to slow the process. The fundamental shift is the
realisation that industry are the ones who implement … and… because we are all
members of society, if we listen and act proactively and progressively then the
regulations are much more likely to be logical and balanced. It’s about embracing
regulation and utilising this as a tool to raise the standards… You could call this
enlightened self interest. They key thing is that we in industry are beginning to listen
to society… The company that is least prepared when the legislation comes in, is
usually the one who has to do the most catch up and has the biggest disadvantage.
Almost always the first movers have the advantage, so being progressive is the name
of the game.’ Greg Bourne Regional Director BP Amoco Australia NZ
This also the view from the Australia and Pacific CEO of Interface Carpets, Rob
Coombs who stated that ‘… up until 5 years ago our aim was to ensure compliance.
We were never less than that and rarely ever more than that. Our aim now is to go
beyond this because regulation doesn’t reflect what needs to be done…. But if we
leave the major changes to government, then it just wouldn’t happen. The only
institution that is strong, wealthy and pervasive enough to make it happen is the
institution that caused the problem in the first place, that is business…. We believe
that governments don’t lead but follow. The education process while important takes
too long, and the church doesn’t appear to be overly committed to this concept. This
leaves business as the only institution to make it happen… Anything government can
do to offer sensible guidelines and regulation are welcomed. They can play a very
active role in providing incentives and ensuring that taxes in place reflect appropriate
rewards to those businesses that are tying to design processes that are sympathetic to
the wider environment. They also need to penalise companies that are operating in
ways that generate hidden environmental costs.’
Helen Lewis, Market Development Manager at EcoRecycle Victoria believes that
government policies, like the Greenhouse Challenge, and regulation are important
drivers. ‘If initiatives are seen as a high priority for government, then this can assist
industry take up. For example there is a lot of discussion and debate about the
packaging covenant and while no regulations are in place yet, this has already had
some impact. Companies in the packaging sector are already thinking about how this
will impact on them and their relationship with customers etc., and are developing
corporate strategies to meet the requirements of the covenant. These types of debates
build up a momentum and eventually become a normal part of doing business. They
assist in shifting corporate culture. It’s clear in some quarters that industry prefers a
voluntary approach to change, to allow the freedom to choose how they will
implement the changes. But it helps if there is a threat of regulation if change does not
occur…. It was the threat of container legislation that got companies involved in
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kerbside recycling over 10 years ago. Recycling has never been regulated in this
State, but Victoria has some of the highest recycling rates in world.’
It is not within the scope of this paper to analyse the pros and cons of regulatory
processes as a means of enforcing a company’s environmental responsibilities. What
was clear from the interviews was business recognition of the need for appropriate
regulation and the growing use of less traditional command and control techniques, to
more co-regulatory approaches, the use of voluntary codes and environmental
management systems or environmental standards like ISO 14000, within business.
What is also interesting is the environmental requirements large companies are
placing on their suppliers and the impact this will have in driving suppliers to examine
their environmental policies and procedures.
Barriers to Implementation Identified in the Interviews
While acknowledging that there are many positive factors in the take up of
environmental programs, those interviewed also discussed some of the inherent
barriers they confronted, even in small scale waste or energy minimisation projects.
The following are brief responses in relation to this topic.
Internal Organisational Barriers
• One of the most consistent responses was that related to human resistance and
whether it be staff, managers, suppliers or customers, this was put down to
people’s inability to think long term and strategically. Related to this were
comments about people’s tendency to want more proof about problems such as
climate change, and how the media’s superficial approach to some stories has
helped to feed this reluctance to change. ‘Often you are asking people to change
behaviours that are routine, mundane and of a lower order.. so they may appear
insignificant. A lot of sustainability issues are about incremental change and
people find it difficult to see the benefits of this and thus resist change. ‘Peter
Mollison, Moreland City Council.
• An interesting anecdote came from BP’s Ian Palliser who sees females as early
adopters of their environment programs. ‘Our company has a 30 percent female
Making Markets Work for the Environment- Inducing Change
Three basic mechanisms can be used to move business to internalize environmental costs, to pay for the cost of pollution, or
to limit damage to the environment by other means.
• Command and Control – these are basically government regulations, including performance standards for
technologies and products, effluent and standards etc.
• Self-regulation – These are initiatives by corporations or industry sectors to regulate themselves through
standards, monitoring pollution reduction targets and the like.
• Economic instruments – These are the efforts to alter the prices of resources and of goods and services in the
marketplace via some form of government action that will affect the cost of production and/or consumption. (47)
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and 70 percent male spilt, buy typically the early adopters were 90 percent female
and 10 percent male. The females in our company seem to make links between
personal and company alignment without having to be convinced. I’m not sure if
there is such a thing as “maleness barrier” or if the barrier is just apathy.’
• Many companies also noted the need to find interesting and innovative ways to
educate, train, maintain enthusiasm and sign staff onto programs, where both
behavioural and attitudinal changes are required.
• Another consistent response across all companies, particularly small to medium,
was the challenge of resource allocation, in terms of staff time and budgets.
Related to this is ongoing business restructures and consequential staff
preoccupation with job security. Many people neither have the time or energy to
take on new programs that may require a behavioural change and in many cases
momentum is difficult to maintain.
• Access to practical and relevant information can also act as a barrier. ‘Often
smaller business don’t employ full time environmental managers and are not
linked into the same networks as larger companies, whose industry associations
provide them with regular information about government regulation, trends and
best practice examples. If you’re not part of the networks, then you’re often not
conscious of the shifts and debates underway.’ Helen Lewis, EcoRecycle Victoria.
• Responses also noted the need to embed environmental roles into job descriptions
to make this part of staff accountability and to provide adequate recognition,
rather than relying on staff’s goodwill and voluntary efforts. Staff continuity was
also important for a continuing program where often inadequate staff induction
and training contributed to program failure.
• The need for an appropriate infrastructure is essential for programs to progress.
The environment program established at the Hawthorn Campus of Melbourne
University in 1993 had to overcome the adhoc nature of recycling collection
services and in essence the temptation to just shift the problem from one area to
another
• Related to this is the barrier of ignorance. Ian Mitchell, Campus Manager at
Hawthorn, says that in the early days ‘many of us were still ignorant about what
could be realistically achieved in office environments and what the benefits were.
There could also be barriers if cost savings could not be demonstrated and we may
have been able to save further if better budget reporting and consumption
reporting systems had been put in place.’
External Barriers
• A major barrier is the market perception of the quality of recycled products.
Remanufacturers noted that customers place a more critical eye and have a higher
expectation of recycled products. Often these negative perceptions are based on
history that is no longer true. Greenworld Office Products have found that ‘if a
customer hasn’t used recycled products or has had a bad experience, then they
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tend to regard them as inferior and assume there has been no improvement in
quality.’ Rob Jolly, Co-founding Director, emphasizes that their products go
through a whole series of quality controls and new components are used when
required. ‘Its not a matter of getting an old cartridge and putting new toner in it
…. I have also found that technicians for major suppliers have mistakenly told
users that warrantees are not guaranteed with recycled products ….. or some
regulations have specifically excluded the use of recycled products ….. this is all
works to form a negative attitude to influence buyer behavior patterns ….. I don’t
see that the market has matured much in terms of its understanding of what can be
achieved with recycled products. In case of laser cartridges only 30 percent are
recycled and 70 percent are still heading for landfill.’
• Another consistent response related to resource allocations was the impact of
current economic conditions working against environmental improvement. In
relation to the use of recycled materials, one of the biggest barriers identified by
Eco Recycled Victoria is the low cost of virgin materials. ‘There is no incentive in
cost savings, for example raw materials for plastics are at a 25 year low, so the
lower costs of virgin materials and the extra difficulty some recycled materials
create in production, makes it impractical for companies.’ Helen Lewis.
• When you are attempting to break new ground and be innovative there are many
lessons to be learned. The first barrier was thus one of knowledge and how to
assemble this knowledge in order to move forward … There are also huge
technological barriers in attempting to create a new business approach. We are
attempting to close the loop and to get to the point where our inputs equal our
outputs. We are long way from this and much of this is because we don’t have
access to the technology to make it happen.’ Rob Coombs, Interface Carpets.
• Hospitals also have the challenge of dealing with suppliers. ‘The higher costs of
disposing of waste could act as a collective driver for hospitals to approach
suppliers and have more influence on product packaging to minimise hospital
waste….’ Carol Sainsbery, Corporate Services Manager, Box Hill Hospital.
‘Many environmentally unsound (office) products have generated huge profits for suppliers because environmental
pollution was never treated as a production cost. This highlights the issue of the hidden costs that technology waste
imposes on a community. The environment never charges when waste by products are dumped on it – the cost of
pollution is externalised from the supplier’s balance sheet and put onto the user’s shoulders. Indeed we have all
become the underwriters of these consequences.’ (49)
Lessons Learnt Checklist
Greenworld Office Products
A growing number of prominent organisations in the public and private sectors have overcome the recycling psychological
barrier and use quality recycled products as a matter of course. Greenworld’s rapidly expanding customer base reflects the
move to recycled products in the business community. Products include remanufactured laser cartridges, refilled ink jet
cartridges, degaussed and reformatted Greendisks and efficient and durable Kyocera Printers. (BATE Case Study Series) (48)
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The cumulative experience of those interviewed is summarized in this checklist of
success factors in driving environmental programs and sustainable development in
their organisations:
• See environment as a normal part of business and a continuous improvement
management model;
• Understand your waste processes and inventory all unused, emitted or discarded
resources;
• Get senior management onside and make them part of the process – use regular
communication forums to get support and leverage;
• Establish a management action plan, this demonstrates public commitment to
action and should be signed off by appropriate management to demonstrate their
support;
• Start by benchmarking yourself against others and then aim to be industry leaders
to get a competitive advantage;
• Consult, communicate, educate and train your staff to increase involvement and
encourage ownership;
• Be proactive, innovative and spend more time on communication;
• Build tasks into job descriptions and performance and bring the responsibility
back to the individual;
• Use incentives and bonuses to meet higher standards;
• Get an external consultant in to do a full audit and start with an internal office
improvement program:
• Make use of government programs and funding potential to save time getting the
information you need;
• Network to get up to date and relevant information to assist you in decision
making.
• Health, safety and environment is a formally structured management process –
this does ensure staff take it seriously;
• Monitor program process and put in a place better information and evaluation
methods; ensure targets are current, performance is measured and the reporting
process is relevant;
• Build responsibility for programs into a line management function;
• Remember that relationships, trust and capacity all take time to build;
• To engage people in a potentially emotive program, they need to be told the
benefits of change according to their own value set; and
• Celebrate your successes.
Building Sustainable Business Practices
While many of the examples used in this paper consisted of projects aimed at
minimizing waste, pollution or energy, there are a few companies that are attempting
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to incorporate sustainability into their strategic thinking. Focusing on sustainability
requires a new vision which goes beyond an internal, operational focus on greening to
a more external, strategic focus on sustainable development.
One model provides a three stage approach to guide companies to an environmental
strategy.
Stage one: Pollution Prevention – this first step requires companies to make the shift
from pollution control to prevention and focus on minimizing waste before it’s
created. Much like Total Quality Management, prevention strategies depend on
continuous improvement efforts to reduce waste and energy use and is driven by the
logic that ‘pollution prevention pays’.
Stage two: Product Stewardship – this step focuses on minimizing not only pollution
from manufacturing but also from all environmental impacts associated with the full
life cycle of a product. Reducing the use of materials and production of wastes
requires companies to look at fundamental changes in the underlying product and
design process. A tool known as Design for Environment (DFE) examines all possible
environmental effects of a product at the design phase. This cradle to grave analysis
includes a full assessment of all inputs to the product and examines how the
customers use and dispose of it.
Stage three: Clean Technology – companies with an eye on the future can begin to
plan and invest in tomorrow’s technologies. Clearly many of the today’s technologies
are not environmentally sustainable and by relying on these they have major
difficulties progressing towards sustainability. The focus will be on new research and
technology that develops and commercializes clean technology. (50)
Pollution prevention, product stewardship and clean technology all move a company
towards sustainability. These in conjunction with a framework to give direction to
activities provide a ‘road map to the future’. (51) See figure ‘The Sustainability
Portfolio’ for a tool to develop this strategic framework.
A clear and fully integrated environmental strategy should also shape the company’s
relationship to customers, suppliers, other companies, policy makers and
shareholders. ‘Companies can and must change the way customers think by creating
preferences for products and services consistent with sustainability. Companies must
become educators rather than mere marketers of products.’ (53) While many senior
executives will focus only on the risk associated with investing in unfamiliar markets,
outweighing the potential benefits, there are many others as seen in this paper who
will embrace the need for change.
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The Sustainability Portfolio
This simple diagnostic tool can help companies determine whether its strategy is
consistent with sustainability. (52)
Clean Technology
Is the environmental performance of the
products limited by existing competency base?
Is there potential to realize major improvements
through new technology?
Sustainability Vision
Does the corporate vision direct towards the solution of
social and environmental problems?
Does the vision guide the development of new
technologies, markets, products and processes?
Pollution Prevention
Where are the most significant waste and
emission streams from current operations?
Can lower costs and risks by eliminating
waste at the source or by using it as a useful
input be achieved?
Product Stewardship
What are the implications for product design and
development if one assumes responsibility for a
product’s entire life cycle?
Can lower cost or value be added while
simultaneously reducing the impact of the products?
INTERNAL EXTERNAL
Conclusion and personal learning’s
In exploring the themes of this paper it became clear that while some companies
focused on a particular motivational factor during the interviews, most saw the need
to consider all factors in their decision making processes. Cost reduction and smarter
business practices are influencing managers, but the interviews do indicate that other,
less easily quantifiable, drivers are strongly at work.
While some organisations had commenced with an office improvement program,
others had seen the need to look more closely at the overall waste question, while
others were analyzing even more deeply the actual product they sold and its impact on
the environment. The spectrum of companies was wide and while the degree of
change varies greatly, all had a commonality in the recognition, importance and in
some cases the opportunity, they gave to environmental issues.
T
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This paper can only provide a snapshot of motivational factors and as described
earlier, the in built biases in the project make it impossible to determine the extent of
environmental recognition throughout Australian business. Although it is fair to say
that the managers interviewed do see environmentalism as part of doing business
better, the degree to which this indicates a significant change in environmental
business ethics or company culture cannot be answered.
There are still great hurdles as indicated by the barriers to program implementation,
focusing on human resistance and perceptions to technology and balancing budgets.
The strong theme emerging from the literature is that the more industry is assisted to
redefine the environmental imperative as part of mainstream business concerns, the
greater the opportunity for both business, society and the environment. The theme of
don’t green your company : commercialise environmentalism (54) is catching on and
linking the economic and environmental crisis with a commercial opportunity.
It is also clear that we still have a long way to go and global climate change demands
new ways of conceptualizing opportunities and new ways of implementing strategies
that will drastically reduce the environmental burden, in particular in the developing
world. As has been reiterated in this paper, a final lesson is captured by this quote….
‘Like it or not, responsibility for ensuring a sustainable world falls largely on the
shoulders of the world’s enterprises, the economic engines of the future. Clearly
public policy innovations … and changes in individual consumption patterns will be
needed to move towards sustainability. But corporations can and should lead the way,
helping to shape public policy and driving change in customers’ behaviours. In the
final analysis, it makes good business sense to pursue strategies for a sustainable
world.’ (55)
Appendix 1a
A list of those interviewed from each organisation
Banksia Environmental Foundation
Graz van Egmond, Corporate Affairs Manager
Box Hill Hospital
Carol Sainsbery, Corporate Services Manager
BP Amoco Australia
Greg Bourne, Regional Director Australia & New Zealand
Kathleen Esdaile, Environment Co-ordinator
Kerry Lodge, Office Facilities Manager
Ian Palliser, Chief Financial Officer and General Manager Shared Services
Susan St Lawrence, Environmental Improvement Facilitator.
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Business Victoria
Brian Waters, Industry Specialist
Consultant and ex Norwich Financial Services
Geoff Donnely
Corporate Environmental Management Pty Ltd
Anne Marie Devine, Managing Director
EcoRecycle Victoria
Helen Lewis, Market Development Manager
Energy Efficiency Victoria
Ian Porter, Manager Business Energy Services
Epworth Hospital
Steve Scott, Engineering Services Manager
Nigel Wolstenscroft, Facilities Technician
Greenworld Office Products
Rob Jolly, Join Managing Director
Interface Australia Pty Ltd.
Rob Coombs, CEO Australia and Pacific
Kodak Australasia Pty Ltd
Claus Dyek, Manager Health, Safety and Environmental Services
Ron Guest, Environment Technical Specialist
Melbourne Patagonia
Scott Edwards, Manager
James Roger, Sales staff
Moreland City Council
Peter Mollison, Manager Urban Strategy
Richland Jennings, Conservation Team Leader
Sheraton Towers at Southgate
Fred Matti, General Manager
Ray Galea, Security, Safety and Environment Manager
Brett Richardson, Stewarding Shift Leader
Trish Wunderlich, Promotions and PR Manager
University of Melbourne
Ian Mitchell, Campus Manager, Hawthorn Campus
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Appendix 1b – Contact List
Greg Bourne Fred Matti
Regional Director Australia & NZ General Manager
BP Amoco Australia Sheraton Towers at Southgate
360 Elizabeth St Melbourne 3000 1 Southgate Ave. Southbank
ph 03 9286 4111 ph 03 9626 3100
fx 03 9626 6581
Rob Coombs Ian Mitchell
CEO Australia and Pacific Campus Manager
Interface Australia Pty Ltd Hawthorn Campus
Unit 1 City Close University of Melbourne
37-40 O’ Riordan St Locked bag 12, Hawthorn 3122
Alexandria NSW 2015 ph 03 9810 3346
ph 02 9698 3303 fx 03 9810 3315
fx 02 9698 3396
Anne Marie Devine Peter Mollison
Managing Director Manager Urban Strategy
Corporate Environmental Management Moreland City Council
Pty Ltd Locked Bag 10
Suite 706, 81 Queens Rd Coburg 3058
Geoff Dommelly Ian Palliser
Consultant and ex Norwich Chief Financial Officer and
Financial Services General Manager Shared Services
ph 03 9529 3474 BP Amoco Australia
fx 06 9529 3476 360 Elizabeth St Melbourne 3000
(now located in USA)
Claus Dyek Ian Porter
Manager Health, Safety & Manager Business Energy Services
Environmental Services Energy Efficiency Victoria
Kodak Australasia Pty Ltd 215 Spring St
173 Elizabeth St Coburg 3058 Melbourne 3000
ph 03 9353 2599 ph 03 9655 3244
fx 03 9353 2023 fx 03 9655 3255
Scott Edward Brett Richardson
Manager Stewarding Shift Leader
Melbourne Patagonia Sheraton Towers at Southgate
37 Little Bourke St 1 Southgate Ave. Southbank
Melbourne 3000 ph 03 9626 3100
ph 9642 2266 fx 03 9626 6581
fx 9642 2277
Kathleen Esdaile James Roger
Environmental Co-ordinator Sales staff
BP Amoco Australia Melbourne Patagonia
360 Elizabeth St Melbourne 3000 370 Little Bourke St
ph 03 9286 4206 Melbourne 3000
fx 03 9268 3133 ph 9642 2266
fx 9642 2277
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Ray Galea Carol Sainsbery
Security, Safety and Environment Manager Corporate Services Manager,
Sheraton Towers at Southgate Box Hill Hospital
1 Southgate Ave. Southbank Nelson Rd., Box Hill 3128
ph 03 9626 4029 ph 03 9895 3261
fx 03 9626 4027 fx 03 9895 5176
Ron Guest Susan St Lawrence
Environmental Technical Specialist Environmental Improvement Co-ordinator
Kodak Australia Pty Ltd BP Amoco Australia
173 Elizabeth St Coburg 3058 360 Elizabeth St Melbourne 3000
ph 03 9353 3247 ph 03 9286 4206
fx 03 9353 2023 fx 03 9268 3133
Richard Jennings Steve Scott
Conservation Team Leader Engineering Services Manager
Moreland City Council Epworth hospital
Locked Bag 10 89 Bridge Rd
Coburg 3028 Richmond 3121
ph 03 9240 1111 ph 03 9420 5234
fx 03 9240 1212 fx 03 9428 6882
Rob Jolly Graz van Egmond
Joint Managing Director Corporate Affairs Manager
Greenworld Office Products Banksia Environmental Foundation
Unit 3, 14 Miles St 61 Gipps St
Mulgrave 3170 Collingwood 3066
ph 03 9796 2413 ph 03 9419 7188
Fx 03 9707 4738 fx 03 9419 7911
Nancy Krause Brian Waters
Conservation Coordinator Industry Specialist
Moreland City Council Business Victoria
Locked Bag 10 Level 11, 55 Collins St
Coburg 3058 Melbourne 3000
Ph 03 9240 1138 ph 03 9651 9846
Fx 03 9240 1186 fx 03 9651 9304
Kelly Lodge Nigel Wolsteacroft
Office Facilities Manager Facilities Technician
BP Amoco Australia Epworth Hospital
360 Elizabeth St Melbourne 3000 89 Bridge Rd
ph 03 9286 4324 Richmond 3121
fx 03 9268 3133 ph 03 9420 5234
fx 03 9428 6882
Helen Lewis Trish Wunderlich
Market Development Manager Promotions and PR Manager
EcoRecycle Victoria Sheraton Towers and Southgate
Level 4, 478 Albert St 1 Southgate Ave. Southbank
Melbourne 3000 ph 03 9626 4127
ph 03 9639 3322 fx 03 9810 3315
fx 03 9639 3077
Advisory Group