Chapter 4: Managing the Downside

Case:
In 1975, 3M started a program Pollution Prevention Pays (3P). The program was unapologetic about one thing. Any idea that could reduce pollution should also save money. "Anything not in a product is considered a cost...it's a sign of poor quality," says Kathy Reed, 3M's top enviromental executive. Everything coming out of a plant is either a product, by-product or waste. Why, should there be any waste? Waste is a sign of inefficiency. 3M's 3P program works so well because it asks people to stop problems before they start in stead of shifting problems from one place to another. Some of the biggest environmental slipups came from new abatement technologies that cost too much, didn't work as planned, or created more problems.  

Problems that don't arise are a strange kind of success. Bob Langert, McDonald's Director for Social Responsibility, said "I'm proud of what we've done, but nobody knows about it." In this case, that's exactly how shareholders would want it. For McDonald's team, risk management is about more than controlling the downside, but the upside is building a "trust bank" with customers. It's very hard to gain, but easy to lose. 

Strategy:
The Eco-Advantage Bottom Line
Look to reduce costs by:
1. eliminating waste and promoting eco-efficiency
2. cutting disposal costs and regulatory compliance expenses 
3. capturing the vaule of reduced environmental burdens up and down the value chain
Control environmental risk by:
4. anticipating environmental issues and addressing them
5. staying ahead of new regulatory requirements
6. managing goverment mandates to gain a relative advantage in the market place.